The Bangladesh Securities and Alternate Payment (BSEC) has launched an inquiry into how nine corporations, listed on the capital market between 2018 and 2024, utilised the funds they raised through preliminary public choices (IPOs) and repeat public choices (RPOs).
In accordance with BSEC sources, the decision modified into as soon as made in a meeting on Tuesday (1 October).
The agencies below scrutiny are Bangladesh Starting up Company (RPO), Index Agro Industries, JMI Hospital Requisite Manufacturing, Lub-rref (Bangladesh), Navana Pharmaceuticals, Ring Shine Textile, Sikder Insurance, Silva Pharmaceuticals, and Wonderful Holdings Ltd.
Sources told TBS that these corporations have not utilised the raised funds at some level of the required timeframes, prompting the BSEC to establish their actions to catch distinct compliance with rules and provide protection to investors’ interests.
In accordance with stock alternate reviews, most of these corporations private prolonged the closing dates for the employ of the funds distributed to their projects.
Consequently, they’ve didn’t fulfill their commitments to investors as outlined in their prospectuses. As a alternative, the companies private profited from maintaining these funds, while fashioned shareholders had been deprived of the expected returns.
Market insiders talked about the BSEC, below the management of M Khairul Hossain and later Shibli Rubayat-Ul Islam, didn’t hold efficient action against corporations that didn’t employ the funds on time.
This allowed the companies to employ regulatory loopholes, extra delaying fund utilization. Allegations private surfaced that every and each BSEC commissions benefited from the companies listed between 2011 and June 2024. This not completely harmed investors but also weakened the structure of IPO fund administration within the capital market.
Several company officials private cited the pandemic, worldwide financial crisis, rising raw cloth costs, challenges with opening Letters of Credit ranking (LCs), and the dollar crisis as reasons for delays within the employ of the funds as deliberate.
They talked about in 2021, the alternate rate of the US dollar in most cases ranged from Tk80 to Tk90. However, since 2022, the alternate rate has been unstable and continuously increasing, reaching Tk121 per dollar at demonstrate.
By law, corporations are not allowed to transfer IPO funds to a form of accounts or employ them for purposes not talked about within the prospectus.
If a company needs to alternate the employ of these funds or lengthen their utilisation, it must first get approval from as a minimum 51% of the public shareholders (except for for sponsors and directors) at a general meeting, with ethical glimpse supplied to all shareholders.
Capital market consultants private pointed out that corporations on the full retain a ways off from looking out for approval from general shareholders when altering the timeframe for the employ of IPO or RPO funds due to there might per chance be not any solid law enforcing this requirement. This loophole permits corporations to misuse or lengthen the employ of investor funds with out dealing with any penalties.
To tackle this misfortune, consultants counsel that the BSEC must aloof introduce stricter rules for fund utilisation. Such rules would catch sure corporations can’t deceive investors or misuse their funds, preserving them guilty for the employ of the funds as outlined in their prospectuses.
Inventory market analyst Abu Ahmed told TBS earlier that the IPO strategies has to be tightened so that the companies to compelled to employ such funds properly. In addition to, the regulator has to comprehend the motive of issuers who must elevate funds from the capital market.
A total lot of the companies which have not fully utilised their IPO funds obtained extensions from the regulatory commission. About a corporations, which had been listed on the capital market within the closing two years, aloof private time to employ their funds as per their prospectuses.
Wonderful Holdings and Navana Pharmaceuticals private the tenure to employ these IPO funds as per the prospectus.
In 2011, inform-owned company Bangladesh Starting up Company raised Tk313.70 crore from the capital market through repeat public providing (RPO) to amplify change operations. The company deliberate to aquire ships and building constructions below the change expansion.
However, it modified into as soon as purported to employ RPO funds within June 2012 within the talked about mission properly as per the prospectus. Until June 2024, the company has yet to employ Tk220.27 crore which is 70.22% of its RPO funds.
In 2021, Lub-rref (Bangladesh) Ltd, a lubricant producer below the BNO worth, raised Tk150 crore from the capital market through an IPO for the pass oil refinery mission.
The pass oil refinery mission price modified into as soon as Tk1,283 crore, in conjunction with Tk150 crore IPO funds. Of this mission, Tk900 crore modified into as soon as in loans in conjunction with Tk750 crore in international loans, which had been purported to be frail as LCs for the mission. However, as a consequence of the worldwide crisis and local liquidity shortage, those loans are being delayed.
Now the company is dealing with a indispensable inform in sustaining its operations as a consequence of a shortage of working capital. The company is strategically concerned with utilising funds as working capital to tackle this pressing misfortune.
This crawl targets to bolster liquidity and catch distinct continuity in its change endeavours amidst the present monetary constraints. Until now, the company has yet to employ Tk56 crore to aquire equipment.
