Thesis paper

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LETTER OF TRANSMITAL
15 February 2014
Pallab Kumar Biswas, Ph.D.
Assistant Professor
Department of Accounting & Information Systems
Faculty of Business Studies
University of Dhaka
Subject - Submission of Thesis Report.
Dear Sir,
With due respect and great pleasure I am submitting my thesis paper report on
“Enforcement Action of BSEC- with emphasis on NFC”. The six weeks thesis paper
program was a great experience to me as it provided me with wide exposure to the activities
of enforcement department. The report is prepared under your supervision and I
respectfully acknowledge your guidance and help. I believe the analysis done here will help
me in future to conduct research program. I will be glad to clarify any queries regarding
this report.
Thank you very much for your kind supervision and great co-operation.
Sincerely yours,
Halima Akter
BBA 16th
Batch
ID-16022
Department of Accounting & Information Systems
Faculty of Business Studies
University of Dhaka.

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ACKNOWLEDGEMENT
At the very outset, I would like to express my sincere thanks and gratitude towards the
chairman, of the Department of Accounting & Information Systems for allowing me to
gather experience on the topic titled “Enforcement Action of BSEC- with emphasis on
NFC”. I am profoundly indebted to my supervisor Pallab Kumar Biswas, PH.D, Assistant
Professor, Department of Accounting & Information Systems, University of Dhaka for his
kind co-operation. He provided overall guidance, support and assistance to the development
of the work plan and report outline, data analysis, and writing of this report and made
valuable comments and suggestions that were very helpful for reshuffling and finalizing the
report. I acknowledge his contribution and thank him.
The intelligence, expertise, and labor of all staff member of Bangladesh Securities and
Exchange Commission worked behind this study and invaluable contribution to its success.
I take this privilege to thank them all. Without their support, I was not able to prepare this
report. All of them extended support towards the successful scripting of this report. I owe
my profound indebt to all of them.
Finally, I would like to say that working on the topic titled” Enforcement Action of
BSEC- with emphasis on NFC” was a great experience and this report is an outcome of
the joint and cordial efforts of all referred to above.

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EXECUTIVE SUMMARY
This report is entitled “Enforcement Action of BSEC- with emphasis on NFC” is an
outcome of BBA thesis paper program. This report contains the detail of the objectives,
methodology, substantive working, and outcome of enforcement action of the BSEC. For
the observation of the efficiency of BSEC, a determination is made as to whether the listing
companies in the Stock Exchanges (DSE and CSE), are following all the Rules,
Regulations, directives and Notification prescribed or directed by the BSEC. Increasing
importance is being placed on the effectiveness of enforcement of laws and regulations as
public interests are related to the listed companies in the Stock Exchanges. For conducting
the research, I have considered only the information regarding the Non Financial
Companies. My findings are also provided in the other chapters. In addition, in the
conclusion part I have recommended some recommendations for the effective enforcement
of laws and regulation in the perspective of Bangladesh.

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Abbreviation
AGM = Annual General Meeting.
BSEC = Bangladesh Securities and Exchange Commission.
CA = Chartered Accountant.
CSE = Chittagong Stock Exchange.
DSE = Dhaka Stock Exchange.
FI = Financial Institutions.
FRC = Financial Reporting Council.
FS = Financial Statements.
NFC = Non-Financial Companies / Company.
SECB = Securities and Exchange Commission Bangladesh.
SRO = Statutory Regulatory Order.
CGG = Corporate Governance Guidelines.

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TABLE OF CONTENTS
particulars Page No
Letter of Transmittal
Acknowledgement
Executive Summary
Abbreviation
Table of Contents
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CHAPTER 1 : INTRODUCTION
1.1 Study Background
1.2 Objective of the Study
1.3 Scope of the Study
1.4 Methodology of collection of information
1.5 limitation of the study
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CHAPTER 2 : IREGULARITIES AND RELATED LAWS
2.1 Regulation regarding Annual general meeting
2.2 Non disseminating information regarding AGM
2.3 Non-submission of audiovisual tape of AGM
2.4 Retention of auditor exceeding 3 years ; and
Non-compliance of law regarding audit fees
2.5 Non Compliance of Laws regarding FS
2.6 Delayed/Non-submission/furnishing of yearly FS
2.7 Delayed/Non-submission/furnishing of half yearly FS
2.8 Delayed/Non-submission/furnishing of first and third quarterly
FS
2.9 Non-compliance of securities laws/rules
2.10 Nonpayment of interest and principle of debenture
2.11 Non co operation with the auditor
2.12 Transfer of shares /holding outside stock exchange
2.13 Non-compliance with the Depositories Act
2.14 Non utilization of IPO fund
2.15 Violation/Non compliance of SECS ordinance / rules /
Notification
2.16 Non submission of the report of intention to buy shares
2.17 Non submission of capital & shareholding position
2.18 Non-compliance of laws regarding Partnership Agreement
2.19 Non-compliance of laws regarding Corporate Governance
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particulars Page No
Guidelines
2.20 Non/delayed payment/Non-compliance of laws regarding
dividend
2.21 Non disseminating price sensitive information
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CHAPTER 3 ABOUT BSEC AND ITS ENFORCEMENT
ACTION
3.1 About BSEC
3.2 Enforcement Department
3.3 Function of Enforcement Department
3.4 Structure of the Enforcement Department
3.5 Enforcement Procedure
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CHAPTER 4 ENFORCEMENT ACTION CHECKLIST
4.1 Enforcement Action Checklist
4.1.1 Non Financial Company
4.1.2 Issuer Company
4.1.3 Present listing Status of the charged companies.
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CHAPTER 5 49
APPENDICES
Appendix – 1
Appendix – 2
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References 57

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1.1 STUDY BACKGROUND
The aim of the research paper is to demonstrate how students can apply knowledge,
understanding and skills gained from knowledge obtained through study (and possibly
working experience)In order to have an idea and gain experience, we, the students of
department of Accounting & Information Systems, University of Dhaka have to undertake
6 weeks thesis paper program on any important topic.
As a part of my BBA program, this thesis paper program gave me the opportunity to have
practical knowledge about how to conduct a research and how to prepare a thesis report.
The assignment was about the enforcement actions of Bangladesh Securities And Exchange
Commission on Non-Financial Companies (NFC).
To face much more complex, challenging corporate world student‟s ability to study
independently and critically certain sources, analyze these sources critically, and apply the
information needed is very much important. for achieving the ability and experience
Regarding conduction of research we were assigned different important topics on business,
accounting, economics, and other important areas. And I was assigned the topic titled”
Enforcement Action of BSEC- with emphasis on NFC”.
This study gave me the opportunity to apply my academic knowledge to conduct a research
and prepare this thesis report. In this period, I could relate the academic knowledge to
practical exposure and analytical as well as critical ability.
CHAPTER1 INTRODUCTION

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1.2 OBJECTIVE OF THE STUDY
In our study period, primarily we gain theoretical knowledge. Now a day, proper
application of theoretical knowledge and achieving the ability of analysis and criticize is
also need. The ability to do meaningful analysis on different field of study should be a
pivotal priority. It has immense importance to establish relationship between theory and
practices in real world situation.
I have mentioned the core objective of the study below-
1. Achieving the ability of analysis and argue clearly and produce a vision of my own.
2. Gaining practical knowledge and experience.
3. Learning how to conduct a research and how to prepare thesis report.
4. Functions of the Enforcement department of BSEC.
1.3 SCOPE OF THE STUDY
I have been assigned the topic titled “.Enforcement Action of BSEC- with emphasis on
NFC” that gave me the tremendous scope to familiarize with the. Activities of the
enforcement department of BSEC After being assigned the assignment, we found that the
scope of the report was confined to various related websites. The report is solely on the
basis of the terms and concepts related to Enforcement Action of Security Exchange
Commission. Major parts of scope are -
 Enforcement methodology of the BSEC, which is followed by enforcement for
imposing penalty or warning.
 Nature and types of irregularities and thereof Laws and Rules related to the
enforcement action.
 Function of the Enforcement department of Bangladesh Securities and Exchange
Commission.
 Procedure and Administration of the BSEC, which are followed by BSEC‟s
Enforcement Department.

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1.4 METHODOLOGY OF COLLECTION OF INFORMATION
In order to prepare the assigned thesis paper i have collected necessary information from
two types of source as following:
1) Primary source information.
2) Secondary source information.
PRIMARY SOURCE INFORMATION
1. I have collected primary information by discussing with Deputy Director and other
staffs of the BSEC.
SECONDARY SOURCE INFORMATION
1. I have also collected secondary information like annual report, monthly report, quarterly
review of BSEC.
2. The information was obtained from the website of the BSEC. http://www.sec.gov.bd/ and
the website of Dhaka Stock Exchange http://www.dsebd.org/pdf/listing_reg.pdf
1.5 LIMITATION OF THE STUDY
The study is conducted with an objective to make an analysis about the enforcement action
of the BSEC.I have availed many facilities and faced some obstacles during my analysis.
This obstacle may term as limitation of the study. These limitations are as following:
 This research is based on only Enforcement action imposed on Non Financial
Institution so the analysis may not hold or applicable for Financial Institutions or
other types of Institutions like CA firm, Broker house etc.
 Inability to collect all information due to official restrictions of BSEC.
 Some websites had no direct reference.
 Scheduled and limited time span.

