Bangladesh Securities and Exchange Commission has drafted amendments to the alternative investment rules, lifting prohibition on listing units of an alternative investment fund on stock exchanges and reducing lock-in period and registration fees for such fund.
According to the proposed amendments, the fund may, for transferring of its units, be listed, in any alternative trading board (ATB) of the exchange. The existing rules, which were framed in 2015, do not allow the listing.
Alternative investment fund means any fund constituted in the form of a trust which is a private equity fund or a venture capital fund or any other type of fund as declared by the commission
The fund is a privately pooled investment vehicle which collects funds from eligible investors, and is a closed-end fund with specific tenure.
The commission on March 14 posted the proposed amendments on its web site, seeking public opinions on the changes by March 31, 2019.
The regulator made the approach to modernise the rules in line with the international standard and practices, BSEC officials said.
They said the commission had already approved a draft of (Alternative Trading Board) Rules, 2018 that would be gazetted soon.
According to the proposed amendments to alternative investment rules, all investments in a fund must be locked in for a period of two years from the date of issuance of units.
The registration fee of a fund has been cut to 0.05 per cent from the existing 0.1 per cent of fund corpus only.
The proposed rules also say that the fund must diversify its investment in portfolio companies of different risk profiles as per their risk management policy.
The eligible investors may acquire units of the fund, by purchase or otherwise, from any eligible investor, or transfer units of the fund, by sales or otherwise, to any eligible investor, the rules said.
The commission also brought changes to the definition of eligible investors or investors.
The approved alternative investment fund, pension fund, superannuation fund and gratuity fund are defined as investors or eligible investors of alternative investment fund.
The existing rules allow registered fund.
Under the amendments, only the recognised provident fund could be eligible investors of the fund.
The definition also adds any fund sponsored or approved by the government or the local government to the eligible investors’ list.
The applicant (company or statutory body) must prepare its financial statements as per International Standards of Auditing instead of Bangladesh Standard of Auditing.
The fund manager would ensure that all investments are made as per the
investment guidelines and approved by the investment committee and obtained consent from the trustee before disbursement of fund.
The fund manager may share up to 20 per cent of the net annual profit of a fund as performance fee.
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