Small-cap companies have got a separate trading platform to raise funds from the capital market, which is good news for small enterprises that look for alternative sources of financing.

Companies with a minimum paid-up capital of Tk 5 crore are eligible to raise funds by using the platform -- Small Capital Platform.

But they will have to raise at least Tk 5 crore from 'qualified investors' through listing on the platform, while the post-issue paid-up capital would not cross Tk 30 crore, according to a new rule, a gazette of which was published last week.

Qualified investors mean institutional investors and high net-worth individuals with adequate knowledge on investment. The institutional investors include merchant bankers and portfolio managers, asset management companies, mutual funds and other collective investment schemes, stock dealers and brokers, banks and financial institutions.

Bangladesh Securities and Exchange Commission in August approved the new rule -- Qualified Investor Offer by Small Capital Companies Rules, 2016 -- to facilitate the growth of small-cap companies that have potential but do not have enough funds.

According to the rule, the Central Depository Bangladesh Ltd will create separate beneficiary owner's accounts for the qualified investors.

General investors will not be allowed to take part in the trading of small-cap companies after their listing on the new platform.

Also, small-cap companies cannot use the initial public offering method to raise funds, as existing rules allow a company with minimum paid-up capital of Tk 30 crore to go for IPO.

If the paid-up capital of a small-cap company exceeds Tk 30 crore after listing on the separate platform, it can apply for listing on the main board of exchanges.

The shares of small-cap companies will have to be in electronic or dematerialised form. There will be a one year lock-in period for the shares held by qualified investors.

Trading, clearing, settlement and trading cycles will be like the main market of the bourses. Trading will take place through existing stockbrokers.

No small-cap company can be listed on the separate platform directly; it will have to be listed either following a fixed-price or book building method.

The issuer company will appoint at least one market maker to maintain liquidity in the market during the trading of shares, and the stock exchanges will organise awareness programmes on the new mechanism.

A market maker is a dealer in securities or other assets who undertakes to buy or sell at specified prices at all times.