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In Bangladesh, enforcement of corporate and securities the Bangladesh Securities and
Exchange Commission (BSEC), the Dhaka Stock Exchange (DSE), the Registrar of Joint
Stock Company (RJSC), professional accounting bodies and the judiciary, generally share
laws. In this report, I worked on the Bangladesh Securities and Exchange Commission‟s
enforcement action on the Non Financial Companies.
The BSEC regulates the securities market through the Securities and Exchange Ordinance
of 1969 and the Securities and Exchange Rules of 1987, and various orders and
notifications under the Securities and Exchange Ordinance of 1969. By analyzing the
enforcement actions of Securities and Exchange Commission, the following irregularities
have been found. The laws regarding those irregularities are presented below-
2.1 Regulation regarding Annual general meeting
As per Company Act 1994, section 81 (Annual general meeting) -
(1) Every company shall in each year of the Gregorian calendar hold in addition to any
other meetings a general meeting as its annual general meeting and shall specify the
meeting as such in the notices calling it; and not more than fifteen months shall elapse
between the date of one annual general meeting of a company and that of the next:
Provided that a company may hold its first annual general meeting within a period of not
more than eighteen months from the date of its incorporation; and if such general meeting
is held within that period, it shall not be necessary for the company to hold any annual
general meeting in the year of its incorporation or in the following year;
Provided further that the Registrar may, on an application made by a company within thirty
days from the date of expiry of the period specified for holding the annual general meeting
as aforesaid, extend the time within which any annual general meeting, not being the first
annual general meeting shall be held, by a period not exceeding ninety days or not
exceeding the 31st December of the calendar year in relation to which the annual general
meeting is required to be held, whichever is earlier.
CHAPTER 2: IREGULARITES AND RELATEDLAWS

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(2) If a company defaults in complying with the provisions of sub-section (1), the Court
may, on the application of any member of the company, call or direct the calling of a
general meeting of the company and give such ancillary or consequential direction as the
Court thinks expedient in relation to the calling holding and conducting of the meeting.
As per Company Act 1994, section 82- (Penalty for default in complying with section
81) -
If default is made in holding a meeting of the company in accordance with sub- section (1)
of section 81(Annual general meeting), or in complying with any directions of the Court
under sub-section (2) thereof, the company and every officer of the company who is in
default, shall be punishable with fine which may extend to ten thousand taka and in case of
a continuing default, with a further fine which may extend to two hundred fifty taka for
every day after the first day during which such default continues.
2. 2 Non Disseminating information regarding AGM
In October 2009, the BSEC directed companies to set their record date or the
commencement date of the book closure period (to determine who will receive a notice of
AGM) to within 15 working days of the date of the board‟s declaration of a dividend and to
hold their AGMs within 45 days of the record date or book closure end date (2009b).
As per DSE listing Regulation 1996, section 19 -
(1) A listed company shall hold its annual general meeting and lay before the said meetings
balance sheet, profit and loss account and cash flows statement within nine months
following the close of its financial year and in keeping with the provisions of the act.
(2) A company may apply to the Exchange for extension in time under sub-regulation (1)
and shall pay the following extension fees with such application:
(i) Extension for the 1st month or part thereof: Tk. 5000.00
(ii) Extension for the 2nd month or part thereof: Tk. 10,000.00
(iii) Extension for the 3rd month or part thereof: Tk. 15,000.00

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Provided that the above extension shall be allowed subject to and upon production of a
letter of approval from the commission allowing a similar Extension.
(3) Upon receipt of the application, with the fee corresponding to the extension applied for,
the council may, in its sole discretion, grant or refuse the extension. In the event of refusal
the fee paid with the application shall be refunded retaining 10% thereof as service charges.
(4) Failure to obtain extension from the exchange or if the annual general meeting is not
held within time of the extension is refused, it shall make the company liable to penalty at
double the rate of extension fees provided above.
(5) No further extension beyond maximum period under sub-regulation (2) shall be granted.
In the event of default continuing after the final extension provided here in above, the
company shall be liable to an additional penalty at the rate of Tk.1, 000.00 per day for
every day of the default and to action of suspension or delisting as may be decided by the
Exchange. The Exchange may also notify the fact of such default and the name of the
defaulting company by notice and by publication of the same in the official quotation List
of the Exchange.
2. 3 Non-submission of audiovisual tape of AGM
To ensure effective functioning of AGM, the BSEC has issued a notification and an order.
According to the notification, no gift or benefit in cash or kind other than a cash and/or
stock dividend shall be paid to equity holders for attaining the AGM (SECB 2000b). The
BSEC has also instructed companies to submit an audiovisual recording of the AGM to the
Commission (condition (c) in SECB 2002a)
2.4 Retention of auditor exceeding 3 years; and
Non-compliance of law regarding audit fees
As per Company Act 1994, section 210(Appointment and remuneration of auditors)-

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(1) Every company shall at each annual general meeting appoint an auditor or auditors to
hold office from the conclusion of that meeting until the next annual general meeting and
shall within seven days of the appointment, give intimation thereof to every auditor so
appointed:
Provided that no person can be appointed auditor of any company unless his written
consent has been obtained prior to such appointment or re-appointment.
(2) Every auditor appointed under sub-section (1) shall, within thirty days of the receipt
from the company of the intimation of hi appointment, inform the Registrar in writing that
he has accepted, or refused to accept, the appointment.
(3) At any annual general meeting a retiring auditor, by whatsoever authority appointed,
shall be reappointed, unless-
(a) he is not qualified for re-appointment; or
(b) he has given the company notice in writings of his unwillingness to be re-
appointed; or
(c) a resolution has been passed at that meeting appointing somebody else instead of
him or providing expressly that he shall not be re-appointed:
Provided that for the purpose of passing a resolution under clause (c), a notice thereof shall
in accordance with section 211 be issued prior to the meeting, and such resolution cannot
be passed except on the ground of death, incapacity or dishonesty of disqualification of the
retiring auditor,
(4) if an appointment of an auditor is not made at an annual general meeting, the
Government may appoint a person to fill the vacancy.
(5) The company shall, within seven days of the Governments power under sub-section (4)
becoming exercisable, give notice of that fact to the Government; and, if a company fails to
give such notice, the company, and every officer of the company who is in default, shall be
punishable with fine, which may extent to one thousand, take.

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(6) The first auditor or auditors of a company shall be appointed by the Board of Directors
within one months of the date of Registration of the company, and the auditor or auditors so
appointed shall hold office until the conclusion of the first annual general meeting:
Provided that-
(a) the company may, at a general meeting remove any such auditor or all or any of
such auditors and appoint in his or their place any other persons or persons who
have been nominated for appointment by any member of the company, and or
whose nomination notice has been given to the members of the company not less
than fourteen days before the date of the meeting and
(b) if the Board of Directors fails to exercise its powers under this sub-section, the
company in a general meeting, may appoint the first auditor or auditors.
(7) The Board may fill any casual vacancy is the office of any auditor, but while any such
vacancy continues, the remaining auditor or auditors, if any, many act:
(8) Any auditor appointed in a causal vacancy shall hold office until the conclusion of the
next annual general meeting.
(9) Except as provided in the process pursuant to sub-section (7), any auditor appointed
under his section may be removed from office before the expiration of his term only by a
special resolution of the company in the general meeting.
(10) The remuneration of the auditors of a company-
(a) In the case of an auditor appointed by the Board or the Government, shall be
fixed by the Board or the Government respectively : and
(b) Subject to clause (a), shall be fixed by the company in the general meeting or in
such manner as the company in the general meeting may determine.
(11) for the purposes of sub-section (10), any sums paid by the company in respect of the
auditors expenses shall be deemed to be included in the expression "remuneration".

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As per Company Act 1994, section 211 (Provisions as to resolutions for appointing or
removing auditors):-
(1) Special notice shall be required for a resolution at an annual general meeting appointing
as auditor a person other than a retiring auditor, or providing expressly that a retiring
auditor shall not be re-appointed.
(2) On receipt of such notice the company shall forthwith send a copy thereof to the retiring
auditor,
(3) Where such notice is given and the retiring auditor makes with respect thereto
representation in writing to the company and requests their notification to members of the
company, the company shall, unless the representation are received by it too late for it to do
so-
(a) in any notice of the resolution given to members of the company, state the fact
of the representation having been made; and
(b) send a copy of the representation to every member of the company to whom
notice of the meeting is sent, whether before or after the receipt of the
representation by the company, and if a copy of the representation, is not sent as
aforesaid because they were received too late or because of the company default, the
auditor may, without prejudice to his right to be heard orally, require that the
representation shall be read out at the meeting.
Provided that copies of the representation need not be sent out and the representations need
not be read out at the meeting if, on the application either of the company or of any other
person who claims to be aggrieved, the court is satisfied that the rights conferred by this
sub-section are being abused to secure needless publicity for defamatory matter; and the
Court may order the company's costs on such an application to be paid whole or in part by
the auditor, notwithstanding that he is not a party to the application.

