Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996

Bangladesh Gazette
Extraordinary Number
Published by Authority
Sunday, May 26, 1996
Vol. 8 -- Notifications and Notices issued by or under the authority of the Government to private persons and corporations.

Securities and Exchange Commission
Life Insurance Tower (16th & 17th Floor)
10, Dilkusha Commercial Area
Dhaka-1000

Notification
Date, 24th April 1996 AD / 11th Bangabda 1403

S.R.O. No. 59-Law/96- In exercise of the powers conferred by Section 25 of the Securities and Exchange Commission Act, 1993 (Act No. 15 of 1993), the Securities and Exchange Commission, with the previous approval of the Government, hereby makes the following [Rules]:

Chapter I

Preliminary

1. Short Title. - These [Rules] shall be called the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) [Rules], 1996.

2. Definitions. - (1) Unless the context or subject matter otherwise requires, in these [Rules]:

(a) "Act" means the Securities and Exchange Commission Act, 1993 (Act No. 15 of 1993);

(b) "Application" means an application for a Merchant Banker Certificate or, as the case may be, a Portfolio Manager Certificate;

(c) "Issue" means a prospectus issued for the sale of securities and the purchase or sale or any other mode of transfer of securities by a person or a statutory body through a merchant banker;

(d) "Corporate Advisor" means a person who advises the issuing company regarding the quantum, type, necessity, or related matters of the issue;

[(dd) "Supervisory Committee" means the supervisory committee appointed by the Merchant Banker;]

(e) "Portfolio" means all securities of a person;

[(f) "Portfolio Manager" means any person who, in addition to managing his own portfolio, advises clients regarding the management and administration of their securities or funds and related matters, or acts as the manager of securities or funds on behalf of clients, or discharges the responsibility of administration of clients' securities or funds;]

(g) "Auditor" means an auditor appointed under Rule 32 [of these Rules];

(h) "Form" means the forms appended to these [Rules];

(i) "Person" shall include a company, a statutory body, and any other institution approved by the Commission;]

[(j) "Merchant Banker" means a person who has obtained a registration certificate to perform various duties as a corporate advisor, portfolio manager, underwriter, and/or issue manager under these Rules;

(k) "Certificate" means the Merchant Banker or, as the case may be, Portfolio Manager Registration Certificate issued by the Commission under these [Rules];

(l) "Board of Directors" means the Board of Directors of the Merchant Banker;

(m) "Managing Director/CEO" means the Managing Director/CEO (MD/CEO) of the Merchant Banker.]]

[2A. Compliance with Orders or Directives.] - The compliant provisions mentioned in these Rules shall be considered as compliance with directives or orders issued under the Securities and Exchange Commission Act, 1993:

Provided that the Commission may, from time to time, issue any other order or directive under these Rules.]

Chapter II

Merchant Banker Registration Certificate, etc.

3. Prohibition of acting as Merchant Banker without Registration Certificate. - No person shall act as a Merchant Banker without obtaining a Merchant Banker Registration Certificate from the Commission under these [Rules]:

Provided that if any person had applied to the Commission for a Merchant Banker Registration Certificate immediately before the commencement of these [Rules], he may continue to be engaged in the profession of Merchant Banker until the said application is disposed of.

[3B. Ineligibility for Grant of Registration.] -(1) An application for Merchant Banker registration shall not be eligible for grant of registration if:

(a) It is not a company, a statutory body, or any other institution approved by the Commission:

Provided that those Merchant Bankers who have previously obtained registration certificates as institutions other than companies or statutory bodies shall be required to convert into companies within 6 (six) months of the publication of this amendment in the Gazette;

[(b) Its paid-up capital is less than 25 (twenty-five) crore Taka and its retained net worth is less than 50 (fifty) percent of the paid-up capital:

Provided that,

(i) If any applicant is interested in engaging in any issue management other than underwriting and portfolio management, he shall have a minimum paid-up capital of 2.50 (two point five) crore Taka, and in the case of a certified issue manager, the paid-up capital shall be enhanced to 2.50 (two point five) crore Taka within 1 (one) year of the publication of the notification of this amendment in the Gazette;

(ii) If any applicant is interested in issue underwriting, he shall have a minimum paid-up capital of 12.50 (twelve point five) crore Taka, and in the case of a certified underwriter, the paid-up capital shall be enhanced to 12.50 (twelve point five) crore Taka within 1 (one) year of the publication of the notification of this amendment in the Gazette;

(iii) If any applicant is interested in portfolio management, issue management, and underwriting, he shall have a minimum paid-up capital of 25 (twenty-five) crore Taka, and in the case of a certified issue manager, underwriter, and portfolio manager, the paid-up capital shall be enhanced to 25 (twenty-five) crore Taka within 1 (one) year of the publication of the notification of this amendment in the Gazette:

And further provided that an underwriter and merchant banker shall not at any time undertake underwriting exceeding five times its capital, i.e., paid-up capital and free reserves (excluding revaluation reserve), and a portfolio manager and merchant banker (excluding banks and financial institutions) shall not at any time manage portfolio funds exceeding five times its capital, i.e., paid-up capital and free reserves (excluding revaluation reserve).]]

(c) In the opinion of the Commission, the application does not warrant consideration in the interest of the capital market or investors;

(2) The Commission may, in the public interest, relax any of the provisions of sub-rule (1) for any Merchant Banker.]]

4. Application for Certificate. - (1) An application for a Merchant Banker Registration Certificate shall be made in Form 'A'.

(2) No application shall be receivable unless an application fee of [1,00,000 (one lakh) Taka] is deposited with the Commission by Pay Order or Bank Draft.

(3) If the information required by the application form is not stated correctly and completely or if other conditions of these 2 [Rules] are not fulfilled, the application shall be liable to be rejected:

Provided that before rejecting any application, the applicant shall be informed in writing to remove the objections within a specified time by the Commission.

(4) For the convenience of deciding any application, the Commission may call for additional information regarding the information submitted with the application or explanation of any information provided, or call the applicant or a person on his behalf to appear personally.

5. Matters to be considered for granting Certificate. -

[3] The Commission shall, among others, investigate and consider the following matters for granting a Merchant Banker Registration Certificate, namely:

(a) The location of the applicant's business, office, etc.;

(b) The staff employed by the Commission for Merchant Banker work and their relevant experience in such work;

(d) Indebtedness of the applicant or any of his [Directors], involvement of the applicant or any of his [Directors] in any case related to the securities market, conviction of the applicant or any of his [Directors] for any offense involving moral turpitude, or conviction for any such offense;

(e) Non-use of the words "Merchant Banker", "Merchant Bank", or "Investment Bank" as part of the name.

5 (2) No stock dealer, stock broker, or asset management company of a mutual fund, trustee, or custodian shall be eligible to obtain a Merchant Banker and Portfolio Manager Registration Certificate.

6 [(3) A Merchant Banker shall not be eligible to obtain a Merchant Banker Registration Certificate unless it appoints one qualified supervisory committee member as determined by the Commission:

Provided that registered Merchant Bankers shall be required to appoint/assign a supervisory committee member within the next six months;

(4) The supervisory committee member must necessarily hold at least a graduate degree, and the Commission may impose any conditions on this matter from time to time;

(5) The supervisory committee member shall submit a report on compliance with securities laws by the Merchant Banker to the Merchant Banker and the Commission in the manner and time determined by the Commission.]]

6. Adequacy of Capital. - (1) The Commission shall not grant a Merchant Banker Registration Certificate to any person unless he has the capital determined by the Commission for this purpose from time to time.

(2) The Commission shall publish the amount of capital under sub-rule (1) [1] by notification.

[6A. Grounds for Rejection of Application due to Board of Directors Composition.] - If the applicant for a Merchant Banker and Portfolio Manager Registration Certificate is a company, its application shall be rejected if more than 50% of the members of its Board of Directors are members of the Board of Directors of its promoter company.]

7. Grant of Merchant Banker Registration Certificate Application. - (1) If, upon considering an application for a Merchant Banker Registration Certificate submitted by a person, the Commission is satisfied that it is appropriate and proper to grant the Certificate to the applicant, the Commission shall decide to grant the Merchant Banker Registration Certificate and inform the applicant in writing of such decision.

(2) Within one month of receiving the decision of the Commission under sub-rule (2) [1], the applicant shall deposit with the Commission a Certificate fee of [10,00,000 (ten lakh) Taka] and the first annual fee of the Certificate of [2,00,000 (two lakh) Taka] by Pay Order or Bank Draft 5 [:]

6 [Provided that in case of delay in fee payment, a late fee of 50,000 Taka per month or part thereof shall be payable.]

(3) If the fee determined under sub-rule (2) [1] is deposited, the Commission shall provide the applicant with a Merchant Banker Registration Certificate in Form 'B'.

