The Bangladesh Securities and Exchange Commission (BSEC) ordered comprehensive inspections of Web Coats PLC and Krishibid Seed Limited to examine whether both companies properly utilized funds raised through their qualified investor offers (QIOs).

Under the inspection orders issued on November 2, BSEC-appointed teams will physically inspect the projects, verify expenditures against approved prospectuses, and examine invoices, bank statements, and supporting financial documents. 

The inspectors will evaluate whether payments were executed through crossed cheques or bank transfers, assess if funds were diverted from approved purposes, and verify the maintenance of unspent balances. 

The teams will also identify potential violations of securities laws, scrutinizing the responsibilities of board members, managing directors, chief financial officers, company secretaries, and auditors. Both inspections must be completed within 30 working days, with formal reports submitted to the commission.

Web Coats PLC, listed in 2024, raised 5 crore taka through a QIO in February of that year. The capital was earmarked for purchasing machinery (2.23 crore taka), working capital (1.08 crore taka), loan repayment (1.43 crore taka), and QIO expenses (0.27 crore taka).

According to its fund utilization report as of September 30, 2024, the company had spent 2.99 crore taka, leaving an unutilized balance of 2.01 crore taka. 

While loan repayments and QIO expenses were reported as fully utilized, Web Coats had spent only 10.46 percent of its machinery allocation. 

An auditor’s report noted that 0.23 crore taka had been deposited as a letter of credit (L/C) margin to import a cast-coating machine from China. Shares of Web Coats closed at 43.40 taka on November 3, compared to their 10 taka face value.

Krishibid Seed Limited, listed in 2022, raised 11.60 crore taka via its QIO in March that year to fund a cold-storage facility, two storage buildings in Savar and Dinajpur, and research, development, and seed production.

Its utilization report for the April–September 2023 period indicated that 11.60 crore taka – representing 99.97 percent of the total proceeds – had been spent. 

The company reported full utilization of funds for all three building projects alongside a 99.93 percent utilization rate for research, development, and seed production. 

Shares of Krishibid Seed closed at 8 taka on November 3, trading below their 10 taka face value.