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(4) sub-section (2) and (3) shall apply to a resolution to remove the first auditors or any of
them under sub-section (6) of section 210 or to the removal or any auditor or auditors under
sub-section (8) of that section, as they apply in relation to are solution that a retiring auditor
shall not be re-appointed.
As per Company Act 1994, section 218-(Penalty for non-compliance with section 211
to 217)
If default is made by a company in complying with any of the provisions contained in
section 211(Provisions as to resolutions for appointing or removing auditors) to 217,
the company, and every officer of the company who is in default, shall be punishable with
fine with which may extend to one thousand taka.
2. 5 Non-Compliance of Laws regarding FS
As per rule 12 of Securities and Commission Rule, 1987(Submission of annual report
by issuers.-
(1) The annual report required by section 11 to be furnished by an issuer of a listed security
shall include a balance sheet, profit and loss account and cash flows statement, and notes to the
Accounts, collectively herein after referred to as the financial statements.
(2) The financial statements of an issuer of a listed security shall be prepared in accordance with
the requirements laid down in the Schedule and the International Accounting Standards as
adopted by the Institute of Chartered Accountants of Bangladesh. Explanation-In this sub-rule,
International Accounting Standard refers to the accounting standards issued by The
International Accounting Standards Committee.
(3) The financial statements of an issuer of a listed security shall be audited by a partnership
firm of chartered accountants within the meaning of Bangladesh Chartered Accountants
Order,1973 (P. O. 2 of 1973) consisting of not less than two partners in practice for a minimum
of seven years none of whom were associated in any way with the issuer during the auditing
period (which includes holding of securities by themselves or through spouse or any other

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relatives and their employees), in accordance with the International Standards on Auditing
applicable in Bangladesh and the report of the Auditors shall be in Form “B” annexed to
the Schedule. Provided that, notwithstanding anything contained in this sub-rule, such financial
statements may also be audited by an auditor appointed by the Commission, whenever such
audit is deemed by the Commission necessary in the public interest and the auditor so
appointed shall furnish his report to the Commission in such form and within such time as the
Commission may specify: Provided further that the fee for such audit and all other expenses in
relation thereto shall be borne by the issuer concerned.
(3A) The financial statements referred to in sub-rule (1) shall be audited within one hundred
and twenty days from the date on which the issuer‟s financial year ends and a copy of such
audited financial statements shall be submitted to the Commission and the Stock Exchange
within fourteen days thereof Provided that on the application filed by the issuer within the
aforesaid specified time the Commission may on good cause shown and only under extreme
circumstances extend the time for auditing the financial statements or submission of the
financial statements to the Commission, as the case may be, as it deems fit: Provided further
that if an issuer fails to get its financial statement, audited in the manner as specified in sub-rule
(3) and fails to submit the same to the Commission and the stock exchange within the said
specified time, or extended time, as the case may be, the Commission may appoint an auditor to
audit the accounts of the issuer at the issuer‟s cost.
2.6 Delayed/Non-submission/furnishing of yearly Financial Statements
As per Company Act 1994, section 181 (Books to be kept by company and penalty for
not keeping them)
(1) Every company shall keep proper books of account with respect to-
(a) all sums of money received and expended by the company and the matters in
respect of which the receipt and expenditure take place;
(b) All sales and purchases of goods by the company;

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(c) The assets and liabilities of the company; and
(d) In the case of a company engaged in production, distribution,
marketing, transportation, processing, manufacturing, milling extraction and mining
activities, such particulars relating to utilization of material, labor and other items of
overhead cost.
(2) For the purpose of sub-section (1), proper books of account shall not be deemed to be
kept with respect to the matters specified therein if there are not kept such books as are
necessary to give a true and fair view of the state of the affairs of the company and to
explain its transactions.
(3) The books of account shall be kept at the registered office of the company and shall at
all times be open to inspection by directors during business hours:
Provided that all or any of the books of account may, for a period not exceeding six
months, be kept at such other place in Bangladesh as the board of Directors may decide and
when the board of Directors so decides, the company shall within seven days of the
decision, file with the Registrar a notice in writing giving the full address of that other
place.
(4) where a company has a branch office, whether in or outside Bangladesh, the company
shall be deemed to have complied with the provisions of sub-section (1), if proper books of
account relating to the transactions effected at the branch office are kept at that office and
proper summarized returns, made up to date at intervals of not more than three months, are
sent by the branch office to the company at its registered office or the other place referred
to in sub-section (3).
(5) The books of account of every company relating to a period of not less than twelve
years immediately preceding the current year together with vouchers relevant to any entry
in such books of account shall be preserved in good order;
Provided that in the case of a company incorporated less than twelve years before the
current year, the books of account for the entire period preceding the current year together
with the vouchers relevant to any entry in such books of account shall be so preserved.

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(6) If any of the persons referred to in sub-section (7) fails to take all reasonable steps to
secure compliance by the company with the requirements of this section, or has, by his own
wilful act, been the cause of any default by the company there under, he shall, in respect of
each offence, be punishable with imprisonment for a term which may extend to six months
or with which may extend to five thousand taka or with both.
(7) The persons referred to in sub-section (6) are the following, namely:-
(a) where the company has a managing agent, managing director executive director,
general manager or manager, such managing agent, managing director, executive
director, general manager or manager and all officers but excluding the bankers,
auditors and legal advisers;
(b) where such managing agent is a firm, every partner in the firm;
(c) where such managing agent is a body corporate, every director of such body
corporate;
(d) where the company has neither a managing agent nor managing director nor
executive director nor general manager nor manager, every director of the company.
2.7 Delayed/Non-submission/furnishing of half yearly Financial
Statements
As per the rule 13 of the Securities and Exchange Rule, 1987 (Submission of periodical
report by issuer) -
Every issuer shall, within one month of close of the first half-year, transmit to the stock
exchange in which its securities are listed, to the security holders and to the Commission
half yearly financial statements which shall be prepared in the same manner and form as the
annual financial statements.]
13A. Forms prescribed for the purpose of preparing the financial statements and the audit
report may be adapted or amended, if deemed necessary, for compliance with the
International Accounting Standards (IAS) and International Standards on Auditing (ISA).

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2.8 Delayed/Non-submission/furnishing of first and third quarterly
Financial Statements
In September, 2009 BSEC provided a notification regarding submission and publication of
first quarterly report and Financial Statements. As per the notification-
In exercise of the power conferred by section 2CC of the Securities and Exchange
Ordinance, 1969 (XVII of 1969), the Securities and Exchange Commission hereby imposes
the following further conditions to the consent already accorded by it, or to be accorded by
it in future, to the issue of capital in Bangladesh, or to the public offer of securities for sale,
namely -
1. The board of directors of the issuer of a listed security shall hold the board meeting
involving price sensitive decision either after the trading hour or on a holiday;
2. The issuer Company excepting the life insurance company shall, within 45 (forty five)
days of end of the first quarter (Q1) and 30 (thirty) days of end of the third quarter (Q3) of
the financial year, submit quarterly financial statements (audited/un-audited) to the
Commission and the stock exchanges, and publish the same in at least two widely
circulated national dailies, one in Bangla and the other in English. In case of significant
deviation in any parameter between the quarterly periods the issuer Company will provide
reasons therefore: Provided that the life insurance company shall, within 90 (ninety) days of
end of Q1 and 30 (thirty) days of end of Q3 of the financial year, submit quarterly financial
statements (audited/un-audited) to the Commission and the stock exchanges, and publish
them in the same manner as above.

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2.9 Non-compliance of securities laws/rules
As per BSEC 1993, section 18
(1) If any person contravenes or attempts to contravene or abets the contravention of any
Provision of this Act, shall be punishable with rigorous imprisonment for a term not more
than- 5 years or with fine not less than Taka 500000 or with both.
(2) If any person, under the Act or rules or regulations-
(a) Fails to comply with any order or direction; or
(b) Fails to furnish necessary information; or
(c) Fails to provide required assistance to the persons conducting any inspection or enquiry
of the Commission may, after giving the person an opportunity of hearing either in person
or through authorized representative, issue warning in writing or impose penalty of an
amount not less than taka one hundred thousand; and in case of continuing default, a further
sum calculated at the rate of taka ten thousand may be imposed for every such day of
continuing default.
(2A) Notwithstanding anything contained in any other law, no appeal under section 21(1)
or review under section 21(5) can be made or no legal proceeding before any court can be
brought by challenging an order of penalty imposed by the Commission as per this act or
rules made there under unless an amount of 15% (fifteen percent) of such penalty is
deposited with the Commission.
(2B) Any sum directed to be paid under this Act shall be recoverable as an arrear of land
revenue.
(3) No case shall be filed, for the same offence, with any court against a person already
convicted under sub-section (2).

