Amendment to Alternative Investment Rules 2015

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Amendments to Alternative Investment Rules

October 03 , 2020 Bangladesh

This note lists the mentionable amendments made to the Alternative Investment Rules in 2020

  • The defini)on of “eligible investor” and “investor” has been expanded to incorporate “founda’ons” and “approved gratuity funds”.
  • Also in the descrip)on of a provident fund which was already eligible as an investor has been prefixed with “recognised”. A similar prefix has been added to “supperanua)on fund” with “approved” . A similar addi)on was made to “gratuity fund” with “approved” being added. The repercussion for such changes is going to require cer)fica)on or accredita)on of the said funds in order to be eligible to invest.
  • The required opera)on track record for eligibility of “private equity fund” has been increased by a year to three years.
  • The amendment here has enabled “venture capital funds” to invest in companies that have already been in opera)on for three years instead of the earlier limita)on of two years. This will broaden the investable op)ons of “venture capital funds”
  • Amendments have been made to prepare financial statements as per Interna)onal Financial Repor)ng Standards as applicable in Bangladesh and the audited financials to be prepared as per Interna)onal Standards on Audi)ng
  • Amendment has been made to ensure that the fund manager should obtain consent from the trustee before disbursement of fund to any non-listed securi)es of porGolio companies.
  • The exercise of an independent valuer , conduc)ng a valua)on of the investments of the fund has been relaxed to a minimum of once every year instead of twice a year.
  • Apart from cons)tu)ve documents, financial documents and other documents will have to be shared to eligible investors with the added flexibility of being shared in electronic form instead of printed hard copy.
  • A check has been placed to ensure that the fund manager cannot share the profit from the fund twice as performance fee.
  • Made amendment to enable the fund manager to hold up-to 30% of unit funds as opposed to 25% before.
  • The lock in for investments in funds has been brought down to 2 years from 3 years .
  • Investments of connected persons’ of the fund manager in alterna)ve investment fund will also have to be disclosed in the annual reports.
  • Registra)on fee has been halved to 0.05% of the fund corpus
  • Annual fee of the fund has been reduced by 20% to 0.04% of NAV of the fund.
  • The minimum subscrip)on by each investor has been brought down to BDT 1,000,000 from BDT 5,000,000.
  • Allowed flexibility of investment diversifica)on according to risk management policy of fund. Allows the fund to jointly investment in a porGolio company along with another fund.
  • New provision allows the life of the fund to be shortened by a vote of 2/3 majority similar to the previous manned of extension of the life of the fund.

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