Bangladesh Securities and Exchange Commission also directed that all share trading of the Alhaj Textile be conducted at the main market instead of the spot market
The Bangladesh Securities and Exchange Commission (BSEC) has fined Alhaj Textile Mills Ltd's Director Shamsul Huda Tk50 lakh and his brokerage firm ANF Management Co Ltd Tk5 lakh for selling shares without a declaration.
The commission also directed that all share trading of the Alhaj Textile be conducted at the main market instead of the spot market.
Saifur Rahman, executive director and spokesperson of the BSEC confirmed the matter to The Business Standard.
Sources from the commission said Huda sold 5 lakh shares of Alhaj Textile from December 31, 2017 to September 8, 2018 without making any declaration on the stock exchange. He then bought 9,100 shares.
Huda conducted the share trading through ANF Management, a TREC holder of the Dhaka Stock Exchange (DSE). He is the managing director of this brokerage firm.
As a large number of shares were sold without declaration, the holdings of sponsors and directors of the textile company went below 30 percent.
Under the existing regulations, the sponsors and directors of a company must jointly hold at least 30 percent shares of the company.
Commission sources said the Alhaj Textile revealed price-sensitive information on January 15 this year, where it was mentioned that the company received Tk56 crore from a fixed deposit in the Agrani Bank.
After the information was released, the textile company's share prices went up. The information was found to be true, so the company was exempted from the accusation of share manipulation, said sources from the commission.
All production of this company currently remains suspended until further notice as it could not sell its manufactured yarn.
The company incurred a loss of Tk0.43 per share in the first nine months (January-September) of the 2018-19 financial year. It had earnings per share of Tk0.42 during the same period in the 2017-18 financial year.
The company handed out a ten percent stock dividend to its shareholders in the financial year 2017-18. It gave a five percent cash dividend and a ten percent stock dividend to its shareholders in the financial year 2016-17.
Listed in the capital market in 1983, Alhaj Textile's current paid-up capital is Tk22 crore. The company's sponsors and directors hold only 12.78 percent shares.
Meanwhile, institutional investors have 9.54 percent stake and general shareholders have 77.65 percent stake.
The company's closing price on Thursday was Tk37.20 per share in the DSE, compared to Tk116 in February this year.