Asset Management Law in Bangladesh 2026: Mutual Funds, Private Funds and the New BSEC Rules

Asset management law Bangladesh: the 2026 framework for public and private funds

Asset management law Bangladesh practitioners worked with for almost a quarter of a century changed on 12 November 2025, when the Bangladesh Securities and Exchange Commission (BSEC) published the BSEC (Mutual Fund) Rules 2025 and repealed the Mutual Fund Rules 2001.[1] The new rules raise capital for asset managers, trustees and custodians, ban new closed-end schemes, force underperforming closed-end funds to a unit holder vote, and rewrite fees, investment limits and pricing. In 2026 the Commission has enforced them through conversion orders, litigation and sanctions against named fund managers.

This guide brings public and private funds together: asset manager licensing, trustees and custodians, open-end and closed-end funds, exchange-traded funds, the BSEC (Alternative Investment) Rules 2015 for private equity, venture capital and impact funds, fund taxation after the Finance Act 2026, foreign investors, and enforcement against asset managers since 2024. Where another TRW insight already covers a topic in depth, we link to it.

Summary: Bangladesh regulates collective investment through two main instruments: the BSEC (Mutual Fund) Rules 2025 for public funds sold to retail investors, and the BSEC (Alternative Investment) Rules 2015 for private funds raised by private placement. Every fund is a trust, and its asset manager, trustee and custodian must each be registered with BSEC and independent of one another. Since November 2025 no new closed-end scheme can be launched, and existing closed-end funds trading at deep discounts must put conversion or winding up to their unit holders.

Key point: The 2025 Rules set minimum paid-up capital of Tk 10 crore for an asset manager and for a trustee, and Tk 200 crore for a custodian, with transition periods for existing licence holders. An asset manager that does not manage at least one fund within the prescribed period risks losing its registration. Capital plans and licence strategy should be reviewed now, not at the deadline.

At a glance

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Table of Contents

What asset management law Bangladesh covers in 2026

Asset management law in Bangladesh is the body of rules that governs pooled investment vehicles and the firms that run them. The statutory base is the Bangladesh Securities and Exchange Commission Act 1993 and the Securities and Exchange Ordinance 1969. The Commission made the 2025 mutual fund rules under section 24(1) of the 1993 Act, and it issues directions to the industry under section 20A of the Ordinance.[1] [2] The Trust Act 1882 and the Registration Act 1908 supply the trust machinery, because every regulated fund is constituted as a trust.[1]

Four kinds of regulated fund

BSEC's rule register currently lists four fund regimes. Mutual funds, including exchange-traded funds, fall under the Mutual Fund Rules 2025. Private equity, venture capital and impact funds fall under the Alternative Investment Rules 2015. Real estate investment trusts have their own Real Estate Investment Trust Fund Rules 2024. Exchange-traded funds are also governed by the BSEC (Exchange Traded Fund) Rules 2016.[1] [2] Discretionary portfolio management for individual clients is a separate licence under the Merchant Banker and Portfolio Manager Rules 1996.[2]

Public funds and private funds

The practical dividing line is how money is raised. Public funds in Bangladesh are mutual funds offered to the general public through a prospectus and, increasingly, traded or redeemed through exchange platforms. Private funds in Bangladesh are alternative investment funds that may be offered only to eligible investors by private placement.[3]

This article focuses on the fund vehicle and its managers. Listed-company obligations are covered in our guide to BSEC compliance in Bangladesh, public offerings of shares in our IPO process guide, and the wider market architecture in securities law in Bangladesh.

The Mutual Fund Rules 2025: how asset management law Bangladesh was rebuilt

The BSEC (Mutual Fund) Rules 2025 were made by notification dated 10 November 2025 and published in an extraordinary issue of the Bangladesh Gazette on 12 November 2025, taking effect on publication.[1] Rule 106 repeals the Securities and Exchange Commission (Mutual Fund) Rules 2001, but saves registrations, approvals, deeds and decisions made under them, which are treated as made under the new rules.[1]

Where the reforms came from

The rules are the main legislative output of the capital market reform programme that followed August 2024. A taskforce formed by the interim government recommended that closed-end funds be redeemed at maturity without extension, and the Commission then barred tenure extensions for existing schemes.[6] BSEC published a draft for consultation in October 2025, which proposed doubling asset manager capital from Tk 5 crore to Tk 10 crore and ending approvals of new closed-end schemes.[5] Both proposals survived into the final text.

