The Bangladesh Securities and Exchange Commission has called the authorities of Pacific Denims Ltd to a hearing today to explain their position on ‘misuse’ of around Tk 21 crore of initial public offering proceeds and a number of other non-compliance relating to the IPO fund utilisation.
The BSEC summoned PDL managing director Shafiul Azam, company secretary Sorhab Ali, independent director Ashfak Ahmed Khan, chief financial officer Abdul Halim and auditor Mahfel Haq & Co to appear before the disciplinary hearing.
A BSEC special audit report found that the directors of PDL misused IPO fund worth Tk 20.98 crore, which had been shown under the head of construction of building in the company’s IPO fund utilisation report.
For the interest of the public/general investors, the amount (Tk 20.98 crore) must be recovered from the directors of PDL, the commission body suggested.
The commission’s decision came after three banks — Agrani Bank, Sonali Bank and NCC Bank — sought the commission’s help to recover the loans they gave the company.
Pacific Denims collected Tk 75 crore through an IPO from the capital market
for business expansion, repayments of loans and bearing the cost of public offering.
The board of directors, audit committee, independent director, company secretary and chief financial officer of PDL have provided false and misleading information to the commission and investors, the BSEC report observed.
The report also said that the issuer’s activities were tantamount to non-compliance of the securities law, which appeared to be deliberate and clear contravention of provision of the securities law.
PDL is yet to pay Tk 15 crore to the banks concerned (Agrani Tk 5 crore and NCC Tk 10 crore) in order to comply with the conditions as mentioned in the IPO prospectus despite the fact that the company had utilised IPO fund amounting to Tk 41.95 crore as on September 30, 2017.
As per its prospectus, partial loan pay-off must be completed within three months of the date of receiving IPO fund, which expired on May 17, 2017.
PDL company secretary Sorhab Ali told New Age that the company would explain reasons for the delay in repayment to the banks and other allegations at today’s hearing.
The company has transacted Tk 59.11 lakh in cash violating securities rules, the BSEC report said.
In case of two suppliers — Habib Enterprise and Meghna Goumti Enterprise, BSEC-appointed auditors found that the same money receipt number was repeatedly used for several payments made on different dates.
The auditors found that the supporting documents for payments made to labours in respect of construction of buildings and other infrastructure comprised of only a single handwritten note and the company also failed to provide further supporting documents to establish the labour costs.
The auditors also found poor internal control of record keeping that enhanced the risk of manipulation.
The auditors informed the commission that PDL had not been cooperative with them and said that the company made a delay in providing supporting documents, ledgers, vouchers relating to the IPO fund utilisation.
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