The Securities and Exchange Commission (SEC) has approved the close-end mutual fund rules, restricting the funds from the issuance of preemptive rights or bonus shares to their unit holders.
"The commission has endorsed the mutual fund rules revision and the decision will be sent for the gazette notification soon," a spokesman of the commission told the reporters after the 'commission meeting' held Tuesday.
He also said, "The SEC reviewed the rules to stop speculation on which the shares of mutual funds fluctuated and behaved like other shares. But, the mutual fund stocks are considered risk-free tools."
On June 29 last, the securities regulator decided in principle to review the close-end mutual fund rules and, to give it final shape, it sought opinions and recommendations from the members of the public.
"The commission received more opinions against the revision of the rules. But these opinions which were like photocopies came from individual investors. Most institutional investors, however, favoured changes in the rules. That is why, the SEC has given the priority to the opinions coming from the intuitional investors," said Farhad Ahmed, executive director of the SEC.
The meeting has also framed the new rules about opening new branches of the brokerage houses in and out of the city.
"Under the new rules, from henceforth, if any brokerage house willing to open new branch, it will need permission from the SEC," Farhad said adding the commission has framed this rule for bringing transparency and accountability in the activities of the brokerage houses.
A brokerage house having a paid up capital of Tk 7.5 million will be allowed to open a maximum of three branches. But for every additional branch, the brokerage house will have to increase its paid up capital by another Tk 5.0 million. However, no brokerage house will be allowed to open more than 15 branches.
The meeting also approved the application of the Republic Insurance to float an initial public offering (IPO) to raise its paid up capital to Tk 150 million from the existing Tk 60 million.
The face value of the share will be Tk 100. The Net Asset Value (NAV) of the insurance company is Tk 122.93 as of December 31, 2007 and earning per share Tk 17.20.
The SEC also decided to allow the Trust Bank to issue one rights share against every five orduinary shares at Tk 200 (including a premium of Tk 100) to raise its paid up capital
