BSEC audit finds Ring Shine Textiles sold shares in the pre-IPO period free of cost through a private offer: Reports

The regulator of the capital market of Bangladesh, the Bangladesh Securities and Exchange Commission or BSEC, in a special audit has found that the Ring Shine Textiles has sold shares in the pre-initial public offering period or pre-IPO period free of cost through a private offer, and also, reportedly, provided stock dividend to non-paying shareholders.

Media reports maintained this, citing BSEC officials, even as it added that with the share allotment, the company increased its paid-up capital, whereas in reality, Ring Shine Textiles had received nothing against the shares while underlining that the company in 2019 raised Taka 150 crore in funds from the stock market in order to purchase machinery and repay bank loans.

Meanwhile, the BSEC has, reportedly, ordered Ring Shine Textiles to rusticate the shares and reduce the paid-up capital.

Speaking to the media, BSEC spokesperson Rezaul Karim, reportedly, maintained that on the basis of a special audit, the irregularities were found.

…we decided to cancel the shares and reduce the paid-up capital, he maintained further while adding that the BSEC was waiting as a lengthy legal process needs to be abided by.

“But we will punish all,” claimed Rezaul even as another official, on the condition of anonymity, reportedly, maintained that the BSEC has allowed the company to utilise Taka 40 crore from its IPO funds (something it was banned from doing earlier), from which Taka 3 crore will be used for paying Bangladesh Export Processing Zones Authority dues, Taka 15 crore will be used in the form of workers’ retrenchment payment and Taka 3.5 crore for paying dues of Titas Gas Transmission and Distribution Company even as the company will use Taka 6 crore to repay loans to Dhaka Bank, Taka 10 crore to repay loan provided by the Premier Bank and Taka 2.5 crore in miscellaneous payments.

The unnamed BSEC officials further, reportedly, maintained that as to the free of cost-share sales, the BSEC had frozen the shares earlier, so the beneficiaries had not been able to sell them.