The LR Global Bangladesh Asset Management Company Ltd has managed to obtain an injunction order from the High Court regarding continuation as the asset manager of two listed mutual funds – Green Delta Mutual Fund and the DBH 1st Mutual Fund.
The temporary injunction issued on November 7 directed the relevant parties to maintain status quo till January 8, 2020, according to the lawyer's certificate sent to the Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh General Insurance Company (BGIC) Ltd – the trustee of the two listed mutual funds.
Earlier on November 4, 2019, in a simultaneous legal move, the LR Global Asset Management Bangladesh Ltd had filed a writ petition with the High Court, seeking an order to stop its removal attempt as the asset manager of two closed-end mutual funds.
The new development may lead to the withdrawal of the previous writ petition, according to Advocate Mohammad Arshadur Rouf, the lawyer for the writ petitioner.
Advocate Md Mijanur Rahman, the asset management company's lawyer for the newly discussed legal attempt, told The Business Standard, "Earlier this month, we had sought an ad-interim injunction order from the First Court of Joint District Judge of Dhaka in Title Suit No 934 of 2019."
"But, the court only agreed to issue a show-cause notice on why the removal attempt of our client from the position of the asset manager of the two mutual funds will not be illegal. As the court failed to issue an injunction order, we moved to the High Court."
On November 7, the High Court, after hearing the issue from the plaintiff-appellant, became pleased to vide its order to issue a rule and pass the ad-interim injunction order, said the lawyer.
Ahmed Saifuddin Chowdhury, managing director of the BGIC, told The Business Standard, "We have been taking necessary steps to replace the asset manager of the two funds based on the majority of investors' demand. But the court injunction made us refrain from the process until further development."
Md Saifur Rahman, an executive director and the spokesperson of the BSEC, said that the BSEC is ready to handle things with the help of its legal team and the office of the attorney general.
Earlier, the hearing against the writ petition filed on November 4 was scheduled to be held on November 11, but as the plaintiff sought more time the hearing was deferred and now the petition is likely to be withdrawn.
The writ petition had mentioned the BSEC as a respondent along with its two executive directors responsible for surveillance, mutual fund, special purpose vehicle departments, and the trustee of the two funds BGIC.
The writ petition also sought a rule nisi to the securities regulator to respond to the LR Global's recent complaints against some of its competitors who are also the majority unitholders of the two listed mutual fund units.
In the writ petition, the LR Global had sought an order to the trustee of the two funds from the BSEC that would help stop the replacement of the asset manager.
The asset manager mentioned the cardinal principle of law in its writ petition which would help it to be in a position not be replaced without an opportunity to defend itself.
Over 70 percent of the unit owners of DBH 1st Mutual Fund and Green Delta Mutual Fund in the last week of October had written to the trustee to remove the LR Global as the asset manager of their fund and appoint IDLC Asset Management as the new one. Sponsors of both the fund were also among the said signatories.