The Bangladesh Securities and Exchange Commission on Wednesday approved the amendment to Section 66 of the Mutual Fund Rules-2001 which will allow all the mutual funds to issue stock dividends to its unit holders for re-investment.
A commission meeting presided over by its chairman M Khairul Hossain made the decision, a BSEC news release said.
The release said that all the mutual funds registered with the BSEC would be able to issue stock dividend as re-investment or cash dividend to its unit holders according to the opinion of the trustee.
The BSEC on October 2012 published the draft amendment to the Mutual Fund Rules-2001 for public opinion.
The commission on April 8 decided to seek opinion from the attorney general about the legal aspects of issuing stock dividends by mutual funds for their unit holders.
According to the amendment to the Mutual Fund Rules-2001, any close-end mutual fund can be able to issue stock dividend or reinvest to its unit holders which will not be less than 70 per cent of its profit.
The amendment said a close-end mutual fund also could be transferred to an
open-end mutual fund subject to consent of its one-third unit holders.
Presently 43 mutual funds are listed with the stock exchanges.
A mutual fund is one type of professionally-managed scheme which pools money from many investors and is supposed to invest money in stocks on behalf of the investors.
Earlier on January 8 this year the commission amended the Mutual Fund Rules 2001 to give scope to the mutual funds in issuing stock dividend as re-investment.
But, the commission in its amendment also said that mutual funds who announced stock dividend in their prospectus would be eligible to issue stock dividend to the unit holders. But the amendment drew criticism from investors who own units in other mutual funds.
Following the criticism the commission again took initiative to amend the mutual fund rules to create a level plying ground.
The controversy started in 2009 when the BSEC rejected stock dividend or rights issue application of AIMS First Mutual Fund.
A group of investors of AIMS First Mutual Fund, following the BSEC decision, filed a writ petition with the High Court regarding the matter.
The court after three years of legal battle allowed the mutual funds to issue rights shares and stock dividend for the mutual fund which were launched before the amendment to Mutual Fund Rules in 2008.
Four mutual funds have taken the facility so far.
Meanwhile, the BSEC on Wednesday also finalised the Research Analysis Rules-2013 which will allow analysis firms and individuals to provide written research on specific stocks, the BSEC release said.
The gazette notification of the Bangladesh Securities and Exchange Commission (Research Analysis) Rules-2013 would be published soon, the release said.
According to the draft rules, merchant banks, stockbrokers, stock dealers, asset management companies and independent research firms would be eligible to publish research reports on listed securities.
The institutions must have a separate research team comprising at least three members, including a head of research, the draft said.
It also said that any person seeking to become a research analyst must have relevant academic or professional qualification with at least three years of experience in the stock market, while the head of research team must have five years of experience.
The research staff must exercise diligence, independence and thoroughness in analysing securities and making investment recommendations. They must have reasonable and adequate basis supported by appropriate research and investigation, for any investment analysis, recommendation or action, it said.
The draft said that the advisory service should be research based and the service provider must have a research wing which would be formed according to the research analysis rule.
-With New Age input
