BSEC fines Index Agro and Prudential Capital for regulatory breaches
Index Agro Industries Managing Director Mahin Bin Mazher was fined Tk5 lakh, while Chief Financial Officer Iqbal Ahmed and Company Secretary Abu Jafar Ali were each fined Tk1 lakh
The Bangladesh Securities and Exchange Commission (BSEC) has imposed financial penalties on Index Agro Industries Limited and brokerage firm Prudential Capital Limited for violating securities laws and regulatory requirements.
According to the regulator's monthly enforcement action report for March, the market watchdog fined several officials of Index Agro Industries after identifying irregularities involving undisclosed related-party transactions and lapses in internal governance practices.
Index Agro Industries Managing Director Mahin Bin Mazher was fined Tk5 lakh, while Chief Financial Officer Iqbal Ahmed and Company Secretary Abu Jafar Ali were each fined Tk1 lakh.
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According to the BSEC report, an inspection team conducted an on-site review of the company's operations, visiting four factory premises as well as the company's head office. The inspectors also examined documents and records submitted by the company at different times to verify compliance with regulatory and accounting standards.
During the inspection, the committee found a related-party transaction worth Tk2 crore between Index Agro Industries and Index Construction Limited.
The inspection found that both the chairman and the managing director of Index Agro Industries also hold positions on the board of Index Construction, making the transaction subject to disclosure requirements under International Accounting Standard.
However, the BSEC found that the Tk2 crore transaction was not disclosed in the company's audited financial statements for the year ended 30 June 2022. The omission was deemed a violation of the accounting standard, which requires companies to disclose transactions with related entities so that stakeholders can assess their financial impact and governance implications.
The regulator also raised concerns over the role of the company's auditor. According to the enforcement report, the statutory auditor, G Kibria and Co, stated in the audit report that the company had no related-party transactions in the normal course of business during the financial year ending June 2022.
This statement conflicted with the inspection findings, raising questions about the accuracy of the audit assessment and compliance with the responsibilities of external auditors.
The inspection further uncovered irregularities in the authorisation of work orders related to construction, civil works and associated activities carried out by the company. Investigators found that some inspection orders that were supposed to be signed by authorised officials of Index Agro Industries were instead signed by representatives of Index Construction.
The inspection team also reported that it had identified alternative quotations for certain works that were higher than those provided by Index Construction, prompting questions about whether procurement processes were conducted in line with standard competitive practices.
In a separate enforcement action, the BSEC also fined brokerage firm Prudential Capital Tk10 lakh for violations related to discrepancies in share records and irregularities involving beneficiary owner (BO) accounts.
The company's Managing Director Rezaul Islam was fined Tk5 lakh, while its former compliance officer AY Zobaer was fined Tk1 lakh.
According to the enforcement report, the irregularities came to light following a letter from ICB Securities Trading Company dated 26 February 2025, which highlighted a mismatch involving 1 lakh shares of Robi Axiata between depository participant accounts and the brokerage firm's back-office system during share reconciliation.
Further investigation revealed that the shares were purchased on behalf of an investor, Ava Dutta, through Prudential Capital Limited on 2 February 2023. The brokerage later transferred the shares to a BO account under the depository participant of ICB Securities Trading Company Limited.
However, scrutiny of Central Depository Bangladesh Limited records by the Dhaka Stock Exchange's monitoring team found that the BO account in the name of Ava Dutta under Prudential Capital was opened on 27 March 2023, nearly two months after the shares were reportedly purchased on her behalf on 31 January 2023.
The regulator said this sequence indicates that the shares were bought before the account was formally opened, raising questions about compliance with operational procedures and investor account management rules.
Such discrepancies between depository records and brokerage back-office systems were termed as serious compliance concerns because they may undermine the integrity of settlement processes and investor protection mechanisms.
Meanwhile, the BSEC also issued a warning to Navana CNG Limited and certain officials of the company for breaching securities rules, though no financial penalty was imposed in that case.
