BSEC turns down rights issue proposal of First Security Islami Bank

The Bangladesh Securities and Exchange Commission (BSEC) on Wednesday denied the issuance of right shares of First Security Islami Bank.

According to a filing on the Dhaka Stock Exchange (DSE) website on Thursday, the BSEC rejected the bank's application due to its failure to form a nomination and remuneration committee (NRC), an increase in number of outstanding shares for payment of stock dividend for the year 2021, and shares trading near to face value in the month of August 2022.

In September 2021, the bank applied to the BSEC for raising Tk498 crore by issuing right shares to strengthen its capital base as required by the Bangladesh Bank.

Right shares are issued in a ratio of equity shares by a company for its existing shareholders.

The bank wanted to issue the right shares at a ratio of 1R:2 (one right share for every two ordinary shares) at an issue price of Tk10 each.

But in April this year, it declared 5% bonus shares, which increased the number of outstanding shares, along with a 5% cash dividend for the year that ended on 31 December 2021.

Also, the price of each share of the bank has been hovering around its face value this month and stood at Tk10.1 at the DSE on Thursday.

First Security Islami Bank started commercial operation in 1999 and its board is controlled by the country's business conglomerate S Alam Group. The lender got listed on the capital market in 2008.

In 2014, it raised Tk206 crore in paid-up capital by issuing right shares at a ratio of 1R:2 at an issue price of Tk10 each.

Sponsors and directors hold 33.02%, institutional investors 18.53%, foreign investors 1.52%, and general investors 46.93% shares of the bank.