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Wednesday, January 9, 2013
Business

Regulator approves stock dividends for mutual funds

RN Spinning directors slapped with fines for breaching rules

The Bangladesh Securities and Exchange Commission (BSEC) yesterday gave the go-ahead to mutual funds to give stock dividends to their unit holders.

The securities regulator approved the Mutual Fund Rules 2001 at yesterday's meeting chaired by BSEC Chairman M Khairul Hossain.

The present cash dividend payout structure will remain effective as well.

The asset management companies (AMCs) and mutual fund managers will have to pay out at least 70 percent of their profits as dividends, according to the Mutual Fund Rules 2001.

Stock dividends, popularly known as bonus dividends, is a payment made in the form of additional shares in place of a cash payout.

Furthermore at the meeting, BSEC brought down the mutual funds' mandatory investment quota in the stockmarket to 60 percent from the existing 75 percent, with the remaining 40 percent to be invested in the money market.

Of the 60 percent to be invested in the stockmarket, 30 percent has to be in listed securities.

Presently, there are 41 listed closed-end mutual funds, run by 17 AMCs.

Race Asset Management is the market leader, managing 45 percent of the total mutual fund industry, followed by LR Global at 18 percent, ICB AMCL at 14 percent and AIMS of Bangladesh at 13 percent.

Also at the meeting, the securities regulator decided that small investors who lost money to stockmarket downswings in 2010-11 would get a 20 percent quota in all initial public offerings.

The market watchdog also approved a rights offer for Phoenix Finance.

The company will issue 92.04 lakh ordinary shares of Tk 10 each, to rake in Tk 9.20 crore which would increase its capital base to Tk 100 crore; one rights share will be offered for every existing 10 shares.

Also, the regulator reduced the size of RN Spinning Mills' rights issue to Tk 120 crore from Tk 278 crore for failure to pay subscription fees in time.

The commission asked the company to remove its company secretary, and banned him from stockmarket-related activities for five years.

For violating securities rules, RN Spinning was fined Tk 10 lakh. Shirin Faruk, a director, was fined Tk 25 lakh, and all other directors were fined Tk 50 lakh each. Siraj-Ud-Daulah, an investor, was fined Tk 30 lakh.

Separately, investors Abu Sadat Sayem, Abdul Mobin Mullah, Mahmuda Yasmin and Dream Holdings were fined Tk 6 lakh, Tk 12 lakh, Tk 40 lakh and Tk 15 lakh respectively for breaching securities rules to trade shares of Fuwang Foods.

For the same offence, Legacy Footwear's investors Mahbubur Rahman and Mojibul Haque were fined Tk 15 lakh and Tk 2 lakh respectively, while Ratan Kumar Saha got away with a warning.

Legacy Footwear was fined Tk 5 lakh for not publishing the company's earnings per share.

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