The Bangladesh Securities and Exchange Commission has cancelled an application of the Investment Corporation of Bangladesh for merging its nine mutual funds, which will finish their tenure this year, with the Bangladesh Fund. The Bangladesh Fund, a Tk 5,000-crore stock market stabilisation fund, has so far managed around Tk 1,600 crore. The fund was formed in May 2011 to rescue the small-scale investors affected by the stock market crash in 2010.
The BSEC rejected the application of the ICB in last week in a regular commission meeting, BSEC officials told New Age.
The mutual funds of the ICB —First ICB Mutual Fund, Second ICB Mutual Fund, Third ICB Mutual Fund, Forth ICB Mutual Fund, Fifth ICB Mutual Fund, Sixth ICB Mutual Fund, Seventh ICB Mutual Fund, Eighth ICB Mutual Fund and ICB AMCL First Mutual Fund — will face redemption this year.
The ICB in August filed two separate applications with the BSEC. Of the applications, one sought permission from the BSEC to convert ICB AMCL First Mutual Fund, a listed closed-ended mutual fund, into an open-ended fund and the other application sought permission for the proposed merger.
The commission, as per the latest amendment to the mutual fund rules, allowed ICB AMCL First Mutual Fund to be converted into an open-ended mutual fund in August but rejected the second application.
‘As per the mutual fund rules, there is no scope of merging an open-ended mutual fund with another,’ a senior BSEC official said.
‘If the commission allows the ICB to merge its mutual funds with the Bangladesh Fund, it will squeeze the scope of diversifying funds in different products. That’s why the commission did not allow the ICB to merge its funds,’ he said.
ICB AMCL First Mutual Fund under ICB Asset Management Company Limited said that its 10 years tenure would end on September 28, 2013, according to a post on the DSE web site on August 25.
The web post also said that the closed-end fund would be de-listed and trading of units of the fund would be discontinued in the stock exchanges from September 28.
The trustee of ICB AMCL Mutual Fund will arrange an extra-ordinary general meeting of its unit holders to get their approval for conversion of the fund into an open-ended mutual fund.
‘We have planned to call an extra-ordinary general meeting for getting unit holders’ approval to transform the fund into open-ended. If one-third of the unit holders agree to the proposal, it could be converted,’ an ICB official said.
Earlier in 2009, the BSEC asked the mutual funds, which has no maturity period and passed 10 years after listing, to pull them out from the market by December 2011.
Later in September last year the capital market regulator extended the maturity period of the mutual funds to December 2013 following applications from the ICB.
-With New Age input
