SC upholds order to close two mutual funds

The Supreme Court yesterday upheld the stockmarket regulator's decision on discontinuing two closed-end mutual funds after the expiry of the funds' tenure.

The apex court also scrapped a High Court verdict that had earlier declared illegal the Bangladesh Securities and Exchange Commission's decision on the closure of the twin mutual funds -- AIMS 1st Mutual Fund and Grameen Mutual Fund One.

It means the asset management company of the two mutual funds now has to liquidate the funds and return the money to their unit-holders.

There is no legal bar for the unit-holders to get back their money following the SC order, Attorney General Mahbubey Alam told reporters after the verdict.

A mutual fund is a professionally managed collective investment scheme that pools money from many investors to invest in stocks, bonds and short-term money market instruments.

Earlier in 2010, the BSEC had decided that all closed-end mutual funds will be discontinued after their 10-year tenure. The regulator in June last year instructed the asset manager of the two funds to redeem the funds or convert those into open-ended funds within December the same year.

But Ali Zaman, a unit holder, filed a writ petition with the HC, challenging the legality of the BSEC decision. Following the petition, the HC in December last year declared illegal the regulator's decision on the discontinuation of the funds.

The regulator then filed an appeal with the SC, challenging the HC verdict.