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2.10 Nonpayment of interest and principle of debenture
As per Company Act 1994, section 173(penalties)—
(1) If any company makes default in filing with the Registrar for registration the
particulars-
(a) Of any mortgage or charge created by the company, or
(b) Of the payment or satisfaction of a debt in respect of which a mortgage or
charge had been registered under section 159 or section 160, or
(c) Of the issue of debentures of a series; requiring registration with the Registrar
under the foregoing provision of this Act, then unless the registration had been
effected on the application of some other person, the company, and also every
officer of the company or other person who is knowingly a party to the default,
shall, on conviction be liable to a fine not exceeding one thousand taka for everyday
during which the default continues.
(2) Subject as aforesaid, if any company makes default in complying with any of the
requirements of this Act as to the registration with the Registrar of any mortgage or charge
created by the company, the company, and also every officer of the company, who is
knowingly and willfully a party to the default, shall, without prejudice to any other liability,
be liable on conviction to a fine not exceeding two thousand taka.
(3) If any person knowingly and willfully authorizes or permits the delivery of any
debenture or certificate of debenture-stock requiring registration with the Registrar under
the foregoing provisions of this Act the certificate of registration being endorsed upon it as
required by section 166, he shall, without prejudice to any other liability, be liable of
conviction to a fine not exceeding two thousand taka.

17
2. 11 Non Co-operation with the auditor
As per Company Act 1994, section- 213 (Power and duties of auditors)_:-
(1) Every auditor of a company shall have a right of access at all times to the books and
accounts and vouchers of the company, whether kept at the head office of the company or
elsewhere and shall be entitled to require from the officers of the company such
information and explanation as the auditor may think necessary for the performance of his
duties as auditor.
(2) Without prejudice to the provisions of sub-section (1), the auditor shall, in particular
inquire into following namely:-
(a) Whether loans and advances made by the company based on security have been
properly secured and whether the terms on which they have been made are not
prejudicial to the interests of the company or its members:
(b) Whether transactions of the company, which are represented merely as book-
entries, are prejudicial to the interests of the company;
(c) where the company is not an investment company or a banking company,
whether so much of the assets of the company as consist of shares, debentures and
other securities, have been sold at a price less than at which they were purchased by
the company;
(d) Whether loans and advances made by the company have been shown as
deposits;
(e) Whether personal expenses have been charged to revenue account;
(f) Where it is stated in the books and paper of the company that any shares have
been allotted for cash, whether cash has actually been received in respect of such
allotment, and if no cash has actually been so received, whether the position as

18
stated in the account books and the balance sheet is correct, regular and not
misleading.
(3) The auditor shall make a report to be presented in the annual general meeting of he
company on the accounts, examined by him, and on every balance sheet and profit and loss
account and on every other document declared by this Act to be part of or annexed to the
balance sheet or profit and loss accounts which are laid before the company in general
meeting during his tenure of office and the report shall state whether, in his opinion and to
the best of his information and according to the explanation given to him, the said accounts
give the information required by this Act in the manner so required and give a true and fair
view-
(a) in the case of the balance sheet, of the state of the company's affairs as at the end
of its financial year;
(b) in the case of the profit and loss account, of the profit or loss for its financial
year.
(4) The auditor‟s report shall also state-
(a) whether he has obtained all the information and explanation which to the best of
his knowledge and belief were necessary for the purposes of his audit;
(b) whether, in his opinion, proper books of account as required by law have been
kept by the company so far as appears from his examination of those books and
proper returns adequate for the purposes of his audit have been received from
branches not visited by him;
(c) Whether the company's balance sheet and profit and loss account dealt with by
the report are in agreement with the books of account and returns.
(5) There any of the matters referred to in clauses(a) and (b) of sub- section (3) or in clauses
(a), (b) and (c) of sub-section (4) are answered in the negative or with a qualification, the
auditor‟s report shall state the reason for the answer.

19
(6) The Government may, be general or special order, direct that in the case of such class or
description of companies as may be specified in the order, the auditor‟s report shall also
include a statement on such matters as may be specified therein.
(7) The accounts of a company shall not be deemed as not having been and the auditors
report shall not state that those accounts have not been, properly drawn up on the ground
merely that the company has not disclosed certain matters, of-
(a) those matters are such as the company is not required to disclose by virtue of any
provision contained in this Act or any other law for the time being in force; and
(b) those provisions are specified in the balance sheet and loss account of the
company.
2.12 Transfer of shares /holding outside stock exchange:
As per Company Act 1994, section- 38(Transfer of shares)-
(1) An application for the registration of the transfer of shares in a company may be made
either by the transferee or the transferred, provided where such application is made by the
transferor no registration shall in case of party paid shares be effected unless the company
gives motive of the application to the transferee and subject to the provisions of sub-section
(7) the company shall, unless objection is made by the transferee two weeks from the date
of receipt of the notice, enter in its register of members the name of the transferee in the
same manner and subject to the same conditions as if the application for registration was
made by the transferee.
(2) For the purpose of sub-section (1), notice to the transferee shall be deemed to have been
duly given if dispatched by prepaid post to the transferee at the address given in the
instrument of transfer and shall be deemed to have been delivered in the ordinary course of
post.

20
(3) It shall not be lawful for the company to register a transfer of share in or debentures of
the company unless the proper instrument of transfer duly stamped and executed by the
transferor and the transferee has been delivered to the company along with script:
Provided that, where it is proved to the satisfaction of the directors of the company that an
instrument of transfer signed by the transferor and transferee has been lost, the company
may, if the directors think fit, on an application in writing made by the transferee and
bearing the stamp required by an instrument of transferor register the transfer on such terms
as to indemnity as the directors may think fit.
(4) If a company refuses to register the transfer of any shares or debentures the company,
shall, within one month from the date on which the instrument of transfer was lodged with
the company, send to the transferee and the transferor notice of the refusal.
(5) If default is made in complying with sub-section (4) of this section, the company shall
be liable to a fine not exceeding one hundred taka for everyday during which the default
continues and every director, manager secretary other officer who is knowing by a party to
the default shall, be liable to a like penalty.
(6) Nothing in sub-section (3) shall prejudice any power of the company to register as
shareholder or debenture holder any person to whom the right to any shares in or
debentures of the company has been transmitted by operation of law.
(7) Nothing in this section shall prejudice any power of the company under its articles to
refuse to register the transfer of any shares.
As per Company Act 1994, section- 40 (Transfer by legal representative) -
A transfer of the share or other interest of a decease member of a company made by his
legal representative shall, although the legal representative is not himself a member, be as
valid, as if he had been a member at the time of the execution of the instrument of transfer

21
2.13 Non-compliance with the Depositories Act
As per Depositories act 1999 section 15 -
(1) If a person contravenes or attempts to contravene or abets the contravention of
any provision of this Act, he shall be punishable with imprisonment for a term not
exceeding five years, or with fine or with both.
(2) Where any person guilty of an offence mentioned in sub-section (1) is a company or any
other body corporate each of its directors, managers or any other officer responsible for
administration of its business shall be deemed to be guilty of the said offence, unless he
proves that the offence was committed without his knowledge, or that he exercised due
diligence to prevent the commission of the offence.
2. 14 Non-utilization of IPO fund
As per The Securities and Exchange Commission (Public Issue) Rules, 2006,
section 8 (B-4) (Use of Proceeds) -
(a) The prospectus shall show how the net proceeds of the offering shall be used, indicating
the amount to be used for each purpose.
(b) The prospectus shall also include a schedule mentioning the stages of implementation
and utilization of funds received through initial public offering, mentioning about the
approximate date of completion of the project and the projected date of full commercial
operation. The schedule shall be signed by the chief executive officer and the chief
financial officer of the issuer.
(c) If there are contracts covering any of the activities of the issuer company for which the
proceeds of sale of securities are to be used, such as contracts for the purchase of land or
contracts for the construction of buildings, the prospectus shall disclose the terms of such
contracts, and copies of the contracts shall be filed with the Commission as annexure to the
prospectus.

22
2.15 Violation/Non compliance of SECs ordinance/rules/Notification
As per The Securities and Exchange Ordinance, 1969 section 22 -
(1) If any person-
(a) refuses or fails to furnish any document, paper or information which he is required to
furnish by or under this Ordinance; or
(b) refuses or fails to comply with any order or direction of the Commission made or issued
under this Ordinance; or
(c) contravenes or otherwise fails to comply with the provisions of this Ordinance;
the Commission may, if it is satisfied after giving the person an opportunity of being heard
that the refusal, failure or contravention was willful, by order direct that such person shall
pay to the Commission by way of penalty such sum 37
[ not less than one lakh taka] as may
be specified in the order and, in the case of a continuing default, a further sum calculated at
the rate of 38
[ ten thousand Taka] for every day after the issue of such order during which
the refusal, failure or contravention continues.
(2) Any sum directed to be paid under sub-section (1) shall be recoverable as an arrear of
land revenue.
(3) No prosecution for an offence against this Ordinance shall be instituted in respect of the
same facts on which a penalty has been imposed under this section.
Restriction in respect of filing of suit
22A. notwithstanding anything contained in any other law for the time being in force, no
legal proceeding before any Court can be brought challenging an order of penalty imposed
by the Commission unless an amount of 15% (fifteen percent) of such penalty is deposited
in the Commission.