8. Decision to Reject Application. - (1) If, upon considering an application for a Merchant Banker Registration Certificate submitted by a person, the Commission is satisfied that it is not appropriate and proper to grant the Certificate to the applicant, the Commission shall record the reasons for not granting the application and inform the applicant in writing of such decision within 15 (fifteen) days from the date of the decision, and inform him that if he has any representation regarding the reasons for not granting the application, he shall inform the Commission in writing within 10 (ten) days of being informed of the decision not to grant the application, or he may appear personally before the Commission and inform the Commission of his intention to present his representation and written representation within the said time.

(2) After considering the written, oral, or both representations submitted by the applicant under sub-rule (1) [1], the Commission shall give a final decision on the relevant application.

(3) If the Commission grants the application under sub-rule (2) [1], the provisions of Rule 7 shall apply, and if it rejects it, his application shall be considered as cancelled.

9. Review of Cancelled Application. - (1) If an application is cancelled by the Commission under Rule 1 [8], the applicant shall be informed in writing of the reasons for cancellation within 30 (thirty) days of the decision to cancel.

(2) Within 30 (thirty) days of receiving the letter of cancellation of the application under sub-rule (1) [1], the applicant may make a written application to the Commission for review of such decision, and the Commission shall review any such application.

(3) Within 30 (thirty) days of receiving the application for review submitted by the applicant under this 1 [Rule], the Commission shall give a final decision on it following the procedure and process determined by the Commission and inform the applicant of such decision in writing.

(4) If the application is granted after review under this 1 [Rule], the provisions of Rule 1 [7] shall apply in that case.

10. Annual Fee of Certificate. - (1) The annual fee for the registration Certificate of each Merchant Banker granted under these 1 [Rules] shall be [2,00,000 (two lakh Taka) Taka], which shall be deposited with the Commission by Pay Order or Bank Draft.

(2) Subject to the provisions of sub-rule (2) [1] of Rule 7, this annual fee shall be payable within three months of the end of each calendar year from the date of commencement of the Certificate work.

(3) If any Merchant Banker fails to pay the annual fee payable under this 1 [Rule], the Commission may suspend his Certificate by written order:

Provided that before issuing such suspension order, a notice showing cause shall be given to the relevant Merchant Banker as to why the suspension order should not be issued.

Chapter III

Duties of Merchant Banker

11. Maintenance of Account Books and Records. -(1) Every Merchant Banker shall maintain the following account books, records, and documents at all times:

(a) Balance Sheet;

(b) Profit and Loss Account;

(d) Auditor's Report;

(e) Account books related to account statements determined by the Commission.

(2) Every Merchant Banker shall inform the Commission where his account books, records, and documents are kept.

(3) All account books, records, and documents maintained under this 1 [Rule] shall be kept for 12 (twelve) years.

(4) Every Merchant Banker shall be bound to submit the Balance Sheet, Profit and Loss Account, Cash Receipts and Payments Statement, and other reports determined by the Commission to the Commission at the end of each accounting period as per the Commission's requirement.

(5) Every Merchant Banker shall be bound to provide the following information to the Commission in the time and manner determined by the Commission, namely:

(1) His responsibility in issue management determined by the Commission;

(2) Any change or modification in previously submitted information that may affect issue approval;

(3) The names of the companies whose issues he has managed or with which he was otherwise associated;

(4) Any discrepancy in capital adequacy; and

(5) His role as manager, underwriter, advisor, or consultant in any issue.

12. Unaudited Account Statements. - For the convenience of the Commission to investigate the capital adequacy of the Merchant Banker, every Merchant Banker shall submit his unaudited account statements to the Commission every 3 (three) months.

13. Report on Steps Taken in Light of Auditor's Report. - The accounts of the Merchant Banker shall be audited according to prevailing law; and within sixty days of receiving the auditor's report, every Merchant Banker shall take necessary measures to rectify the deficiencies or irregularities mentioned in the report.

14. Provision of Information Regarding Issue Management. - The Merchant Banker involved in issue management shall provide the Commission with all matters related to such issue management determined by the Commission, along with a reasonable Certificate (Fair Certificate).

15. Prohibition of Share Trading. - No Merchant Banker or any of his directors, partners, managers, or chief executives, however named, shall, during the performance of his professional duties, make any share purchase or be associated with any transaction based on unpublished price-sensitive information (UPSI) of a statutory body obtained from a client or any other source, for his own account or through associates or relatives.

Explanation. - In this 1 [Rule], "relative" shall include father, mother, father-in-law, mother-in-law, husband, wife, brother, sister, brother-in-law, sister-in-law, son-in-law, or daughter-in-law.

[15A. Prohibition in Appointment of Staff, etc.] - No staff or employee appointed by a Merchant Banker and Portfolio Manager shall be able to be staff or employee of any mutual fund, stock dealer, or stock broker.]

Chapter IV

Portfolio Manager Registration Certificate, etc.

16. Prohibition of acting as Portfolio Manager without Certificate. - No person shall act as a Portfolio Manager without obtaining a Portfolio Registration Certificate from the Commission under these 1 [Rules]:

Provided that if any person had applied to the Commission for a Portfolio Manager Registration Certificate immediately before the commencement of these 1 [Rules], he may continue to be engaged in the profession of Portfolio Manager until the said application is disposed of.

[16A. Ineligibility for Grant of Registration.] -(1) An application for Portfolio Manager registration shall not be eligible for grant of registration if:

(a) It is not a company, a statutory body, or any other institution approved by the Commission:

Provided that those Portfolio Managers who have previously obtained registration certificates as institutions other than companies or statutory bodies shall be required to convert into companies within 6 (six) months of the publication of this amendment in the Gazette;

4 [(b) Its paid-up capital is less than 12.50 (twelve point five) crore Taka and its retained net worth is less than 50 (fifty) percent of the paid-up capital, and in the case of a certified Portfolio Manager, the paid-up capital shall be enhanced to 12.50 (twelve point five) crore Taka within 1 (one) year of the publication of the notification of this amendment in the Gazette:

Provided that a Portfolio Manager (excluding banks and financial institutions) shall not at any time manage portfolio funds exceeding five times its capital, i.e., paid-up capital and free reserves (excluding revaluation reserve).]]

(c) In the opinion of the Commission, the application does not warrant consideration in the interest of the capital market or investors.

(2) The Commission may, in the public interest, relax any of the provisions of sub-rule (1) for any Portfolio Manager.]]

17. Application for Certificate. - (1) An application for a Portfolio Manager Registration Certificate shall be made in Form 'C'.

Footnotes from source text:

The word "Rules" has been replaced by Notification No. SECI/Regi:/Pro:/Mabya/2000/747, dated 24th October 2000 AD, published in the Bangladesh Gazette on November 7, 2000 AD.
Inserted by Notification No.-SECI/CMARRCID/2001-50/Admin-03/14, dated January 9, 2006 AD, published in the Bangladesh Gazette on April 5, 2006 AD.
Replaced by Notification No. SECI/LSD/(Ad-Hoc)/2003/122/Admin-03/12 dated: 26th January 2006 AD.
Replaced by Notification No.-SECI/CMARRCID/2006-159/Admin-01/31 dated June 16, 2008, published in the Bangladesh Gazette on July 20, 2008 AD.
Replaced by Notification No. SECI/LSD/(Ad-Hoc)/2003/122/Admin-03/12 dated: 26th January 2006 AD.
Added by Notification No.-SECI/CMARRCID/2001-50/121/Admin/36 dated December 20, 2011, published in the Bangladesh Gazette on January 11, 2012.
Inserted by Notification No.-SECI/CMARRCID/2001-50/Admin-03/14, dated January 9, 2006 AD, published in the Bangladesh Gazette on April 5, 2006 AD.
Replaced by Notification No:-BSECI/CMARRC/2019-392/24/Admin/124, dated, June 30, 2021 AD, published in the Bangladesh Gazette on August 24, 2021 AD.
Replaced by Notification No. SECI/Regi:/Pro:/Mabya/2000/747, dated 24th October 2000 AD, published in the Bangladesh Gazette on November 7, 2000 AD.
Re-numbered by Notification No. SECI/Regi:/Pro:/Mabya/2000/747, dated 24th October 2000 AD, published in the Bangladesh Gazette on November 7, 2000 AD.
Replaced by Notification No.-SECI/CMARRCID/2006-159/Admin-01/31 dated June 16, 2008, published in the Bangladesh Gazette on July 20, 2008 AD.
Replaced by Notification No. SECI/Regi:/Pro:/Mabya/2000/747, dated 24th October 2000 AD, published in the Bangladesh Gazette on November 7, 2000 AD.
Replaced by Notification No.-SECI/CMARRCID/2001-50/125/Admin/40 dated March 11, 2012 AD, published in the Bangladesh Gazette on April 1, 2012 AD.
Replaced by Notification No.-SECI/CMARRCID/2006-159/Admin-01/31 dated June 16, 2008, published in the Bangladesh Gazette on July 20, 2008 AD.
Replaced by Notification No:-BSECI/CMARRC/2019-392/24/Admin/124, dated, June 30, 2021 AD, published in the Bangladesh Gazette on August 24, 2021 AD.
Replaced by Notification No. BSECI/CMARRC/2019-392/24/Admin/124, dated, June 30, 2021 AD, published in the Bangladesh Gazette on August 24, 2021 AD.
Replaced by Notification No. BSECI/CMARRC/2019-392/24/Admin/124, dated, June 30, 2021 AD, published in the Bangladesh Gazette on August 24, 2021 AD.
Added by Notification No. BSECI/CMARRC/2019-392/24/Admin/124, dated, June 30, 2021 AD, published in the Bangladesh Gazette on August 24, 2021.
Replaced by Notification No.-SECI/CMARRCID/2006-159/Admin-01/31 dated June 16, 2008, published in the Bangladesh Gazette on July 20, 2008 AD.
Replaced by Notification No:-BSECI/CMARRC/2019-392/24/Admin/124, dated, June 30, 2021 AD, published in the Bangladesh Gazette on August 24, 2021 AD.
Replaced by Notification No. SECI/Regi:/Pro:/Mabya/2000/747, dated 24th October 2000 AD, published in the Bangladesh Gazette on November 7, 2000 AD.
Replaced by Notification No. SECI/Regi:/Pro:/Mabya/2000/747, dated 24th October 2000 AD, published in the Bangladesh Gazette on November 7, 2000 AD.
Replaced by Notification No.-SECI/CMARRCID/2006-159/Admin-01/31 dated June 16, 2008, published in the Bangladesh Gazette on July 20, 2008 AD.
Replaced by Notification No.-SECI/CMARRCID/2001-50/127/Admin/42 dated April 16, 2012, published in the Bangladesh Gazette on May 27, 2012.

