Crisis deepens for Hami Industries. What lies ahead?

Infographic: TBS

After a significant setback, following the original owners fleeing abroad, a ray of hope emerged for Hami Industries, formerly known as Imam Button Industries, when a general shareholder took charge to run the company. 

However, the company's crisis deepened when the new owner died, leading to various non-compliance issues.

Amid the failure to publish quarterly and annual financials of the current fiscal year 2024-25, the Dhaka Stock Exchange (DSE), the primary regulator of listed firms, revealed that Hami Industries had provided misleading information to investors and violated securities laws regarding the appointment of a shareholder director to the board.

The finding stated that it falsely listed Rifat Ara Papri as a shareholder-director, claiming she held 2.589% of the company's shares.

However, this appointment was made without approval from the company's board of directors and was not included in any official board meeting agenda.

In September 2024, ASM Hasib Hasan, the managing director of Hami Industries PLC, passed away. Following his death, the company faced significant challenges, compounded by widespread political and economic uncertainty across the country.

On Wednesday, the company's share price, classified under the Z or junk category, closed at Tk125.30 on the Dhaka bourse.
In February 2023, Hasib assumed the role of managing director and took responsibility for the company, aiming to revive the business.

DSE finding on shareholder director

DSE's investigation further revealed that the company secretary and other board members were unaware of the appointment, indicating a serious lapse in corporate governance. This act by Hami Industries constitutes clear noncompliance with the regulations set by the Bangladesh Securities and Exchange Commission (BSEC), officials say.

According to a report by the DSE, the shareholding position of Hami Industries, as per the monthly reports for August and September 2024, indicated that Rifat Ara Papri was listed as a shareholder-director, holding 199,402 shares, which accounts for 2.589% of the company's total shares. These shares were blocked in the Block Module of the Central Depository Bangladesh Limited (CDBL).

However, a review of the board meeting minutes of Hami Industries from 29 January 2024 to the present showed no discussion or approval regarding the appointment of Papri as a director. There is no official record indicating that her appointment was ever considered or endorsed by the board.

In a legal opinion collected by the DSE, it was revealed that in August 2024, Hasib informed the BSEC that Papri had been appointed as a director during a board meeting held on 17 August 2024, leading to the blocking of her shares.

However, following Hasib's death in September 2024, it was discovered that the minutes of the mentioned board meeting contained no such agenda or resolution. Moreover, the company secretary and another director confirmed that they were unaware of her appointment.

This indicates that the blocking of Papri's shares was based on misrepresentation by Hasib.

In light of this, the Listing Affairs Department of DSE took corrective action by updating the records in the CDBL Block Module and unblocking the shares of Papri. She is now recognised as a general shareholder, not a director.

Director appointment planned to buy shares with margin loans

Meanwhile, officials of Hami Industries, speaking on condition of anonymity, said that the company's former managing director had submitted certain information to the Dhaka bourse and the BSEC, which later drew the attention of both the regulators and the company.

Following an internal review, it was discovered that the former managing director had purchased shares on margin through two separate Beneficiary Owner (BO) accounts, one of which belonged to Papri. He subsequently listed one of these BO account holders as a shareholder-director of the company — without proper approval or board resolution.

The issue surfaced when the involved brokerage firms issued margin calls against both BO accounts and later filed a formal complaint with the BSEC regarding one of them. While one of the complaints has already been resolved, the other case remains pending with the regulator.

Meanwhile, the company's current management is facing difficulties, which has led to an inability to hold board meetings. In this situation, the company has applied to the BSEC for the appointment of two independent directors.

The BSEC has requested additional information from the company on this matter. However, the company's management remains optimistic that a solution will be reached soon and normal operations will resume.

Officials of Hami Industries said they later discovered there was no fish farming project under the company's name, and no investment had been made in such a project.

Regarding the company's current situation, they mentioned that a fish farming project has now been established in Cumilla's Daudkandi that is currently operational. Additionally, the main factory of the company has an active shoe manufacturing unit. A portion of the factory has also been leased out, providing the company with an additional income stream.

Hami Industries has not yet approved its annual audited financial statements for the fiscal year ending 30 June 2024, nor its unaudited quarterly financial statements for the period ending 30 September 2024.

Furthermore, it has been found from the shareholding reports of the sponsors and directors of Hami Industries that the current management has violated several securities regulations.