The fate of the Capital Market Stabilisation Fund (CMSF) is hanging as it is yet to know whether it will be allowed to run operations in the changed political landscape.
The uncertainty loomed after the fall of the Sheikh Hasina-led regime on August 5 and the formation of the new securities commission that expressed skepticism about the role of the CMSF that had been formed to settle undistributed dividends.
Then the Ministry of Finance (MoF) constituted a body led by Additional Secretary Mohammad Abu Yusuf to submit a report with recommendations for continuation or closure of the CMSF.
CMSF sources said a member of the committee informed them that there was no need for the Fund.
The CMSF was also notified that the undistributed dividends so far deposited into its accounts would be transferred to the government's exchequer.
But the Stabilisation Fund has not formally received any decision of the securities regulator or any other government body on the matter of its existence.
The previous commission introduced the Stabilisation Fund by formulating rules, which came into effect in June 2021, to help revitalise the market through liquidity support along with settling investors' claims of undistributed/unsettled dividends.
Mohammad Rezaul Karim, spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), said the CMSF had continued routine work despite no board constituted by the market regulator.
"The commission will take the ultimate decision," Mr Karim said, without elaborating further.
The CMSF has been running without any board since August last year following the completion of the tenure of the previous board.
It has received undistributed cash dividends worth Tk 37 million from some issuer companies in the last three months. A delisted company namely Beximco Synthetics deposited a fund of Tk 108.9 million to distribute among its shareholders.
"Neither the finance ministry nor the securities regulator has called the Fund's management to discuss whether to keep the organisation running or close it," said an official of the Stabilisation Fund, requesting anonymity.
Meanwhile, the Fund has continued to settle undistributed dividends and has been distributing share money among shareholders of Beximco Synthetics.
According to CMSF officials, the new commission led by Chairman Khondoker Rashed Maqsood initially was very unhappy with the CMSF's activities, such as investing investors' money in equity-based securities.
The BSEC chief said the Stabilization Fund should have its functions limited to collecting unclaimed/unsettled dividends and rights shares and settling investors' claims.
Significance or insignificance of CMSF
Preferring anonymity, an investor said his father had a good amount of paper shares of Olympic Industries.
His father died long before the formation of the CMSF in 2021 but the company communicated with him after the launch of the Fund to inform him about his father's holdings in the company.
"The company felt a pressure to find out shareholders whose dividends remained undistributed only after the formation of the CMSF," he said.
Many listed companies, which had been reluctant to settle undistributed dividends, started working to settle claims when the Fund pushed them to do so.
Md. Ashequr Rahman, managing director of Midway Securities, said the formation of the CMSF was a good job but injecting investors' funds into risky equities was not a right move.
Moreover, the CMSF's previous board stirred controversy through unjustified expenses.
"The only objective of the CMSF should be finding out missing investors and settling claims for undistributed dividends," Mr Rahman said.
He suggested that the CMSF should continue operations under a trust, say, Capital Market Dividends Trust. The operating expenditure of the Fund could be met easily by investing a small portion of undistributed dividends into Treasury bonds.
Operating status of CMSF
Since the launch of its operation in June 2021, the Fund received unclaimed or undistributed cash dividends worth around Tk 6.71 billion from listed companies until December last year.
Claims for cash dividends worth Tk 80 million and stock dividends worth Tk 2.94 billion have so far been settled by the Fund.
A portion of the cash dividends collected has been injected into equity securities through the Investment Corporation of Bangladesh (ICB).
At this moment, the Fund has undistributed cash dividends plus interest worth Tk 7.7 billion and undistributed stock dividends equivalent to around Tk 10 billion at the current market price.
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