BSEC allows IFAD Autos to invest bond fund in associate firm

The securities regulator Bangladesh Securities and Exchange Commission (BSEC) has exempted IFAD Autos Limited from a provision of the debt securities rules that will enable the firm to invest its bond fund in its associate firm— IFAD Multi Products Limited. 

To this end, the stock market regulator issued a notification on October 4 and made it public on Monday.

As per the notification, the commission exempted IFAD Autos Limited from a provision of the Bangladesh Securities and Exchange Commission (Debt Securities) Rules, 2021.

The BSEC, however, imposed a condition that the fund of Tk 300 crore raised by IFAD Autos through the issuance of secured fully redeemable coupon-bearing floating rate bonds or any parts of the fund to be invested in IFAD Multi Products Limited would be subscribed in ordinary shares at face value as per the prior approval of the commission.

According to the existing bond securities rules, the fund of any debt securities or Islamic shariah-based securities (ISBS) is not allowed to be used for providing loans or acquisition of shares of any person or entity whose function is closely related to the bond issuer.

Thus, a bond issuer cannot use the bond fund for any of its parent company, subsidiaries, associates, or sister concerns. 

Earlier in November 2019, automobile dealer IFAD Autos decided to raise up to Tk 300 crore through the issuance of a coupon-bearing non-convertible fully redeemable bond. 

The company’s stock was traded at Tk 46.3 per share on the trading floor of the Dhaka Stock Exchange (DSE) on Monday. 

The company disbursed an 11 per cent cash dividend for the year 2021.

With an authorised capital of Tk 300 crore, the company has a paid-up capital of Tk 252 crore.