The capital market regulator, Bangladesh Securities and Exchange Commission, has put a stop to Shepherd Industries Limited’s buying shares of the newly formed Shepherd Jeans for Tk 15.50 crore on finding the transaction suspicious.
The BSEC issued a directive on November 14 in this regard asking Shepherd Industries to refrain from the transfer of its assets to the newly incorporated private company, Shepherd Jeans.
The BSEC found that Shepherd Jeans was incorporated on April 9, 2019 as a private limited company.
On October 24, 2019, the board of directors of Shepherd Industries decided to buy 15,500 shares of Shepherd Jeans at Tk 10 per share with assets —land, factory building and machineries — valued at Tk 15.5 crore.
However, the commission observed that the company did not undertake valuation of the Shepherd Jeans assets as per the securities rules.
Moreover, Shepherd Jeans was yet to obtain its taxpayers’ identification number, trade licence, import registration certificate, export registration certificate, bonded warehouse licence, VAT registration number, BGMEA membership number, EPB licence, fire licence number and environment clearance certificate.
The market regulator also found that the registered office and factory address of the both Shepherd Industries and Shepherd Jeans were the same. There were only two directors at Shepherd Jeans, who were also the chairman and managing director of Shepherd Industries.
Adding to these, both the companies had decided to transfer assets and acquire shares from each other on the same day.
The commission also mentioned in its order ‘SIL at the board meeting decided to give, among others, a 3-G storeyed building to SJL as purchase consideration but it was found in the submitted structural drawing that the building is 4-G storeyed.’
In light of the findings, the commission directed Shepherd Industries to abstain from executing the deal.
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