Muhammad Ayub Ali :
In a bid to boost investor confidence and tighten regulatory control over dormant dividends, the government is preparing to transform the Capital Market Stabilisation Fund (CMSF) into a statutory entity.
The move comes amid concerns over approximately Tk 40 billion in unclaimed dividends from over 370 listed companies, which remain with banks and issuing institutions despite regulatory directives to transfer the funds to CMSF.
A recent high-level meeting at the Ministry of Finance brought together senior officials from the Bangladesh Securities and Exchange Commission (BSEC) and the Financial Institutions Division (FID), where the call for legislative reform was strongly echoed.
Finance Adviser Dr Salehuddin Ahmed is reported to have endorsed the proposal, stressing the importance of a clear legal mandate to ensure better governance and investor protection.
Originally established in June 2021 under BSEC regulations, CMSF was designed to provide liquidity support and manage claims relating to unclaimed dividends. To date, the fund has collected over Tk 21 billion, yet a significantly larger amount remains in limbo due to legal ambiguities and delayed compliance from financial institutions.
Unclaimed dividends typically arise from circumstances such as shareholder deaths, outdated contact details, or prolonged overseas stays. Some dividends have remained untouched for more than a decade.
Officials say that elevating CMSF to statutory status will address these persistent issues by closing legal loopholes, preventing potential misuse, and formalising the fund’s role in safeguarding investor assets.
A key aspect of the reform will be the prohibition of CMSF investments in unclaimed equities-an issue that sparked criticism in the case of the ICB AMCL CMSF Golden Jubilee Mutual Fund.
The planned changes will also require all cash dividends to be routed through CMSF, thereby enhancing transparency, strengthening tax compliance, and clarifying the process for tax exemptions.
The initiative follows growing concerns over the fund’s operational costs and responds to a previous proposal from the Ministry of Finance to transfer CMSF assets to the government treasury. Both BSEC and FID firmly opposed the idea, maintaining that the funds rightfully belong to investors or their heirs and must remain accessible for legitimate claims.
Another recent complication involved Bangladesh Bank blocking CMSF’s attempt to open a foreign currency account to remit dividends to non-resident Bangladeshis, citing the fund’s lack of statutory recognition.
To address these legal and operational gaps, the government is in the final stages of drafting a presidential ordinance that will clearly define the CMSF’s mandate, limit its functions to the protection of unclaimed dividends, and prevent potential abuses.
Once enacted, the statutory framework is expected to significantly enhance investor trust, bolster transparency, and solidify CMSF’s position as a responsible custodian of dormant funds in Bangladesh’s capital market.
