BSEC imposes bar on two cos to raise funds - Share market analysis of dhaka stock exchange, Bangladesh

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15 October, 2014 10:14 AM Source: The Financial Express Bangladesh

The securities regulator has imposed embargo on Argon Denims and Salvo Chemical Industry from raising fund from capital market for next three years for 'unlawful' expenditure of IPO funds, officials said.

The Bangladesh Securities and Exchange Commission (BSEC) also fined Argon Denims and Salvo Chemical Industry Tk 3.0 million and Tk 0.5 million respectively.

The decisions were taken at a commission meeting held Tuesday at the BSEC office.

The securities regulator has approved the IPO (Initial Public Offering) proposal of Shasha Denims which will raise a fund worth Tk 1.75 billion by offloading 50 million shares at an offer price of Tk 35, including a premium of Tk 25 for each ten taka share.

As per audited financial statement for the year ended on December 31, 2013 the earnings per share (EPS) and net asset value (NAV) of Shasha Denims are Tk 3.73 and Tk 52.95 respectively.

At Tuesday's meeting the securities regulator has also imposed a penalty of Tk 5.0 million on former director of Sylhet Metro City Securities Shamim Ahmed who allegedly embezzled shares and money of his clients.

At the same time, Mr. Ahmed will never be involved with any organisation of capital market and his BO (beneficiary owner's) account has been freezed until further instruction. According to BSEC findings, Argon Denims breached securities rules by spending IPO fund beyond the conditions set in the prospectus and consent letter approved by the securities regulator.

The BSEC said the company paid excess money to repay short-term loan and debt taken from One Bank and Mercantile Bank respectively. Besides, the company re-paid the short term loan worth Tk 30 million taken from LankaBangla Finance, although the issue was not mentioned in the prospectus. Besides, Argon Denims paid Tk 279.4 million for purchasing construction materials without banking channel. In January, 2011 Salvo Chemical Industry raised a fund worth Tk 260 million from the capital market.

According to BSEC finds, the Salvo Chemical Industry showed utilisation of Tk 260 million although the company utilised Tk 240 million. The company also spent Tk 22.1 million without banking channel. The securities regulator banned the involvement of Shamim Ahmed, a former director of Sylhet Metro City Securities (SMCS), with the capital market for ever as his involvement in embezzling clients' shares and money has been proved.

The regulator has also decided to issue directive on Chittagong Stock Exchange (CSE) for submitting report to the commission within November 30 next by taking initiatives to return the money and shares of the clients of SMCS. At Tuesday's meeting, the BSEC has formed a three-member body led by executive director Mohammad Anwarul Islam to formulate a guideline on as to how the aspirant companies of OTC (over-the-counter) market can be re-listed with main bourse.

"The non-performing companies of OTC market recently showed the tendency to be re-listed with the main bourse. The BSEC took the decision of considering the companies' re-listing as per specific guideline," the BSEC said.

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