What changed in substance

The headline changes are structural. Trustee, asset manager and custodian must be separately registered and independent; existing funds whose trustee also acted as custodian had one year to appoint a new custodian.[1] Capital thresholds rose for all three licence types. New schemes must be open-end. Closed-end schemes face a mandatory discount test. Management fees now follow a sliding scale, performance fees are allowed above a hurdle, and total recurring expenses are capped. Investment limits were rewritten in the Sixth Schedule. For anyone advising on asset management law Bangladesh after 2025, the 2001 Rules are now relevant mainly to past conduct.

Past conduct is still judged under the 2001 Rules

That last point matters in enforcement. BSEC's 2026 decision removing LR Global as manager of six funds relied on a breach of rule 56 of the 2001 Rules, because the impugned investment pre-dated the new regime.[8]

Licensing an asset manager under asset management law Bangladesh

No company may act as asset manager of a mutual fund without BSEC registration under the 2025 Rules. The applicant must be a company incorporated under the Companies Act 1994 or a statutory body.[1] A private limited asset manager whose funds under management reach Tk 250 crore at cost must convert into a public limited company, within one year of the gazette for existing managers, or within six months of reaching that size.[1]

Capital and eligibility

The minimum paid-up capital is Tk 10 crore; an existing manager below that figure has three years from the gazette to top up, failing which its registration may be cancelled and its funds moved to a new manager.[1] The applicant and its directors must not be loan defaulters on the latest Credit Information Bureau report. No director may be a director of a trustee, custodian, stock dealer, stock broker, merchant banker or portfolio manager, or otherwise an interested party. The firm must also maintain adequate capital under the BSEC (Risk Based Capital Adequacy) Rules 2019.[1]

Board and people

At least one-fifth of the board must be independent directors, appointed with BSEC's no-objection and approved by shareholders at the annual general meeting; an independent director may not be a shareholder or a member of a shareholder's family.[1] The chief executive needs five years' financial or capital market experience within at least ten years' work experience. The compliance officer needs two years in the capital market within five years' work experience and a BSEC-recognised certificate. A board-approved recruitment policy and code of conduct are required within one year.[1]

Fees, timing and lock-in

The application fee is Tk 1 lakh and the registration fee Tk 5 lakh. BSEC is to decide within 30 working days of a complete application, and the clock restarts if it asks for more information.[1] Sponsors' shares in the asset manager are locked in for three years from registration.[1] Changes in ownership, board or name require BSEC's prior approval, so selling an asset management company is a regulated transaction.

Use it or lose it

Rule 87 requires every registered asset manager to manage at least one mutual fund or scheme within three years of registration or one year after the gazette, whichever is later. Failing that, BSEC may cancel the registration or bar the firm from IPO and qualified investor offer quotas as an eligible investor.[1]

Trustees and custodians

Asset management law Bangladesh splits control of a fund three ways. Under rule 16 the fund's assets are held by a registered trustee under the trust deed, the asset manager runs the portfolio, and a registered custodian keeps the securities and operates the fund's BO accounts and bank accounts in the name of the fund or scheme.[1]

Trustee eligibility

A trustee must be a statutory body or a public limited company; private limited trustees registered under the old regime had six months to convert.[1] Minimum paid-up capital is Tk 10 crore, with one year for existing trustees to comply. The trustee and its directors must not be sponsors, asset managers, dealers, brokers, merchant bankers or portfolio managers. It needs a chief executive with five years' financial or capital market experience, at least one legal adviser with five years' relevant experience, a Shari'ah adviser if it supervises Shari'ah schemes, and a compliance officer.[1] The application fee is Tk 50,000 and the registration fee Tk 1.5 lakh.[1]

