The Bangladesh Securities and Exchange Commission (BSEC) has launched an investigation into the utilisation of funds raised by Web Coats PLC through its Qualified Investor Offer (QIO) on the SME platform of the stock market.

The investigation will examine whether the company spent the funds in the sectors specified in its prospectus, who were involved in the transactions and whether any irregularities took place. If violations are established, the regulator will also determine the responsibility of the company’s board of directors, managing director and other relevant individuals.

To conduct the investigation, the BSEC has formed a two-member inspection team. The commission’s Inspection Division under the Market Intelligence and Investigation Department recently issued an order in this regard.

The team comprises BSEC Deputy Director Md. Sirajul Islam and Assistant Director Farhana Waleja. They have been instructed to complete the inspection and submit a report within 30 working days of the issuance of the order.

BSEC Executive Director and spokesperson Md. Abul Kalam confirmed the development.

According to the commission’s order, the inspection has been initiated in the interest of the stock market and general investors. The officials have been appointed under Rule 17 of the Securities and Exchange Rules, 2020, to examine various activities of the company.

The inspection team will first verify whether the funds collected through the QIO were spent in accordance with the purposes mentioned in the prospectus and the conditions set out in the commission’s consent letter. The officials will also independently verify the actual use of the money rather than relying solely on documents submitted by the company.

The investigation will examine the individuals and institutions involved in the financial transactions, the channels through which the funds were transferred and the justification for the expenditures.

The company’s financial statements will also come under scrutiny to determine whether information regarding the use of QIO proceeds was disclosed accurately and on time. The team will further check whether transactions, except petty cash expenses, were conducted through crossed cheques or bank transfers.

Bank account transactions and the balance of any unutilised funds will also be examined.

Most importantly, if evidence of violations of securities laws, rules or regulations is found, the commission will identify those responsible. The roles and accountability of the company’s board members, managing director, chief financial officer, company secretary, auditor and other relevant individuals will be assessed.

The inspection team will also review their statements and explanations before determining responsibility.

The investigation, therefore, will not be limited to the company’s accountability. The BSEC will also examine the roles of individuals involved in decisions and transactions concerning the use of the QIO proceeds.