In order to protect the interests of investors, the Bangladesh Securities and Exchange Commission (BSEC) has restructured the board of directors of Fu Wang Food Ltd.
The stock market regulator nominated five independent directors for the company on Tuesday.
They are Brigadier General Md Israt Hossain, chief finance officer of Bangladesh University of Professionals; Mohammad Salahuddin Chowdhury, FCA, an assistant professor of the department of finance at the Dhaka University; Professor Md Nizamul Hoque Bhuiyan, Ajit Kumar Pual, additional secretary on post-retirement leave; and Mohammad Sanaullah.
The shares held by existing directors and sponsors will not be unblocked until further instruction from the commission.
The company shall not be allowed to sell, mortgage, pledge, transfer, and transmit without permission of the BSEC.
The commission-appointed independent directors will not have any personal financial liability.
Besides, the independent directors will report on a monthly basis to the commission regarding the operation status of the company and the compliance regarding issues.
According to BSEC, sponsors and directors jointly hold 9.86% shares of the paid-up capital and thus failed to comply with the 30% shareholding rules.
Fu-Wang Food Ltd was supposed to reshape its board within 45 working days as per the rules, but the company failed to comply with the regulation.
The company and its board of directors did not appoint two additional directors and also violate the condition of BSEC.
The inquiry committee has found that the company made huge transactions with related parties and family members without proper disclosers to the market.
The commission also said Dr Arif Ahmed Chowdhury, managing director of the company, provided it with a loan to purchase 96 decimal lands from his wife Rafia Akther.
But the company did not provide any documents related to the payment of the loan by the managing director to purchase the land.
The company took the land from seller Rafia Akther from 1 April 2011 by providing rent of Tk6 lakh every month.
The managing director takes remuneration of Tk48 lakh in 2019 and 2020.
Also, the company is paying a remuneration of Tk1.50 lakh per month to Lubaba Tabassum, daughter of the managing director, as a director. BSEC said there is no scope for such a payment.
The inquiry committee reported that the company has been siphoning off the profit of Fu-Wang Food Ltd by overstating the value of assets and expenses.
Moreover, the company is not appropriately growing and the shareholders of the company are getting fewer dividends for the last two years, which is detrimental to the interest of the investors of the company and undesirable to the commission.
The company got listed on stock exchanges in 2000.
In the nine months of last fiscal year, the revenue of the company was Tk59.21 crore and the profit stood at Tk2.86 crore.