Dhaka bourse directed to probe unusual price surge in Imam Button shares

Infographics: TBS

The securities regulator has instructed the Dhaka Stock Exchange (DSE) to investigate the abnormal increase in share price of Imam Button Industries Ltd.

In an order issued on Tuesday, the Bangladesh Securities and Exchange Commission (BSEC) conveyed the directive for investigation to the DSE.

The commission, in a press release, highlighted that its surveillance department observed a remarkable 85% surge in Imam Button's share price, reaching Tk194.10 apiece between 7 September and 26 October of this year.

Deeming this price movement as abnormal, the BSEC has called for scrutiny into the trading activities of the company to find out if any manipulation has taken place.

The BSEC has mandated that the Dhaka bourse submits the investigative report within 15 working days from the date of the order.

Imam Button's Managing Director ASM Hasib Hasan told The Business Standard, "I am also surprised to see the abnormal price hike of the company's shares. So, I highly appreciate the regulator's move."

According to the DSE, the price of Imam Button shares was Tk82.8 each on 21 May this year. Subsequently, the share price experienced a significant jump of over 158%, reaching Tk213.8 each by 22 November.

In September, the DSE issued a query letter to the company seeking explanation behind the abnormal surge in the stock price. In response, the company stated on 25 September that there was no price sensitive information influencing the increase in share prices.

However, on 15 October, the company announced a board meeting scheduled for 21 October to approve financial statements for the last four fiscal years until 2022-23.

Another board meeting was convened on 28 October to approve the first quarter's financial report of the current fiscal year. During this meeting, the company's board declared a 1% interim cash dividend for its general shareholders, marking the first dividend declaration since the fiscal 2009-10.

Additionally, the company reported a net profit for the July-September quarter, a notable development for a company that had been incurring losses since 2011.

Imam Button is a subsidiary of Imam Group, whose owners are currently fugitives in connection with a loan scam.

In February of this year, the BSEC restructured the company's board, appointing Professor Mohammad Sogir Hossain Khandoker, Md Mahamud Hosain, and Mohammed Masum Iqbal as independent directors. The regulator also directed the newly-appointed independent directors to nominate two shareholder directors from investors holding a minimum of 2% of the company's shares.

In compliance with the BSEC's order, the company reconstituted the board of directors on Saturday, with Professor Mohammad Sogir Hossain Khandoker appointed as chairman and ASM Hasib Hasan as managing director.

Hasib Hasan shared, "We are working to resume production and have already invested around Tk10 crore for this purpose. Initially, Tk1 crore was invested in the agro business, contributing to a profit in the first quarter."