Kattali Textile misappropriated Tk25.04cr IPO fund: BSEC
Suspecting money laundering, the stock market regulator has decided to refer the matter to the Anti-Corruption Commission (ACC) for further investigation, according to a BSEC press release issued yesterday
The Bangladesh Securities and Exchange Commission (BSEC) has found that Kattali Textile, a listed company in the capital market, misappropriated Tk25.04 crore from its initial public offering (IPO) funds.
Suspecting money laundering, the stock market regulator has decided to refer the matter to the Anti-Corruption Commission (ACC) for further investigation, according to a BSEC press release issued today (9 April).
The press release also mentioned that the company has been given one month to pay its listing fees to the Dhaka Stock Exchange (DSE). If it fails, each director, except independent and nominated directors, will face a fine of Tk2 lakh.
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In October 2023, the BSEC formed a three-member probe committee to examine the utilisation of IPO funds by the textile company.
Upon submission of the investigation report, earlier, the BSEC directed the Criminal Investigation Department (CID) of Bangladesh Police to take action under the Anti-Money Laundering Act against Kattali Textile after proving allegations of misusing funds from its IPO.
In 2018, the textile firm raised Tk34 crore through IPO to purchase capital machinery, repay bank loans, and install an electric transformer. Even after six years, the fund remains unused.
Later, the commission appointed a special auditor to find out the reasons behind Kattali Textile's repeated failure to use the IPO funds, disburse dividends for FY21, and publish financial statements for more than a year.
In January 2024, the securities regulator slapped a Tk1 crore fine on each Kattali Textile director, except independent ones, this time for not cooperating with the special auditor appointed by the commission.
Kattali Textile paid a 0.25% cash dividend to general shareholders for the 2023-24 fiscal year.
Nine months of the current fiscal year have passed, but the textile firm has failed to disclose its financials, leaving investors in the dark. On Wednesday, its share price closed at Tk12.30 each at the Dhaka Stock Exchange (DSE).