23
2.16 Not submitting report of intention to buy shares
As per The Securities and Exchange Ordinance, 1969 section, 17-
No person shall, for the purpose of inducing, dissuading, effecting, preventing or in any
manner influencing or turning to his advantage, the sale or purchase of any security,
directly or indirectly –
(a) Employee any device, scheme or artifice, or engage in any act, practice or course of
business, which operates or is intended or calculated to operate as a fraud or deceit upon
any person; or
(b) make any suggestion or statement as a fact of that which he does not believe to be true;
or
(c) omit to state or actively conceal a fact having knowledge or belief of such fact; or
(d) induce any person by deceiving him to do or omit to do anything which he would not
do or omit if he were not so deceived; or
(e) do any act or practice or engage in a course of business, or omit to do any act which
operates or would operate as a fraud, deceit or manipulation upon any person, in particular-
(I) make any fictitious quotation;
(ii) create a false and misleading appearance of active trading in any security;
(iii) effect any transaction in such security which involves no change in its beneficial
ownership;
(iv) enter into an order or orders for the purchase and sale of security which will ultimately
cancel out each other and will not result in any change in the beneficial ownership of such
security;
(v) directly or indirectly effect a series of transactions in any security creating the
appearance of active trading therein or of raising of price for the purpose of inducing its
purchase by others or depressing its price for the purpose of inducing its sale by others;
(vi) directly or indirectly effect a series of transactions in any security creating the
appearance of active trading therein or of raising of price for the purpose of inducing its
purchase by others or depressing its price for the purpose of inducing its sale by others;
(vii) being a director or an officer of the issuer of a listed equity security or a beneficial
owner of not less than ten per cent of such security who is in possession of material facts
omit to disclose any such facts while buying or selling such security.

24
As per The Securities and Exchange Ordinance, 1969 section 24 -
(1) Whoever contravenes the provisions of section 17 shall be punishable with
imprisonment for a term which may extend to 40
[ five years, or with fine 41
[ which shall not
be less than five lakh taka],] or with both.
(2) Where the person guilty of an offence referred to in sub-section (1) is a company or
other body corporate, every director, manager or other officer responsible for the conduct
of
2. 17 Non-submission of capital & shareholding position
As per Company Act 1994, section 71(Rights of holders of special classes of shares) -
(1) If in the case of a company, the share capital of which is divided into different classes of
shares, provision is made by the memorandum or articles authorizing the variation of the
rights attached to any class of shares in the company, subject to the consent of any specified
proportion of the holders of the issued shares of that class or the sanction of are solution
passed at a separate meeting of the holders of those shares, and in pursuance of the said
provision the rights attached to any class of shares are at any time varied, the holders of the
less in the aggregate than ten per cent of the issued shares of that class, being persons who
did not consent to or vote in favor of the resolution for the variation, may apply to the Court
to have the variation cancelled, and where any such application is made, the variation shall
not have effect unless and until it is confirmed by the Court.
(2) An application under sub-section (1) must be made within fourteen days after the date
on which the consent was given or the resolution was passed, as the case may be, under that
sub-section and may be made on behalf of the shareholders entitled to make the application
by such one or more of their numbers as they may appoint in writing for the purpose.
(3) On any such application, the Court, after hearing the applicant and any other persons
who apply to the Court to be heard and appear to the Court to be interested in the
application, may if it is satisfied having regard to all the circumstances of the case that the

25
variation would unfairly prejudice the shareholders of the class represented by the
applicant, disallow the variation and shall, if not so satisfied, confirm the variation.
(4) The decision of the Court on any such application shall be final.
(5) The company shall, within fifteen days after the service on the company of any order
made on any such application, forward a copy of the order to the Registrar, and if default is
made in complying with this provision, the company shall be liable to a fine not exceeding
two hundred taka and every officer of the company who is knowingly and willfully in
default shall be liable to a like penalty.
(6) The expression "variation" in this section includes "abrogation" and the expression
"varied" shall be construed accordingly.
2.18 Non-compliance of laws regarding Partnership Agreement -
As per The Partnership act section-26
Where, by the wrongful act or omission of a partner acting in the ordinary course of the
business of a firm, or with the authority of his partners, loss or injury is caused to any third
party, or any penalty is incurred, the firm is liable therefore to the same extent as the
partner
In addition , as per section 70.
Any person who signs any statement, amending statement, notice or intimation under this
Chapter containing any particular which he knows to be false or does not believe to be true,
or containing particulars which he knows to be incomplete or does not believe to be
complete, shall be punishable with imprisonment which may extend to three months, or
with fine, or with both.
2.19 Non-compliance of laws regarding Corporate Governance Guidelines
As per corporate Governance Code, 2006 -

26
Provided, however, that these conditions are imposed on „comply or explain‟ basis. The
companies listed with any stock exchange in Bangladesh should comply with these
conditions or shall explain the reasons for non-compliance in accordance with the 5
condition. Those conditions are-
1.0 BOARD OF DIRECTORS
1.1. Board‟s Size
1.2. Independent Directors
1.3. Chairman of the Board and Chief Executive
1.4. The Directors‟ Report to Shareholders
2.0 CHIEF FINANCIAL OFFICER (CFO), HEAD OF INTERNAL AUDIT AND
COMPANY SECRETARY
2.1. Appointment
2.2. Requirement to Attend Board Meetings
3.0 AUDIT COMMITTEE:
3.1. Constitution of Audit Committee
3.2. Chairman of the Audit Committee
3.3. Reporting of the Audit Committee
3.3.1. Reporting to the Board of Directors
3.3.2. Reporting to the Authorities
3.4. Reporting to the Shareholders and General Investors
4.0. EXTERNAL/STATUTORY AUDITORS
5.0 REPORTING THE COMPLIANCE IN THE DIRECTOR‟S REPORT
2.20 Non/delayed payment/Non-compliance of laws regarding dividend
In 1 June 2009 BSEC, provided a notification regarding the timely payment of dividend.
As per the notification-
In exercise of the power conferred by section 2CC of the Securities and Exchange
Ordinance, 1969 (XVII of 1969), the Securities and Exchange Commission hereby imposes
the following further conditions to the consent already accorded by it or to be accorded by

27
it in future, to the issue of capital in Bangladesh, or to the public offer of securities for sale,
namely : -
1. The Board of Directors of the issuer company of a listed security, while
considering/adopting any audited financial statements shall, in the same Board Meeting,
declare the Net Asset Value (NAV), Earning Per Share (EPS) and Net Operating Cash
Flow Per Share (NOCFPS) and also fix the date of the relevant annual general meeting and
take specific decisions with regard to -
(a) Recommending or not recommending dividend for the shareholders on the basis of said
financial statements; and
(b) the shareholders who shall be entitled to such dividend, if recommended.
2. The decision about recommending or not recommending dividend and entitlement for
such dividend, if recommended, cannot be changed prior to holding of the annual general
meeting in terms of condition at 1 above.
3. The issuer shall, within 30(thirty) days of declaration or approval, as the case may be,
Continued.
(a) transfer the cash dividend to the bank of the shareholder for depositing into the later‟s
account, as provided in the beneficial owner‟s (BO) account set up in case of
dematerialized share or as provided by the shareholder in case of paper share; (b) transfer
the stock dividend into the beneficial owner‟s (BO) account of the shareholder in case of
dematerialized share or issue and deliver the dividend warrant to the shareholder in case of
paper share. The condition shall be effective from October 01, 2009.
4. The issuer shall submit a compliance report to the Commission in the format prescribed
by the Commission in respect of Condition 3 above within 7 (seven) working days
thereof.
These super cede the earlier Notification No. SEC/CMRRCD/2001-14/24/Admin/03-03,
dated November 26, 2001, published in the Bangladesh Gazette on December 10, 2001
while SRO 385-Law/91 dated December 15, 1991 issued by the erstwhile Controller of

