The securities regulator Monday approved the draft rules of 'Alternative Investment', paving the way for foreign and local investments in the non-listed companies, officials said.
The approval came at a commission meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC).
The BSEC officials said the regulator formulated and approved the rules to promote the venture financing and equity investment facilities for non-listed local firms having fund shortage.
According to the rules titled 'Bangladesh Securities and Exchange Commission (Alternative Investment) Rules, 2015', foreign and local equity investments will be injected into non-listed companies through 'Alternative Investment' funds.
Prof. Helal Uddin Nizami, a BSEC commissioner, said the 'Alternative Investment' funds will specially facilitate the funding arrangements for non-listed companies, specially the IT firms and infrastructure projects.
"The gazette on the rules of Alternative Investment is likely to be passed within two days. We hope such rules will play an important role in creating funding facility for prospective companies," Mr. Nizami said.
According to the rules, Alternative Investment' funds will have to be managed professionally by the fund managers and the trustees.
Both the trustees and fund managers will have to be registered with the securities regulator.
According to the rules, the fund managers will raise capital for a fund from the eligible investors who may be Bangladeshi, foreign and NRBs by issuing units of the fund.
"Under the Trust Act, 1882, the trustee will play a vital role in ensuring the interest of the unit holders," the rules said.
Shawkat Hossain, managing director of BD Venture Limited, said banks are not interested to finance the small firms having prospects.
He said initially it may take some time to make the venture financing popular.
"But across the world many renowned companies achieved their targets through venture financing. I think the regulatory approval to the rules of Alternative Investments is a good start," Mr. Shawkat said.
As per the rules, the minimum size of the fund will be Tk 100 million and the initial subscription by the sponsors will not be less than 10 per cent of total size of the fund.
At least 75 per cent of the fund shall be invested in non-listed securities as the main objective of forming such funds is to promote private firms in their early stage.
The fund manager will be allowed to invest maximum 25 per cent of the fund in listed securities and units of alternative funds managed by other fund managers.
An Alternative Investment fund shall be formed for a specific period of five to 15 years and the tenure will be mentioned in the constitutive documents.
All investments in a fund shall be locked for a period of three years from the date of the issuance of the units.
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