New rules for private equity and venture capital firms

Bangladesh Securities and Exchange Commission yesterday approved new rules for private equity and venture capital firms so that they can pool funds and make equity investment in non-listed companies.

The private equity and venture capital firms will have to follow the Alternative Investment Rules to create and manage the funds for equity financing.

The rules will be posted on the commission's website and will also be published as a gazette notification soon, the BSEC said in a statement.

The fund managers, which will have to be registered with the BSEC, will raise capital from eligible investors, who may be institutions, high-net-worth individuals and foreign fund managers.

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The funds cannot be raised through public issue or initial public offering; it can be raised only through private placement and it will not be listed or traded on the stock exchanges like other mutual funds.

Earlier on June 2, BSEC approved the draft on the Alternative Investment Rules and posted it on the commission's website and published it on national dailies for public opinion. Also at yesterday's meeting, the regulator warned Kormop Company, a Savar-based Korean private firm, for violating securities rules.

The non-listed firm raised capital three times without prior permission from the stockmarket regulator. The company also misreported its paid-up capital in the proposal to raise capital.

The BSEC found that Kormop mentioned its paid-up capital was Tk 9.81 crore instead of Tk 14.17 crore.