28
Capital Issues shall be deemed to have been superseded immediately upon becoming the
Condition 3 effective.
As per the Company act, 1994 section52 (Power of company to arrange for different
amounts being paid on shares) -
A company, if so authorized by its articles may do any one or more of the following things,
namely--
(i) make arrangements on the issue of shares for a difference between he shareholders in the
amounts and times of payment of calls on their shares;
(ii) accept from any member who assents thereto the whole or a part of the amount
remaining unpaid on any shares held by him although no part of that amount has been
called up;
(iii) Pay dividend in proportion to the amount paid-up on each share where a larger amount
is paid-up on some shares than on others.
As per The Company act, 1994 section 154 (Issue of redeemable preference shares.) -
(1) Subject to the provisions of this section, a company limited by shares may, if so
authorized by its articles, issue preference shares which are, or at the option of the company
are to be or liable to be redeemed :
Provided that -
(a) no such shares shall be redeemed except out of profits of the company which
should otherwise be available for dividend or out or the proceeds of a fresh issue of
shares made for the purposes of the redemption or out of sale proceeds of any
property of the company.
(b) No such shares shall be redeemed unless they are fully paid;
(c) Where any such shares are redeemed otherwise than out of the proceeds of a
fresh issue, there shall, out of profits which would otherwise have been available

29
for dividend, be transferred to a reserve fund, to be called "the capital redemption
reserve fund" a sum equal to the amount applied in redeeming the shares, and the
provisions of this relating to the reduction of the shares capital of a company shall,
except as provided in this section, apply if the capital redemption reserve fund were
paid up share capital of the company;
(d) where any such share are redeemed out of the proceeds of a fresh issue, the
premium, if payable on redemption, must be provided for out of the profits of the
company before the shares are redeemed.
(2) In every balance-sheet of a company which has issued redeemable preference shares the
following shall be included, namely : ---
(a) a statement specifying what part of the issued capital of the company consists of
such shares; and
(b) the date on or before which those shares are, or are to be, liable to be, redeemed
or where no definite date is fixed for redemption, the period of notice to be given
for redemption.
(3) Subject to the provisions of this section, the redemption of preference shares may be
affected on such terms and in such terms and in such manner as may be provided by the
articles of the company.
(4) Where in pursuance of this section a company has redeemed or is about to redeem any
preference shares, it shall have power to issue shares up to the nominal amount of the
shares redeemed or to be redeemed, as if those had never been issued, and accordingly the
share capital of the company shall not, for the purpose of calculating the fees payable
under section 384, be deemed to be increased by the issue, of shares in pursuance of this
sub-section :
Provided that, where new shares are issued before the redemption of the old shares, the
new shares shall not, so far as they relate to stamp duty, be deemed to have been issued in
pursuance of this sub-section, unless the old shares are redeemed within one month after
the issue of the new shares.

30
(5) Notwithstanding anything in the other provisions of this section, where redeemable
preference shares deemed, under sub-section (4), to have never been issued are, or are to
be, redeemed for the purpose of allotting them as fully paid up bonus shares to the members
of the company, the redemption reserve fund may be applied by the company up to the
nominal value of the new shares referred to in sub-section (1) (c) for such redemption.
(6) If a company defaults in complying with any of the provisions of this section, the
company and also every officer of the company who is in default shall be liable to a fine
not exceeding two thousand taka.
2.21Non disseminating price sensitive informationThe BSEC also requires
listed companies to make immediate full disclosure of all price information by ensuring
simultaneous publication of such disclosure in two widely circulated national dailies, one in
Bangla and one in English (SECB 2000b)

31
3. 1 About BSEC
The Bangladesh Securities and Exchange Commission (BSEC) was established on 8th
June, 1993 as the regulator of the country‟s capital market through enactment of the
Securities and Exchange Commission Act 1993. Through an amendment of the Securities
and Exchange Commission Act, 1993, on December 10, 2012, its name has been changed
as Bangladesh Securities and Exchange Commission from previous Securities and
Exchange Commission. The Commission consists of a Chairman and four Commissioners
who are appointed for fulltime by the government for a period of four years and their
appointment can be renewed only for further one term, but the condition is that age cannot
exceed 65 in position during the tenure. The Chairman acts as the Chief Executive Officer
(CEO) of the Commission. The Commission has overall responsibility to
formulate securities legislation and to administer as well. The Commission is a statutory
body and attached to the Ministry of Finance.
3.2 Enforcement Department
Under the Securities laws, the Enforcement Department takes legal measures including imposition
of penalty against those who breach/violate securities laws in consideration of nature of crimes they
commit. Prior to taking measures, it follows due process that includes giving the accused an
opportunity of being heard. All departments of the Commission send referral to Enforcement
Department if they see any violation of securities laws. Executive Director heads the department.
3.3 Function of Enforcement Department:
The major functions of enforcement department are the following-
 Sending Directives to the companies and members in time to time when required
 Warned the companies for non compliance of any laws or rules or ordinance or
notice or provision
 Imposing penalty of various amount or other types of penalty like- cancelling
licenses, obligation on trading of shares etc.
CHAPTER 3 ABOUT BSEC & ITS ENFORCEMENT ACTION

32
 With the right of acceptation and rejection review the application of appeal by the
company on which penalty has been imposed.
 File certificate cases against the complaints company if failed to submit the penalty
 Dispose of all the enforcement action following the laws and regulations.
3.4 Structure of the Enforcement Department
 One Executive Director
 Tow Director
 Four Deputy Director
3.5 Enforcement Procedure:
The success of any reform depends on the effectiveness of the monitoring and enforcement
mechanisms. Enriques and Volpin (2007) argued that public enforcement like fine and
prison terms may be an effective tool in preventing specific forms of exprotion, such as
insider trading.
If the BSEC finds any irregularities, it sends a show-cause cum hearing notice to the
companies and asked to show the reason for the irregularities. If the commission is satisfied
with the reason, it dismisses the matter. On the other hand, if the commission is not
satisfied with the reason BSEC impose penalty on the companies of different amounts,
which varies by the nature and types of irregularities. Sometimes additional penalty is
imposed if the complaints failed to submit the penalty on due time. Here the charged
company has the right to appeal to the Chairman to waive the penalty. If the appeal is
rejected the charged company is obliged to submit the imposed penalty. Later if the charged
company failed to submit the penalty with additional penalty, BSEC files a certificate case
against the charged company. The whole procedure is shown in the flow chart in the next
page –

33
Figure: enforcement procedure of Enforcement department of BSEC.
Directive
Show cause cum hearing notice
No ActionFineWarning
Review/Appeal
Waiver Certificate case

34
4.1 Enforcement Action Checklist
After analyzing enforcement actions of BSEC from October 2002 to December 2013, the
result of my research is presented in this “Enforcement Action Checklist chapter”.
Different types of irregularities were found for which enforcement actions were taken.
There is no particular trend of the irregularities or no correlation is found among the
frequency of irregularities and the enforcement action. In this report, I have classified those
irregularities in 19 major types. Among those irregularities, non submission/delayed/non
furnishing of the yearly Financial Statements, non submission/delayed/non furnishing of
the half yearly Financial Statements, non-compliance of securities laws and rules and
regulations, non compliance of laws regarding Financial Statements happened for the
maximum time. Year to year comparison of those irregularities are presented below-
CHAPTER 4:ENFORCEMENT ACTION CHECKLIST

35
Types of Irregularities 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
Non holding of AGM 1 4 24 2 1 1 33
Non submission of audio visual
tape of AGM
1 30 3 1 35
Non furnishing of info of AGM 1 1 1 3
Nonpayment of Interest and
principle of debenture
2 2
Non/Delayed payment/Non
compliance of laws regarding
dividend
4 4 5 3 5 9 30
Non compliance of securities
laws/rules
9 14 3 1 4 17 3 2 3 56
Non compliance of laws
regarding FS
4 7 14 13 10 3 2 53
Non cooperation with auditor 1 1
Retention of auditor Exceeding 3
years
4 1 9 3 1 2 3 23

36
Delayed/Non-
submission/furnishing of yearly
FS
1 1 10 13 23 11 7 9 5 5 85
Delayed/Non-
submission/furnishing of
quarterly FS
4 5 10 19
Delayed/ Non-
submission/furnishing of half
yearly FS
1 3 18 11 10 3 11 2 1 60
Appointing Co’s auditor as
valuer & advisor
1 1
Not submitting report of
intention to buy shares
3 3
Nondisclosure/ disseminating of
price sensitive info
2 3 3 3 3 14
Transfer of shares /holding
outside stock exchange
2 2

37
Non submission of capital &
shareholding position
23 10 2 1 36
Non-compliance with the
Depositories Act
1 1 2
Unusual trading of shares 1 1 2 1 5
Non-compliance of law regarding
audit fees
1 1
non submission of sale
confirmation report/information
1 2 3
Re-Scheduling of payment of
principal and interest
3 1 4
Violation/Non compliance of
SECs
ordinance/rules/Notification
1 1 1 1 1 5
Non-Compliance of laws
regarding raising capital
3 3
Non-Compliance of laws
regarding CG Guidelines
2 2

38
Non-compliance of law regarding
audit report
1 1
Non-compliance of laws
regarding Partnership
Agreement
1 1
Non-Utilization of IPO fund 1 1
Delayed submission of annual
report
1 1

