The Bangladesh Securities and Exchange Commission (BSEC) has formed a seven-member interim board to oversee the Capital Market Stabilisation Fund (CMSF), ending a 26-month leadership vacuum as the regulator moves to replace the fund's existing rules-based framework with a dedicated law.
Established in 2021 with undistributed dividends and other unclaimed investor assets, the CMSF holds around Tk1,700 crore, including Tk900 crore in cash and Tk800 crore in stocks.
The fund had been operating without a board since the previous board's tenure expired in 2024.
In a directive, the BSEC said the interim Board of Governors would ensure uninterrupted operations until the proposed Capital Market Stabilisation Fund Act, 2026, receives final approval. It instructed the fund to complete the necessary formalities while complying with all applicable laws, rules, regulations and directives.
BSEC Chairman Masud Khan will lead the board. Other members are BSEC Commissioner Hossain Sadat; an additional secretary from the Financial Institutions Division, subject to ministry nomination; Institute of Chartered Accountants of Bangladesh President Sabbir Ahmed; Bangladesh Association of Publicly Listed Companies President Riad Mahmud; Dhaka Stock Exchange Managing Director Nuzhat Anwar; and the CMSF chief executive officer, who will serve as member secretary.
CMSF Act to establish legal basis
The regulator is pursuing a dedicated law to strengthen the fund's legal standing following concerns raised by Bangladesh Bank over the legal basis for receiving unclaimed investor dividends.
A joint committee of Finance Ministry officials and the BSEC was formed to address the issue. Sources said the committee initially recommended winding up the fund and transferring its assets to the government exchequer, but the regulator maintained that the money should be used exclusively for investors. The decision was subsequently made to replace the rules-based framework with a statutory act.
After stakeholder feedback, officials expect the draft law to be placed before parliament for approval.
Draft law expands fund's mandate
Under the draft law, the fund's resources would include undistributed dividends and rights shares, unallotted initial public offering (IPO) and qualified investor offering (QIO) subscription money, undistributed assets of delisted companies, investment returns, government and institutional grants, and other approved sources.
The CMSF would act as custodian of these assets and settle eligible claims for dividends, rights shares, bonus shares, IPO subscription money and undistributed assets of delisted companies.
Claims would remain valid indefinitely until settled. Lawful heirs could also claim assets by following the prescribed procedures, subject to verification.
The draft would establish a centralised framework for dividend distribution and tax deducted at source (TDS) management. It would also allow the fund to finance investor education and awareness programmes, institutional capacity building, research and training.
Existing rules govern fund investments
The CMSF was established under the BSEC's Capital Market Stabilisation Fund Rules, 2021, to hold undistributed cash and stock dividends, unrefunded public subscription money and unallotted rights shares from listed issuers. Investors can claim eligible cash and shares indefinitely.
Under the existing rules, up to 40% of the fund's cash balance may be used to buy and sell listed securities. At least 50% must be used to provide refinancing loans to market intermediaries for margin lending, while up to 10% may be invested in fixed deposits, government and fixed-income securities, mutual funds and other permitted instruments.