BSEC bars NTC chief from taking unsubscribed placement shares

The securities regulator has asked National Tea Company (NTC) not to issue any unsubscribed placement shares to its incumbent Chairman Mamun Rashid following criticism of the board's decision in this regard.

The Bangladesh Securities and Exchange Commission (BSEC) has conveyed its decision verbally to the board of the loss-making company, confirmed BSEC spokesperson Md. Abul Kalam.

In a filing posted on Sunday on the website of the Dhaka Stock Exchange (DSE), the NTC said Mr. Rashid had shown interest in purchasing 250,000 shares of the company from the unsubscribed portion.

Mr. Rashid has been an independent director of NTC after the formation of the new securities commission following the political changeover in August last year. He became NTC's chairman in February this year.

Md. Kalam said the commission noticed the company's decision and the subsequent criticisms made by investors and market intermediaries.

No one outside the list of shareholders, published before the record date -- May 15, 2023 -- for the placement shares, is entitled to the shares, he added.

However, any of the existing shareholders can surrender their shares and allow someone else to purchase them.

In that case, the matter must be mentioned in the company's placement share offer document approved by the BSEC in 2022.

The present chairman was not there in the document. He was not among the directors at the time when the offer of placement shares was made and the document approved.

So, there is no scope to consider the present chairman as a shareholder of NTC, said Mr. Kalam.

The company's stock price on Monday closed at Tk 210.10 per share on the Dhaka bourse, while the offer price of the placement shares had been fixed at Tk 119.53 each.

In October 2022, the NTC at an EGM (extraordinary general meeting) decided that the existing directors could purchase unsubscribed placement shares.

The company had moved to raise capital by issuing placement shares to repay bank loans, meet working capital needs, and improve tea gardens and factories.

The BSEC approved NTC's plan to issue 23.4 million shares at Tk 119.53 each (including Tk 109.53 premium) to increase capital.

Of the shares, the government, ICB, and Sadharan Bima Corporation were supposed to subscribe to 12.4 million shares (at a ratio of 4.43:1), sponsor-directors 1.38 million shares (at a ratio of 3.21:1), and general shareholders around 9.6 million shares (at 2.85:1).

The subscription of the shares remained incomplete despite the extension of the subscription period four times. The fourth round of applications ended in August 13 2025, leaving several hundred thousand shares unsubscribed.

Meanwhile, the company considered utilising whatever funds had been raised through incomplete subscription.

But in October 2023, the BSEC said the funds should not be used until the government could acquire a 51 per cent stake in the company.

Another reason behind the issuance of the placement shares was to boost the company's paid-up capital.

As per a 2022 directive of the BSEC, all listed companies must have a minimum paid-up capital of Tk 300 million.

The NTC's paid-up capital is only Tk 110.47 million.

Production at NTC has remained suspended amid workers' unrest over the non-payment of wages.

For lack of capital, the company could not ensure tree plantation at the right time. On top of that, tea leaves could not be processed, maintaining quality, due to rundown machines.

Company officials said they sell processed tea leaves at Tk 180 per kilogram at auctions, whereas the cost of the produce is Tk 250 per kg, leading to losses every year.

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