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Misuse of IPO fund

BSEC directs Pacific Denims to refund above Tk 209 million

| Updated: December 13, 2018 11:17:53

BSEC directs Pacific Denims to refund Tk 209m

The securities regulator has ordered Pacific Denims to refund IPO fund above Tk 209.80 million, which was 'misused' in the name of constructing building, into the company account.

After taking required measures for refunding the IPO fund, the company's managing director will have to submit evidence in this regard to the commission within January 31, 2019.

The securities regulator took the decision on Tuesday at a meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC).

Earlier, the securities regulator had appointed auditor to examine the utilisation of the IPO fund raised by the Pacific Denims.

As per the auditor's findings, the company did not repay bank loans within stipulated timeframe mentioned in the IPO prospectus.

"The company spent above Tk 5.91 million in violation of the agreement letter," the BSEC said referring to auditor's findings.

Besides, the auditor did not get cooperation from the Pacific Denims during the audit.

"A portion of IPO fund worth above Tk 209.80 million was misused and the company showed this expense in the head of building construction," the BSEC said.

In this regard, the company provided 'false' information to the securities regulator.

For misusing the IPO fund, the securities regulator has also fined the company's managing director and other directors Tk 0.30 million each.=

Pacific Denims raised an IPO fund worth Tk 750 million in December, 2016.

"The company also conducted illegal transactions of huge fund through repayments made in single receipt," the BSEC investigation found.

As per the BSEC directive, the managing director of the Pacific Denims will have to take required measures to transfer the IPO fund, which was misused, to the company account.

The managing director will also have to submit proofs in this regard to the commission within January 31, 2019.

Asked, BSEC executive director Mohammad Saifur Rahman said the regulatory move taken to recapture the misused fund is a warning for other companies.

"The listed companies will have to keep mind that they will not be spared if the IPO fund is misused," said Rahman, also the BSEC spokesperson.

At Tuesday's meeting, the securities regulator also approved the proposal of Tk 5.0 billion subordinated bond to be issued by Eastern Bank Ltd.

The tenure of the bond will be seven years, while the characteristics will be floating rate, non-convertible, fully redeemable, unsecured and unlisted.

The trustee and sponsor earlier applied to the BSEC to change the fund manager of the Sandhani Life Unit Fund.

Two third of unit holders gave opinion in favour of changing the fund.

The securities regulator has accepted the proposal of appointing Alliance Capital Asset Management as fund manager of Sandhani Life Unit Fund instead of Alif Asset Management.

At Tuesday's meeting, the securities regulator has also imposed a penalty worth Tk 0.50 million on Ali Securities Company for breaching the securities rules.

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