(2) Application fees shall be deposited as non-refundable to the Commission via Pay Order or Bank Draft. [1,00,000 (One Lakh) Taka] If not deposited, no application shall be receivable.

(3) If the information required by the application form is not stated correctly and completely, or if other provisions of these [Rules] are not complied with, the application shall be liable to be cancelled:
Provided that, before cancelling any application, the Commission shall inform the concerned applicant in writing within a specified time to remove the objections.

(4) For the convenience of deciding any application, the Commission may call upon the applicant to provide additional information regarding the information submitted with the application or to explain any information provided, or to appear personally or through an authorized representative.

Matters to be considered for issuance of Certificate.- For the issuance of Portfolio Manager Registration Certificate, the Commission, among others, shall investigate and consider the following matters, namely:-
(a) The place of business, office, etc. of the applicant; (b) The staff engaged in portfolio work as determined by the Commission and their experience in such work; (c) Capital adequacy; (d) Insolvency of the applicant or any [Director], involvement of the applicant or any [Director] in any case related to the Securities Market, conviction of the applicant or any [Director] for any offense involving moral turpitude, etc.
Capital Adequacy.- (1) If there is no capital as determined from time to time by the Commission for this purpose, the Commission shall not issue a Portfolio Manager Registration Certificate to any person.

(2) The Commission shall notify the amount of capital determined under sub-rule (1) [Sub-rule] by gazette notification.

Approval of Application for Portfolio Manager Registration Certificate.- (1) After considering the application for Portfolio Manager Registration Certificate submitted by a person, if the Commission is satisfied that it is appropriate and proper to issue the certificate to the applicant, the Commission shall take a decision to issue the Portfolio Manager Registration Certificate and inform the applicant in writing of such decision.

(2) Within one month of receiving the decision of the Commission under [Sub-rule] (1), the applicant shall deposit [10,00,000 (Ten Lakh) Taka] as certificate fee and [2,00,000 (Two Lakh) Taka] as the first annual fee of the certificate to the Commission via Pay Order or Bank Draft.

1
[Provided that, in case of delay in payment of fee, a late fee of 50,000 Taka per month or part thereof shall be payable.]

(3) Upon payment of the fee determined under [Sub-rule] (2), the Commission shall issue a Certificate of Portfolio Manager in Form 'B' to the applicant.

Decision to Reject Application.- (1) After considering the application for Portfolio Manager Registration Certificate submitted by a person, if the Commission is not satisfied that it is appropriate and proper to issue the certificate to the applicant, the Commission shall record the reasons for not approving the application and inform the applicant in writing within 15 (fifteen) days from the date of taking such decision, and inform him that if he has any representation regarding the reasons for non-approval, he shall inform the Commission in writing within 10 (ten) days of being informed of the decision of non-approval, or he may personally appear before the Commission and inform the Commission within the said period of his intention to submit his representation and additional written representation.

(2) After considering the written, oral, or both representations submitted by the applicant under [Sub-rule] (1), the Commission shall give a final decision on the relevant application.

(3) If the Commission approves the application of the applicant under [Sub-rule] (2), the provisions of Rule 20 shall apply, and if it does not approve, his application shall be deemed to be cancelled.

Reconsideration of Cancelled Application.- (1) If any application is cancelled under [Rule] 20 by the Commission, it shall be informed to the applicant in writing within 30 (thirty) days of taking the decision of cancellation, along with the reasons for cancellation.

(2) Within 30 (thirty) days of receiving the letter of cancellation of application under [Sub-rule] (1), the applicant may make a written application to the Commission for reconsideration of such decision, and any such application shall be reconsidered by the Commission.

(3) Within 30 (thirty) days of receiving the application for reconsideration submitted by the applicant under this [Rule], a final decision shall be given on it following the prescribed method and procedure, and the applicant shall be informed of such decision in writing.

(4) If the application is approved after reconsideration under this [Rule], the provisions of [Rule] 20 shall apply in that case.

Change in Nature, etc. of Portfolio Manager.- Notwithstanding anything contained in this Chapter, no change in the scope and nature of any Portfolio Manager shall be made without the prior written permission of the Commission.
Annual Fee of Certificate.- (1) The annual fee for each Portfolio Registration Certificate issued under these [Rules] shall be [2,00,000 (Two Lakh) Taka], which shall be deposited to the Commission via Pay Order or Bank Draft.

1
[Provided that, subject to the provisions of [Rule] 7 [Sub-rule] (2), this annual fee shall be paid within three months of the end of each calendar year from the date of commencement of business of the certificate.]

(2) If any Portfolio Manager fails to pay the annual fee payable under this [Rule], the Commission may, by written order, suspend his certificate:
Provided that, before issuing such suspension order, a notice explaining the reasons for issuing the suspension order shall be given to the Portfolio Manager.

(3) Each Portfolio Manager shall submit to the Commission a Balance Sheet, Profit and Loss Account, Cash Flow Statement, and other reports determined by the Commission, as required by the Commission, at the end of each accounting period.

(4) Each Portfolio Manager shall be bound to provide the following information to the Commission at the time and in the manner determined by the Commission, namely:- (a) Detailed description of portfolio management; (b) Any change or modification in previously submitted information that may affect the approved certificate; (c) Names and addresses of clients whose portfolios have been managed; (d) Any variation in capital adequacy.

Un-audited Statement of Accounts.- For the convenience of investigating the capital adequacy of the Portfolio Manager by the Commission, each Portfolio Manager shall submit his un-audited statement of accounts to the Commission every 3 (three) months.
Accounts and Audit.- (1) The Portfolio Manager shall maintain the accounts of each of his clients separately and shall properly show all expenses including income and tax deductions of the clients in such accounts.

(2) The Portfolio Manager shall get his accounts maintained as determined by the Commission audited by a Chartered Accountant, in which it is determined that the Portfolio Manager is following proper accounting methods and has discharged his duties according to 1[Rule]. Such audit report shall be submitted to the Commission within six months of the completion of the Portfolio Manager's accounts.

Report on steps taken in light of Auditor's Report.- Within sixty days of receiving the auditor's report, each Portfolio Manager shall take necessary measures to remove the deficiencies or shortcomings mentioned in the report.

1
Gazette Notification No. SECI/Regi:/Pr:/Mabya/2000/747, dated 24th October 2000, has been replaced by which was published in the Bangladesh Gazette on November 7, 2000.

Fifth Chapter
Duties of Portfolio Manager

Maintenance of Account Books and Records.- Each Portfolio Manager shall maintain the following account books, records, and documents for each accounting period, namely:-
(a) Balance Sheet;
(b) Profit and Loss Account;
(c) Cash Flow Statement;
(d) Auditor's Report on Accounts;
(e) Account books related to account statements determined by the Commission.

(2) Each Portfolio Manager shall inform the Commission where his account books, records, and documents are kept.

(3) All account books, records, and documents kept under this [Rule] shall be preserved for 12 (twelve) years.

