Securities regulator rejects 2 IPO applications
BSEC sources said the two companies did not comply with the Public Issue Rules and securities laws
The Bangladesh Securities and Exchange Commission (BSEC) has recently rejected the Initial Public Offering (IPO) applications of two companies for not complying with the Public Issue Rules and securities laws.
The companies are Al-Faruque Bags Ltd and Infinity Technology International Ltd.
However, the related issue managers claimed that despite the problems identified by the BSEC are solvable, the commission has rejected the applications.
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Besides, the regulator has cancelled another IPO application of Delta Hospital Ltd in the second week of this month after the company authorities decided to withdraw the IPO as they did not get the desired response to their shares in the book building method.
Al-Faruque Bags Ltd
On July 1, 2018, Al-Faruque Bags Ltd applied to the BSEC for raising Tk30 crore as a capital by issuing 3 crores of ordinary shares in the capital market.
The company's main business is to manufacture different types of PP woven bag, liner, garments poly and selling them to export-oriented companies.
The company wanted to procure machinery and equipment, construct buildings and repay bank loans with the raised capital.
Sources said that the company, the issue managers, and the auditing firm have violated the Public Issue Rules 2015.
Instead of issuing through a separate auditor, the company issued a Corporate Governance Code (CGC) Compliance Certificate through Artisan Chartered Accountants – a statutory auditing firm.
However, the issue manager certified that all the information included in the company's IPO prospectus was correct. For violating the rules, the commission has also imposed fines.
On 21 June, the commission wrote to the company, "It is not in a position to process your application at this moment since an enforcement proceeding is pending. The company may submit a fresh application after disposing of the said enforcement action."
Infinity Technology International Ltd
On April 12, 2018, Infinity Technology International Ltd applied to the BSEC for raising Tk30 crore as the capital by issuing 3 crores of ordinary shares in the capital market, intending to spend for infrastructure and software development.
Infinity Technology International Ltd was founded in 1993 and is a leading provider of IT services in large database management solutions, especially in financial institutions. Infinity has also been engaged in providing various engineering and application engineering solutions locally as well as globally.
Sources said that the company did not submit auditors' certificates on the utilisation of the fund raised through the capital earlier. The company has also violated the Public Issue Rules 2015.
