National Tea faces BSEC investigation on placement shares issue
Probe report to be submitted within 60 days
The Bangladesh Securities and Exchange Commission (BSEC) has formed a three-member inquiry committee to investigate various issues related to the placement shares and financial dealings of the state-owned National Tea Company.
The investigation will focus on the company's placement share issuance, government shareholding, fund utilisation, and overall financial management to ensure regulatory compliance, the regulator said in a press release yesterday (17 October).
The probe committee is headed by Md Rakibur Rahman, additional director of the BSEC, with Bony Yeamin Khan, deputy director, and Md Ariful Islam, assistant director as the other members.
The committee is tasked with completing its investigation and submitting a report to the BSEC within 60 days from the issuance of the order.
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The BSEC has also decided to extend the subscription period for National Tea Company's placement shares until 31 March 2025.
The extension depends on the government maintaining at least 51% share in the company and will only be allowed to utilise the funds if the condition is met, the regulator said.
On Thursday, its share price closed at Tk208.10 on the Dhaka stock exchange.
What will be probed
The inquiry will examine the reduction of government shareholding in National Tea over the past five years, changes in its capital structure, and the transfer of ICB shares to new shareholders.
Besides, the inquiry will scrutinise the purpose and use of the Tk279.70 crore raised through the issuance of 2.34 crore ordinary shares, each priced at Tk119.53, including a Tk109.53 premium.
The committee will also examine why placement shares worth Tk53.15 crore were issued to shareholders instead of the approved ordinary shares as part of this total capital.
It will also look into the early crediting of shares to BO accounts on 2 October 2024, review loan obligations, and assess the company's continuous operational losses over the past three years.
Issues in placement shares
In April 2023, National Tea received BSEC approval to raise its paid-up capital by issuing 2.34 crore shares. Of these, the government, ICB, and Sadharan Bima Corporation will receive 1.24 crore shares; sponsor-directors 13.8 lakh shares; and general shareholders nearly 96 lakh shares.
The subscription for placement shares opened on 10 July 2023, and was set to continue until 10 September 2023.
However, it was postponed due to a writ petition by shareholder Jakir Hossain Sarkar. After legal issues were resolved, the process resumed with a deadline extended to 19 September 2024.
Due to unrest after Sheikh Hasina's departure, major shareholders couldn't subscribe.
An official, speaking anonymously, said key shareholders, including the government, ICB, and Sadharan Bima, did not subscribe to the placement shares within the designated subscription period. Some company directors also failed to subscribe on time.
After subscription, the company has been to raise Tk54 crore out of Tk279.70 crore.
The government's shareholding, including that of the ICB and Sadharan Bima, jointly held 41% of the company. After new share adjustments, that portion declined to 16%.
The National Tea Company is now struggling. Its accumulated loss stood at Tk132.22 crore at the end of March 2024, while its per share loss was Tk104.10.