Contract with Client.- Before undertaking the responsibility of portfolio management, each Portfolio Manager shall enter into a contract with the client, which shall include, among other matters, the following matters, namely:-
(a) Purpose of investment and services to be provided; (b) Investment sector; (c) Objection of the client to investment in any specific company or industry, if any; (d) Risk in portfolio management; (e) Term of the contract and matter of cancelling the contract before expiry; (f) Investable funds; (g) Rules for settlement of client's accounts; (h) Fee payable to the Portfolio Manager; (i) Custody of securities.

(2) The Portfolio Manager shall keep the client's fund in a separate account in a scheduled bank and manage it himself.

2
[(3) Except for portfolio management operated on the basis of equity partnership, the Portfolio Manager shall be entitled to receive fees from clients for portfolio management.]

3
[(4) The Portfolio Manager may form and manage the portfolio of his clients on the basis of equity partnership subject to the following conditions:
(a) The Portfolio Manager may invest according to his own discretion; (b) The minimum share of the Portfolio Manager in such investment shall be 30 (thirty) percent; and

Investment of Client's Funds.-
3
[(1)]
1
[(2)]
2
[
3
{(1) Notwithstanding anything contained in the contract concluded with the client, any client may, at his own responsibility and under the following circumstances, withdraw or return the portfolio securities or funds, namely:- (a) If the Portfolio Manager resigns from his work; (b) If the Portfolio Manager's certificate is suspended or cancelled; (c) If the Portfolio Manager becomes insolvent, and in the case of a company, if it is dissolved; (d) If something like permanent incapacity occurs to the Portfolio Manager.}

(2) The Portfolio Manager shall be bound to invest the client's funds in the money market or according to the conditions of the contract.
Explanation- For the purpose of this 4[Sub-rule], money market means the market related to commercial papers, trade bills, treasury bills, deposit certificates, and other money instruments determined from time to time by the Commission.

(3) The Portfolio Manager shall not engage in insider trading while investing the client's funds.

(4) 5[The Portfolio Manager shall generally purchase and sell securities separately for each client, and in cases where securities are purchased or sold collectively, he shall distribute them proportionately at the average price:
Provided that, in the case of securities kept in a pooled manner, the Portfolio Manager shall maintain separate Beneficiary Owner Accounts (BO Accounts) separately for each client and purchase and sell securities for such accounts, and in cases where securities are purchased and sold in a pooled account (Pooled BO Account), he shall transfer the securities to the respective Beneficiary Owner Accounts (BO Accounts) proportionately at the average price.]

(5) Transactions of purchase or sale of accounts of the Portfolio Manager's own accounts and client's accounts, or accounts of two clients, shall be at current market prices.

(6) 6[The Portfolio Manager shall keep the funds and securities of each client separate and keep them separate from his own funds and securities, and the Portfolio Manager shall act as the custodian of the client's funds and securities:

1
Gazette Notification No. SECI/LSD(A:S)2003/122/Admin/01/18 dated 26 May 2003 has been abolished, which was published in the Bangladesh Gazette on July 13, 2003.
2
Gazette Notification No. SECI/LSD(A:S)2003/122/Admin/01/18 dated 26 May 2003 has been renumbered, which was published in the Bangladesh Gazette on July 13, 2003.
3
Gazette Notification No. SECI/LSD(A:S)/2003/122/Admin/1/19, dated May 26, 2003 has been renumbered which was published in the Bangladesh Gazette on July 13, 2003.
4
Gazette Notification No. SECI/Regi:/Pr:/Mabya/2000/747, dated 24th October 2000, has been replaced by which was published in the Bangladesh Gazette on November 7, 2000.
5
Gazette Notification No. SECI/CMARRCID/2006-159/Admin-01/31 dated 16th June 2008 has been replaced by which was published in the Bangladesh Gazette on July 20, 2008.
6
Gazette Notification No. SECI/CMARRCID/2006-159/Admin-01/31 dated 16th June 2008 has been replaced by which was published in the Bangladesh Gazette on July 20, 2008.

Provided that, if the contract document states that the Portfolio Manager may keep the client's securities in his own account, and if so, the Portfolio Manager may inform the client accordingly and take such measures:
Further provided that, in the case of securities kept in a pooled manner, the Portfolio Manager shall maintain separate Beneficiary Owner Accounts (BO Accounts) separately for each client, and in cases where there is no separate Beneficiary Owner Account, such accounts shall be opened within 3 (three) months from the date of publication of this amendment Gazette, otherwise, the Portfolio Manager shall provide the funds to the client before selling the relevant client's securities held in the pooled account:
Further provided that, in cases where the Portfolio Manager deals in pooled (fossid) securities on behalf of the client in a pooled account (Pooled BO Account), the traded securities shall be transferred to the relevant Beneficiary Owner Account (BO Account) within two consecutive settlement times of the Stock Exchange (T+2 Business Days) or within 7 (seven) trading days, whichever is earlier.]

1
[(7) The Portfolio Manager shall give priority to the management and administration of the client's securities or funds and to executing the client's orders.]

Reports to be Provided to Client.- (1) The Portfolio Manager shall provide periodic reports to the client, but not later than six months, which shall contain detailed information on the following matters, namely:-
(a) Composition and value of the portfolio, description of securities present in the portfolio, number, price per security, and cash surplus and total value of the portfolio on the date of submission of the report; (b) Transactions during the period covered by the report, including date of transaction and description of sale and purchase; (c) Financial benefits received during that period, including interest, dividends, bonuses, shares, and debentures; (d) Expenses of managing the client's portfolio; (e) Description of potential risks according to the Portfolio Manager's opinion and description of recommended risks in investment or withdrawal of securities.

(2) The Portfolio Manager shall provide only documents and information related to portfolio management to the client.

(3) After cancellation of the contract, the Portfolio Manager shall send a detailed report of the accounts to the client and settle the client's accounts according to the conditions of the contract.

(4) If any dispute arises between the Portfolio Manager and the client, the client shall reserve the right to know detailed information about the client's accounts from the Portfolio Manager.

1
Gazette Notification No. SECI/LSD(A:S)2003/122/Admin/01/18 dated 26 May 2003 has been added by which was published in the Bangladesh Gazette on July 13, 2003.

409
Sixth Chapter
Inspection, etc.

Inspection, etc.- (1) The Commission may appoint any person as an inspector to inspect the account books, records, and documents of Merchant Bankers and Portfolio Managers.

(2) Inspection shall be conducted to determine whether any Merchant Banker and Portfolio Manager is correctly discharging his duties and responsibilities under the law and these [Rules] and whether he is properly preserving his account books, records, and documents for this purpose. The duties of the inspector appointed under this 2[Rule] and in addition to this, he shall investigate the following matters, namely:- (a) Complaints of investors against Merchant Bankers or Portfolio Managers; (b) Complaints against any Merchant Banker or Portfolio Manager by any other Merchant Banker or Portfolio Manager or any other person having an interest; (c) All matters related to the duties and responsibilities of Merchant Bankers and Portfolio Managers concerning the interests of securities business and investors.

(3) For the purpose of this 3[Rule], the inspector shall inform the relevant Merchant Banker or Portfolio Manager about the subject of inspection by giving notice of at least 3 (three) days or less time approved by the Commission.

(4) Upon receiving the notice under [Sub-rule] (3), the relevant Merchant Banker or Portfolio Manager shall be bound to provide the relevant account books, records, documents, and other relevant information to the inspector as required and to cooperate with him to conduct the inspection work properly.

(5) The inspector shall submit a report to the Commission based on the inspection, and such report shall be submitted within 60 (sixty) days from the start of the inspection.

(6) The Commission shall consider the inspection report within 30 (thirty) days of receiving it, and if any Merchant Banker or Portfolio Manager is found guilty, he may cancel or suspend his certificate:
Provided that, the certificate of the relevant Merchant Banker or Portfolio Manager shall not be cancelled or suspended without giving him a reasonable opportunity to explain.

(7) Notwithstanding anything in [Sub-rule] (6), upon considering the inspector's report, the Commission may issue necessary instructions to any accused Merchant Banker or Portfolio Manager to comply with the law and these [Rules].

412
Seventh Chapter
Cancellation, Suspension of Certificate, etc.

Cancellation, Suspension of Certificate, etc.- (1) The Commission may cancel or declare the suspension of the certificate of any Merchant Banker or Portfolio Manager for the following reasons, namely:-
(a) Violation of any provision of the law or these [Rules] or any condition of the certificate; (b) Failure to provide any information or report required or determined by the Commission, or undue delay in providing; (c) Providing false or misleading information to the Commission; (d) Failure to cooperate with the inspector appointed under these [Rules]; (e) Failure to pay the fee determined by the Commission within the time limit determined under these [Rules]; (f) Not following the code of conduct under these [Rules]; (g) Failure of the Merchant Banker or Portfolio Manager to perform his duties; (h) If the Commission is satisfied that any Merchant Banker or Portfolio Manager is doing work contrary to the interests of investors; (i) Convicted by a court for any offense involving moral turpitude or any other offense; (j) Any other reasons mentioned in these [Rules]; 2 [Provided that, without prejudice to the provisions of sub-rule (1), the Commission may impose a fine on the accused person under the law.]

