The stock market regulator has decided to scrutinise the utilisation of proceeds from initial public offerings (IPOs) and repeat public offerings (RPOs) issued by nine companies, to see whether the funds are being used properly.
The decision was taken at a meeting of Bangladesh Securities and Exchange Commission (BSEC) held on Tuesday, with its Chairman Khondoker Rashed Maqsood in the chair.
The companies are Bangladesh Shipping Corporation, Best Holdings, Index Agro Industries, JMI Hospital Requisite Manufacturing, Lub-reef (Bangladesh), Navana Pharmaceuticals, Ring Shine Textiles, Sikder Insurance Company, and Silva Pharmaceuticals.
Eight of the companies raised an aggregate amount of Tk 8.96 billion through IPOs from the capital market for business expansion, while Bangladesh Shipping Corporation raised Tk 3.14 billion through repeat public offering (RPO).
However, they utilised around Tk 6.79 billion in total so far.
In 2011, state-owned Shipping Corporation raised the said amount to expand its business operations, purchase ships and construct buildings.
Although the BSC was supposed to use the funds by June 2012, the company's more than 70 per cent or Tk 2.2 billion RPO proceeds still remains unutilised.
Several of these firms had extended the timeframe for using the funds allocated to their projects but failed to use their proceeds in time.
Moreover, previous commissions led by M Khairul Hossain and Shibli Rubayat-Ul Islam did not take any effective measures against the companies that failed to utilise these funds in time.
There are allegations that some firms were taking advantage of various loopholes due to the absence of effective regulations in this regard.
As a result, the investors have been deprived of the expected returns.
