The Bangladesh Securities and Exchange Commission (BSEC), in its 973rd commission meeting chaired by BSEC Chairman Khondoker Rashed Maqsood, has taken a series of stern actions against listed companies, their directors, auditors, and issue managers over financial irregularities and violations of securities laws.

Based on an investigation report, the Commission decided to forward the case of ACME Pesticides Limited to the Anti-Corruption Commission (ACC) for necessary action against four board members—Chairman Ms. Shanta Sinha, Managing Director Mr. Reza-ur-Rahman Sinha, Director Mr. Ahsan Habib Sinha, and Director Mr. K M Heluar—as well as Company Secretary Mr. Sabuj Kumar Ghose, Chief Financial Officer Mr. Selim Reza, and several placement holders including SK Trims & Industries Ltd, Bikrampur Potato Flakes Industries Ltd, Bengal Assets Holdings Ltd, Chittagong Pesticides & Fisheries Ltd, Heritage Capital Management Ltd, NRB Equity Management Ltd, and others, for failing to pay against allotted shares.

The Commission also decided to initiate the process of cancelling the registration of Shahjalal Equity Management Ltd (SEML), the issue manager of ACME Pesticides, for submitting false or inconsistent information in the prospectus and failing to perform its responsibilities properly.

Additionally, enforcement action will be initiated against audit firm Shiraz Khan Basak & Co. for failing to reflect the true financial condition of the company in its pre-IPO audited financial statements. Similarly, the matter of auditor Shafiq Basak & Co. will be referred to the Financial Reporting Council (FRC) for not properly disclosing the utilisation of IPO proceeds in the company’s audited financial reports.

Penalty on Genex Infosys Directors

The Commission also imposed hefty penalties on Genex Infosys Limited’s board members for securities law violations during share trading of Sonali Paper & Board Mills Ltd between December 1 and December 30, 2021.

Each of the nine directors—including Chairman and Independent Director TIM. Nurul Kabir, Vice Chairman Prince Mojumder, Acting Managing Director & CEO Shah Jalal Uddin, and others—was fined Tk 1.03 crore, while Genex Infrastructure Ltd was fined Tk 2.55 crore.

Show-Cause against Multiple Auditors

BSEC also found serious irregularities and violations of securities laws in audited financial statements of several listed companies, including Suhrued Industries Ltd (FY2019), Ring Shine Textile Ltd (FY2017-2020), Aman Cotton Fibrous Ltd (FY2020), and Fareast Islami Life Insurance Ltd (FY2018-19).

Audit firms and auditors including A Haque & Co, Ahmed & Akhtar, Mahfel Haque & Co, Ata Khan & Co, Shiraz Khan Basak & Co, and Islam Kazi Shafiq & Co failed to disclose these irregularities in their audit reports, the regulator observed.

As a result, the Commission issued show-cause notices asking why these firms and auditors should not be declared ineligible for five years to conduct audit and assurance activities of all listed companies, investment schemes (including mutual funds, alternative investment funds, and exchange-traded funds), and capital market intermediaries.

BSEC said the strong measures are aimed at ensuring transparency, accountability, and investor protection in the country’s capital market.