Securities and Exchange Commission (Asset-Backed Security Issuance) Rules, 2004 (Updated until August 24, 2021)

Bangladesh Gazette
Extraordinary Issue
Published by Authority

Saturday, October 16, 2004

[Vol. 8 -- Notices and Advertisements Issued by Private Individuals and Corporations]

Securities and Exchange Commission

Notification

Date, September 18, 2004

No.-SECM/CMRRCD/2004-137/Admin/01-23-23: The Securities and Exchange Commission, considering the need to regulate the process of converting the future cash flows or accumulated assets of an institution or trust through credit enhancement (credit enhancement) or related processes into liquid and tradable securities, and thereby creating opportunities for investment in the securities market or completing the relevant securities, has decided to make the following rules under the power conferred by Section 24, Sub-section (1) of the Securities and Exchange Commission Act, 1993 (Act No. 15 of 1993):

1. Title – ‘[(1)] These rules shall be known as the Securities and Exchange Commission (Asset-Backed Security Issuance) Rules, 2004.

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¹ Notification No.-SECM/CMRRCD/2004-137/Admin/03-18, dated January 09, 2006, has been consolidated, which was published in the Bangladesh Gazette on April 5, 2006.

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²(2) The administrative provisions mentioned in these rules shall be considered as orders or directions issued under the Securities and Exchange Commission Act, 1993; Provided that the Commission may, from time to time, issue any other order or direction under these rules.

2. Definitions – (1) In these rules,–
(a) “Compliance Officer” means the Compliance Officer appointed by the Trustee; (b) “Assets” means the specific assets of a company or any institution or trust recognized by law; (c) “Asset-backed security” means any security issued by a company or any institution or trust recognized by law based on the assets of an institution, which is regulated by the Securities and Exchange Commission under these rules.

Explanation: All types of receivables and loans, such as credit card receivables, lease rental, franchise, licence, healthcare receivables, cash flows from various sources, and any other category considered by the Commission, shall be included under “Assets”.

(2) The words or expressions used in these rules or in related deeds and documents, for which no definition is provided, shall be used in the sense in which they are used in The Trust Act, 1882 (Act No. 2 of 1882), The Registration Act, 1908 (Act No. 6 of 1908), Securities and Exchange Ordinance, 1969 (XVII of 1969), Banking Companies Act, 1991 (Act No. 14 of 1991), Securities and Exchange Commission Act, 1993 (Act No. 15 of 1993), Financial Institutions Act, 1993 (Act No. 27 of 1993), Companies Act, 1994 (Act No. 18 of 1994), Depository Act, 1999 (Act No. 6 of 1999), and any rules or regulations made thereunder.

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¹ Notification No.-SECM/CMRRCD/2004-137/Admin/03-18, dated January 09, 2006, has been consolidated, which was published in the Bangladesh Gazette on April 5, 2006.
² Notification No.-SECM/CMRRCD/2004-137/Admin/03-18, dated January 09, 2006, has been consolidated, which was published in the Bangladesh Gazette on April 5, 2006.
³ Notification No.-SECM/CMRRCD/2004-137/Admin/03-18, dated January 09, 2006, has been consolidated, which was published in the Bangladesh Gazette on April 5, 2006.

3. Registration for Issuance of Asset-Backed Securities - (1) No one shall issue asset-backed securities or act as a trustee (trustee) for such issuance without the registration of the Commission.

(2) An application in writing must be submitted to the Commission along with all relevant documents, audited financial statements, draft Trust Deed and other relevant documents (where applicable), and complete information by the issuer or sponsor; Provided that, if any part of the relevant securities is sold through a public offer, such application must be made through a Market Banker or Issuance Manager in the manner prescribed in the Public Issue Rules, 1998.

(3) In the case of sale through public offer, a draft public offer document containing the terms and conditions of the securities and other relevant information, and the main report on credit rating issued in accordance with rule 3 of the Credit Rating Companies Rules, 1996, must also be submitted.

(4) If the Commission deems it necessary, it may ask the applicant for additional information, documents, or deeds, which the applicant shall be obliged to provide duly.

(5) Along with the application, a non-refundable application fee of ‘Fifty Thousand’ Taka in the form of a Payment Order or Bank Draft issued by a scheduled bank in favor of the ‘Securities and Exchange Commission’ must be submitted.

†(6) If the application is approved, the registration fee at the rate of 0.1% (zero point one percent) of the issue value must be paid to the Commission in the manner prescribed in sub-rule (5) within the specified conditions and time mentioned in the Commission’s approval letter, after which the Commission shall immediately grant registration for the issuance of the relevant securities.]