(2) Notwithstanding anything in [Sub-rule] (1), no action under 3[Sub-rule (1)] shall be taken without giving the relevant Merchant Banker or Portfolio Manager an opportunity to submit a written representation on the action taken against him and without conducting a special investigation on the allegations raised against him, and for this purpose, he shall be given at least 15 (fifteen) days to submit his representation.

(3) Upon submission of his representation by the relevant Merchant Banker or Portfolio Manager in due time, the Commission shall consider it and the investigation report obtained under 1[Sub-rule] (2), and after giving the accused Merchant Banker or Portfolio Manager an opportunity to be heard personally or through a representative, shall take a decision under 4[Sub-rule (1)] and inform the decision in writing.

Reconsideration.- (1) If any Merchant Banker or Portfolio Manager is aggrieved by an order of 1[Rule] 33 under 5[Fine], he may apply to the Commission for reconsideration within 15 days of receiving a copy of the order.

(2) The Commission shall consider the application obtained under [Sub-rule] (1) and the decision of the Commission on it shall be final.

1
Gazette Notification No. SECI/Regi:/Pr:/Mabya/2000/747, dated 24th October 2000, has been replaced by which was published in the Bangladesh Gazette on November 7, 2000.
2
Gazette Notification No. SECI/CMARRCID/2001-50/Admin-03/14 dated January 9, 2006 has been replaced, which was published in the Bangladesh Gazette on April 5, 2006.
3
Gazette Notification No. SECI/CMARRCID/2001-50/Admin-03/14 dated January 9, 2006 has been replaced, which was published in the Bangladesh Gazette on April 5, 2006.
4
Gazette Notification No. SECI/CMARRCID/2001-50/Admin-03/14 dated January 9, 2006 has been replaced, which was published in the Bangladesh Gazette on April 5, 2006.
5
Gazette Notification No. SECI/CMARRCID/2001-50/Admin-03/14 dated January 9, 2006 has been replaced, which was published in the Bangladesh Gazette on April 5, 2006.

Chapter VIII
Code of Conduct
35. Code of Conduct. - (1) Each merchant banker -
(a) shall demonstrate honesty and integrity in the discharge of his duties; (b) shall provide services and advice to all through labor, care, and independent professional judgment; (c) shall not make any statement or engage in competition that may be contrary to the interests of another merchant banker or hinder the discharge of his duties; (d) shall not provide exaggerated information regarding his qualifications, skills, and success to his client; (e) shall not disclose any information of his client to anyone; (f) shall keep all matters regarding the client's securities confidential; (g) shall provide investors with true and proper information fixed by the Commission and inform them about the potential risks of investment; (h) shall ensure the supply of the relevant prospectus, memorandum, and ancillary and necessary documents to the investor; (i) shall ensure proper allocation to the investor and the return of excess applied money; (j) shall properly investigate any complaints from investors. (2) Each portfolio manager - (a) shall manage the client's funds with trust; (b) shall trade securities within the limits given by the client; (c) shall not derive any benefit from the client's funds or securities; (d) shall invest the funds received from the client for investment purposes as soon as possible and repay the client's due funds on time; (e) shall provide services and advice to all neutrally through labor, care, and independent professional judgment; (f) shall not make any statement or engage in competition that may be contrary to the interests of another portfolio manager or hinder the discharge of his duties; (g) shall not provide exaggerated information regarding his qualifications, skills, and success to his client; (h) shall not disclose any information of his client to anyone; (i) shall obtain a written description from the client when entering into any contract, which shall mention his relevance with various joint capital companies; (j) shall keep all matters regarding the client's securities confidential and shall not disclose them anywhere; (k) shall provide the client with true and proper information fixed by the Commission and inform him about the potential risks of investment; (l) shall take steps for the registration of transfer of the client's securities in the interest of the client, claim and receive dividends and interest, and exercise other rights; (m) shall take steps to change securities according to the client's wishes; (n) shall not assist in creating false market conditions for securities; (o) shall not apply unfair tactics in the case of price rigging or securities; (p) shall not provide value-sensitive information to stock brokers, stock dealers, or any other intermediary of the capital market; (q) shall ensure proper allocation to the client and the return of excess applied money; (r) shall properly investigate any complaints from the client; (s) shall arrange for redressal within one month of receiving any complaint
from the client. (3) [Sub-rule] (1) and (2) In addition to observing and complying with the behavioral codes mentioned in (1) and (2), each merchant banker and, where applicable, portfolio manager shall be bound to follow other behavioral codes fixed by the Commission from time to time. 2 [36. Maximum Loan. - Each merchant banker (portfolio manager), in granting maximum loans to his client, shall follow the instructions mentioned in the schedule below.] 3 [Chapter IX Appointment, Dismissal, Powers, etc. of Managing Director/CEO
37. Appointment, Dismissal, etc. of Managing Director/CEO. - (1) The Board of Directors shall appoint a full-time "Managing Director/CEO" subject to the prior approval of the Commission.
4
[(2) A person appointed as Managing Director or CEO shall not be directly or indirectly involved in anything other than the purchase and sale of securities of any issuer company by a stock exchange or a track holder of a stock exchange, or an asset management company:
Provided that a merchant banker shall not purchase or otherwise acquire any securities of any company for which it acts as issue manager, by the relevant merchant banker or its Managing Director or CEO:
Further provided that such Managing Director or CEO shall not be a shareholder, promoter, or director of any merchant banker.]
(3) The term of office of the Managing Director/CEO shall be 3 (three) years, which may be renewed with the prior approval of the Commission; Provided that a person who has attained the age of 66 years shall not be eligible to be appointed as Managing Director/CEO or shall not remain in the post of Managing Director/CEO. (4) If the Managing Director/CEO fails to discharge his duties properly, or is found guilty of misconduct or negligence, the Board of Directors may dismiss or remove him (as applicable) subject to the prior approval of the Commission. However, such decision must be passed by a vote of at least two-thirds of the members at a special meeting of the Board of Directors for this purpose;

1 Notification No. SECI/Regi:Pr:Mabya/2000/747, dated 24th October 2000, which was published in the Bangladesh Gazette on November 7, 2000.
2 Notification No.- SECI/CMARRCID/2006-159/Admin/01-29 dated 02 October 2007, which was published in the Bangladesh Gazette on October 11, 2007.
3 Notification No.-SECI/CMARRCID/2001-50/121/Admin/36 dated December 20, 2011, was added.
4 Notification No. No.-BSECI/CMARRCID/2001-50/231/Admin/100, dated 10 December 2019, was replaced, which was published in the Bangladesh Gazette on January 23, 2020.

Provided that before taking such a decision, he must be given reasonable time to present his written and oral views on the relevant allegations.
(5) If the Managing Director/CEO wishes to resign, he shall submit an application to the Chairman of the Board of Directors 3 (three) months in advance and provide a copy to the Commission. (6) If the post of Managing Director is vacant or he is unable to perform his duties for any reason, the next higher authority of the relevant merchant banker shall perform the interim duties of the Managing Director. (7) If the post of Managing Director/CEO becomes vacant, and the Board of Directors fails to make an appointment within the next 90 (ninety) days, the Commission may, if necessary, appoint a suitable person to this post for the time fixed by it. However, the relevant company shall bear the expenses of his salary, allowances, and other benefits. (8) The Commission may issue instructions regarding the qualifications of the Managing Director/CEO from time to time as necessary; Provided that the appointment of the Managing Director/CEO of merchant bankers formed as subsidiaries of ICB and state-owned banks (such as Sonali, Rupali, Janata, and Agrani Bank Ltd) shall be outside the scope of these rules.
38. Powers of Managing Director/CEO. - (1) The Managing Director/CEO shall implement all laws, rules, regulations, instructions, orders, sub-laws, or instructions, orders issued from time to time by the Commission or Board of Directors regarding the securities market in the case of the relevant merchant banker;
Provided that if any instruction or order issued by the Commission and Board of Directors is conflicting, in that case, the Commission's instruction or order shall be considered final. (2) The Managing Director/CEO shall ensure the maintenance of these rules and supervise the work of the officers of the relevant merchant banker. (3) The Managing Director/CEO shall be a member of all committees formed by the Board of Directors; Provided that he shall not be a member of the inquiry committee formed for the purpose of taking disciplinary action against the Managing Director/CEO. (4) In any special situation, the Managing Director/CEO shall perform/apply duties/powers not entrusted to him, informing the Chairman of the Board of Directors and the Commission simultaneously. However, such action must be approved at the next meeting of the Board of Directors. (5) The Managing Director/CEO shall submit reports to the Commission and the Board of Directors as requested by the Commission regarding administrative work and compliance with all relevant laws, rules, sub-laws, instructions, or orders.] 1 [39. Submission 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 by Pay Order, Bank Draft, or Electronic Fund Transfer.]