What the trustee must do

The trustee board approves audited and unaudited accounts, dividend and record dates, quarterly fund reports and the opening of every bank and BO account, and reviews related-party dealings with the asset manager every quarter.[1] The rules also oblige the trustee to call a unit holders' meeting, on 21 days' notice, within 15 days of specified triggers. They include a BSEC direction; a request from holders of three-quarters of the units; a fall in fair-value NAV of more than 40 per cent below cost-basis NAV; a closed-end scheme's six-month average trading price falling more than 25 per cent below fair-value NAV; no dividend for three consecutive years; and an open-end scheme dropping below 25 unit holders.[1]

Custodian eligibility

A custodian may be a bank, financial institution, statutory body, public limited company or depository, and must hold minimum paid-up capital of Tk 200 crore, with one year for existing custodians to comply.[1] It needs IT infrastructure, a depository participant certificate under the Depository Act 1999, adequate capital under the 2019 capital adequacy rules and a qualified compliance officer. The registration fee is Tk 2 lakh.[1] In August 2026 BSEC issued directives allowing the management committee or nominated official of a foreign bank to act in place of a board for custodian signatory purposes, and on CIB reports for custodians.[2]

Public funds in Bangladesh: sponsoring and registering a mutual fund

Every mutual fund must be registered with BSEC before it operates.[1] The sponsor applies in Form A with a non-refundable fee of Tk 1 lakh, and BSEC is to decide within 30 working days.[1] Registration will be refused unless the fund is constituted as a trust with a BSEC-approved trust deed, and its trustee, asset manager and custodian are registered, separate and independent.[1]

Who can be a sponsor

The definition of sponsor is broad. It includes banks, financial institutions, registered asset management companies, insurers, statutory bodies, public and private limited companies, recognised trust, pension, provident and superannuation funds, and foreign companies or approved foreign funds acting alone or with a local sponsor.[1] A private limited company may sponsor a fund if it has net worth of at least Tk 10 crore, enough cash or liquid assets to meet its committed subscription, a regular tax record and no loan default.[1] A 2021 BSEC directive, issued under the old regime, capped a foreign sponsor's subscription at 25 per cent of the fund size; confirm with BSEC whether it is still applied.[4]

Sponsor commitment and lock-in

For an open-end fund the sponsor must contribute at least 10 per cent of the initial target size. It must hold all its units for at least one year from the date the scheme is declared and at least 10 per cent of them at all times thereafter; after one year it may transfer the units, with BSEC's prior approval, to a person qualified to be a sponsor.[1] Sponsors should build this permanent holding into their capital planning.

Fees and the prospectus

Before the certificate issues, the applicant pays a registration fee of 0.2 per cent of the fund size stated in the trust deed. The draft prospectus must be filed within three months of registration, unless BSEC extends that period.[1] Each scheme then pays an annual fee before the start of each financial year of 0.10 per cent of fund size at fair value or Tk 1 lakh, whichever is higher, with a penalty of half the annual fee for each month of delay, payable from the asset manager's own account.[1]

Private placement within a public fund

A public fund may also place units privately before its public offer. No single individual other than the sponsor may receive more than 5 per cent of the initial target size, but there is no cap for companies, recognised trusts or pension, provident and superannuation funds investing for their own portfolios. Privately placed units in an open-end scheme are subject to a six-month lock-in.[1]

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Open-end vs closed-end funds

An open-end scheme has no fixed term or fixed size: it offers new units and repurchases existing ones throughout the year, apart from book-closure periods.[1] A closed-end scheme raises a fixed amount for a fixed period, usually ten years, and investors can exit before maturity only by selling on the exchange.[5] Rule 59 now provides that, after the gazette, no new closed-end scheme may be declared; only open-end schemes can be launched.[1]

How open-end pricing works

The asset manager must calculate NAV daily, at cost and at fair value, and publish the NAV per unit before trading starts each day.[1] It must also announce sale and repurchase prices daily. The spread between them may not exceed 3 per cent of the sale price, and the sale price may not exceed fair-value NAV per unit by more than 2 per cent. Redemption proceeds must be paid within three trading days, and a surrender request is priced on the day it is lodged.[1]