¹ Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has replaced the words “Five Thousand Taka” with the words “Fifty Thousand Taka”, which was published in the Bangladesh Gazette on August 24, 2021.

² Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has replaced sub-rule (6), which was published in the Bangladesh Gazette on August 24, 2021.

(7) If the application is rejected, the Commission shall inform the applicant in writing within thirty days of receiving the application form or additional information, documents, or deeds, stating the reasons for rejection.

4. Listing of Registered Securities Sold via Public Offer on Stock Exchange OTC or Stock Exchange - In the case of sale of registered securities via public offer, the relevant securities must be listed for trading on the Over-the-Counter (OTC) of a Stock Exchange or Stock Exchange within three months of the public offer.

5. Suspension or Cancellation of Registration of Registered Securities - The Commission may, for failure to comply with the conditions of registration of securities under these rules, for any reason, or in the interest of the capital market or public interest, suspend the validity of the registration of the relevant securities for a specified period, take appropriate measures, or completely cancel it, and in such case, the relevant institution (which shall include the sponsor, trustee, and servicer) shall be obliged to duly comply with any order or direction of the Commission regarding the refund of investors' money;
   Provided that the Commission shall not issue any order or direction for suspension or cancellation without providing the person to whom such order or direction is issued the opportunity to present their views; Further provided that the Commission's decision in this matter shall be considered final.

6. Appointment of Trustee for Issuance of Asset-Backed Securities - (1) For the issuance of any securities under these rules, a company or institution registered for this purpose must be appointed as Trustee, and the Deed for Engagement of Trustee must be approved by the Commission.

(2) Registration as Trustee - A bank or financial institution, company, or statutory body must be registered by the Commission in accordance with these rules for appointment as Trustee.

(3) Application for Registration - For obtaining registration as Trustee, Form ‘A’ and a fee (non-refundable) of ‘Fifty Thousand’ Taka in the form of a Pay Order/Bank Draft

³ Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has replaced the words “Five Thousand” with the words “Fifty Thousand”, which was published in the Bangladesh Gazette on August 24, 2021.

must be submitted to the Securities and Exchange Commission. [4] †Provided that, for the issuance of the Asset-Backed Security Trust Registration Certificate, Two Lakh Taka must be paid to the Commission.|

(4) Ineligibility for Registration Approval - (1) A company, bank, financial institution, or statutory body shall not be eligible for registration approval as a Trustee if- (a) It does not have a paid-up capital of at least 10 million Taka and a net-worth of 8 million Taka; (b) It or any of its directors or subsidiary institutions is significantly involved with the issuer or sponsor; (c) It or any of its directors is a loan defaulter; (d) It does not have a good reputation for integrity in transactions; (e) If it is involved in any capital or securities market activities, it shows negligence or indifference in the performance of duties; (f) Its Chief Executive Officer does not have at least five years of experience as an executive in financial market services, and other officers do not have the necessary experience related to financial markets; (g) It does not have the necessary equipment, office, and facilities for business and service provision. †[(h) It does not appoint a qualified Compliance Officer as determined by the Commission.

Provided that, existing registered Trusts must appoint/assign a Compliance Officer within the next six months.

Further provided that, the Compliance Officer must necessarily be a minimum of a secured borrower, and the Commission may, from time to time, impose any conditions regarding this matter;

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¹ Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has replaced “.” with “5”, which was published in the Bangladesh Gazette on August 24, 2021.
² Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has added a new proviso, which was published in the Bangladesh Gazette on August 24, 2021.
³ Notification No.-SECM/CMRRCD/2004-137/Admin/03-18, dated January 09, 2006, has been consolidated, which was published in the Bangladesh Gazette on April 5, 2006.

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(b) The Compliance Officer shall submit the Trust’s compliance report regarding securities laws and regulations to the Trust and the Commission in the manner and time determined by the Commission.|

(2) The Commission may, for sufficient reasons, relax any of the provisions of sub-rule (4)(1) for any Trust.
(3) Prior approval of the Commission must be obtained for any changes regarding Trust appointment.
(4) Upon written application by two-thirds of the securities holders, or if the Commission deems it appropriate, the Commission may cancel the appointment of any Trust and appoint a new Trust in its place:

Provided that, the Commission shall not make a decision to cancel the appointment of any Trust without providing personal local opportunity.
(5) A Trust may not retire until another Trust is appointed in its place.

