A Malaysian seaweed company in Kampot province has begun selling public shares to local citizens as a way to raise investment capital, a move the government claims is illegal.

Since early 2009, FMC Services, Bhd., has invested nearly $3 million in growing seaweed on the coast, which sells as foodstuff in Japan, China, Korea, the US and Europe and can be used in cosmetics.

The company had been using about 60 hectares of sea area, but plans to increase that to 10,000 hectares, offering in September unlimited shares at $300 per share, said Mei Ratha, FMC’s Cambodia representative.

Shares could yield an increase in value of 30 percent the first year, 50 percent the second and 75 percent the third, with value doubling in the fourth year, he said, adding that around 400 people are waiting to buy in.

“Don’t wait and see,” Mei Ratha said. “Time is limited. Come and buy shares. It is beneficial. More beneficial than keeping your money with other people.”

However, on learning of the scheme, Minh Ban Kosal, director-general of the Securities Commission of Cambodia, said the public offering was not yet legal in Cambodia.

“If my company wants to sell shares, I can sell them to people I know, but not publicly announce it and ask the public to buy them,” he said.

Cambodia plans to establish a stock exchange at the end of the year, listing between four and 10 companies, but FMC is not among them, he said, adding the commission would immediately look into the offering.

Mei Ratha said he had not asked for permission to sell the shares, denying the company had done anything wrong in seeking to raise capital. The company was not only selling shares in Cambodia, but other countries as well.

Risk of bankruptcy will be insured for shareholders, he said.

Sam Ganty, a stocks expert who sits on the Securities Commission, said the shares were illegal and risky.

“If we buy shares when we know nothing about the company, and the company doesn’t have permission to sell such kind of shares, I think the shares are very risky,” he said.