The High Court issued a rule asking the authorities concerned to show causes as to why their inaction or failure to take action against a public listed company for its fraudulent conduct and false statements provided in the prospectus should not be declared illegal.
The court in its rule also asked as to why the “inaction” of the Bangladesh Securities and Exchange Commission (BSEC), Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), Shahjalal Equity Management Limited as respondents for non-compliance of the condition in providing approval to raise capital through IPO (initial public offering) should not be declared illegal.
The HC division bench comprising Justice J.B.M. Hassan and Justice Razik-Al-Jalil passed the order recently after holding a hearing on a writ petition filed in this regard.
On November 22, 2022, Barrister Akhtar Imam, who is also a senior advocate, and Barrister Rashna Imam filed the writ petition before the court on behalf of petitioner National Finance Limited, a leading non-banking financial institution (lender) against those respondents.
Deputy attorney general Tushar Kanti Roy, who represented the state, opposed the prayer for ad-interim order.
The BSEC, DSE, CSE, ACME Pesticides Limited, Reza-ur-Rahman, managing director of ACME Pesticides Limited, Sinha Securities Limited and Shahjalal Equity Management Limited were made respondents in the petition.
In the rule, the court also asked why a direction should not be given upon the BSCE to order ACME Pesticides Limited to pay the petitioner Tk 55 million from its IPO proceeds as stated in its prospectus.
The court asked why a direction should not be given upon the BSEC, DSE, CSE, ACME Pesticides Limited, Reza-ur-Rahman, managing director of ACME Pesticides Limited to dematerialise its shares in the ACME Pesticides Limited and complete creation of the pledge of Tk 5.0 million of the mentioned shares in favour of the petitioner in the Central Depository Bangladesh Limited system as per its byelaws (11.9).
Talking to the FE, Barrister Rashna Imam said that public listed companies cannot take their prospectus lightly based on which the BSEC consents to capital issues and investors invest in it.
The funds raised through an IPO must be used as stated in the prospectus and any deviation has to be approved by the shareholders, the Supreme Court lawyer noted.
The Securities and Exchange Ordinance, the Securities and Exchange Commission Act, Listing Regulations of DSE and CSE all contain anti-fraud provisions to address false statements in the prospectus, Barrister Rashna added.
The rule has been made returnable within four weeks.