Capital raising request of Magura Multiplex disregarded by BSEC due to non-compliance issues

In a surprising turn of events, the Bangladesh Securities and Exchange Commission (BSEC) has rejected a proposal by Magura Multiplex PLC to raise its paid-up capital to Tk30 crore. This decision comes following several regulatory non-compliance issues, including no offer made to existing shareholders, no extra-ordinary general meeting (EGM) held, and no price sensitive information (PSI) notice disseminated.

The application, submitted to the BSEC on 21 July this year, sought to issue new shares worth Tk39 lakh to three of its sponsors. This move was aimed at meeting stock exchange listing requirements, as the merged entity, renamed Magura Multiplex PLC, was re-listed on the market in June 2021.

Despite the rejection, Magura Multiplex's share price has shown resilience, jumping 8.88% today (24 August), closing at Tk114. This surge in share price may be attributed to the strong financial performance of the company in recent times.

In the first nine months of FY25, Magura Multiplex's earnings per share (EPS) jumped 42% year-on-year to Tk3.21. This impressive growth was underpinned by a net profit that rose by 51% to Tk7.45 crore compared to the previous year, leading to a 14% cash dividend declaration for FY24.

However, the BSEC also observed that the proposed issuance price was set at face value, which was below the prevailing market price. Furthermore, the audited financial statements of Magura Multiplex contained "emphasis-of-matter" points, raising concerns about the financial disclosures.

As of the July's shareholding report, the company's sponsors and directors held 45.81%, institutional investors 7.32%, and general shareholders 46.87% of the shares. Despite the lack of publicly available information specifying which founders or members of Magura Multiplex PLC held shares in the company on August 24, 2022, the rejection of the proposal may have implications for the company's future capital raising efforts.

The merger of Magura Group's listed entities with non-listed companies in 2023 saw Paper Processing and Packaging Limited, previously listed on the DSE since 1990, merged with non-listed Magura Paper Mills. The details of the merger and its impact on the financial performance of the merged entity are yet to be fully understood.

The rejection of Magura Multiplex's proposal serves as a reminder for companies to adhere to regulatory requirements when seeking to raise capital. As the company navigates this setback, investors will be closely watching its financial performance and regulatory compliance to gauge its future prospects.

Capital raising request of Magura Multiplex disregarded by BSEC due to non-compliance issues