Units on the exchange platform

Dematerialised open-end units must be transferable through a stock exchange or BSEC-recognised platform, and existing open-end schemes had six months from the gazette to arrange this.[1] Where units are still issued in paper form, sales and repurchases may run through the asset manager's office, an approved liaison office or individual selling agents under a trustee-recommended policy. Subscription money must come through a bank account, mobile financial services or another BSEC-approved channel, never in cash to the manager, and units must issue within three working days.[1]

The closed-end conversion regime

The 2025 Rules deal with the stock of existing closed-end schemes in three ways. Their tenure cannot be extended in any manner.[1] They must distribute at least 70 per cent of annual net profit as cash dividend.[1] And they are subject to a discount test that can force a vote on their future.

The 25 per cent discount test

Under rule 62(2), if in the six months after the gazette a closed-end scheme's average trading price per unit is more than 25 per cent below the higher of its average cost-basis and fair-value NAV per unit, the trustee must call a special meeting. Holders of three-quarters of the units voting, by secret ballot, may decide to convert the scheme into an open-end scheme or to wind it up, subject to BSEC approval. The record date must be declared within 30 days of the six-month period, with 21 days' notice of the meeting.[1] Separately, holders of at least 75 per cent of units can resolve to wind up an existing closed-end scheme early.[1]

The May 2026 conversion order

BSEC issued its order on converting closed-end funds on 7 May 2026, gazetted on 24 May 2026.[2] It allows asset managers to propose voluntary conversion, requires trustees to decide on such proposals at least 150 days before maturity, prescribes publication of notices as price-sensitive information, and suspends unit trading from the record date. If the proposal fails, trading resumes and the existing manager bears the costs; if it passes, the newly selected manager pays the meeting costs and trustee fees, which are capped at Tk 10 lakh per scheme.[6]

The litigation

Some unit holders challenged the process. The High Court Division granted status quo orders on writ petitions filed by five unit holders, but in June 2026 the chamber judge of the Appellate Division stayed those orders, clearing BSEC and trustees to proceed.[7] Conversions and votes are now running fund by fund. BSEC's own explanation is that conversion lets holders redeem at NAV at any time, while winding up returns only what the manager realises on sale.[6]

Investment limits, fees and valuation

Mutual fund money may be invested only in securities listed on the main board or SME platform, in subscriptions to IPOs, qualified investor offers, repeat offers and rights issues, and in government securities. Listed debt and Shari'ah securities must carry a credit rating of at least A.[1] A fixed income scheme must keep at least 75 per cent of its assets in fixed income securities. Funds may not trade options, sell short, use carry-forward, invest in unlisted securities or lend.[1] Holdings that are delisted or moved to the OTC or alternative trading board must be sold within six months.[1]

Concentration limits in the Sixth Schedule

The Sixth Schedule sets the key concentration limits.[1]

• No scheme may put more than 10 per cent of its total assets, at cost, in the shares of a single company.
• All schemes of a fund together may not put more than 25 per cent in a single group, or more than 30 per cent in a single sector, unless the scheme is a declared sector fund.
• All schemes of a fund may not hold more than 10 per cent of any company's paid-up capital, and all funds under one asset manager not more than 25 per cent.
• No scheme may keep more than 20 per cent of its assets in bank deposits, or more than 15 per cent with a single bank.
• Block-market dealing between funds of the same manager, cross-investment between schemes, borrowing and cash withdrawals from fund accounts are prohibited.

