The Bangladesh Securities and Exchange Commission (BSEC) has fined five Regent Textile Mills directors Tk100 crore for misusing IPO proceeds, after the company invested Tk80 crore from its public issue funds in sister concern Legacy Fashion instead of using the money for the stated purposes.
The penalties were imposed on Yakub Ali, Yasin Ali, Tanvir Habib, Mashruf Habib and Salman Habib, with each director fined Tk20 crore under a BSEC order issued on August 13.
Regent Textile had raised Tk125 crore through an IPO in 2015, stating that the funds would be used for machinery purchase, factory expansion, repayment of bank loans and other approved business purposes.
The company later invested Tk80 crore from the IPO proceeds to acquire a 99 percent stake in Legacy Fashion, an export-oriented garment company based in Chattogram.
BSEC said IPO funds can only be used for purposes approved by the regulator and cannot be invested in subsidiaries, associates, sister concerns or related entities.
The regulator found links between Regent Textile and Legacy Fashion through common directors, a shared registered address and ownership ties among related families.
BSEC concluded that the investment breached rules on related-party transactions.
The decision followed Regent Textile’s failure to comply with a BSEC directive to return Tk90 crore of IPO proceeds.
The penalty was approved at BSEC’s 964th commission meeting held on July 22, 2025.
BSEC also raised concerns over the company’s financial reporting, including Tk137.80 crore recorded as capital work-in-progress that had not been transferred to property, plant and equipment.
The company’s IPO fund utilisation deadline had been extended four times, with no utilisation reported since February 2019.
Regent Textile officials cited business disruptions caused by the Covid-19 pandemic, delayed gas supply and tax-related issues involving group company H G Aviation.
The company sought relief under Section 22 of the Securities and Exchange Ordinance 1969, but BSEC rejected the request.
The five directors, who are linked to Chattogram-based Habib Group, have been given 10 working days to pay the penalties.
Failure to comply will result in an additional Tk10,000 daily penalty, according to the order signed by BSEC Commissioner Nahid Mahtab.
The directors have filed an appeal seeking a review of the penalties, according to regulatory officials.
Regent Textile raised Tk125 crore through an IPO in 2015. The company has not published financial statements since June 2023 and has not provided updates to the stock exchange since then.
Regent Textile shares fell 3.23 percent to Tk6 each on the Dhaka Stock Exchange on Sunday.
