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The Financial Express

Foreign companies allowed to be sponsor of mutual funds

| Updated: May 06, 2021 10:17:49


Foreign companies allowed to be sponsor of mutual funds

Foreign companies from now on will be allowed to be the sponsor of mutual funds (MFs) managed by local fund managers.

The Bangladesh Securities and Exchange Commission (BSEC) on Monday took the decision of allowing foreign companies as the sponsors of MFs at a meeting held at the BSEC office.

The securities regulator has paved the way of including foreign companies as the sponsors following the pleas madeby some fund managers.

"Some fund managers have received proposals from foreign companies regarding their investments in MFs. That's why, the securities regulator has introduced a new provision of including foreign companies as sponsors of MFs," said the BSEC commissioner Dr. Mizanur Rahman.

He said as per the new provision, a foreign company will be allowed to contribute maximum 25 per cent of the size of a MF.

As per the existing rules, the banks, financial institutions, insurers and any kind of public limited company can be the sponsor of a MF. A sponsor can contribute minimum 10 per cent of the MF.

After the 2010-11 stock market debacle, the MFs witnessed large erosion in their portfolios and investors' confidence declined as well.

As a result, the local fund managers also faced the crisis of sponsors. Then the securities regulator allowed the asset management companies to be the sponsor of the MFs. From now on, the foreign companies will be the sponsors of the MFs.

On Monday, the securities regulator has extended the timeframe of submitting proposal of raising capital through debt and equity securities by 60 days.

The BSEC took the decision taking into account the Covid-19 pandemic situation and the instructions enforced by the government to contain the Covid infection.

"Besides, the period of enforcing instructions by the government to contain covid-19 infections will be counted as the extended period of submitting financial statements and other information to the commission, bourses and depository organisation," the BSEC said.

At Monday's meeting, the securities regulator has also took the decision of appointing an auditor in Fareast Finance & Investment to conduct thorough audit of the company's financial statements and activities.

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