Management fees and the expense cap

Management fees now fall as a fund grows. The annual cap on average daily net assets at fair value is 2.0 per cent up to Tk 5 crore, 1.5 per cent from Tk 5 crore to Tk 25 crore, 1.25 per cent from Tk 25 crore to Tk 50 crore, 1.0 per cent from Tk 50 crore to Tk 200 crore, and 0.75 per cent above Tk 200 crore.[1] Trustee and custodian fees are each capped at 0.50 per cent. Initial issue costs may not exceed 2 per cent of the fund and are amortised over up to seven years for an open-end scheme. Total recurring expenses may not exceed 3.50 per cent of average daily net assets.[1]

Performance fees

For the first time the rules allow a performance fee. Where a scheme, without any provisioning shortfall, declares a cash dividend representing a return above the higher of the 10-year Treasury bond yield and 10 per cent, the asset manager may charge a performance fee of 20 per cent of the declared dividend above that threshold.[1] Funds must be valued under IFRS, and impaired or illiquid holdings follow BSEC valuation directions.[1]

Dividend policy in 2026

In July 2026 BSEC directed that, in specified cases, a scheme could retain profits instead of declaring a cash dividend, and then clarified on 29 July 2026 that this applies only to open-end funds.[2] Closed-end schemes remain bound by the 70 per cent cash distribution rule.

Exchange-traded funds

The 2025 Rules define a mutual fund to include an exchange-traded fund, but provide that ETFs are registered and operated under the BSEC (Exchange Traded Fund) Rules 2016.[1] An ETF therefore uses the same trust, asset manager, trustee and custodian structure, with an ETF-specific layer on creation, listing and index tracking.

The market so far

The market has been slow to start. LankaBangla Asset Management's LB Multi Asset Income ETF targeted Tk 1 billion but collected only Tk 270 million from eligible investors, its sponsor and the manager. The ETF rules required commitments from eligible investors within six months of registration, and after two extensions BSEC refused more time. The manager refunded investors and sought closure in late 2024.[10] The same report notes that the rules contemplate passive management, but BSEC allowed this ETF to be actively managed because passive tracking is difficult in Bangladesh.[10]

Private funds in Bangladesh: the Alternative Investment Rules 2015

Private funds in Bangladesh are regulated by the BSEC (Alternative Investment) Rules 2015. An alternative investment fund is a trust formed in Bangladesh as a private equity, venture capital or impact fund. It pools money from eligible investors under a defined investment policy, is closed-ended with a fixed tenure, and raises money only by private placement.[3] Funds covered by the mutual fund rules are excluded.

The three fund types

A venture capital fund invests mainly in unlisted start-ups and early-stage companies; a private equity fund invests mainly in unlisted growth companies with at least three years' operating history, or carries out buyouts; and an impact fund pursues measurable social or environmental outcomes alongside financial return.[3] Each needs a BSEC-registered fund manager and trustee, and units may be offered only to eligible investors, with a minimum fund corpus of Tk 10 crore.[3]

Status of amendments

The Rules were amended in 2020 and 2021, and BSEC's consolidated text is stated to be current to the amendment gazetted on 24 August 2021.[3] BSEC's rule register, checked on 20 October 2026, lists no later amendment; reform effort has gone into the mutual fund regime instead.[2] Investor eligibility, fund manager capital, corpus, investment limits, fees and tenure are analysed in detail in our guide to venture capital law in Bangladesh, and we do not repeat them here.

Choosing between a private and a public fund

The choice usually follows the assets. A strategy that needs unlisted equity, preference shares or convertible instruments must use an alternative investment fund, because mutual funds are barred from unlisted securities.[1] [3] A strategy in listed equities, bonds and government securities aimed at retail savers belongs in an open-end mutual fund.

Fund taxation after the Finance Act 2026

Tax is where asset management law Bangladesh is most generous. At fund level, paragraph 10 of Part 1 of the Sixth Schedule to the Income Tax Act 2023 excludes from total income any income of a BSEC-recognised mutual fund, alternative investment fund, real estate investment trust or exchange-traded fund.[11] Gains, dividends and interest earned inside a registered fund are therefore not taxed in the fund's hands. Fees earned by the asset manager, trustee and custodian are taxed in their own hands in the normal way.

Unit holders

An individual's capital gain of up to Tk 50 lakh on transferring units of a listed fund is exempt, but the exemption does not cover sponsors, directors or placement holders.[11] The Finance Act 2026 set dividends for individual taxpayers at 15 per cent.[12] How a particular fund distribution is characterised and withheld should be confirmed against the fund's structure and the current withholding rules; see our note on withholding tax in Bangladesh.

