Dhaka, Bangladesh (BBN)-The Bangladesh securities regulator on Monday approved the revised rules of mutual funds (MFs) incorporating some new provisions including the performance based management fees for asset management companies (AMCs), officials said.
The Bangladesh Securities and Exchange Commission (BSEC) has also fixed 10-year tenure for the closed-end MFs.
The approval to the amendment of Securities and Exchange Commission (Mutual Fund) Rules, 2001 came at a commission meeting held at the office of the securities regulator.
The BSEC has brought changes in rules of MFs in an effort to bring disciplines in the country’s MF industry.
As per the amendment, the fees of the AMCs and Trustees will be restructured.
“The provision of cutting the management fees will be included if the AMCs fail to give dividends. At the same time, the AMCs will be eligible for performance bonus if they are able to give cash dividends above stipulated rates,” the BSEC said.
The chief executive officer (CEO) of an AMC will be appointed as per prior consent of the regulatory body.
A BSEC source said, the regulator has incorporated the provision of appointing the AMC’s CEO following some bad incidents.
According to revised rules, the maximum tenure of a closed-end MF will be 10 years.
The MFs will be able to invest maximum 20 per cent of total fund size in fixed deposits.
“The reports regarding the MFs’ investments made in capital market and out of capital market will have to be published on the MFs’ website on monthly basis,” the regulator said.
The regulator itself will give decision when an AMC can issue re-investment unit (RIU) as dividend.
“The AMCs will get the scope of giving interim dividend if there is no shortage of provision.”
The regulator has also incorporated a mandatory provision of publishing complete information regarding the fund for the sake of investors.
“Net Asset Value (NAV) will be calculated on daily basis instead of weekly basis,” the revised rules said.
MFs will have to arrange general meeting for the unit holders once after every two years.
“The unit holders will discuss the performance of the MFs and their relevant parties at the general meeting. The unit holders will also have the scope of changing the parties having involvement with the MFs,” the BSEC said.
According to the BSEC, the units of open-end MFs will also be transformed into electronic units.
“Separate trading platforms will be introduced in the stock exchanges for trading of the units of the open-end MFs.”
For getting registration from the securities regulator, an AMC must have a paid-up capital of BDT 100 million.