The Bangladesh Securities and Exchange Commission on Thursday decided to take legal action against 11 sponsor-directors and 33 placement shareholders of listed Ring Shine Textiles Limited for receiving shares without paying money.
The BSEC made the decision at a commission meeting presided over by its chairman Shibli Rubayat-Ul-Islam, a BSEC press release said.
It said that the company raised paid up capital from Tk 9.95 crore to Tk 285.05 crore through issuing shares worth Tk 275 crore.
The published audited financial statements for the financial year 2017 to 2020 did not reflect the true and fair view of the company’s actual financial performance, BSEC officials said.
AFC Capital Limited and CAPM Advisory Limited were the issue managers of the company’s IPO. Mahfel Huq & Co was auditor of the company.
Market analysts said that a company cannot issue shares to any individual or institution before it receives money for the shares, also known as share money deposit, in its bank account.
Before converting the share money deposit into paid up capital, a company has to go through various regulatory window including Registrar of Joint Stock Companies & Firms, BSEC and external auditor.
The share money deposits were withdrawn and utilised before it turned into paid-up capital.
The previous commission led by M Khairul Hossain allowed the company to raise Tk 150 crore from the capital market, ignoring a spate of criticisms from different corners.
Earlier on May 20, the BSEC decided to cancel the placement shares Ring Shine issued against fake share money deposits. It also decided to deduct the fake placement shares from the company’s paid up capital.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Stocks