The stock market regulator on Tuesday set up an inquiry committee to investigate the use of initial public offering (IPO) proceeds by Esquire Knit Composite Ltd.
On 7 October 2020, the Bangladesh Securities and Exchange Commission (BSEC) decided to form the committee.
The three-member committee comprising BSEC's Deputy Director Mollah Md Miraz-Us-Sunnah, and assistant directors Md Bony Yeamin Khan and Towhid Hassan, will complete the inquiry and submit a report to the commission within 30 working days.
Sources said the investigators will scrutinise the audit report made by Howladar Yunus and Co. and check out the company's anomalies as per laws.
They will also probe the audit reports prepared by Malek Siddiqui Wali Chartered Accountants, which was the regular auditor of the company's IPO projects.
Further, the committee will look into the allegations of money laundering by the company.
Previously, in February this year, the securities regulator appointed a special auditor to investigate the use of the company's IPO proceeds.
Sources also said Esquire Knit started using Tk100.42 crore from its IPO fund of Tk150 crore through Pinnacle Construction Management Ltd without disclosing it to the regulator.
Chairman Ayesha Habib and Managing Director Tamanna Habib of Pinnacle, a private company set up in August 2018, are daughters of Esquire Knit's Managing Director Md Ehsanul Habib.
Any listed company's transaction with its related party must be disclosed, as per the regulatory condition, which Esquire Knit failed to follow, added sources.
Also, the company put its investors at risk by using the IPO fund without disclosing Pinnacle's name, said the BSEC sources.
They also said Esquire Knit violated the terms of an arms-length transaction because its neutrality is dubious here.
Esquire Knit got IPO approval on 27 September 2018 to raise Tk150 crore from the stock market.
The company received IPO proceeds in March 2019. It used Tk57.02 crore of its committed expenditures as of August 2020.
In nine months from July 2019, the company's earnings per share was Tk2.40, which was Tk4.17 in the same period of the previous year.
It declared a 15% cash dividend for its investors on 30 June 2019.
The company, a strategic business unit of Esquire Group, was incorporated in February 2000.
It is a 100% export-oriented company. It produces different types of knit garments.
The company was listed on the stock exchanges in 2019.
Sponsors and directors jointly hold 46.95% of the company's shares, while institutions and general investors hold 40.67% and 12.38%, respectively.
The last trading price of the company's shares at the DSE was Tk28 per share on Thursday.