The Bangladesh Securities and Exchange Commission (BSEC) has extended the closed-end mutual funds by 10 years.
The commission extended the tenure of 30 mutual funds which are scheduled to be wound up or be made open-end funds by 2023 on the advice from the ministry.
The decision was taken at a BSEC meeting presided over by its Chairman M Khairul Hossain on Sunday.
On June 18, a letter signed by Finance Minister AMA Muhith was sent to BSEC asking the commission to take necessary measures to extend the time limit of mutual funds, which played a vital role in stabilizing the capital market after the 2011 market crash.
In reply BSEC stated a number of issues with regard to executing the proposal.
The note also said that the winding up of closed-end mutual funds could affect the small-scale investors as they might not get fair value after closing of the mutual funds.
The commission said, 10 mutual funds were converted to open-end mutual funds and four winded up under a notification, issued in January 24, 2010, that limits the tenure of closed-end mutual funds to 10 years and Grameen One: Scheme Two was abolished by order of the appellate division of the Supreme Court.
On August 6, former senior secretary of finance ministry, Md Eunusur Rahman said: A secret report has come in hand from a special organization on May 31, on how to overcome the latest situation going on in the Capital markets.”
In such case, the finance, law ministries, and responsible parties, should play a positive role. If necessary, the policy must be changed by issuing a statement.
According to the note from the BSEC chairman, from 2018-2028, 36 existing closed-end mutual funds valued at TK5302.38 crores, should be dissolved. The note also mentioned that increasing the duration is against the terms of the trust document.