1 Notification No.: BSECI/CMARRC/2019-392/24/Admin/124, dated, 30 June 2021 was added, which was published in the Bangladesh Gazette on August 24, 2021.

418
Form 'A'
Application for Merchant Banker Certificate
(
1 [Rule] See Rule 4)

Name of the Applicant .............................................................
Name of the person for contact........................................
Telephone No. .......................... Fax No. .............................
Details of the Applicant
(a) Main place of business/Registered office of the company
....................................................................................................................................
......................
Postal Code ...................... Telephone No.....................
Telex No.......................... Fax No. .........................
(b) Contact address: ....................................................
................................................................................
Postal Code ...................... Telephone No.....................
Telex No.......................... Fax No. .........................
(c) Branch office address: .............................................
.............................................................................
Organizational Structure:
(a) Work and duties of the Merchant Banker
(Chart to be attached)
(b) Objective
Copy of Memorandum and Articles of Association to be attached (c) Place and date of institutional registration:
Day Month Year Place
(d) Legal status of the Applicant (ংঃধঃঁং)
1
[If the [Applicant] is listed, the name of the stock exchange on which it is listed and the latest share price must be mentioned.]
(e) 2
[Details of Directors:
Name Qualification Experience in Merchant Banking and Financial Services Shares in the Applied Company Other Directorships in Companies

1 Notification No- SECI/CMARRCID/2006-159/Admin-01/31, dated 16 June 2008 was replaced, which was published in the Bangladesh Gazette on July 20, 2008.
2 Notification No- SECI/CMARRCID/2006-159/Admin-01/31, dated 16 June 2008, by which the words "Partner", "Owner", "Firm" were cancelled, which was published in the Bangladesh Gazette on July 20, 2008.

(c) Details of the Chief Manager:
Name Qualification Scope of Appointment in Merchant Banking Experience Date (d) Names and functions of associated organizations:
Company/
Firm's Name
Address Type of Work
Nature of Interests of Promoters and Directors Nature of Interests of the Applicant Company
5. Business Information:
(a) History, main events, and current operations:
(b) Detailed description of Merchant Banking operations experience:
(c) Description of other financial services experience:
(d) Operations conducted in the last three years:
6. Issue Management Experience:
Client's
Name
Type of
Issue
Size of
Issue
Year of
Issue
How many
Subscribed
Name of the
Lead Merchant
Banker
Practical
Liability- responsibility
7. Experience as Investment Advisor:
Client's Name Duration Type of Service Provided
8. Experience in Underwriting:
Client's
Name
Year of
Issue
Type and
Size of
Issue
Amount
Underwritten
Percentage of
Underwriting
Underwriting
Experience
9. Portfolio Management Experience:
Scheme Name Scheme

Balance
Number of
Clients Total Managed
Amount of Funds
Average
Profit

Experience as Corporate/Advisor:
Client's
Name
Year of
Issue
Type and
Size of
Issue
Type of
Service Provided
Name of the Lead Merchant Banker
Experience in other securities business:
Type of Business Duration of Service Provided Type of Service Provided
Client Information:
Name and Address of the Main Client
Name Type of Service Provided
If the applicant wishes to engage in Merchant Banking business for the first time, the experience of the main management officers must be mentioned:
Name of Main Management
Officers
Educational
Qualification
Previous Post
Previous Experience in Merchant Banking Business
If the applicant wishes to engage in Merchant Banking business for the first time, the business plan of the company, description of the planned business, and income must be mentioned:
Physical facilities such as computers, equity research, and databases available with the applicant must be mentioned:
Other ancillary information related to the services provided by the applicant.
Financial Information
Capital Structure
(Lakh Taka)
Current Year One Year Previous
Year Previous Year Current Year
(a) Paid-up Capital
(b) Free Reserve (excluding Revaluation Reserve) (c) Total (a)+(b) Note: 1 [1 and 2]
Asset Resources:
Current Year One Year Previous
Year Previous Year Current Year
(Lakh Taka)
(a) Fixed Assets
(b) Furniture, Machinery, and other equipment
(c) Specified (ছড়ঃবফ) Investments
(d) Unspecified (টহয়ঁড়ঃবফ) Investments
(e) Details of Liquid Assets
(f) Others
(If investments, loans, and advances are taken from any associated institution, and if the promoters/directors of the company have any interest there, it must be mentioned).
Main Sources of Income:
(Lakh Taka)
Current Year One
Year Previous
Year Previous
Year Current
Year
Percentage of Issue as Fee
(a) Issue Management
(b) Underwriting
(c) Portfolio Management
(d) Investment Advisor
(e) Others

The fee of the merchant banker may vary from one issue to another, but in that case, the range of the fee must be mentioned.
Note: Please attach three years of continuous audited annual statements. If statements are not audited, provide reasons. If the audited annual statements do not have the minimum net capital, the next audited annual statements must be submitted.

List of main shareholders (those who own 5% and more shares and their associates) applicable only to limited companies.
Date of Shareholding--------------------------------------- Name of Shareholder Number of Shares Company's Capital
Name and address of the applicant's main banker:
Name and address of the auditor:
Other Information
Details of all settled and unsettled disputes:
Type of Dispute Name of Parties Unsettled/Settled
If the applicant, any director, or any chief manager has been accused or involved in any financial complaint in the last three years, details thereof:
Declaration
This declaration must be signed by two directors 1 [ * ] by.
I/We are applying for registration. I/We assure that I/We have answered the above questions truly and fully, and have provided all relevant information for our registration. I/We declare that the information contained in this application is complete and true.
Applicant himself or on his behalf ...................................

1 Notification No- SECI/CMARRCID/2006-159/Admin-01/31, dated 16 June 2008 was cancelled by which, which was published in the Bangladesh Gazette on July 20, 2008.

(Applicant's Name)
.........................................
Director/Partner or
Sole Proprietor
Name (in capital letters)
.........................................
Date................................
........................................
Director/Partner or
Sole Proprietor
Name (in capital letters)
........................................
Date................................
Instructions for Form Completion:

The application must be complete.
The application must be filled out in accordance with the relevant 1
[Rules].
Incomplete applications will not be considered.
The application reply must be typed.
Information to be submitted with the application must be attached separately.
All signatures in the application must be original signatures.
Form-'B'
Merchant Banker Registration Certificate
[
1
(Rule) See Rule 7]
The Securities and Exchange Commission, under the powers granted by the Securities and Exchange Commission Act, 1993 (Act No. 15 of 1993), issues this Merchant Banker Registration Certificate to ........................................ to conduct the operations of Issue Manager/Underwriter/Portfolio Manager. This certificate shall remain valid until cancelled or suspended in accordance with the provisions of the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) 1 [Rules], 1996. 2 [Conditions of the Registration Certificate
The recipient of the certificate cannot sell, gift, mortgage, lease, or otherwise transfer or encumber this registration certificate, or allow anyone else to operate under this certificate, and no one else can operate in such manner under this certificate.
The original registration certificate or a certified copy of the certificate must be prominently displayed in the main office of the recipient institution for public viewing.
The institution must start business operations within 6 (six) months from the date of issue of the registration certificate, and within 7 (seven) days of starting such operations, the Securities and Exchange Commission must be informed in writing.
Even if the registration certificate is issued at the current registered address of the institution, prior approval of the Commission must be obtained before establishing a business office or main branch (however named) at the same address or any other address to conduct merchant banker operations.

1 Notification No SECI/Regi:Pr:Mabya/2000/747, dated 24th October 2000, was replaced, which was published in the Bangladesh Gazette on November 7, 2000.
2 Notification No SECI/CMARRCID/2006-159/Admin-01/28, dated, 5 April 2007 was inserted, which was published in the Bangladesh Gazette on May 30, 2007.

