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The stock market regulator has rejected a proposal by Magura Multiplex to issue shares worth 3.96 million to three of its sponsors to raise paid-up capital as per regulatory requirement.
According to a stock exchange filing on Sunday, the company submitted the proposal to Bangladesh Securities and Exchange Commission (BSEC) on July 21 to raise paid-up capital from Tk 296 million to minimum required Tk 300 million by issuing shares to three sponsors.
However, the regulator observed that the offer was not made to the existing shareholders and that no extra-ordinary general meeting was convened to seek approval of the general shareholders in this regard.
Moreover, the company did not disclose price sensitive information (PSI) related to the issuance of new shares.
Besides, the proposed price of the shares was fixed at face value of Tk 10 each, much below the prevailing market price, and there are emphasis-of-matter points in the audited financial statements.
The company's stock price closed at Tk 114 on Sunday on the Dhaka Stock Exchange, over 11 times higher than face value of Tk 10 each.
"Thus the proposal has been declined by the securities regulator," said the disclosure.
In July 2022, the BSEC directed 64 listed small-cap companies, including Magura Multiplex (formerly Paper Processing) to increase their paid-up capital to at least Tk 300 million.
The instruction came in a bid to tackle stock price volatility of such companies on the secondary market. Manipulators find it within their investment capacity to influence the share prices.
But a good number of listed firms, including Magura Multiplex, are yet to comply with minimum regulatory requirements in this regard.
Paper Processing and Packaging, a firm listed on the country's stock market, and non-listed Magura Paper Mills, both owned by same business group, merged in March 2023 and renamed as Magura Multiplex PLC.
The company's annual profit surged 53 per cent year-on-year to Tk 75 million in FY24 and paid a dividend of 14 per cent cash dividend for the year.
Its nine-month profit also jumped 44 per cent year-on-year to Tk 95 million through March this year.
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