SEC to review overvaluation of 17 companies - Share market analysis of dhaka stock exchange, Bangladesh

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25 September, 2012 11:09 AM Source: The Daily Star Bangladesh

Gazi Towhid Ahmed

The Securities and Exchange Commission (SEC) will review the overvaluation of assets of 17 companies, an official said yesterday.

The decision taken last week at a meeting came after a recommendation from a government probe committee on the stockmarket crash of last year.

“We will reexamine the overvaluation of assets and companies' financial statements to ensure transparency and accountability in the market,” the SEC official said.

The securities regulator will also investigate irregularities in the issuance of rights and preference shares of all listed firms, he said, asking not to be named.

The market watchdog will take action against companies, issue managers and valuers if securities rules are violated, he added.

A four-member panel, headed by Krishi Bank's Chairman Khondker Ibrahim Khaled, had conducted an inquiry into the market crash that happened during the February-March period of last year.

The committee submitted a 300-page report to the government on April 7 of the same year.

The study found the crash to have been brought about by the swindling activities of around 100 individuals and business organisations amounting to Tk 20,000 crore.

A total of eight companies -- Libra Infusion, Sonali Ansh Industries, Rahim Textile, BD Thai Aluminum, Orion Infusion and Ocean Container -- overvalued their assets, the probe report found.

As a result, the net asset value of these companies shot up between 104 percent and 3,500 percent.

The report also recommended a further investigation into 17 companies, which would be investigated by SEC Director Rejaul Karim and Pradip Kumar.

The companies are BD Thai Aluminum, Khulna Power, GMG Airlines, Chittagong Vegetable, Beach Hatchery, BD Welding, CMC Kamal, Meghna Cement, Malek Spinning Mills, Active Fine, MJL Bangladesh, Barakatullah Electro Dynamics, Salvo Chemical, United Airways, Becon Pharma, MI Cement and Fuwang Ceramics.

A five-member committee will reevaluate the assets of state-owned companies.

SEC directors Mahbubul Alam and Abul Kalam will investigate irregularities in rights and preference shares.

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