Ring Shine tricks investors over shareholdings
The company had previously utilised Tk90 crore of the IPO fund after listing on the stock exchanges in 2019
Poorly-performing Ring Shine Textiles Ltd's sponsors and directors have shown their shareholdings at much higher than what they own – to trick and keep investors in the dark about the real situation, the market regulator finds.
According to an enquiry by the Bangladesh Securities and Exchange Commission (BSEC), the sponsors and directors together held a 17.92% stake as of February 2022, way below the compulsory regulatory requirement of holding at least 30% shares.
However, both the Dhaka and Chittagong stock exchanges show the shareholdings to be at 31.54% as per the company's papers.
Sources said the company raised its paid-up capital from Tk9.95 crore to Tk285.05 crore by issuing pre-IPO shares, known as placement shares, to existing sponsors, directors and 73 external local shareholders.
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Of these, however, 11 sponsors and directors and 33 external shareholders did not make any payment against their allotted shares, found the market regulator.
An official of the company said it will amend the shareholding position after receiving an instruction from the BSEC.
The company applied to the commission to use Tk30 crore more from its initial public offering (IPO) fund to continue the business.
The company had previously utilised Tk90 crore of the IPO fund after listing on the stock exchanges in 2019.
It used Tk50 crore for bank loans and Tk40 crore for resuming the factory after a long shutdown last year.
Mejbah Uddin, chairman of the company, had earlier told TBS that the company was in operation but faced numerous challenges.
A portion of the IPO fund has been sought to tackle some challenges and needs support to take the company to a better position, he added.
In January last year, the securities regulator restructured the Board of Directors of Ring Shine Textiles Ltd in a bid to rescue the company from its worsening condition.
For this to be attained, the commission appointed seven independent directors to observe the company's overall condition and make a plan on how to operate it.
Mejbah Uddin, an additional inspector general of police – who is on post-retirement leave – was appointed the new chairman of the company's Board of Directors.
The new board resumed 25% production of total capacity on 13 June 2021. The production however closed in September 2020 due to being badly affected by the Covid-19 pandemic.
