BSEC to sue Nurani Dyeing for misappropriation in IPO fund

Bangladesh Securities and Exchange Commission (BSEC) has decided to take enforcement action as well as initiate a criminal proceeding against Nurani Dyeing and Sweater Limited, a listed company, for presenting false financial information and misappropriation of the IPO fund.

This decision was taken during a commission meeting at its office in the capital Wednesday.

Mohammad Rezaul Karim, executive director and spokesperson of the BSEC confirmed it to the media.

According to a BSEC press statement, the entrepreneurs of Noorani Dying, the concerned issue manager, its auditor, and the IPO fund utilisation certifier were involved in forgery as they had concealed the firm’s proper financial information and also help it defraud the IPO fund, which is the violation of securities law under the section 17 of the Securities and Exchange Ordinance, 1969.

According to the BSEC statement, Noorani Dyeing had mentioned Tk 57.20 crore and Tk 42.95 crore as loans to AB Bank in its 2016 and 2017 audited financial reports respectively.

But as per the bank accounts collected by a Dhaka Stock Exchange (DSE) inspection and inquiry committee, the company’s liability was Tk 168.96 crore in 2018, Tk 192.68 crore in 2019, and Tk 216.41 crore in 2020.

This proves that the company’s financial reports prepared between 2016 and 2020 had concealed the true financial information, the BSEC press statement read.

Alongside, the company had misappropriated Tk 41.14 crore out of Tk 43 crore it raised through the IPO issuance.

Besides, the directors of the company jointly lost their 30.93% held shares as they put them as collateral with Jamuna Bank Capital Management for taking a margin loan, which later became the default.

But the company had not disclosed it at the time of its listing.

Earlier in 2021, Bangladesh Securities and Exchange Commission restructured the board of Nurani Dyeing and Sweater after the regulator found falsehoods in its financial report.

With a paid-up capital of Tk 122.62 crore, the company has an authorised capital of Tk150 crore.

Listed in the stock market in 2017, the ‘A’ category company provided a 10 per cent stock dividend for the year 2020.

Nurani Dying stock traded at Tk7 per share which is its floor price, on the trading floor of the DSE Wednesday.