FAR Chemicals Industries is set to make a controversial debut on the stock market today, after the company masked market-sensitive information about its directors in the IPO prospectus -- a violation of security rules.
Neither Bangladesh Securities and Exchange Commission, nor the Dhaka Stock Exchange made any attempt to block the debut.
Earlier in 2012, the stock market regulator filed criminal cases against two of its directors for their involvement in forgery of rights issue of FAR Chemicals' associated firm RN Spinning.
RN Spinning, a listed firm, undertook a rights issue in January 2012 that closed in March, but it did not credit the rights shares to the beneficiary owners' accounts within the stipulated time.
The company had also provided fake documents to a regulatory inquiry committee that was formed to investigate the spinner's rights issue offer.
After the probe, the BSEC in January last year fined all the directors of RN Spinning, two of whom are directors of FAR Chemicals, Tk 50 lakh each, in addition to the criminal cases.
The managing director of RN Spinning, who is also a director of FAR Chemicals, was also removed from the post after instruction from the BSEC, and there is also a regulatory bar on transfer and sell of RN Spinning shares by any sponsor and director. But the information was not mentioned in the initial public offering prospectus; rather, the company claimed there were no criminal cases against any director.
The penalty for concealing information during the initial public offering is cancellation of the listing, as per rules.
Saifur Rahman, spokesman of BSEC, said the issue came to the regulator's knowledge after the approval was given for the IPO.
“We asked the company to make the information on the criminal case and fine public and the company did so,” he said.
But the commission will take action against the textile chemicals company and the issue manager of IPO, said Rahman, also an executive director of the BSEC.
The regulator gave the green light to FAR Chemicals to raise Tk 12 crore from the public through floating 1.2 crore ordinary shares worth Tk 10 each.
The company was supposed to use the raised fund to buy capital machinery and increase the current capacity.
Contacted, ABM Gulam Mostafa, company secretary of FAR Chemicals, first did not respond and then switched off his mobile.