BSEC fines five Regent Textile directors Tk100cr over IPO fund diversion
However, the company repeatedly extended the deadlines for completing the projects while leaving a significant portion of the public funds unutilised.
The Bangladesh Securities and Exchange Commission (BSEC) has imposed personal fines of Tk20 crore each on five directors of Regent Textile Mills Limited, totalling Tk100 crore, for failing to return Tk90 crore in misused initial public offering (IPO) funds to the company's bank accounts.
The penalised board members are directors Yakub Ali, Yasin Ali, Tanvir Habib, Mashruf Habib and Salman Habib.
According to an order issued by the securities regulator's enforcement division, the decision was finalised at a commission meeting after Regent Textile failed to deposit Tk90 crore within the deadline set in an earlier directive.
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The directors must pay the penalty within 20 working days of the order's issuance. Failure to comply within the given timeframe will attract an additional penalty of Tk10,000 per day for each director for as long as the default continues, according to the BSEC order.
The enforcement action follows a regulatory investigation that found Regent Textile had diverted Tk80.11 crore (including accrued interest) from unutilised IPO proceeds to acquire a 99% stake in Legacy Fashion Limited, an entity owned and controlled by members of the same family.
BSEC rules prohibit listed companies from using IPO proceeds in subsidiaries, associates or sister concerns, requiring such entities to raise funds through separate public offerings.
The commission also found multiple breaches of securities regulations by Regent Textile, including non-compliance with Bangladesh Accounting Standard (BAS) 1 and International Accounting Standard (IAS) 24 on related-party transactions.
The company was also found to have failed to present fair financial statements under the Securities and Exchange Rules.
Regent Textile raised Tk125 crore from the capital market through its IPO in 2015 to fund BMRE projects and establish a new ready-made garment unit.
However, the company repeatedly extended the deadlines for completing the projects while leaving a significant portion of the public funds unutilised.
This ultimately resulted in the company breaching the primary conditions set out in its consent letter for the IPO.
