The Bangladesh Securities and Exchange Commission (BSEC) has approved retrospectively the raising of Tk 25 crore in paid-up capital by a chemical company although the pooling had effectively breached securities rules for not acquiring the prerequisite regulatory approval.

The approval paves the way for the company to transfer its shares to the SME platform from the over-the-counter market, a move Dhaka Stock Exchange (DSE) had rejected earlier following a probe citing the violation of the rules.

Al-Amin Chemical Industries Limited had applied with the DSE for the transfer on May 31 last year, prompting the initiation of an inspection in August.

According to the DSE inspection report, the company had breached securities rules by raising the Tk 25 crore through the issuance of 2.50 crore ordinary shares at a face value of Tk 10 without the BSEC's consent.

It said four corporate shareholders -- Eshaal Communication, Lava Electrodes, Monarch Express and Monarch Mart -- purchased the shares.

"The corporate shareholders have no visible operation since (they were formed)…It appears that indirectly Md Abul Khayer Hiru and his associates are pulling string from behind," it added.

Md Abul Khayer Hiru is a stock market investor and, according to the report, he and his associates were fined a number of times, the total amount of which stands at Tk 10.89 crore, for manipulating listed shares.

Contacted by The Daily Star yesterday, Md Abul Khayer Hiru said he was not involved with Al-Amin Chemical Industries Limited.

"…Monarch Mart purchased its shares…yes, my family has connection with Monarch Mart, my wife is its managing director but I have no connection," he said following another query.

The report said the inspection was able to deduce that the chemical company would not be able to perform as per a strategic business plan it had submitted earlier.

Following the DSE's rejection, the company had sought the approval retrospectively from the BSEC for the paid-up capital raised.

And in a meeting on December 28 last year, the BSEC gave the approval.

However, this approval was not made public through a press release, as is done in other cases involving the raising of capital.