SEC won't challenge HC verdict
Monday, 25 January 2010
FE Report
The Securities and Exchange Commission (SEC) will not go for writ petition challenging the High Court's verdict allowing closed-end mutual funds to raise their size by issuing bonus and rights shares, ending much speculation on the regulator's move.
On November 8 last year, the court handed down judgment that mutual funds can raise their size by issuing bonus and rights shares, without curbing the securities regulator's absolute power to determine which funds would be eligible to expand their capital base.
The issue remained unresolved for long one and a half years as a group of general investors filed a writ petition in August, 2008 challenging the SEC's amendments to the mutual fund rules, barring the fund managers from issuing preemptive rights or bonus shares.
Immediately after the writ petition, the court had directed all the listed mutual funds not to declare dividends until its disposal.
"The decision not to appeal against HC's verdict was taken for the interest of investors as well as the market," said Mansur Alam, a member of the SEC, at a press conference in the city Sunday.
The mutual funds can now raise their capital base, provided that they get clearance from the SEC, he said.
In its ruling the High Court bench said that the SEC will be at liberty to allow or disallow the existing mutual funds to issue bonus and rights shares.
"We are not aware of the exact verdict of the HC or when the stay order was withdrawn. We would prefer to refer to the commission for final interpretation and determination," said Yawer Sayeed, a leading fund manager, in his reaction.
On June 26, 2008, the SEC decided in principle to review the closed-end mutual fund rules and give the same a final shape. It sought opinions and recommendations from the members of the public in this connection.
Later on July 22, 2008, the SEC formally approved the changes in mutual fund rules barring closed-end mutual funds from offering bonus shares as dividend or offering rights shares.
There are 19 closed-end mutual funds listed with the Dhaka Stock Exchange. Among them, only the First ICB mutual fund issued 50 per cent bonus shares and AIMS First mutual fund issued 20 per cent bonus shares in the last two years.
The Investment Corporation of Bangladesh (ICB) had to cancel the record dates for entitlement of dividends it declared earlier for its unit fund shareholders due to the court injunction.
In another development, the SEC has issued letters asking the fund mangers to redeem the nine listed closed-end mutual funds without tenure. Earlier in December last, the commission decided to redeem those mutual funds.
The nine closed-end mutual funds are 1st BSRS and 1st to 8th ICB.
The Securities and Exchange Commission (SEC) will not go for writ petition challenging the High Court's verdict allowing closed-end mutual funds to raise their size by issuing bonus and rights shares, ending much speculation on the regulator's move.
On November 8 last year, the court handed down judgment that mutual funds can raise their size by issuing bonus and rights shares, without curbing the securities regulator's absolute power to determine which funds would be eligible to expand their capital base.
The issue remained unresolved for long one and a half years as a group of general investors filed a writ petition in August, 2008 challenging the SEC's amendments to the mutual fund rules, barring the fund managers from issuing preemptive rights or bonus shares.
Immediately after the writ petition, the court had directed all the listed mutual funds not to declare dividends until its disposal.
"The decision not to appeal against HC's verdict was taken for the interest of investors as well as the market," said Mansur Alam, a member of the SEC, at a press conference in the city Sunday.
The mutual funds can now raise their capital base, provided that they get clearance from the SEC, he said.
In its ruling the High Court bench said that the SEC will be at liberty to allow or disallow the existing mutual funds to issue bonus and rights shares.
"We are not aware of the exact verdict of the HC or when the stay order was withdrawn. We would prefer to refer to the commission for final interpretation and determination," said Yawer Sayeed, a leading fund manager, in his reaction.
On June 26, 2008, the SEC decided in principle to review the closed-end mutual fund rules and give the same a final shape. It sought opinions and recommendations from the members of the public in this connection.
Later on July 22, 2008, the SEC formally approved the changes in mutual fund rules barring closed-end mutual funds from offering bonus shares as dividend or offering rights shares.
There are 19 closed-end mutual funds listed with the Dhaka Stock Exchange. Among them, only the First ICB mutual fund issued 50 per cent bonus shares and AIMS First mutual fund issued 20 per cent bonus shares in the last two years.
The Investment Corporation of Bangladesh (ICB) had to cancel the record dates for entitlement of dividends it declared earlier for its unit fund shareholders due to the court injunction.
In another development, the SEC has issued letters asking the fund mangers to redeem the nine listed closed-end mutual funds without tenure. Earlier in December last, the commission decided to redeem those mutual funds.
The nine closed-end mutual funds are 1st BSRS and 1st to 8th ICB.