Capital market reform task force recommended a 30-per cent quota for small investors investing up to Tk聽2 lakh and a 15-per cent quota for high net-worth individuals investing over Tk聽2 lakh.
It also proposed mandatory enlisting of companies with outstanding loans of over Tk聽1,000 crore.
The task force made the recommendation in a draft report submitted to the Bangladesh Securities and Exchange Commission on Monday.
It recommended bringing back Dutch auction method, a system where investors bid to determine share price, with slight changes to ensure fair pricing in initial public offerings.
The task force also proposed reducing eligible institutional investor share buy limit from 2 per cent to 1 per cent to increase participation and improve price discovery.
Other suggestions included locking half the shares bought by big investors for three months so they make careful decisions during bidding and removing existing 10-per cent circuit breaker 鈥� a rule that limits price changes 鈥� for the first three days after listing to avoid sudden price swings.
The task force also suggested reducing time needed for IPO listing to six months by newly structuring the IPO checklist, a list of required documents and information that a company must submit when applying to sell its shares publicly.
It proposed allowing only one approval from the BSEC instead of two and an online dashboard to monitor IPO progress.
To encourage more small investors, the task force report suggested removing requirement of minimum Tk聽50,000 investment in secondary market for IPO applications.
Another proposal focused on increasing supply of quality stocks by allowing multinational corporations to list their shares directly.
The report recommended raising minimum paid-up capital limit to Tk聽30 crore for companies to enlist through fixed price method and Tk聽50 crore for companies to enlist by book building method.
It suggested allowing companies to raise funds from outside Bangladesh.
To improve audit quality, the task force recommended selecting the top auditors through a fit and proper test.
It proposed a second auditor to review key financial details.
Mandatory site visits before approval and an expert panel to review a company鈥檚 earnings and sustainability were also suggested for better transparency.
The draft report proposed giving stock exchanges more power by letting them approve IPOs first.
If an exchange rejects a listing, the BSEC should not approve it. If a company appeals, the BSEC may review it, but final approval should depend on the exchange鈥檚 independent team.
For IPOs that do not sell enough shares, the task force recommended having more organisations as underwriters 鈥� companies that guarantee to buy unsold shares.
The underwriters must have enough cash and follow financial rules. They also proposed allowing banks, non-bank financial institutions insurance companies and stockbrokers to be underwriters.
To cut costs and simplify the process, the task force suggested removing need to distribute hard copies of prospectuses.
They also proposed reducing fees and allowing online applications to make the process easier for companies.