Investment rebate

The Finance Act 2026 removed the Tk 5 lakh ceiling on investment in unit certificates, mutual funds, ETFs or collective investment scheme units for the individual investment rebate.[12] The same Act cut the qualifying rebate amount from 15 to 10 per cent of actual investment, or from Tk 10 lakh to Tk 7.5 lakh.[12]

Foreign investors in Bangladeshi funds

Under asset management law Bangladesh, foreign participation can take three forms: sponsoring a fund, managing one, or buying units. A foreign company may sponsor a mutual fund, alone or with a local partner, and a 2021 directive capped its subscription at 25 per cent.[1] [4] A foreign manager that wants to manage an alternative investment fund must do so through a Bangladeshi fund management company registered with BSEC; there is no passporting.[3]

Buying units as a non-resident

Non-residents may buy Bangladeshi securities against foreign currency remitted through banking channels, with purchases, dividends and sale proceeds routed through a Non-resident Investor's Taka Account (NITA). Proceeds of listed securities can be repatriated without prior Bangladesh Bank approval up to the prevailing market price.[14] For alternative investment funds, a 2018 Bangladesh Bank circular allows eligible non-residents to invest in units through a NITA or permitted accounts. The authorised dealer must report each issue, transfer or redemption to Bangladesh Bank within 14 days.[13]

Exiting a private fund

Dividends on AIF units are remittable after tax. Sale or redemption proceeds are remittable at fair value only with Bangladesh Bank's prior approval, supported by a valuation from a BSEC-licensed merchant banker or experienced chartered accountant and the trustee's recommendation.[13] Build that approval into exit timetables. Wider repatriation practice is covered in our guide to capital repatriation in Bangladesh, and tax relief in tax incentives for foreign investors.

BSEC reform and enforcement against asset managers, 2024 to 2026

Enforcement has moved from general warnings to named fund managers, and the regulator now uses removal, registration cancellation and penalties against them.

LR Global

In February 2026 BSEC removed LR Global Bangladesh Asset Management as asset manager of six mutual funds and began cancellation of its registration.[8] The Commission found that the manager had invested about Tk 23.6 crore of fund money for a 51 per cent stake in Padma Printers & Colors, later Quest BDC, without proper financial analysis. It also found a conflict of interest with a sister concern that bought the same shares more cheaply, and holdings above 15 per cent of one company's paid-up capital from a single fund. The trustees were instructed to find a new manager after audit.[8]

RACE Asset Management

An enquiry report submitted in November 2024 recommended revoking the licence of RACE Asset Management, barring its chairman and chief executive from the market, and cancelling the registration of its ten mutual funds with units redeemed under trustee supervision.[9] RACE obtained a High Court Division stay in February 2025, which was vacated in May 2026.[9] In June 2026 the Appellate Division chamber judge also stayed a High Court status quo order on a separate enquiry into RACE-managed funds' investment in Best Holdings, which recommended cancelling RACE's registration and a Tk 25 crore fine.[7] Separately, BSEC fined RACE Tk 55 lakh in April 2026 for failing to hold the required minimum of listed bonds and Treasury bonds across its funds.[9]

What the cases teach

Investment committee papers and valuation work are the first documents BSEC asks for. Related-party dealings are treated as fiduciary breaches, not commercial judgments. And trustees are expected to act: in both matters the trustee's own inspection and instructions formed part of the record.[8] [9] For the wider enforcement framework and penalty powers, see our guide to BSEC compliance in Bangladesh.

Asset management law Bangladesh mistakes to avoid

Most problems under asset management law Bangladesh arise from treating the fund as the sponsor's business rather than a trust for unit holders.

• Under-capitalising the licence. Capital that only just meets Tk 10 crore leaves no headroom for the capital adequacy rules or for losses in the first years.[1]
• Blurring the three roles. A trustee, custodian and asset manager with overlapping directors or group links fail the independence tests and invite cancellation.
• Launching without a fund. Registration without a scheme under management within the rule 87 period puts the licence at risk.
• Ignoring the Sixth Schedule at group level. The 25 per cent group limit and the 25 per cent cap across all funds of one manager are measured across schemes, not scheme by scheme.
• Using a mutual fund for unlisted assets. Unlisted equity, convertibles and private credit belong in an alternative investment fund, not a public fund.
• Selling an asset manager without approval. Ownership and board changes need BSEC's prior consent, and sponsor shares are locked in for three years.

