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The Capital Market Stabilisation Fund (CMSF) will be reconstituted as a statutory entity, bolstering its legal foundation and sharpening its focus on protecting investors’ unclaimed dividends. The overhaul—approved by Finance Adviser Dr Salehuddin Ahmed—will also introduce a new name and operating framework for the fund.

Government Signs Off on Statutory Overhaul
At a recent Finance Ministry meeting, senior officials from the Bangladesh Securities and Exchange Commission (BSEC) and the Financial Institutions Division (FID) outlined proposals to strengthen the CMSF’s authority. Dr Ahmed gave his consent to:

• Elevate the CMSF’s status via presidential ordinance
• Remove investment powers currently used to purchase equities or sponsor funds
• Channel listed companies’ cash dividends through the CMSF to streamline tax certification and waiver processes

Rationale Behind Legal Strengthening
Since its launch in June 2021, the CMSF has struggled with:

• High management overheads and governance costs
• Attempts to divert investor funds into the government treasury
• Operational challenges, including a blocked loan-funding proposal and a halted foreign-currency account for non-resident investors

By enshrining the fund’s mandate in law, regulators aim to ensure that:

• Undistributed dividends—now totaling around Tk 40 billion at listed banks—are promptly transferred to the CMSF
• Investors’ money remains protected and accessible on demand
• Financial operations adhere strictly to the fund’s core purpose

Fund’s Track Record Since 2021
Under rules enacted by the previous BSEC:

• Cash dividends totalling Tk 94 million have been settled
• Stock dividends worth Tk 3.05 billion have been distributed at market prices

Key Proposed Changes

1. Ban on Equity Investments and Sponsorships
   – CMSF will no longer buy shares or back mutual funds with unclaimed dividends.
2. Restricted Banking Relationships
   – Deposits must be held only at state-owned commercial banks.
3. Centralised Cash Dividend Distribution
   – Shareholders receive a single tax certificate from the CMSF, simplifying tax-waiver claims and eliminating multiple corporate certifications.

Next Steps
An ordinance drafted for presidential assent will:

• Specify the CMSF’s mandatory functions in statute
• Confirm that existing licences and commitments remain valid until expiry
• Offer incentives for early conversion to the new framework

Wasi Azam, head of CMSF operations, says the dividend-distribution mechanism will be piloted once the BSEC and National Board of Revenue complete their review. Regulators anticipate that the statutory overhaul will close longstanding loopholes and reinforce investor confidence in Bangladesh’s capital market.