Dhaka, Bangladesh (BBN)-Matin Spinning Mills, a listed company on the Bangladesh stock markets, deposited IPO (initial public offering) fund as Fixed Deposit Receipt (FDR) in different banks without utilizing for the projects mentioned in prospectus, officials said.
The company has also breached the condition of utilising IPO fund within a year of listing on the Bangladesh stock exchanges.
The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday imposed a penalty of BDT 0.2 million each on directors and managing director, other than nominated and independent ones, of Matin Spinning Mills for violating the securities rules.
Analysts termed the imposition of penalty on the directors of Matin Spinning Mills as ‘light punishment’ in ‘serious offence’.
“The securities regulator should consider the punishment mentioned in securities rules for serious offence so that other companies refrain from committing such kind of offence,” said an analyst.
According to the securities regulator, Matin Spinning Mills deposited IPO fund in different banks as FDR without using for company’s projects as per condition made in prospectus.
Besides, the company took bank loans and used for its projects.
According to condition (7) of part (B) of the securities regulator’s consent letter, the company was required to take share holders’ approval along with informing the regulator and stock exchanges in case of using IPO fund for the purposes which are not mentioned in prospectus.
Besides, according to condition (4) of part (B) of the securities regulator’s consent letter, the company was also supposed to utilise the IPO funds within 12 months of listing with the stock exchanges.
“The company has breached both the conditions of the regulator’s consent letter in case of using IPO fund,” the BSEC said.
On December 10, 2013, the securities regulator approved the IPO proposal of Matin Spinning Mills.
Under the fixed price method, the company floated 34.1 million ordinary shares at an offer price of BDT 37, including a premium of BDT 27 for each ten taka share.
The company raised a fund worth BDT 1.26 billion through IPO.
The IPO proceeds were supposed to be used in expanding the company’s existing projects.