The securities regulator has paved the way for private limited companies to be sponsors of mutual funds (MFs).
The Bangladesh Securities and Exchange Commission (BSEC) on Thursday issued a directive in this regard setting some eligibility criteria.
As per the existing rules, such companies have no scope of playing the role of sponsors of pooled funds.
BSEC spokesperson Mohammad Rezaul Karim said the regulatory directive came after some private limited companies had showed interest in becoming part of the mutual fund industry. The asset management companies also presently face a crisis of sponsors to float new funds.
"Private companies will facilitate the launching of new funds," Mr. Karim said.
To work as a sponsor of any MF, a private ltd. company must have a net wealth of at least Tk 100 million.
The company shall have sufficient cash and cash equivalent assets or be ready to liquidate assets at least equivalent to the committed subscription as a sponsor.
The company's board of directors must comprise at least three members including an independent director, according to the directive.
Moreover, a loan defaulter, identified by the Credit Information Bureau (CIB) of the central bank, will not be allowed to sponsor a MF.
"The company or any of its directors shall not be associated with any money laundering and terrorism financing activities," added the BSEC directive.
As per the existing provision, banks, financial institutions, registered asset management companies and insurers solely or jointly with other banks, financial institutions, statutory bodies and registered funds can launch MFs.
Asif Khan, chairman of EDGE Asset Management, said the conditions to be met would help keep away fraudsters from misusing pooled funds.
"Private ltd. companies should facilitate the growth of the MF industry," he said.
mufazzal.fe@gamil.com