A chamber bench at the Appellate Division on Sunday issued a stay order on the previous high court injunction to stop the Bangladesh Securities and Exchange Commission (BSEC) from approving the replacement of LR Global Bangladesh Asset Management Company Ltd, the asset manager of two listed mutual funds.
A full bench at the Appellate Division will hear the matter on Thursday, said the lawyers representing the securities regulator and the unit-holders.
On November 7, 2019, the High Court said in its injunction order that all the respondents including the BSEC should maintain the status quo till January 8, 2019.
The injunction order led to a pause in the process of replacing LR Global Bangladesh as the asset manager of DBH 1st Mutual Fund and Green Delta Mutual Fund.
On October 29, 2019, investors had written to the trustee to appoint IDLC Asset Management as the asset manager of the two funds instead of LR Global Bangladesh. The investors hold 72.5 percent of DBH 1st Mutual Fund's units and over 70 percent of Green Delta Mutual Fund's units.
And, Bangladesh General Insurance Company (BGIC) Ltd, the trustee of both the funds, on October 31 had sought permission from the BSEC to go ahead with what the majority unit-holders instructed.
Mutual fund rules set by the BSEC suggest that if investors owning over two-thirds units of any mutual fund want to change the asset manager of their fund, the trustee will act accordingly with permission from the securities regulator.
Listed mutual funds in Bangladesh are going through a hard time in terms of investors' confidence due to unsettled regulation and more importantly unwanted practices by some asset managers.
Investors of the two funds recently have been vocal against the decision of its asset manager to put their money into a less profitable media venture. They also questioned the transparency of the investment process. The trustee along with the securities regulator has taken a strong stance to protect investors' interest.
The Anti-Corruption Commission is also investigating the declared investment process.