Many investors fail to meet BO account fee deadline

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Raihan M Chowdhury
A large number of investors failed to deposit Tk 300 as annual fee charged for the maintenance of beneficiary owner's (BO) accounts by the Securities and Exchange Commission (SEC) until the last day Friday, sources said.
Although September 30 was the deadline for payment of the annual maintenance fee, the Central Depository Bangladesh Ltd (CDBL) informed the BO account holders of its inability to continue transactions on the last day (September 30) and instead remained open on Friday to complete the job.
"My office remained open Friday, as per Thursday's CDBL notification that the CDS operating system will be available for voluntary BO account closure from 9-00 am to 4-00 pm, but CDBL stopped the day's operation at 2-00 pm due to 'technical error' depriving a lot of my clients from depositing their annual fee," a leading DSE brokerage house source told the FE.
According to sources, at present there are around 1.6 million BO account-holders.
When contacted, a top source in the CDBL, however, said the expiry of the deadline will not affect the investors as the move was aimed at having an assessment of BO account holders.
"We will make an assessment of the total BO account-holders on the basis of Friday's calculation and then we will consider extending the time for depositing annual fees," the CDBL source said.
Investors said that CDBL should extend the deadline considering the short period allowed this time.
"It is quite impossible for the depository participants (DPs) to contact 1.6 million BO account-holders for the deposit of the annual fee within a 30-day period," Moinul Hasan, an investor said.
A DSE DP said 70 per cent of his company's BO account-holders have been able to deposit the maintenance fee until Friday.
"But so far I know a large number of BO account-holders of other DSE DPs are yet to response," he said.
He said the DPs are facing trouble in contacting the non-resident Bangladeshi (NRBs) BO account holders in such a short period.
According to market sources, the maintenance fee was imposed to bring a 'qualitative change' in the operation of BO accounts in the stock market.
The annual mandatory fee was also imposed through a gazette notification in late-June this year in a bid to discourage use of 'shady BO accounts' during initial public offerings (IPOs).
"Imposition of the annual maintenance fee will discourage the opening of BO accounts by using other persons' information. Besides, the institutional investors will also be benefited," one SEC source added.
A large group of fictitious investors participate in the IPOs through more than one BO account, which ultimately cuts the actual investors' competitiveness, market sources said.
Since the primary shares for the last couple of years have been fetching a handsome return on investment, the craze among the investors to hit the IPO jackpots is very strong.
Most of the newly listed companies in recent years were traded at a premium rate against their respective offered prices on the very first few days of their debut tradings.
"Investors are getting handsome returns against their primary investment in the newly listed companies as the issues are priced several times higher against the face value levels after making the debut tradings creating a craze among the BO account holders," said a DSE source.
Investors joined the mad rally of BO account opening when the SEC made it mandatory in late 2004 with the IPO of Exim Bank.
The sources said of the annual fee of Tk 300, a depository participant will get Tk 150, the CDBL will receive Tk 100 and the SEC will get Tk 50.
The SEC official said the capital market regulator will take a portion of the fee to be self-sufficient as well as to reduce the financial dependence on the government.