B Mirror Report: The regulatory authority, the Bangladesh Securities and Exchange Commission (BSEC), has once again blocked the use of IPO funds of Ring Shine Textiles Limited, a listed company in the textile sector of the stock market.
The commission rejected the company’s application for the release of funds after it failed to secure the required level of shareholder support. The decision was taken at a recent meeting of the BSEC.
According to commission sources, Ring Shine authorities had taken steps to amend the purposes and timelines for the use of funds as stated in the IPO prospectus. Under the rules, any such change in the use of IPO funds requires the consent of at least 51 percent of general shareholders. As the company failed to obtain this mandatory approval, the BSEC rejected its application. At the same time, the proposal to immediately release USD 1 million from the fund was also cancelled.
Behind the BSEC’s strict stance lies the company’s history of large-scale financial fraud. Investigations revealed that although the company had announced a capital increase of BDT 2.75 billion through private placement in the pre-IPO period, a significant portion of the funds was never actually deposited into the company.
Over allegations of fraud and providing false information in the IPO prospectus, the BSEC has imposed travel bans on 13 individuals, including nine directors and senior officials. The commission has also decided to refer the matter to the Anti-Corruption Commission (ACC) for investigation.
Four chartered accountancy firms that audited Ring Shine’s financial statements have also become entangled in the web of irregularities. Complaints have been filed with the Financial Reporting Council (FRC) against Ahmed & Akhtar, Siraj Khan Basak & Co., Mahfel Huq & Co., and ATA Khan & Co. for certifying fabricated financial statements from the 2015–16 to 2019–20 fiscal years. Legal proceedings have also been initiated to take strict action against Abdul Kader Faruk and Ashok Kumar Chirimer, identified as the main masterminds behind the fraud.
The company, which was listed on the stock market in 2019, is currently classified under the ‘Z’ category. With paid-up capital exceeding BDT 5 billion, around 58 percent of the company’s shares are held by general investors. Market analysts believe that the BSEC’s decision aims to protect investor interests and ensure transparency in the market.
It is worth noting that the BSEC had rejected a similar application from the company in July of last year as well.
