Directors embezzled Tk 500 crore in the name of IPO through ghost companies

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Directors embezzled Tk 500 crore in the name of IPO through ghost companies

Directors of nine ghost companies have been embezzled about Tk 500 crore from capital market since 2010 by providing inflated financial statements in connivance with BSEC officials, auditors, issue mangers and under-righter’s.

Those companies trapped small investors as well as some institutional investors and misappropriated entire money they drew from the market in the name of Initial Public Offerings (IPO), sources said

“The tendency to give exaggerated and false information in the prospectus and financial statements in case of listing in the capital market through initial public offering (IPO) is long standing. Many companies have come to the capital market with exaggerated information before, which later turned into bad companies.,” Asif Ashkari a capital market trader told Business Mirror.

The performance of several of the companies that have come to IPOs in the past is disappointing. Companies have not been able to improve their business by investing money from investors. On the contrary, investors have had to count losses due to poor performance of the company. In the last nine years since the collapse in 2010, 92 companies have raised capital from the capital market through IPOs.

Of these, nine companies, which raised about Tk 500 crore from the market but failed to improve their business conditions, have become the worst companies in the capital market.

Among the companies that have not been able to improve their business with the use of IPO funds are Jahintex Industries Limited, Generation Next Fashions, Apollo Ispat Complex, Fareast Finance and Investment, Familytex (BD), Emerald Oil Industries, Khan Brothers and Co. Dyeing and C&A textiles.

However, the capital market regulator Bangladesh Securities and Exchange Commission (BSEC) has adopted a policy of not giving any concessions in case of IPO approval. The commission has taken this position not to repeat any previous mistake after the new chairman and commissioners took charge last May.

Bmirrorhttps://bmirror.net/
businessmirror20@gmail.com

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