A complication arose in the meeting of unit holders on Thursday (October 31) regarding the proposal for extension of tenure of Asian Tiger Sandhani Life Growth Fund.

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

Bangladesh General Insurance Company (BGIC), the trustee of the closed-end investment fund, noted in a letter to the BSEC that only 15 out of 3,913 shareholders attended the meeting.

The meeting, held at the RAOWA Congress Hall in the capital at 11am on Thursday, resulted in a show of hands vote, with 11 members voting against the proposal to extend the fund’s mandate for another 10 years after it expires in March 2025.

Some voters called for a vote after a show of hands vote rejected the extension proposal.

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

Promoters included 51.88 lakh units of Trust Bank Investment Limited, an institutional investor; however, trustee BGIC declared this vote invalid because Masud Rana, who voted on behalf of Trust Bank Investment, did not have the necessary authority from the institution.

As a result, the trustee announced that the majority decision was “No Extension”.

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

BGIC also asked the BSEC to communicate its decision through the trade board, arguing that the issue was “price sensitive”.

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

Previously, the BSEC was engaged in a legal battle for the timely liquidation of closed-end investment funds, but in 2018 it amended its regulations to allow a ten-year tenure extension based on a majority vote of unit holders.

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

Timely redemption will allow funds to get their money back at current net asset value, especially since most closed-end funds trade at a discount on the stock exchange.

As of October 27, the 37 listed mutual funds were trading at an average of 52% of their disclosed net asset values.
A senior BSEC official said on Saturday (November 2) that there is very little chance of the tenure of any expired closed-end investment fund being extended.

The draft amendment prepared by the regulator regarding investment fund regulations does not include provisions regarding the extension of the usage period of closed-end funds.

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