1.22 lakh BO accounts closed in June

The Central Depository Bangladesh Limited (CDBL) closed around 1.22 lakh beneficiary owners' (BO) accounts in June as the account holders did not renew them.

On 31 May this year, the number of active BO accounts was 26.59 lakh, which stood at 25.36 lakh at the end of June, according to the CDBL.

Sources said investors who had more than one BO accounts have not renewed them as they are not going to benefit by using them under the new system.

Market insiders said the investors used to apply for the initial public offerings (IPO) to get new company's shares by creating accounts using fake information. They would unusually benefit from the primary market by using these accounts.

Recently, the Bangladesh Securities and Exchange Commission (BSEC) quashed the lottery system to allot IPO shares among all applicants on a pro-rata basis.

Under the current system, the general investors must invest at least Tk20,000 in a listed company at the market price in the secondary market of the stock exchanges and they must apply with Tk10,000 or its multiple for an IPO.

One investor is permitted to submit a maximum of two applications using the same bank account for an IPO.

There were long-standing questions about the transparency of BO accounts. As a result, the real picture of investors in the stock market was not clear. The securities regulator's recent initiatives will play a vital role in bringing transparency regarding the BO accounts in the stock market, said people involved in the business.

Recently, the commission declared forfeited Tk5.7 crore in investments by general investors for dropping more than two applications using the same bank account in Sonali Life Insurance Company's IPO.

A total of 25,389 applications worth Tk37.94 crore became invalid, which was 15% of the total subscription.

Of the BO accounts active currently, 18.64 lakh are held by males and 6.5 lakh by females.

Among the BO account holders around 23.73 lakh are Bangladeshi residents and the rest 1.40 lakh are non-resident Bangladeshis.

Around 2.5 lakh BO accounts were closed in the previous fiscal year.