The securities regulator has found that Kattali Textile misappropriated at least Tk 250.4 million of its 2018 IPO proceeds. Now, it has decided to hand over the matter to the Anti Corruption Commission (ACC) for action.
The decision was taken at a meeting of the Bangladesh Securities and Exchange Commission (BSEC) on Wednesday, presided by its Chairman Khondoker Rashed Maqsood, according to a press release.
The Chattogram-based garment exporter raised Tk 340 million by issuing primary shares in 2018 for business expansion. While the fresh fund was expected to help the company to do better, its business went downhill due to irregularities.
The company has failed to use the money raised through the initial public offering (IPO) in the last six years. So, the promised business expansion has not happened, depriving investors of their expected returns.
The IPO fund was supposed to be fully utilized by October 2020.
A primary investigation by the securities regulator last year identified the top brass of Kattali Textile as being involved in fund embezzlement.
The commission investigated overall business activities of the company and detected serious violations of the IPO fund utilisation plan.
The BSEC also asked the company to pay the annual listing fees to the Dhaka Stock Exchange (DSE) within a month from April 9, which remained unpaid for two years.
Failure to meet the deadline would result in a penalty of Tk 0.2 million for every sponsor-director of the company, other than independent directors, reads the BSEC statement.
The company had provided false information about the use of IPO proceeds in 2019. The securities regulator fined Kattali Textile in 2020 Tk 25 million for providing fake bank certificates.
Having failed to utilize the IPO funds within the stipulated time, the company applied for time extension several times between 2020 and 2023. Though the regulator did not give time extension, it continued to show utilization of the funds.
Meanwhile, the company's auditor also pointed out that Kattali Textile had not disbursed cash dividend worth Tk 47.65 million declared for FY21.
The securities regulator in February last year penalised four top officials of Kattali Textile, including its chairman, with fines worth Tk 40 million upon hearing from the accused.
Following the latest news, its stock plunged 4.65 per cent to Tk 12.3 per share on Wednesday on the Dhaka bourse.
At Wednesday's meeting, the securities regulator also imposed a fine of Tk 0.5 million on Shahjahan Securities and Dynasty Securities each for violating securities laws.
Moreover, the BSEC approved the draft trust deed and investment management agreement of an open-ended mutual fund named 'LankabaBangla Fixed Income Fund' with an initial target size of Tk 250 million.
The face value of each unit of the fund will be Tk 10.
LankaBangla Asset Management Company is acting as the asset manager while Commercial Bank
of Ceylon is acting as trustee and custodian of the fund.
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