The proposal for opening a new branch or relocating a branch by the Issue Manager/Portfolio Manager/Merchant Banker for conducting operations, along with the approval of the institution's Board of Directors, must be submitted to the Commission for prior approval.
Equity shares held by the promoters/directors of the institution mentioned in this registration certificate shall not be transferred within the next 3 (three) years from the date of issue of this registration certificate. Provided that, in the case of banks, financial institutions, and insurance companies, etc., where the lock-in (খড়পশ-রহ) imposed by their primary regulatory authority, or the provision that equity shares held by their promoters/directors shall not be transferred within 3 (three) years, is already in force or remains in force, no new lock-in will be applicable for the relevant merchant bank.
No promoter/director, partner/owner, or the institution itself of an Issue Manager/Portfolio Manager/Merchant Banker shall be engaged as a dealer/broker of any stock exchange.
If a bank or financial institution remains as a merchant banker, it must maintain a separate account book for its merchant banking unit. The account book/financial statements must clearly reflect merchant banking operations. All financial statements must be audited by a Chartered Accountant firm and certified that in the case of the relevant financial statements, the provisions issued from time to time by the Securities and Exchange Commission and other relevant authorities have been properly complied with.
Regardless of what the Memorandum and Articles of Association or constitution of the institution receiving the registration certificate contains, the conditions mentioned in the Letter of Intent, শতাব্দী: শর্তাবলী, ১৯৬৯. Securities and Exchange Commission Act, 1993, Depository Act, 1999, and Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996, all sections, sub-sections, and rules and regulations under said Act, শতাব্দী: শর্তাবলী, and all related conditions and instructions issued from time to time under the rules are mandatory for the recipient of this registration certificate to comply with.
Prior objection letter from the Securities and Exchange Commission must be obtained before any change/amendment to any section or sub-section regarding merchant banking in the Articles of Association or constitution of the institution receiving the registration certificate.
1
[11. Issue Manager, Portfolio Manager, Merchant Banker must perform the following works applicable to them, namely:- (a) The Issue Manager must submit at least 1 (one) formal proposal (ফড়পঁসবহঃবফ) for bringing capital to the market to the Commission in two consecutive English calendar years (calculated from January 1, 2010). (b) The Portfolio Manager must form at least 5 (five) new client portfolios per English calendar year. (c) The Merchant Banker must form 5 (five) new client portfolios per English calendar year in addition to its own portfolios, and submit at least 1 (one) formal proposal (ফড়পঁসবহঃবফ) for bringing capital to the market to the Commission in two consecutive English calendar years (calculated from January 1, 2010).]. By Order of the Securities and Exchange Commission Place:
Date:

1 Notification No SECI/CMARRCID/2006-159/Admin-01-39 dated 20 April, 2009 was replaced, which was published in the Bangladesh Gazette on May 18, 2009.

430
Form-'C'
(
1
[Rule] See Rule 17)
Application for Portfolio Manager Certificate

Name of the Applicant:--------------------------------------------
Name of the person for contact:---------------------------
Telephone No.------------------------------------------------- Fax No.-----------------------------------------------------
Details of the Applicant:
(a) Main place of business/Registered office------------------------------------------------------------------ ------------------ Postal Code----------------------------------------------Telephone No.----------------------------- ------------------ Telex No.------------------------------------------------ Fax No.--------------------------------- ---------------- (b) Address for contact---------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- Postal Code ----------------------------------------- Telephone No.---------------------------------- Telex No.------------------------------------------------ Fax No.--------------------------------- ---------------- Branch office address: ------------------------------------
Organizational Structure:
(a) Work and duties of the Portfolio Manager (Chart to be attached).
(b) Brief objective
(Copy of Memorandum and Articles of Association to be attached).
(c) Date and date of institutional registration Day Month Year Place (d) Legal status of the Applicant (ংঃধঃঁং) 1 [If the [Applicant] is listed, the name of the stock exchange on which it is listed and the latest share price must be mentioned).] (e) Details of Directors/Partners/Owners and Chief Management Officers:
(f) Names and functions of associated organizations:
Company's/
Firm's Name
Address/
Phone No.
Type of
Work
Ownership
Details
Type and
Amount of
Financial
Management
Nature of Interests of
Promoters/
Directors
Nature of Interests of the Applicant
Company

1 Notification No- SECI/CMARRCID/2006-159/Admin-01/31, dated 16 June 2008 was replaced, which was published in the Bangladesh Gazette on July 20, 2008.

Business Information:
(a) History, major events, list of current activities (b) Proposed business plan and means of implementation (c) Estimated profit (next three years), physical targets, implementation plan for targets, expected income.
Financial Information:
Capital Structure:
(In Lakh Taka)
Previous year of the current year Previous to the previous year (a) Paid-up capital (Share Capital) (b) Free Reserves (excluding Revaluation Reserves) (c) Total (a)+(b) Note: 1 [1. & 2.]
Assets:
(In Lakh Taka)
Previous year of the current year Previous to the previous year (a) Fixed Assets (b) Plants, Machinery and Office Equipment (c) Investments (to be given separately in detail) (d) Others
Sources of Income:
(In Lakh Taka)
Previous year of the current year Previous to the previous year
Net Profit:
(In Lakh Taka)
Previous year of the current year Previous to the previous year
Names and addresses of Principal Bankers
Names and addresses of Auditors
Other information

1
Cancelled by Notification No. SECI/CMMRCID/2006-159/Admin-01/31, dated June 16, 2008, which was published in the Bangladesh Gazette on July 20, 2008.

431
14. Details of all settled and unsettled disputes:
Type of dispute Name of the party Unsettled/Settled
15. Description if convicted or involved in offenses related to fraud, breach of trust, forgery, false reporting, bribery, misuse, and embezzlement.
16. Description if business is conducted with any medium that has been declared defaulter or suspended by any Stock Exchange or other authority.
17. Relevant details of any other work done by the company.
18. Business Information:
(a) Details of proposed or ongoing work.
(b) Description of facilities for taking portfolio investment decisions.
(c) Details of portfolio management in the past year and details of proposed portfolio management for the coming year (a sample copy of the portfolio management agreement with the client must be attached). (d) List of approved stock-brokers who participated in portfolio management transactions, and details if any of them have been declared defaulter or suspended by any Stock Exchange authority. (e) Accounting method for client and scheme-based portfolio management services. (f) Details of various research and database facilities.
19. Experience:
(a) Experience in portfolio management work, mentioning the duration.
(b) Experience in other financial service businesses (time, scope (area), date of commencement of work) (c) Business conducted in the last year:
Declaration
This declaration must be signed by two directors 1 [*] by.
I/we are applying for this registration. I/we assure that I/we have answered the above questions truthfully and completely, and have provided all relevant information for the purpose of my/our registration.
Applicant himself or on his behalf ..............................................
(Name of the Applicant)
.........................................
Director/Partner or
Sole Proprietor
Name (in capital letters)
.........................................
Date................................
........................................
Director/Partner or
Sole Proprietor
Name (in capital letters)
........................................
Date................................

1
Cancelled by Notification No. SECI/CMMRCID/2006-159/Admin-01/31, dated June 16, 2008, which was published in the Bangladesh Gazette on July 20, 2008.

434
Instructions for filling the form:

The application must be complete.
The application must be filled in accordance with the relevant [Rules] of the [Rules and Regulations].
Incomplete applications will not be considered.
The application reply must be typed.
Information to be submitted with the application must be attached separately.
All signatures in the application must be original signatures.
2
[Schedule
[See Rule 36]
Guidelines on Margin Lending
Margin Loan Account (Margin Loan Account).-(a) The Merchant Banker (Portfolio Manager) shall open a margin loan account in the name of the client.
(b) The margin loan account may be sole or joint.
(c) A sole account refers to an account where, according to the contract concluded between the Merchant Banker (Portfolio Manager) and the client, the client gives the Merchant Banker (Portfolio Manager) discretionary authority to operate the margin loan account along with investment programs on his behalf, and a joint account refers to an account where, according to the contract concluded between the Merchant Banker (Portfolio Manager) and the client, the client operates the margin loan account along with his own discretionary investment programs. (d) For each margin loan account, the client may open one account in his own name and one account in joint name with another client. Inter-fund transfer between both accounts may be made, but no security (tangible or intangible) may be transferred internally. (e) The risk of operating the margin loan account is entirely the client's. In this regard, there may be no assurance of any direct or indirect predetermined income return:
However, it is provided that the Merchant Banker (Portfolio Manager) shall not provide margin loan facilities to the directors, members of the board of directors, employees engaged in management, and staff of his own establishment, their fathers, mothers, husbands, wives, sons, daughters, brothers, sisters, sons-in-law, daughters-in-law, and other relatives specified from time to time by the Commission.
Execution of Documents (Execution). - At the time of opening the margin loan account, the Merchant Banker (Portfolio Manager) shall conclude a contract with the client, which shall contain details regarding the implementation of the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996 and the margin-related guidelines mentioned in this schedule.

1
Replaced by Notification No. SECI/Reg:Pro:MB/2000/747, dated October 24, 2000, which was published in the Bangladesh Gazette on November 7, 2000.
2
Replaced by Notification No. SECI/CMMRCID/2006-159/Admin/01-29 dated October 02, 2007, which was published in the Bangladesh Gazette on October 11, 2007.

