BSEC to decide Asian Tiger Sandhani Life Growth Fund’s fate

A complexity arose during a Thursday (31 October) meeting of unit holders concerning a proposed extension of the tenure for the Asian Tiger Sandhani Life Growth Fund. 

The trustee sought guidance from the Bangladesh Securities and Exchange Commission (BSEC). 

In a letter to the BSEC, the Bangladesh General Insurance Company (BGIC), the trustee of the closed-end mutual fund, noted that only 15 out of 3,913 unit holders were present at the meeting.

Held at 11:00am on Thursday at the RAOWA Convention Hall in the capital, the meeting resulted in a show of hands vote, where 11 members voted against the proposal to extend the fund's tenure by an additional 10 years after it concludes in March 2025.

After the show of hands vote rejected the extension proposal, some voters called for a ballot vote. 

Those opposing the extension held a total of over 44.33 lakh units, while supporters represented more than 59.78 lakh units. 

Among the supporters, one institutional investor, Trust Bank Investment Limited, held 51.88 lakh units; however, the trustee, BGIC, declared this vote invalid because Masud Rana, who voted on behalf of Trust Bank Investment, lacked proper authorisation from the institution. 

As a result, the trustee announced that the majority decision was for "No Extension."

In light of this situation, the trustee requested guidance from the BSEC on the next steps. 

The BGIC also asked the BSEC to communicate its decision through the trading board, citing the matter as "price sensitive." 

BSEC Executive Director and spokesperson Rezaul Karim confirmed these developments, stating that the regulator was "working on it."

Previously, the BSEC had been engaged in a legal battle for the timely liquidation of closed-end mutual funds but changed its regulations in 2018 to allow for a ten-year tenure extension based on a majority vote from unit holders. 

However, many mutual fund investors found this painful, as their investments in several closed-end mutual funds would be locked for an additional ten years. 

Timely redemption would allow them to recover their money at the current net asset value of the funds, especially as most closed-end funds are trading at a discount in the stock market. 

As of 27 October, the 37 listed mutual funds were trading at an average of 52% of their disclosed net asset value. 
A senior BSEC official stated on Saturday (2 November) that there is little likelihood of any maturing closed-end mutual funds receiving a tenure extension. 

The draft amendments prepared by the regulator for mutual fund regulations do not include provisions for extending the tenure of closed-end funds. 

However, if a majority of investors agree, the funds could potentially convert to open-end status; otherwise, liquidation remains the only option.