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IPO proceeds: Pacific Denims directors, MD fined for misappropriating Tk20.98cr

  • Published at 12:57 am December 12th, 2018
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File photo of Bangladesh Securities and Exchange Commission Office in Dhaka Syed Zakir Hossain/Dhaka Tribune

Asks them to return the money by January

The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday slapped Tk3 lakh in fine on managing director and each of the directors of Pacific Denims Ltd after the commission found them guilty of misusing initial public offering (IPO) proceeds, according to a press statement. 

The decision was taken at a commission meeting held at its headquarters on Tuesday, where BSEC Chairman M Khairul Hossain presided over.

The commission in March appointed chartered accountant firm MABS and J Partners to audit the utilization of IPO proceeds of Pacific Denims. The audit report said the company had failed to pay bank loans in due time, despite pledging on its IPO prospectus.

As per the prospectus, they were supposed to pay off the loan partially within three months from the date of receiving the IPO funds, which expired on May 17 last year.

The auditing firm also uncovered that other rules of the securities were violated. It also said the company did not cooperate with them and had delayed in providing copies of relevant documents, ledgers and vouchers related to the IPO proceeds.

Another audit report by the same firm found that the total amount of misappropriated IPO funds by Pacific Denims stood at Tk20.98 crore. It was initially shown under a head of building construction, which was proved to be false.

Pacific Denims had reportedly collected Tk75 crore through IPO from the capital market for business expansion, repayments of loans and bearing the cost of public offering.

The company’s board of directors, audit committee and other concerned personnel had provided false information to the commission and its investors, the audit report observed.

The regulator also asked managing director of the company to refund the misappropriated money and submit related documents to the commission by January 31, 2019.

EBL gets TK500 crore bond

The meeting approved Eastern Bank Ltd to issue a 7-year-long floating rate non-convertible subordinated bond worth Tk500 crore.

Per unit price of the bond will be Tk1 crore.

Penalty levied

The commission also levied penalty of Tk5 lakh on Ali Securities Company Limited as the company fell short in consolidated customer account (CCA) and conducted more than one CCA at the same bank.

The house also provided loans to client’s cash accounts and received more than Tk5 lakhs in cash, violating securities laws as a result.

The units will be sold to banks, financial institutions and other high net-worth individuals through private placements.

The proceeds of the bond will strengthen its capital base and meet its capital requirement through private placement, subject to the approval from the central bank, company officials said.