A High Court (HC) rule asked the authorities concerned as to why their inaction against a publicly-listed company for fraudulence and false statements in its prospectus should not be declared illegal.
The court also asked as to why the "inaction" of Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange, Chittagong Stock Exchange, 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 JBM Hassan and Justice Razik-Al-Jalil passed the order recently after holding a hearing on a writ petition filed to this end.
On November 22, barristers Akhtar Imam and Rashna Imam filed the petition on behalf of the petitioner, National Finance Limited, a leading non-banking financial institution against those respondents.
Deputy attorney general Tushar Kanti Roy, who represented the state, opposed the prayer for an ad-interim order.
BSEC, DSE, CSE, ACME Pesticides Ltd, Reza-ur-Rahman, managing director of ACME Pesticides, Sinha Securities Ltd and Shahjalal Equity Management Ltd were made respondents in the petition.
In the rule, the HC also asked why a direction should not be given upon the BSEC to order ACME Pesticides 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 to BSEC, DSE, CSE, ACME Pesticides, Mr Reza-ur-Rahman, to dematerialise its shares in ACME Pesticides 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 by-laws (11.9).
Talking to the FE, barrister Rashna said publicly-listed companies cannot take their prospectus lightly based on which the BSEC consents to capital issue 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 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, she added.
The rule has been made returnable within four weeks.
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