39
4. 1.1 Non-Financial Company
By analyzing the data from October 2002 to December 2013, I have classified Penalties and
Warnings as well as the maximum penalty imposed by the BSEC on Non-financial
Institutions. The summary of the analysis is presented below -
TABLE: 4 (a) Chart showing the number of Non Financial Companies against which
penalty and warning were imposed.
YEAR PENALTY WARNING MAXIMUM PENALTY
(taka)
2002 9 4 4000000
2003 4 13 150000000
2004 4 8 100000
2005 1 50 500000
2006 2 129 200000
2007 0 75 0
2008 1 41 2500000
2009 4 29 200000
2010 24 34 59743000
2011 3 15 1500000
2012 3 15 14500000
2013 2 19 2700000

40
From the graph, we see that maximum penalty was imposed in the year 2010 and maximum
warning was provided in 2006 on the Non-financial Institutions.
4.1.2 Issuer Company
In addition, also by analyzing the Annual Report from 2002 to 2013 I have found Penalties
and Warnings as well as the maximum penalty imposed by the BSEC on the issuer
companies. The summary is presented below -
TABLE: 4 (b) Chart showing the number of Non Financial Companies against which
penalty and warning were imposed
YEAR PENALTY WARNING DIRECTIVES
2002 12 10 11
2003 24 11 19
2004 8 25 6
2005 14 0 0
2006 27 0 17
4
13
8
50
129
75
41
29
34
15 15
19
0
20
40
60
80
100
120
140
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Penalty
Warning

41
YEAR PENALTY WARNING DIRECTIVES
2007 32 117 1
2008 42 68 1
2009 52 62 9
2010 85 61 0
2011 45 33 0
2012 60 51 0
2013 20 18 0
Form the above graph it is observed that maximum penalty was imposed in 2010 and
maximum warning was provide in 2007. In addition, the provision on of directives has no
certain trend or flow.
10 11
25
0
117
68
62 61
33
51
18
0
20
40
60
80
100
120
140
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Penalty
Warning
directives

42
4.2 TABLE (frequency of how many times the companies came under
enforcement action)
Frequency Name of the company Total
number of
company
13 1) Mona Food Industries Ltd. 1
10 1) Meghna Shrimp Culture Ltd 1
9 1) Perfume Chemical Inds ltd
2) Dynamic Textile Inds Lts
3) Rose Heaven Ball Pen Ltd
4) Bengal Fine Ceramics Ltd
4
8 1) Sonali Paper & Board Mills
Ltd
2) Sreepur Textile Mills Ltd
3) Quasem Textile Mills Ltd
4) Eagle Star Textile Mills Ltd
5) Amam Sea Food Ltd
5
7 1) Meghna Pet Industries Ltd
2) Pharmaco Intl Ltd
2

43
number of
company
6 1) Meghna Condensed Milk
Ltd
2) Arbee Textiles Ltd
3) Ashraf Textile Mills Ltd
4) Bangladesh Luggage
Industries
5) BD Dyeing & Finishing
Inds Ltd
6) Excelsior Shoes Ltd
7) Bangladesh Shipping Corp
8) Fine Foods Ltd
9) Tulip Dairy & Food Prdcts
10) Miracle Industries Ltd
10
5
1) Tamijuddin Textile
Mills Ltd.
2) Beach Hatchery Ltd
3) Maq Paper Industries ltd
4) BD Electricity Meter
Co. Ltd
5) Quasem Silk Mills
6) BD Welding Electrodes
Ltd
7) Chic Tex Ltd
8) BD Chemical Inds Ltd
9) Bangladesh Hotels Ltd
10) Padma Printers &
Colour Ltd
10

44
number of
company
4 1) Meghna Petrolium Ltd
2) Saleh Carpet Mills Ltd.
3) Anlima Yarn Dyeing Ltd
4) Mita Textiles Ltd
5) Chittagong Vegt Oil Inds
6) Bangladesh Thai Alumn Ltd
7) Al-Amin Chemical Ind Ltd
8) Himadri Ltd
9) Sonali Aansh Inds Ltd
10) Stylecraft Ltd
11) Modern Cement Ltd
12) Jago Corporation Ltd
13) Alhaj Textile Mills Ltd
14) BD Leaf Tobacco Co Ltd
15) Lexco Ltd
16) Legacy Footwear Ltd
17) Eastern Cables Ltd
18) Bionic Sea Food Exports Ltd
18

45
number of
company
3 1) M. Hossain Garments Washing
& Dyeing
2) Niloy Cement Industries Ltd
3) Gachihata Acquaculture Farms
Ltd
4) Usmania Glass sheet Factory
Ltd
5) Bangas Limited
6) Tallu Spinning Mills Ltd
7) Mithun Knitting & Dyeing Ltd
8) Bangladesh services ltd
9) Bangladesh Zipper Inds Ltd
10) Bangla Process Inds Ltd
11) Sajib Knitwear & Garments Ind
12) Rangamati Food Products
13) National Tea Co Ltd
14) Azadi Printers Ltd
15) Daffodil Computers Ltd
16) The Engineers ltd
17) Golden Son Limited
18) CMC-Kamal Textile Mills Ltd
19) Metalex Corporation Ltd
20) Alpha Tobacco Mfg Ltd
21) Grameenphone Ltd
22) Alltex Industries Limited
23) Anwar Ganvalizing LTD
23

46
number of
company
2 1) Meghna Cement Mills Ltd
2) Padma Cement Ltd.
3) German Bangla J. V. Food Ltd.
4) Raspit Data Mgt & Telc Ltd
5) Rupan Oil & Feeds Ltd
6) Renata Limited
7) Wata Chemicals Ltd
8) Quasem Drycells ltd
9) Raspit Inc(BD) Ltd
10) Khaza Mosaic Tiles & Stone
Inds
11) Modern Industries Ltd
12) Eastern Housing Ltd
13) Yusuf Flour Mills Ltd
14) Atlas Bangladesh Ltd
15) Bd.Com Online Ltd
16) Ambee Pharmaceuticals Ltd
17) GMG Ind. Corp Ltd
18) Phoenix Leather Complex
19) SES Company Ltd
20) Pharma Aids Ltd
21) Hakkani Pulp & Paper Mills
22) Eastern Lubricants Blenders
23) Padma Oil Company Ltd
24) BD Monospool Paper Mfg Co
25) Paper Processing & Packaging
Ltd
26) Power Grid Company of Bd Ltd
27) Jamuna Oil Co Ltd
28) Kaya Cosmetics ltd
29) Orion pharma ltd
29

47
number of
company
1 1) Meghna Vegetable Oil Inds
2) Chittagong Cement Clinker
Grinding Co
3) Highspeed Shipbuilding &
Heavy Eng co
4) Apex Tannery Limited.
5) Paragon Leather & Footwear
Inds
6) Karim Pipe Mills Ltd
7) A. B. Biscuit Company Ltd
8) Dhaka Vegetable Oil Inds ltd
9) Texpic Industries Ltd
10) ZEM Knitwear Fabrics Co
11) Eastern Lubricants Blenders
12) Bangladesh Autocars Ltd
13) Tripti Industries Ltd
14) Apex Weaving and Finishing
Mills
15) Delta Spinners Ltd
16) J.K. Fabrics Ltd
17) Rangpur Foundry Ltd
18) Gemini Sea Food Ltd
19) Gulf Foods Ltd
20) Therapeutics BD Ltd
21) Standard Ceramic Indus Ltd
22) Northern Jute Mfg Co Ltd
23) Dulamia Cotton Mills Ltd
24) Aftab Automobiles Ltd
25) Confidence Cement Ltd
26) Imam Button Ind Ltd
27) Rahman Chemicals td
28) Nor-Pearl Knitwear Ltd
29) Popular Phar. Ltd
30) Aziz Pipes Ltd
31) Fu-Wang Ceramic Industries
32) Monno Jute Stafllers Ltd
33) Libra Infusions Ltd
34) Jute Spinners Limited
35) Petro Synthetic Products Ltd
36) JMI Bangla Co Limited
37) Information Services Network
Ltd
1. Shampur Sugar Mills Ltd
2. H.R Textile Mills Ltd
3. Modern Dyeing and Screen
Printing Ltd
62

48
4.1.3 Present listing Status of the charged companies
From the table it is observed that Mona Food Industries Ltd has come under the enforcement
action for 13 times, which is the highest number. In addition, Meghna Shrimp Culture Ltd has come
under enforcement action for 10 times, which is the second highest number.
TABLE
Listing Status Number of
companies
a) Delisted 72
b) Still listed 93
c) Total number of NFC came under enforcement
action (a + b)
165
93
72
Listing Status
Listed
Delisted

