Stabilisation fund for stocks to stay in bank, be managed risk-free

The Capital Market Stabilization Fund (CMSF) will now have to keep all its funds in a bank account and manage them in a risk-free manner, according to a draft of the Capital Market Stabilisation Fund Ordinance published yesterday on the Financial Institutions Division website.

Established by the Bangladesh Securities and Exchange Commission (BSEC) in 2021, the CMSF holds undistributed cash and stock dividends, non-refunded public subscription money, and unallotted rights shares of listed securities.

These assets are intended to be returned to shareholders or investors based on verified claims at any time. Until then, they are to be used to maintain stability in the capital market.

The new draft ordinance specifies that all funds must remain in a bank, while all shares must be held with the fund’s own depository participant. Any costs will be covered from the fund’s profits, keeping both the funds and shares intact.

The fund will be overseen by a seven-member board of governors, with the BSEC chairman serving as the board’s chair

The draft ordinance also protects the government, government officials, the BSEC chairman, commissioners and officials, and the fund’s board of governors and staff from any legal action if losses occur while implementing the rules in good faith.

The fund will be overseen by a seven-member board of governors, with the BSEC chairman serving as the board’s chair. Other members will include a BSEC commissioner, an additional secretary from the Financial Institutions Division, the president of The Institute of Chartered Accountants of Bangladesh, the president of the Bangladesh Association of Publicly Listed Companies, and a managing director of a stock exchange. The fund’s chief executive officer will act as the member secretary.

The fund will act as a custodian for investors, returning money upon proper claims. It will also support financial literacy initiatives and conduct research to raise awareness among investors.

Its financial statements must follow International Financial Reporting Standards, and audits must be completed within 90 days after the end of each financial year.

Under the draft ordinance, any cash dividend announced by a company but unclaimed for more than three years must be transferred to the CMSF.