The Bangladesh Securities and Exchange Commission on Monday decided to seek opinion from the attorney general about the legal aspects of issuing stock dividends by mutual funds for their unit holders.
The BSEC made the decision after some asset management firms applied for issuing stock dividends for their unit holders. ‘The commission has decided to seek the attorney general’s opinion about the issue as it wants to keep itself clear from any possible future controversy,’ a senior BSEC official told New Age.
According to the latest amendment to the Mutual Fund Regulations-2001, any close-end mutual fund can 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.
The latest amendment to the mutual fund regulation defines a close-end mutual fund that its life time is fixed and the size of the fund can be changed through reinvestment.
Presently 41 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.
Following the debacle in the capital market, of the 41 listed mutual funds, profits of 22 MFs dropped in July-December, 2012 compared with those in the same period of the previous year.
Only 12 mutual funds managed to get increased profits while four other MFs offset their losses in the period.
In the previous year, more than 10 mutual funds failed to declare any dividend for their unit holders due to the prolonged downtrend in the market.
-With New Age input