49
As per the World Bank Country Report (2002), 99: “… the gap between international
standards is not as serious [in Bangladesh] as the gap between national standards and
national practices. Laws and regulations exist, but are not enforced. At present, there are
few visible sanctions for wrongdoing. As laws and regulations have not been enforced they
have fallen into disuse and often been forgotten”.
All the listed companies of Bangladesh are bound to follow the rules and regulations of
BSEC and other related laws and the directives and notification as directed by BSEC. If any
kind of irregularities or default is found the enforcement department of BSEC, take legal
action as per the various laws (presented in the chapter of this report). In addition, from the
research it is found that from October 2002 to December 2013 against 165 companies
enforcement department of BSEC take legal action and among them 71 companies were
delisted. Therefore, from this report we found a correlation that which companies comes
under the enforcement action most of the times have a possibility to be delisted. For
increasing the situation of present enforcement system of BSEC Bangladesh Government
should present to parliament a‟ Financial Reporting Act‟ including provision for an
independent oversights body named “ Financial Reporting Council” (FRC). In addition, the
council is expected to monitor how the auditors are conducting their professional duties at
the corporate bodies.
CHAPTER 5 CONCLUSION

50
Appendix 1 (List of delisted company)
Number Company ID Name of the company
1 17435 M. Hossain Garments Washing & Dyeing
2 17418 Arbee Textiles Ltd
3 16363 Saleh Carpet Mills Ltd.
4 99616 Highspeed Shipbuilding & Heavy Eng co
5 21630 Niloy Cement Industries Ltd
6 17419 Tamijuddin Textile Mills Ltd.
7 21642 Padma Cement Ltd.
8 14289 German Bangla J. V. Food Ltd.
9 14284 Gachihata Acquaculture Farms Ltd
10 22638 Raspit Data Mgt & Telc Ltd
11 17402 Ashraf Textile Mills Ltd
12 99625 Bangladesh Luggage Industries
13 17426 BD Dyeing & Finishing Inds Ltd
14 14267 Rupan Oil & Feeds Ltd
15 14283 Mona Food Industries Ltd.
16 23629 Paragon Leather & Footwear Inds
17 19503 Sonali Paper & Board Mills Ltd.
18 13207 Karim Pipe Mills Ltd
19 14251 A. B. Biscuit Company Ltd
20 17475 Perfume Chemical Inds ltd
21 19508 Maq Paper Industries ltd
22 14265 Dhaka Vegetable Oil Inds ltd
23 17438 Sreepur Textile Mills Ltd
24 99617 Texpic Industries Ltd
25 17423 Dynamic Textile Inds Lts
26 18467 Wata Chemicals Ltd
27 17406 Quasem Textile Mills Ltd
28 17411 Quasem Silk Mills
29 17425 Mita Textiles Ltd

51
30 99631 Rose Heaven Ball Pen Ltd
31 14276 Raspit Inc(BD) Ltd
32 18458 Pharmaco Intl Ltd
33 23627 Excelsior Shoes Ltd
34 17443 ZEM Knitwear Fabrics Co
35 17437 Chic Tex Ltd
36 17414 Eagle Star Textile Mills Ltd
37 20551 Bangladesh Hotels Ltd
38 14610 Modern Industries Ltd
39 17432 Bangladesh Zipper Inds Ltd
40 14268 Tulip Dairy & Food Prdcts
41 99615 Himadri Ltd
42 18452 Bangla Process Inds Ltd
43 14256 Tripti Industries Ltd
44 17436 Sajib Knitwear & Garments Ind
45 14282 Gulf Foods Ltd
46 10501 Padma Printers & Colour Ltd
47 19507 Azadi Printers Ltd
48 14253 Amam Sea Food Ltd
49 14258 BD Leaf Tobacco Co Ltd
50 24624 Bengal Fine Ceramics Ltd
51 23623 Lexco Ltd
52 99609 The Engineers ltd
53 17405 GMG Ind. Corp Ltd
54 23606 Phoenix Leather Complex
55 19505 BD Monospool Paper Mfg Co
56 18456 Petro Synthetic Products Ltd
57 19506 Paper Processing & Packaging Ltd
58 14285 Bionic Sea Food Exports Ltd
59 13216 Metalex Corporation Ltd

52
60 14252 Alpha Tobacco Mfg Ltd
61 17429 Dandy Dying Ltd
62 18465 Rahman Chemicals Ltd
63 14610 Modern Industries ltd
64 14274 Bengal Biscuits Ltd
65 14264 Yusuf Flour Mills ltd
66 17433 Beximco Denims Ltd
67 17420 Beximco Textile Mills Ltd
68 18478 Al-Amin Chemical Inds Ltd
69 17428 Apex Weaving and Finishing Mills
70 18456 Perto Synthetic Products
71 14610 Modern Industries Ltd
72 18461 Therapeutics BD Ltd

53
Appendix 2 (List of listed company)
1 14275 Meghna Shrimp Culture Ltd
2 Chittagong Cement Clinker Grinding Co
3 23601 Apex Tannery Limited.
4 99608 Usmania Glass sheet Factory Ltd
5 14291 Beach Hatchery Ltd
6 17441 Anlima Yarn Dyeing Ltd
7 14257 Bangas Limited
8 17417 Tallu Spinning Mills Ltd
9 17424 Mithun Knitting & Dyeing Ltd
10 20552 Bangladesh services ltd
11 20552 Meghna Vegetable Oil Inds
12 BD Electricity Meter Co. Ltd
13 14290 Meghna Condensed Milk Ltd
14 14287 Meghna Pet Industries Ltd
15 17457 Renata Limited
16 13214 Quasem Drycells ltd
17 15305 BD Welding Electrodes Ltd
18 14269 Chittagong Vegt Oil Inds
19 Bangladesh Shipping Corp
20 14292 Fine Foods Ltd
21 BD Chemical Inds Ltd
22 Khaza Mosaic Tiles & Stone Inds
23 13219 Bangladesh Thai Alumn Ltd
24 15303 Eastern Lubricants Blenders
25 13213 Bangladesh Autocars Ltd
26 20620 Eastern Housing Ltd
27 16360 Sonali Aansh Inds Ltd

54
28 17427 Delta Spinners Ltd
29 17408 Stylecraft Ltd
30 J.K. Fabrics Ltd
31 21640 Modern Cement Ltd
32 13224 Rangpur Foundry Ltd
33 14262 Gemini Sea Food Ltd
34 14293 Rangamati Food Products
35 14263 National Tea Co Ltd
36 13212 Atlas Bangladesh Ltd
37 Jago Corporation Ltd
38 24626 Standard Ceramic Indus Ltd
39 16357 Northern Jute Mfg Co Ltd
40 17416 Dulamia Cotton Mills Ltd
41 13201 Aftab Automobiles Ltd
42 21621 Confidence Cement Ltd
43 17401 Alhaj Textile Mills Ltd
44 22643 Bd.Com Online Ltd
45 18474 Imam Button Ind Ltd
46 99637 Miracle Industries Ltd
47 22646 Daffodil Computers Ltd
48 23636 Legacy Footwear Ltd
49 17451 Ambee Pharmaceuticals Ltd
50 Nor-Pearl Knitwear Ltd
51 Popular Phar. Ltd
52 13202 Aziz Pipes Ltd
53 24632 Fu-Wang Ceramic Industries
54 13209 Monno Jute Stafllers Ltd
55 18471 Libra Infusions Ltd
56 SES Company Ltd
57 18462 Pharma Aids Ltd
58 19510 Hakkani Pulp & Paper Mills

55
59 13206 Eastern Cables Ltd
60 15302 Padma Oil Company Ltd
61 16355 Jute Spinners Limited
62 13226 Golden Son Limited
63 17444 CMC-Kamal Textile Mills Ltd
64 21622 Meghna Cement Mills Ltd
65 18487 JMI Bangla Co Limited
66 22641 Information Services Network Ltd
67 15308 Power Grid Company of Bd Ltd
68 14279 Shampur Sugar Mills Ltd
69 17442 H.R Textile Mills Ltd
70 17413 Modern Dyeing and Screen Printing Ltd
71 18453 Beximco Pha. Ltd
72 13222 Kay & que(BD) Ltd
73 15310 Meghna Petrolium Ltd
74 Be Rich Limited
75 15307 Dhaka Electric Supply Co
76 15309 Jamuna Oil Co Ltd
77 27001 Grameenphone Ltd
78 17447 Metro Spinning Ltd
79 18477 Kaya Cosmetics ltd
80 C.P. Bangladesh Co. Ltd
81 17448 Maksons Spinning Mills Ltd
82 Galco Steel (BD) Limited
83 24634 R.A.K. Ceramics
84 17440 Alltex Industries Limited
85 29001 United Airways (BD) Ltd
86 22647 Aamra Technologies Ltd
87 15313 Barakatullah Electro Dynamics Ltd
88 18486 Orion pharma ltd
89 17456 Argon Denims ltd

56
90 14286 Fu-Wang Foods Limited
91 24606 Monno Ceramic Indus ltd
92 13221 Anwar Galvanizing Limited

57
Refferances
1 http://www.sec.gov.bd/ (visited 1 January, 2014)
2 http://www.dsebd.org/pdf/listing_reg.pdf visited 10 January , 2014)
3 company law
4dse listing regulation
5siddique 2007
6volpin
7world bank
8
9
10

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