BSEC asks trustee to complete liquidation within 14 days

The securities regulator Wednesday asked the Trustee of the AIMS First Guaranteed Mutual Fund to complete the liquidation of the fund within 14 working days, officials said.
The regulatory order came after the Supreme Court SC recently stayed the High Court's (HC) verdict which declared the securities regulator's directive relating to conversion or redemption of closed-end mutual funds (MFs) 'illegal'.
"The directive of the securities regulator prevails, as the SC lifted the status quo and stayed the HC's verdict," said an official of the Bangladesh Securities and Exchange Commission (BSEC) preferring anonymity.
He said the Trustee has obtained 14 days for completing liquidation as same time period was interrupted due to legal battle.
On November 21, the unit holders who own majority number of units of the AIMS First Guaranteed MF exercised votes for liquidation of the fund.
The fund was supposed to be converted or liquidated by December 31, 2015.
On December 15 last, a division bench of the HC had declared the directive of the securities regulator about conversion or liquidation of the closed-end MFs 'illegal' after hearing a writ petition filed by Ali Zaman, a unit holder of the MFs.
Later, the securities regulator filed a civil miscellaneous petition (CMP) with the chamber judge and the judge ordered all relevant parties to maintain status quo until January 10, 2016.
Later, on February 11, the SC lifted the status quo and stayed the HC's verdict.
Earlier, in a directive issued on January 24, 2010, the BSEC said tenures of the closed-end MFs would not be more than 10 years. The funds, which had crossed 10 years, would have to be redeemed by December 31, 2011.
BSEC said, in 2005 the tenure of the AIMS First Guaranteed MF was extended for 10 years as per the section 50 (kha) of the Mutual Rules, 2001.
The section said the tenure of the closed-end MF can be extended at best for one period of 10 years as per three-forth votes of the unit holders.   
As a result, the extended tenure of the AIMS First Guaranteed MF ended in 2015.  
On the other hand, the tenures of the eight closed-end MFs managed by the state-run Investment Corporation of Bangladesh (ICB) were extended thrice by one year considering the ICB's plea and the market situation.
Meanwhile, the majority number unit holders of the 1st and 2nd MFs exercised their votes in favor of converting the funds into open-end ones.
"Both the closed-end funds of the ICB will be converted into open-end ones soon as per regulatory directive," said the BSEC official.   
On the close of operation on February 11, 2016, the AIMS First Guaranteed Mutual Fund has reported net asset value (NAV) of Tk 26.62 per unit at current market price basis and Tk 10.83 per unit at cost price basis against face value of Tk 100 whereas net assets of the fund stood at Tk. 2,396,061,777.
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