Ipo Fund Diversion
Argon Denim, Salvo Chem fined, barred from raising capital for 3yrs
The stock market regulator on Tuesday fined Argon Denims and Salvo Chemicals Industry Tk 35 lakh and barred them from raising any capital from the market for three years for violating conditions of using the funds raised through initial public offering (IPO).
The decision of Bangladesh Securities and Exchange Commission came in a regular meeting on the day presided over by its chairman M Khairul Hossain.
The BSEC fined Argon Denims Tk 30 lakh and Salvo Chemicals Tk 5 lakh and also restricted the two companies from raising any capital from the stock market in next three years.
A BSEC press release issued on the day said that Argon Denim paid loans of ONE bank, Mercantile Bank and Tk 3 crore loan of Lanka Bangla Finance Ltd from the IPO funds without mentioning it in the IPO prospectus.
Furthermore, Argon Denim paid Tk 27.94 crore in cash to its contactors and suppliers. It also paid construction workers through Everyway Engineers, said the BSEC press release.
Through this Argon Denim violated the prospectus condition B-7 and Section-18 of Securities and Exchange Ordinance 1969, it said.
The BSEC release said that Salvo Chemicals spent Tk 24 crore from the IPO fund but showed Tk 26 crore in a report submitted to the commission.
It also said that the company spent Tk 2.21 crore in cash without banking channel.
Through this, Salvo Chemicals violated the prospectus condition B-4, 6 and Section-18 of Securities and Exchange Ordinance 1969, it said.
-With New Age input
