SEC to fix ceilings of investment in MFs under pvt placement

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Sheikh Shahariar Zaman
The securities regulator has moved to fix three separate ceilings of investment in a mutual fund under private placement to broaden the base of ownerships of such funds.
Under the move, the ceilings of investment are going to be fixed for individuals, listed and non-listed companies so that a single entity cannot own a big chunk of a mutual fund (MF), Securities and Exchange Commission (SEC) member Mansur Alam told the FE.
Mutual funds are considered a safe instrument of investment for the small and fixed income investors worldwide, as professionals manage these funds.
An SEC official, however, said the ceiling of investment of a listed company would be higher than that a non-listed company or an individual as the benefit will ultimately go to the general shareholders.
"It'll help stop making of windfall profit by individuals," he said.
The existing regulation allows any individual or company to buy any amount of shares of a mutual fund under private placement.
The SEC will fix the investment ceilings within this month, said an official of the regulator.
The regulator earlier decided that a mutual fund must float 50 per cent of its shares through the initial public offering, 10 per cent be reserved for sponsors and 40 per cent for private placement.
It also decided that the lock-in period for private placement will be one year irrespective of the status of the owners.
The SEC also took a decision to approve applications of two mutual funds every month.
Since March last four mutual funds including the biggest in the history -LR Global - have received nod of the SEC. The MF will raise Tk 3.0 billion from the market.
About 50 MFs are awaiting approval of the regulator.
Currently, 24 mutual funds are listed with the two bourses of the country, Dhaka Stock Exchange and Chittagong Stock Exchange.