HC orders BSEC to resolve Ring Shine's frozen IPO fund row within a month

Infographic: TBS

The High Court has directed the Bangladesh Securities and Exchange Commission (BSEC) to take necessary steps within one month to resolve complications surrounding the utilisation of unused initial public offering (IPO) funds of listed export-oriented textile manufacturer Ring Shine Textiles Ltd.

The company formally informed BSEC of the court's Rule Nisi through a letter to the regulator's chairman on 4 June, issued in response to Writ Petition No. 2872 of 2026.

Ring Shine claims that despite receiving shareholder approval, it has not been allowed to utilise the remaining IPO proceeds, hampering its business expansion plans and putting several industrial land leases at risk over unpaid liabilities to the Bangladesh Export Processing Zones Authority (BEPZA).

In its letter, the company alleged that prolonged delays and restrictions imposed by the regulator have prevented it from using the funds, severely affecting both its ongoing operations and expansion plans.

Near-unanimous AGM approval

Shareholders approved a special resolution at the 27th Annual General Meeting on 18 December 2024, with 99.994% of votes cast in favour. The resolution extended the timeframe for utilising the IPO proceeds by another year and revised the utilisation plan for approximately $3.6 million in remaining funds, including accrued interest, according to company disclosure. 

Ring Shine said it submitted all required documents to BSEC including price-sensitive information disclosures, AGM minutes, and e-voting reports but the regulator did not approve its application to use the funds for shareholder-approved purposes, including settlement of outstanding dues to BEPZA. Multiple subsequent applications also failed to produce any resolution, and the IPO fund account maintained with BRAC Bank remains frozen.

Why the company goes to court

Ring Shine said it approached the High Court only after exhausting all administrative avenues, with the board filing a writ petition under Article 102(2) of the Constitution on 11 May 2026.

Legal experts noted that the issuance of a Rule Nisi indicates the court considers the matter worthy of judicial review and has sought explanations from the concerned parties. The final verdict could set an important precedent on the balance between shareholder decisions and regulatory authority in the utilisation of IPO proceeds.

Company's position

Speaking to The Business Standard, Ring Shine Managing Director Aniruddha Pial said the company had complied with all BSEC rules, regulations, directives, and corporate governance requirements before obtaining shareholder approval for the revised utilisation plan.

He said approximately $3.3 million in unused IPO funds has remained idle for a prolonged period despite overwhelming shareholder approval, while long-standing dues to BEPZA, subject to an annual surcharge of 24%, continue to accumulate. BEPZA has also been cancelling industrial plot leases over unpaid obligations.

Pial claimed that nearly one-third of the company's leasehold land has already been cancelled and is subject to legal disputes, adding that repeated requests to BSEC to release the funds in line with the AGM-approved resolution were unsuccessful.

He alleged that nearly a year after the application was submitted, the commission rejected the proposal and declined to implement the AGM decision, with a subsequent review petition also failing to produce any effective response.

"On one hand, investors' money remains unused, while on the other, suspended and cancelled plots are threatening the company's operations. With no alternative left, we sought relief from the High Court," he said.

He added that while the court has given one month to resolve the issue, the funds have yet to be released, with 20 days still remaining under the court order.

Risk of losing BEPZA land

The company said its inability to use the IPO proceeds prevented it from clearing outstanding liabilities to BEPZA, which has already cancelled the leases of industrial plots numbered 231–236 and 157–163. Final cancellation notices have also been issued for plots 224–231, 237–260, and 79–84.

Located in the Dhaka Export Processing Zone, these plots are considered critical to Ring Shine's manufacturing operations. The company warned that losing them could amount to the loss of nearly one-third of its allocated land, posing an existential threat to the company and potentially disrupting production, causing job losses, and significantly harming shareholder investments.

Ring Shine Textiles raised funds through an IPO in 2019, with plans to use the proceeds for business expansion, machinery acquisition, debt repayment, and working capital. However, changing business realities, rising costs, and other operational challenges prevented the company from implementing the original utilisation plan, and efforts to revise the allocation of remaining funds subsequently led to disagreements with BSEC.

Market participants believe the case has once again highlighted concerns over the proper utilisation of IPO proceeds and the protection of investor interests, reigniting debate over how much flexibility listed companies should be granted in adapting IPO utilisation plans to evolving business conditions.