Minimum Equity in Margin Loan Account (Minimum Equity in Margin Loan Account). - The Merchant Banker (Portfolio Manager) shall determine the equity of the client in the margin loan account.
Securities Depositable in Margin Loan Account (Securities in Margin Loan Account). - (1) In the case of providing margin loans, the following securities shall be considered as marginable securities, namely:-
(a) Listed ordinary shares;
(b) Listed corporate bonds and debentures;
(c) Open-ended and listed closed-end mutual fund certificates; (d) Government securities; (e) Marginable securities specified from time to time by the Securities and Exchange Commission for this purpose. (2) The Merchant Banker (Portfolio Manager) may prepare a list of securities or instruments of their choice from among the above-mentioned securities when providing margin loans.
Matters to be considered in providing margin loans. - In the case of providing margin loans against marginable securities, the Merchant Banker (Portfolio Manager) shall consider, among others, the following matters, namely:-
(a) Investment safety;
(b) Fundamentals of securities;
(c) Liquidity/marketability of securities;
(d) Reasonable return;
(e) Capital appreciation;
(f) Risk elements;
(g) Impact of taxation.
Margin Loan (Margin Loan). - (1) The Merchant Banker (Portfolio Manager) shall provide margin loans at the rate determined from time to time by the Commission.
(2) The Merchant Banker (Portfolio Manager) shall determine its own system for maintaining the minimum margin application (Minimum Margin Application) for the ratio of margin loan to equity, which shall include mandatory sale or margin call. (3) The Merchant Banker (Portfolio Manager) may collect predetermined interest and other charges from the client against the provision of margin loans, which shall be informed to the client in advance. (4) The Merchant Banker (Portfolio Manager) shall prepare its own margin monitoring guidelines, among others, in the following matters, namely:- (a) Minimum margin application; (b) Margin call or mandatory sale; (c) Appropriate measures for under-margined accounts; (d) Purchase capacity determination method; (e) Fund and security withdrawal method. (5) All transactions executed on the same day shall be aggregated based on the transaction date, and the total purchase price or sales proceeds, including the Merchant Banker's (Portfolio Manager's) commission and expenses, shall be considered for margin determination.
Determination of Portfolio/Security Market Value. - (1) The Merchant Banker (Portfolio Manager) shall determine the market value of the portfolio/securities by the following method for determining the margin application (Margin Application), namely:-
"Closing Price of Security + Accrued Interest (AI)" 2 (2) All corporate benefits due, such as dividends, bonuses, rights, etc., according to the book closure/record date, shall be added to the value of the portfolio. (3) In the case of valuation of government securities and open-end mutual fund securities, if the above method cannot be applied appropriately, the Merchant Banker (Portfolio Manager) shall adopt a case-by-case consideration process for determining their market value.
Portfolio Diversification (Portfolio Diversification). - In the case of sole accounts, the Merchant Banker (Portfolio Manager) may adopt its own policy regarding portfolio diversification to ensure the safety of itself and the client.
Margin Maintenance (Margin Maintenance). - Unless otherwise directed by the Commission, the Merchant Banker (Portfolio Manager) shall follow its own policies regarding margin maintenance.
Custodian of Securities (Custodian of Securities). - (1) The Merchant Banker (Portfolio Manager) shall act as the custodian of the securities included in the margin loan account. Securities deposited or purchased by the client shall be kept in demat or physical form, but in the case of demat accounts, records shall be maintained separately according to the client's ownership.
(2) The Merchant Banker (Portfolio Manager) shall not use securities kept in the client's margin loan account for its own borrowing or any other purpose.
(3) The Merchant Banker (Portfolio Manager) shall not merge its investments with the client's investments and shall maintain separate records of funds and securities received from the client and investments related thereto. (4) The Merchant Banker (Portfolio Manager) shall keep transactions and decisions related to its own investment accounts separate from the client's accounts in a transparent and practical manner.
Account Closure (Closure of Account). - Upon receiving notice from the client at least 7 (seven) days in advance, the Merchant Banker (Portfolio Manager) shall take necessary steps to close the client's account and return the funds or securities due to the client after settling all dues. If any funds or securities, dividends, rights, or bonuses are credited or received into the said account after account closure by any means, the Merchant Banker (Portfolio Manager) shall keep them in a suspense account for providing to the client.
Provisioning (Provisioning). - As a safety measure against capital market instability, the Merchant Banker (Portfolio Manager) may make a general reserve (General Provision) of 1% of the total dues at the end of the accounting year.
Submission of information to the Commission. - The Merchant Banker (Portfolio Manager) shall submit information regarding margin loans to the Commission at the time and in the format determined by the Commission.
Issuance of Orders or Directives. - The Commission may, at any time, issue necessary orders or directives on any matter mentioned in these guidelines in the public interest.'
Sultan-Uz-Jaman Khan
Chairman,
Securities and Exchange Commission

Bangladesh Gazette
Extraordinary Number
Published by Authority
1
[Tuesday, July 30, 1996
8th Volume - Advertisements and Notices issued by private persons and corporations in exchange for other considerations.
Notification
Date, April 24, 1996
No.-SECI/Branch-7/Law/94-4/114-Securities and Exchange Commission (Merchant Banker and Portfolio Manager) 2 [Rules], 1996 (SRO No.-59 Law/96 dated April 24, 1996)-under the powers conferred by Rules 1 [Rule] 6 and 19- The Securities and Exchange Commission has determined the following capital adequacy for any Merchant Banker and Portfolio Manager, namely:1. An applicant, who is interested in being engaged in any issue management other than underwriting, shall have a minimum capital of twenty-five (25) lakh Taka.
2. An applicant who is interested in underwriting issues shall have a minimum capital of one crore Taka.
However, it is provided that a Merchant Banker shall not underwrite more than five times his capital at any time.
3. An applicant who is interested in working as a Portfolio Manager shall have a minimum capital of one crore Taka.
However, it is provided that a Portfolio Manager shall not manage portfolio funds more than five times the total of his capital at any time.
4. An applicant who is interested in portfolio management, issue management, and underwriting shall have a minimum capital of twenty lakh Taka.
However, it is provided that a Merchant Banker shall not combine underwriting and portfolio fund management more than five times his capital at any time.
Sultan-Uz Jaman Khan
Chairman
Securities and Exchange Commission.]

1
Cancelled by Notification No. SECI/CMMRCID/2001-50/Admin/01-36 dated January 12, 2009, which was published in the Bangladesh Gazette on March 30, 2009.
2
Replaced by Notification No. SECI/Reg:Pro:MB/2000/747, dated October 24, 2000, which was published in the Bangladesh Gazette on November 7, 2000.

Note: This notification has no effect. It has been cancelled by Notification No.-SECI/CMMRCID/2001-50/Admin/01-36 dated January 12, 2009, which was published in the Bangladesh Gazette on March 30, 2009. Bangladesh Gazette Extraordinary Number Published by Authority Tuesday, July 30, 1996 8th Volume - Advertisements and Notices issued by private persons and corporations in exchange for other considerations. Notification Date, April 24, 1996 No.-SECI/Branch-7/Law/94-4/115-Securities and Exchange Commission (Merchant Banker and Portfolio Manager) 1 [Rules], 1996 (SRO No. 59 Law/96 dated April 24, 1996)-under the powers conferred by Rules 1 [Rule] 5(b) and 18(b)-The Securities and Exchange Commission has determined the following minimum manpower and their relevant experience in the work for any Merchant Banker and Portfolio Manager, namely:1. The applicant or principal officer shall have a minimum graduate educational qualification from any institution recognized by the government.
2. At least two persons shall be employed under the applicant who are experienced in working as Merchant Banker or Portfolio Manager.
Sultan-Uz Jaman Khan
Chairman
Securities and Exchange Commission

1
Replaced by Notification No. SECI/Reg:Pro:MB/2000/747, dated October 24, 2000, which was published in the Bangladesh Gazette on November 7, 2000.

Bangladesh Gazette
Extraordinary Number
Published by Authority
Monday, September 28, 1998
8th Volume - Advertisements and Notices issued by private persons and corporations in exchange for other considerations.
Notification
Date, September 3, 1998
No.-SECI/Branch-7/98-139-Under the powers conferred by Section 23 of the Securities and Exchange Commission Act, 1993 (Act No. 15 of 1993), the Commission hereby grants exemption until December 31, 1998 to persons engaged in the profession of Merchant Banker from the provisions of Section 10(1) of the said Act [person means a person defined in Section 2(1)(j) of the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Provisions, 1996]. M. A. Saeed Chairman Securities and Exchange Commission

Bangladesh Gazette
Extraordinary Number
Published by Authority
Monday, March 30, 2009
8th Volume - Advertisements and Notices issued by private persons and corporations in exchange for other considerations.
People's Republic of Bangladesh Government
Securities and Exchange Commission
Life Insurance Tower (16th, 17th and 21st Floors) 10, Dilkusha B/ A, Dhaka-1000, Bangladesh.
Notification
Date, January 12, 2009
No.-SECI/CMMRCID/2001-50/Admin/01-36-Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996 (SRO No. 59 Law/96, dated April 24, 1996) under the powers conferred by Rules 6 and 19, the Securities and Exchange Commission hereby cancels its Notification No.-SECI/Branch-7/Law/94-4/114, dated April 24, 1996 (which was published in the Bangladesh Gazette on July 30, 1996) regarding capital adequacy of Merchant Bankers and Portfolio Managers. By order of the Securities and Exchange Commission, Farhan Ahmed Siddique Chairman.

Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996 (Updated until August 24, 2021)