Fraudulently purchases dredger with IPO funds

The Bangladesh Securities and Exchange Commission (BSEC) has taken disciplinary action against the board of directors and relevant officials of Dominage Steel Building Systems Limited over allegations of irregularities, concealment of information and fraud in the use of initial public offering (IPO) funds. Each of the company’s five directors has been fined Tk 10 million. The regulator has also fined two former officials Tk 500,000 each. The total fines imposed on those involved with Dominage Steel amount to Tk 51 million.

BSEC inspection and investigation reports found several irregularities in the use of the company’s IPO funds. According to the prospectus, Tk 300 million raised through the IPO was supposed to be used for specific purposes. However, securities laws and prescribed rules were not followed in using the funds. Irregularities were also found in obtaining prior approval from general shareholders to change the use of IPO funds.

For these alleged irregularities, Dominage Steel Chairman Engineer Mohammad Shamsul Islam, Managing Director Engineer Mohammad Rafiqul Islam, Director Sujit Saha, Director Rakibul Islam and Director Abul Kalam Bhuiyan have each been fined Tk 10 million. Former Chief Financial Officer (CFO) Md. Zillur Rahman and former Company Secretary Md. Zamir Hossain Chowdhury have each been fined Tk 500,000. The order said the accused must deposit the fines with the commission within 30 days through bank drafts or pay orders.

The investigation found that the company concealed actual information from investors and resorted to fraud to change the use of the funds. It allegedly attempted to obtain the required approval from general shareholders by collecting proxy votes through forged signatures. BSEC took the matter of misleading shareholders through false information and fraud seriously and imposed disciplinary measures.

One of the major irregularities involving the use of IPO funds occurred in the purchase of a dredger. A dredger named CSD Dominage 3 was purchased for Tk 147.3 million without prior approval from general shareholders. The dredger was purchased in 2021. However, it generated no business income for nearly three years through 2024. The investigation report said the company did not use the dredger for any business purpose after purchasing it.

Questions were also raised about the manufacturer and price of the dredger. Company documents identified Sundarban Shipbuilders as the manufacturer of the dredger. However, the company informed BSEC in writing that it had not manufactured the dredger. Following the manufacturer’s statement, questions arose over the accuracy of the information provided by the company to the regulator and stock exchange.

The investigation also found that two factories owned by the company in Ashulia in Savar and Palash in Narsingdi had remained closed for a long period. The company did not inform investors about the closure of the factories, which violated provisions concerning the disclosure of price sensitive information. Meanwhile, BSEC’s investigation found allegations of embezzlement of around Tk 32.7 million from IPO funds by showing abnormally high construction costs for the expansion of a factory shed in Ashulia.

Dominage Steel raised capital from the stock market through an initial public offering (IPO) in 2020. The company raised Tk 300 million by issuing 30 million shares. Each share was priced at Tk 10. The company had stated that the funds would be used for building construction, electrical installation, purchasing plants and machinery and IPO expenses.

The company is a Category B company and has paid up capital of Tk 1.026 billion. Accordingly, the company has a total of 102.6 million shares. As of August 31, 2026, sponsor directors held 30.20% of the company’s shares, institutional investors held 8.08%, foreign investors held 0.02% and general investors held 61.70%.