7. Annual Fee of Trust - (1) Each Trust registered under these rules must pay an annual fee of [Ninety-Five Thousand Taka] to the Commission in the form of a Pay Order or Bank Draft before the start of each financial year (calculated from the date of certificate issuance):

†Provided that, if the annual fee is not deposited within the specified time, a penalty of Five Lakh Taka per month or part thereof for delay must be paid to the Commission.|

(2) If a Trust fails to pay the annual fee, the Commission shall not consider any new Trusteeship application until the outstanding fee is paid.
(3) Without prejudice to any provision of these rules, if the Commission considers that there are reasons for delay in fee payment, it may, upon the application of a Trust, permit the payment of the relevant fee at any time within sixty days after the start of the financial year.

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¹ Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has replaced the words “Five Thousand Taka” with the words “Ninety-Five Thousand Taka”, which was published in the Bangladesh Gazette on August 24, 2021. ² Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has replaced the proviso, which was published in the Bangladesh Gazette on August 24, 2021.

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8. Rights and Responsibilities of Trustee.– (1) The Trustee shall have the right to obtain any information related to the management of the Trust from the Issuer or Customer, and the Trustee may request information or reports from them from time to time.

(2) If any Trustee ever feels that the Trust Fund is not being operated in accordance with the relevant laws or these rules, such Trustee shall immediately take necessary measures to rectify the Trust Deed and inform the Commission regarding the same.

(3) The Trustee shall ensure that all necessary measures and deeds are executed for any acquisition and transfer on behalf of the Trust, and ensure that transactions by the Customer are conducted properly and in accordance with these rules.

(4) The Trustee shall supervise the assets of the Trust Fund and keep them in custody on behalf of the Securities Holders in accordance with these rules and the Trust Deed.

(5) The Trustee shall ensure that all transactions of the Trust Fund are conducted in accordance with the Trust Deed and these rules.

(6) The Trustee shall be responsible for maintaining accounts for any money payable to the Trust Fund in accordance with these rules and the Trust Deed, and for any money received by the Trust Fund on behalf of the Securities Holders.

(7) The Trustee shall receive monthly reports from the Issuer or Customer regarding the activities of the Trust Fund, examine them, and submit such monthly reports to the Commission within the next month along with a certification that the Issuer or Customer is duly fulfilling their responsibilities.

(8) The Trustee shall convene a meeting of Securities Holders in the following cases, namely:
(a) When the Commission orders the convening of a meeting in the absence of Unit Owners; (b) When three-fourths of the Owners of any scheme request the meeting, or (c) When any scheme needs to be wound up or securities need to be redeemed earlier than scheduled, or any scheme needs to be amended.

9. Punishment.– Without prejudice to the provisions of punitive measures mentioned in these rules, in case of violation of registration-related conditions mentioned in or under these rules, the punitive measures mentioned in the Securities and Exchange Ordinance, 1969, Securities and Exchange Commission Act, 1993, or Depository Act, 1999, shall be adopted and applied where applicable.

10. Payment of Fees, etc. in favor of the Commission.– Various types of fees, etc., in favor of the Bangladesh Securities and Exchange Commission may be deposited through Pay Order, Bank Draft, or Electronic Fund Transfer.

¹ Notification No.-BSECM/CMRRCD/2019-392/24/Admin/124, dated June 30, 2021, has amended Rule 10, which was published in the Bangladesh Gazette on August 24, 2021.

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Form-‘A’

[By Rule 6(3)]

Application for Registration as Trustee

1. Name of the Trustee.

2. Registered Office/Contact Address.
   Telephone No.
   E-mail No.
   Fax No.

3. Name of the person to be contacted.

4. Date and place of incorporation/statutory establishment.

5. Objectives of the Trustee.
   (Copy of Memorandum and Articles of Association/Relevant Law must be attached).

6. Capital Structure and Type of Shareholding.

7. Name and Address of the Trustee’s Auditor and Banker (where applicable).

8. Is the Trust or any of its directors a loan defaulter? If so, full details.

9. Is the Trust or any of its directors an organizer, asset manager, custodian, stock dealer, stock broker, market banker, or portfolio manager of any Mutual Fund, or is any of its directors or subsidiary institutions involved with any such entity? If so, mention in detail.

10. Full details if the Trust or any of its directors or subsidiary institutions is involved with the Issuer or Customer in any way.

11. Full details if the Trustee is involved in any capital or securities market activities (if previously appointed or involved as a Trustee, full details must be mentioned).

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12. Name and duration of experience in financial services of the Trustee’s Chief Executive Officer (details to be provided).

13. Names and qualifications of other key officers.

14. Organizational Structure.

15. Description of necessary equipment for service provision.

Name, Signature, and Seal of the Applicant on behalf of the Trustee ……………………………………… Date ……………………………………… Place ………………………………………

On behalf of the Securities and Exchange Commission Saleh Ahmed Chowdhury Member and Acting Chairman.