Written by The Banking Post
Investors in close-ended mutual funds are facing prolonged uncertainty as delays in conversion and liquidation processes prevent timely recovery of their investments.
One such case involves the SEML Lecture Equity Management Fund, which was scheduled to convert into an open-ended fund by December last year. However, approval from the Bangladesh Securities and Exchange Commission (BSEC) came only last week.
The delay has left unitholders unable to access or reinvest their money.
“Such unexpected delays in conversion or liquidation leave investors in uncertainty. They cannot decide how to utilise their funds,” said a unitholder.
Officials at Bangladesh General Insurance Company (BGIC), the trustee of the fund, said they are yet to receive the formal consent letter. “Once we receive it, we will complete the process quickly,” an official said.
The issue is not isolated. Investors in the Asian Tiger Sandhani Life Growth Fund had to wait more than six months to recover their investments after liquidation.
Market insiders say such delays defeat the purpose of mutual funds, as investors often intend to reinvest or use their money elsewhere. “No goal is achieved when funds remain stuck for so long,” another investor said.
Officials point to lengthy regulatory scrutiny as a key reason. The BSEC reviews documents, asset valuations and audit reports before granting approval, often raising queries that prolong the process.
“We need to thoroughly examine all documents. In many cases, there are discrepancies or valuation issues,” said a spokesperson of the regulator.
Currently, there is no fixed timeline for the BSEC to approve conversion or liquidation proposals, although trustees must complete their part within specified deadlines.
To address the issue, the commission has moved to introduce new guidelines aimed at setting clear timelines and streamlining approvals. A committee has already been formed to draft the rules, which will also cover fund mergers.
Under existing regulations, trustees must hold unitholders’ meetings within 30 days of notice, and liquidation requires approval from three-fourths of participating investors. After regulatory consent, funds are to be distributed within seven days.
The proposed reforms are also expected to promote fund mergers, helping reduce management costs and improve oversight.
“The guidelines will help expedite fund operations and make the process more efficient,” the BSEC spokesperson said.
Until then, investors remain exposed to delays that tie up their capital and limit flexibility in an already constrained market.
