Ring Shine Textiles commits forgery

Ring Shine Textiles has sold shares in the pre-IPO (initial public offering) period free of cost through a private offer, a clear act of forgery, according to a special audit of the Bangladesh Securities and Exchange Commission (BSEC).

What is more, it provided stock dividend too to non-paying shareholders.

With the share allotment, the company increased its paid-up capital, but in reality, the company had received nothing against the shares. Now, the stock market regulator has ordered the company to rusticate the shares and reduce the paid-up capital.

Ring Shine Textiles raised Tk 150 crore in funds from the stock market in order to purchase machinery and repay bank loans in 2019.

A top official of the BSEC, preferring anonymity, said the company had committed a serious offence. So, despite being an export-based company with good performance records, it had turned into a junk company.

"We are making the company run at first so that it can come into production," he said, adding that the BSEC wants to see the company functional.

The regulator allowed Ring Shine Textiles to utilise Tk 40 crore from its IPO funds, something it was banned from doing earlier.

Of the fund, Tk 15 crore will be used in the form of workers' retrenchment payment, Tk 3 crore for paying Bangladesh Export Processing Zones Authority dues and Tk 3.5 crore for paying dues of Titas Gas Transmission and Distribution Company.

The textile company will use Tk 10 crore to repay loans provided by Premier Bank, Tk 6 crore to Dhaka Bank and Tk 2.5 crore in miscellaneous payments.

About the free of cost-share sales, the BSEC official said the regulator froze the shares earlier, so the beneficiaries had not been able to sell them.

"On the basis of a special audit, we found the irregularities. Primarily, we decided to cancel the shares and reduce the paid-up capital," said Rezaul Karim, spokesperson of the BSEC.

He said the BSEC would soon dole out punishments to all the related intermediaries.

"As a lengthy legal process needs to be abided by, we are waiting but we will punish all," he added.

The company committed the forgery, which ultimately had a deep impact on the general investors and the stock market. So, they should be punished, said one stockbroker, preferring anonymity.

"The issue manager claimed to have exercised due diligence and the auditor did not find anything wrong. All should be punished so that others never dare to do something like that again," he said.

Stocks of Ring Shine Textiles closed at Tk 7.10 yesterday.

From last August, the company management had decided to announce lay-offs citing it as the pandemic's fallout.

"The shares were issued before I joined the company," said Ashraf Ali, company secretary, who has become inactive after the BSEC restructured the Ring Shine board recently.