Due to non-payment of fees on time, 84,000 BO accounts have been closed at the end of the outgoing financial year 2019-2020. However, this number is less than half compared to last year. About two lakh BOs were canceled last year.
Sources said that this time less amount of BO account has been canceled due to Walton’s IPO and Robi’s IPO being in the pipeline. However, the list of canceled accounts from some brokerage houses has not been sent to CDBL yet. If all the accounts are received, the number of canceled BOs may increase further.
Meanwhile, the capital market could not return to its normal form after the terrible collapse of (2010). As a result, ordinary investors have turned away from the market, which has been hit hard by the BO account.
It was thought that the coronavirus would cause more BOs to be canceled this year. But investors did not cancel the BO as some good companies are in the IPO pipeline. This is because the lion’s share of the BOs that are canceled every year are open BOs for applying for shares in the primary market.
In the last six years, more than seven lakh BO accounts have been closed due to non-renewal. According to Central Depository Bangladesh Limited (CDBL), a company that stores shares electronically.
According to the information received, at the end of the financial year 2014-15, the total number of BOs was 32 lakh four thousand 602. In the 2019-20 financial year, it has come down to 24 lakh 94 thousand 156.
It is learned that, like other years, a significant number of the accounts that have been closed this time are BOs applying in the primary market or IPO. Besides, many investors have left the capital market as they could not take advantage of the secondary market. Again, a small number of shareholders have closed their accounts.
According to the concerned, numerous BOs are canceled every year mainly for two reasons. One is the downturn in the market, the other is the unavailability of investors from the primary market.
In this regard, DSE Director Shakil Rizvi told that most of the canceled accounts were opened for application in the primary market. This happens every year. If there is an IPO of a good company then the tendency to open BO increases. At the end of the year, many people do not renew these accounts. As a result, many accounts are lost.
As a rule, if the BO fee is not paid in June, those accounts will be closed automatically. But the accounts that have shares or money are not closed. According to Schedule-4 of the Securities and Exchange Commission’s (SEC) Depository (Practical) Regulations, 2003, a depository participant or investor is required to renew an account with an annual accounting fee at a fixed rate to manage a BO account.
Earlier, the fee was collected in December every year as a calendar year. However, in June 2010, the BSEC changed the time for renewal of BO accounts and fixed June as the time for payment of annual fees. At this time the BO renewal fee was increased from 300 to 500 rupees. Subsequently, a circular issued by BSEC on April 17, 2011 imposed the obligation to renew the BO account by June 30. If not, it will be canceled, the circular said. At present the BO renewal fee has been fixed at Tk. 450.
