BSEC freezes 1.8cr placement shares of SS Steel amid allegation of anomalies

Mostafizur Rahman | Published: 22:10, Feb 11,2020


The Bangladesh Securities and Exchange Commission has frozen around 1.8 crore placement shares of SS Steel Limited after a company alleged that the steel company was trying to embezzle its placement shares.

The BSEC has recently instructed the Central Depository Bangladesh Limited not to free shares in the beneficiary owners’ account of five investors, BSEC officials said.

Of the shares, 99.91 lakh shares are held by Shorecap Holdings, 29.50 lakh shares held by Equity Growth Limited, 22.5 lakh shares held by Food Chain Asia, 15.5 lakh shares held by Absolute Return Limited and 12.5 lakh shares held by Shoma Alam Rahman, they said.

SS Steel chairman Javed Opgenhaffen declined to comment on the issue.

BSEC officials said that they were investigating the recent allegation by Shore Cap Holdings Limited that SS Steel had been trying to embezzle 99.91 lakh shares.

It also examines shares held by other four placement holders, they said.

The BSEC has asked SS Steel to explain why the company in its initial public offering prospectus showed the BO account number 1202550066003217 against the name of Shorecap Holding Limited , although the account was opened in the name of ‘SS Steel Limited Suspense Account’ as stated by the CDBL, they said.

Shore Cap Holdings officials at a press conference on February 3 said that Shore Cap Holdings Limited purchased above 99 lakh shares of SS Steel in 2015, and Tk 9.99 crore was paid against the placement shares through six cheques of ICB Islamic Bank.

But, SS Steel has been trying to embezzle the whole amount of shares by opening a new company, Shorecap Holdings Limited, they alleged.

‘On November 1, 2018, a BO account was opened with Sheltech Brokerage for the Shorecap Holding Limited, which was incorporated in 2019,’ according to the written allegation made by Muhammad Mazaharul Islam, the company secretary of Shore Cap Holdings Limited.

Following a writ petition filed by Shore Cap Holdings Limited, the High Court issued a stay order on January 15 on any sale procedure for the said amount of placement shares, Mazaharul said.

Later, the Chamber Judge stayed the HC’s order on January 20.

‘The lawyer of Shore Cap Holdings Limited was not aware of the hearing in the Chamber court,’ the company secretary of Shore Cap Holdings alleged.

SS Steel made its debut on the stock exchanges on January 17, 2019 after raising Tk 25 crore through an IPO.

Before that, the company issued placement shares worth Tk 210 crore in 2016.

The company approved 15 per cent stock dividend in its annual general meeting, instead of earlier declared 5 per cent cash and 10 per cent stock dividend for the year ended on June 30, 2019.

The paid-up capital of the company now stands at Tk 281.75 crore.

The BSEC has approved the IPO of SS Steel despite the Dhaka Stock Exchange’s reservation against the company.

Share prices of the company have been falling sharply since November 11 last year due to the concern of lock-in free of huge placement shares. The prices were Tk 33 per share in November 11 last year and it dropped to Tk 12.6 per share on Tuesday.

On January 17 this year, around 9.7 crore shares of SS Steel got lock-in free.

The company›s sponsor-directors held 32.33 per cent shares, institutes 28.93 per cent and general public 38.74 per cent as on December 31, 2019.

The sponsor-directors of SS Steel also have involvement with Fu-Wang Ceramic Industries and Generation Next. The shares of the two companies have been trading under ‘Z’ category, which groups low-profile shares, and far below the face value of Tk 10.

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