Stocks
Pvt firms must have Tk10cr net worth to sponsor mutual funds
The securities regulator has set certain criteria for private limited companies intending to be a sponsor of any mutual fund, as part of its mutual fund sector reform initiatives.
According to a recent directive by the Bangladesh Securities and Exchange Commission (BSEC), a private company must have a minimum net worth of Tk10 crore to become a sponsor of a mutual fund.
A sponsor provides the initial capital for a mutual fund, enabling it to attract further investment from investors in a regulated manner. The sponsor provides the initial capital, the asset manager oversees the mutual fund’s assets, and the trustee committee acts as the board to govern the mutual fund’s operations.
The custodian, on the other hand, is responsible for ensuring that the securities held by mutual funds are safely kept under its custody, while the auditor verifies the authenticity of the financial statements published by the asset manager and approved by the trustee.
The BSEC, in its recent directive, also stated that the amount a sponsor commits to subscribe to a mutual fund must be backed by an equivalent amount in cash or readily liquidatable assets. Regulatory officials said this requirement will prevent sponsors from failing to provide the committed funds on time.
To ensure the quality of a sponsor company, the regulator also mandated that a private limited company must have at least three directors on its board, including one independent director.
Of course, the sponsor company itself, or any of its directors, cannot be a loan defaulter according to the Credit Information Bureau (CIB) report of the Bangladesh Bank.
If the sponsor company or any of its directors is associated with money laundering or terrorism financing activities, the company will be disqualified from being a mutual fund sponsor.
The directive will have immediate effect, according to the BSEC, which has already initiated a major reform in the country’s mutual fund sector.
Unlike in peer markets, mutual funds in Bangladesh have been relatively small compared to the size of the overall equity market.
According to EBL Securities research in 2023, the asset under management (AUM) of the mutual fund industry was 0.24% of the GDP in Bangladesh, which was 1.3% in Pakistan, 16.2% in India, 54% in Malaysia, and over 195% in the USA.
A February 2024 report by IDLC Research suggests that total AUM in Bangladesh was slightly over Tk16,000 crore that was being managed under 125 mutual funds. The AUM was not even 3% of the total market capitalization in the Dhaka Stock Exchange then.
Also, the AUM compared to the total band deposits is extremely low in Bangladesh. According to the EBL Securities report last year, AUM in Bangladesh was 0.01%, which was 6.8% in Pakistan and 20.8% in India.
Experts blame lack of opportunities for brilliant fund managers, fraudulent acts by a handful of asset managers amid a lack of fiduciary responsibilities, among a few others, together for the sorry state of the sector in Bangladesh.
BSEC officials said that for expanding the sector, the regulator has been welcoming more qualified professionals and firms to enter the industry and earn and retain investors’ trust.
The number of asset management firms has already risen to 66 in Bangladesh.
Dhaka Stock Market DSE, Bourse on the second working day of the week, 30th September, ended with a negative performance in Indices and a hike in Turnover from the previous working session. This information is known from DSE sources.
503 crore 90 lakh taka shares were traded on this day. 22 crore 58 lakh more tradings were done in DSE today compared to the previous workday, 29th September, Shares worth Tk 481 crores 31 lakh shares were traded last time, Sunday.
The benchmark DSEX lost 33.61 points or 5,624 The Shariah-based index DSES dropped 7.36 point or 1,263 and the blue-chip index DS30 decreased by 9.57 points or 2,053.
Of the issues traded, 72 advanced, 299 declined and 25 remained unchanged.
Shahjibazar Power Company Limited ranked top gainer on DSE, the share price increased by Tk 4.00 paisa or 9.76 percent. On this day, the share was last traded at Tk 45.00 paisa.
Dhaka Electric Supply Company Limited ranked top loser on the DSE, the share price dropped by Tk 1.80 paisa or 7.56 percent. On this day, the share was last traded at Tk 22.00 paisa.
DSE topped on trade is Pragati Life Insurance Limited 25 crore 35 lakh takas of company shares have been traded.
A total of 27 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 50 lakh 42 thousand 956 shares of the companies were traded. The financial value of which is 65 crore 60 lakh taka
One of the Listed companies, National Polymer Limited has recommended 10.50% Cash Dividend for the year ended June 30, 2024.
It has reported Consolidated EPS of Tk 2.27 paisa, and Consolidated NAV per share of Tk 30.63 for the year ended March 31, 2024.
The Annual General Meeting (AGM) of the company will be held on December 18, through the digital platform. The record date for this has been fixed at October 22.
The Company also discloses its financial reports for the second quarter, (April – June 24).
As per the company’s consolidated life revenue account for April to June 2024, the excess of total income over total expenses, including claims (surplus), stood at Tk 1,394.24 million. This marks a significant increase from the surplus of Tk 823.68 million during the same period in 2023.
For the first half of 2024, from January to June, the company reported a surplus of Tk 2,177.57 million, compared to Tk 1,290.39 million in the corresponding period of the previous year.
Additionally, the Life Insurance Fund balance as of June 30, 2024, reached Tk 55,188.62 million, showing a net increase of Tk 5,892.25 million from Tk 49,296.37 million on June 30, 2023.
One of the Listed companies, Beacon Pharmaceuticals PLC has recommended 20% Cash dividend and 10% Cash Dividend to Sponsor Shareholder and Directors for the year ended June 30, 2024.
It has reported EPS of Tk 2.26 paisa, and NAV per share of Tk. 26.37 for the year ended June 30, 2024.
The Annual General Meeting (AGM) of the company will be held on December 23, through the digital platform. The record date for this has been fixed at October 27.
