BSEC panel to probe Active Fine Chemicals irregularities  

The Bangladesh Securities and Exchange Commission (BSEC) has formed a three-member enquiry committee to look into the complaints lodged to the regulator against Active Fine Chemicals Ltd.

The committee consisting of BSEC Additional Director Mollah Md Miraz-Us-Sunnah, Deputy Director Mohammad Ratan Miah and Dhaka Stock Exchange Manager Snehasish Chakraborty will submit its findings to the commission in the next 15 working days.

BSEC officials said the company has been in multiple irregularities in recent years. That includes non-compliance with the regulatory order for mandatory 30% shareholding by sponsor-directors, some qualified opinion on its account's elements by the statutory auditor, not arranging the annual general meeting of shareholders for the 2019-20 financial year, and most importantly its deteriorating financial performance.

A quarter of its shareholders are annoyed with the way the board of directors is steering the company, while some believe there have been serious financial irregularities. One of them lodged a written complaint to the BSEC against the company.

The regulator in September appointed chartered accountant firm Howladar Yunus and Company to check and report if the company's balance sheet reflects the true asset liabilities, alongside its equity, earnings and cash flow.

The regulator also instructed the special auditor to look into the company documents of the past four years to report on any related party transactions that might hurt general shareholders.

A company's related party transactions take place with entities related to its sponsors, directors or top officials, which have a very high chance of depriving minority shareholders.

Checking and reporting on Active Fine's assets, liabilities, accounting recognition and reporting authenticity alongside the role of its compliance auditor, board members and top officials also were ordered.

The company did not cooperate with the auditor, instead pleading to defer the special audit and BSEC called the company directors and senior management team members at its office on 10 February to explain their position.

Active Fine Chemicals Managing Director SM Saifur Rahman did not respond to The Business Standard request for comment.

Also, his company secretary Md Mahbubur Rahman did not answer the phone calls for comment.

The company, listed in 2010, is the first local firm to produce active pharmaceutical ingredients (API), the value-added intermediary raw material for medicines.

Finding it in alignment with the government's vision for a strong backward linkage in the country's tremendous pharmaceuticals industry, investors had been well appreciating the company in the stock market.

But its years-long struggle to avail tax breaks amid the procedural complexity on top of too many questions regarding the company's accounts reduced Active Fine stock's appeal in the bourses.

Recently, the National Board of Revenue has issued its much-sought order regarding the tax break to the API firm.

The company's profits drastically dropped in the last three years and nowadays it is swinging between losses and poor profits.

Active Fine shares closed 2% lower at Tk24.5 at the Dhaka Stock Exchange on Tuesday.

In 2010, its share price shot to Tk180 and before the pandemic in early 2020, it bottomed out at Tk10.5.