Listed-company acquisitions by funds can also trigger disclosure duties; see our guide to the substantial acquisition of shares in Bangladesh.

Funds and asset management lawyers: what to expect

Funds and asset management lawyers in Bangladesh work at three points in a fund's life: formation (structure, trust deed, management and custodian agreements, prospectus or placement memorandum, licence and registration filings); operation (investment limits, related-party dealings, valuation and BSEC directions); and disputes (enquiries, show-cause hearings, writ petitions and appeals).

Choosing a public funds or private funds law firm

A public funds law firm in Bangladesh needs current command of the 2025 Rules, the conversion order and the directives issued since, and an understanding of how trustees such as the Investment Corporation of Bangladesh actually take decisions.[7] A private funds law firm needs fluency in the alternative investment regime, foreign exchange approvals for non-resident investors, and the instruments used in portfolio deals. TRW's capital markets practice and private equity practice cover both.

What to watch for the rest of 2026

Four developments will shape the next year. First, closed-end conversion votes are running fund by fund now that the Appellate Division has lifted the status quo orders, and each vote will decide whether a fund opens up or is wound up.[7] Second, the transition deadlines for capital, independent directors and public company status fall due in stages through 2026 to 2028.[1]

Third, the RACE enforcement is moving to final orders after the courts lifted the stays, and the outcome will set the benchmark for sanctions against fund managers.[9] Fourth, BSEC continues to refine the regime by directive, as the July and August 2026 directions on dividends and custodians show.[2] Guidance on asset management law Bangladesh written before November 2025 is out of date.

Frequently asked questions

What law governs mutual funds in Bangladesh in 2026?

The BSEC (Mutual Fund) Rules 2025, published in the Gazette on 12 November 2025 and effective on publication. They repealed the Mutual Fund Rules 2001, while saving registrations and approvals made under them.[1]

How much capital does an asset manager need?

Minimum paid-up capital of Tk 10 crore. Existing asset managers below that level have three years from the gazette to comply.[1]

Can the same company be trustee and custodian of a fund?

No. The trustee, asset manager and custodian must be separately registered and independent. Existing funds with a combined trustee and custodian had one year to appoint a new custodian.[1]

Can a new closed-end mutual fund be launched?

No. Rule 59 of the 2025 Rules prohibits declaring any new closed-end scheme after the gazette; only open-end schemes may be launched.[1]

When must a closed-end fund hold a conversion vote?

When its average trading price over the six-month test period is more than 25 per cent below the higher of its cost-basis and fair-value NAV. Holders of three-quarters of the units voting decide, by secret ballot, whether to convert or wind up.[1]

How quickly must an open-end fund pay redemptions?

Within three trading days. The sale price may not exceed fair-value NAV per unit by more than 2 per cent, and the sale and repurchase spread is capped at 3 per cent.[1]

What is the difference between a private fund and a public fund?

A public fund is a mutual fund offered to the public under the 2025 Rules. A private fund is an alternative investment fund under the 2015 Rules, offered only to eligible investors by private placement and able to invest in unlisted companies.[1] [3]

Is a mutual fund's income taxed?

Income of a BSEC-recognised mutual fund, alternative investment fund, REIT or ETF is excluded from total income under the Sixth Schedule to the Income Tax Act 2023.[11]

Can a foreign company sponsor a mutual fund?

Yes. The 2025 Rules include foreign companies, alone or jointly with a local sponsor, in the definition of sponsor. A 2021 directive capped a foreign sponsor's subscription at 25 per cent of fund size.[1] [4]

Have the Alternative Investment Rules 2015 been amended recently?

BSEC's consolidated text is current to the amendment gazetted on 24 August 2021, and its rule register lists no later amendment as at 20 October 2026.[2] [3]