The Bangladesh Securities and Exchange Commission on Monday allowed the Investment Corporation of Bangladesh to convert its eight close-ended mutual funds into open-ended ones after the expiry of their tenure on December 31.
The capital market regulator gave the approval following an application from the ICB, BSEC officials said.
A senior BSEC official said, ‘The commission has made the decision as per the latest amendments to the mutual fund rules which allow close-ended mutual funds to be converted into open-ended ones.’
The ICB earlier filed an application with the BSEC to merge its nine close-ended mutual funds, which will finish their tenure this year, with the Bangladesh Fund, but the commission rejected the plea as no rules permit such merger.
The latest amendments to the Mutual Fund Rules-2001 also allowed all the mutual funds to issue stock dividend for its unit holders as re-investments.
The BSEC allowed the ICB to convert its eight close-ended mutual funds — First ICB Mutual Fund, Second ICB Mutual Fund, Third ICB Mutual Fund, Forth ICB Mutual Fund, Fifth ICB Mutual Fund,
Sixth ICB Mutual Fund, Seventh ICB Mutual Fund and Eighth ICB Mutual Fund — into open-ended ones.
As per the mutual fund rules, a decision of conversion will be effective after getting approval of two-third of unit holders of a fund in an extraordinary general meeting.
The ICB in August filed two separate applications with the BSEC. Of the applications, one sought permission from the BSEC to convert ICB AMCL First Mutual Fund, a listed closed-ended mutual fund, into an open-ended fund and the other application sought permission for the proposed merger.
The commission, as per the latest amendments to the mutual fund rules, allowed ICB AMCL First Mutual Fund to be converted into an open-ended mutual fund in August but rejected the second application.
ICB AMCL First Mutual Fund under ICB Asset Management Company Limited finished its 10-year tenure on September 28, 2013.
Earlier in 2009, the BSEC asked the mutual funds, without any maturity period and passed 10 years after listing, to pull them out from the market by December 2011.
Later in September last year the capital market regulator extended the maturity period of the mutual funds to December 2013 following an application from the ICB.