Assignment

On
Legal framework of capital Market
Intermediaries, Infrastructure and service provider of Capital Market
Course Title: Investment Banking
Course Code: BI-405

Submitted To
Mr. Md. Abu Bakkar Siddik
Assistant Professor
Department of Banking and Insurance
University of Chittagong
Submitted By:
Muhammad Farabee Ferdous
ID:16306023
7th Semester
Session:2015-2016
Department of Banking and Insurance
University of Chittagong
Date of Submission: 4th April,2019

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 Contents
Topic Name Page
Legal Frame work of Capital Market 2-8

8-13
Intermediaries, Infrastructure and service provider of Capital Market

Legal Frame work of Capital Market

Securities and Exchange Commission,1969

BSEC was established on 8 June 1993 under the Securities and Exchange Commission Act,
1993. The Chairman and Members of the Commission are appointed by the government and
have overall responsibility to administer securities legislation. The Commission, at present has
three full-time members, excluding the Chairman. The Commission is a statutory body and
attached to the Ministry of Finance.
Initially named simply as the Securities and Exchange Commission, on 10 December 2012, its
name was officially changed to the Bangladesh Securities and Exchange Commission.
During the 2011 Bangladesh share market scam the BSEC withdrawing various directives given
earlier to help stabilise trading at the Dhaka Stock Exchange and was criticised by some
commentators for its actions during the subsequent crash.[2]
Mission:

 Protect the interests of securities investors

 Develop and maintain fair, transparent and efficient securities markets
 Ensure proper issuance of securities and compliance with securities laws

Functions:

 Regulating the business of the Stock Exchanges or any other securities market.
 Registering and regulating the business of stock-brokers, sub-brokers, share transfer
agents, merchant bankers and managers of issues, trustee of trust deeds, registrar of an issue,
underwriters, portfolio managers, investment advisers and other intermediaries in the
securities market.
 Registering, monitoring and regulating of collective investment scheme including all
forms of mutual funds.

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 Monitoring and regulating all authorized self-regulatory organizations in the securities
market.
 Prohibiting fraudulent and unfair trade practices relating to securities trading in any
securities market.
 Promoting investors’ education and providing training for intermediaries of the securities
market.
 Prohibiting insider trading in securities.
 Regulating the substantial acquisition of shares and take-over of companies.
 Undertaking investigation and inspection, inquiries and audit of any issuer or dealer of
securities, the Stock Exchanges and intermediaries and any self-regulatory organization in
the securities market.
 Conducting research and publishing information.

Securities and Exchange Ordinanance,1969

To provide for the protection of investors, regulation of markets and dealings in securities.
Short title, extent and commencement.-
(1) This Ordinance may be called the Securities and Exchange Ordinance,1969.
(2) It extends to the whole of Pakistan.
(3) It shall come into force on such date as the Federal Government may, by notification in the
official Gazette, appoint.
Definitions.-
(1) In this Ordinance, unless there is anything repugnant in the subject or context,- (a) “agent”
means a person appointed by a member to act on his behalf for the purposes recognized by an
exchange; (ab) “associate” means any partner, employee, officer or director of a member; (ac)
“asset management company” means a company which offers investment schemes under trust
deeds and issues redeemable securities”; (ad) “balloter” means a person who provides services to
an issuer for selecting the required number of applicants of public issue through a computer
draw;
(b) “bank” means a banking company as defined in the Banking Companies Ordinance,1962
(LVII of 1962);
(c) “broker” means any person engaged in the business of effecting transactions in securities for
the account of others; (ca) “central depository” means a company formed to establish and operate
a system for the central handling of securities, whether or not listed on an exchange, whereby
such securities are deposited with and held in custody by, or registered in the name of, the
company as a nominee for the depositors and dealings in respect of such securities are effected
by means of entries in securities accounts without the physical delivery of scrips.” (cb)
“Commission” means the Securities and Exchange Commission of Pakistan established under
the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997); (cc)
“Commodity Exchange” means a company that provides or, proposes to provide, the physical
facilities necessary for trading in Commodity Futures Contracts; (cd) Commodity Futures
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Contracts” means an agreement to purchase or sell a particular commodity for delivery [or
settlement]1 in the future at a price that is determined at the initiation of the contract that
obligates each party to the contract to fulfill the contract at the specified price and that may be
settled by delivery, cash or offset at an organized Exchange duly registered with the Commission
and in relation to Commodity Futures the expression “commodity” includes,- 1 The words “or
settlement” inserted through Finance Act, 2008 dated June 27 2008. (i) agricultural, livestock,
fishery, forestry, mining or energy goods, and any product that is manufactured or processed
from any such goods; and (ii) any other matter as may be notified by the Commission in the
Official Gazette; (ce) “corporatisation” means the conversion (iv) the publisher of any
newspaper, news magazine, or other publication of general and regular circulation; or (v) the
Investment Corporation of Pakistan;
(f) “Investment Company” means a company engaged principally or wholly in buying and
selling securities of other companies and includes a company, not being a holding company, the
investment of which in the share capital of other companies at any one time is of an amount
equivalent to eighty per cent of the aggregate of its own paid up capital and free reserves, but
does not include a bank or an insurance company or a corporation which is a member of a Stock
Exchange;
(g) “issuer” means any person who has issued or proposes to issue any security;
(h) “jobber or dealer” means any person engaged in the business of effecting transactions in
securities for his own account, through a broker or otherwise, but does not include any person
who trades in securities for his own account, either individually or in some fiduciary capacity,
otherwise than as a part of a regular business;
(i) “member” means a member of an Exchange; [(ii) Omitted]
(j) “person” includes a Hindu undivided family, a firm, an association or body of individuals,
whether incorporated or not, a company and every other artificial juridical person;
(k) “prescribed” means prescribed by rules made under this Ordinance;
(l) “security” includes- (i) any stock, transferable share, scrip, [ Mudaraba Certificate], note,
debenture, debenture stock, [anticipation term certificate] bond, investment contract, [forward or
futures contract], and preorganization certificate or subscription, and, in general, any interest or
instrument commonly known as a “security” and, any certificate of deposit for, certificate of
interest or participation in, temporary or interim certificate for, receipt for , or any warrant or
right to subscribe to or purchase, any of the foregoing but does not include currency or any note,
draft, bill of exchange or banker’s acceptance or any note which has a maturity at the time of
issuance of not more than twelve months, exclusive of days of grace, or any renewal thereof
whose maturity is likewise limited; (ii) any Government security as defined in the Securities Act,
1920 (X of 1920); (iii) any bonus entitlement voucher issued by the State Bank of Pakistan in
accordance with any scheme announced by the Commission; and (iv) Commodity Futures
Contract;
(m) “stock exchange” means any person who maintains or provides a market place or facilities
for bringing together buyers and sellers of securities or for otherwise performing with respect to
securities the functions commonly performed by a Stock Exchange, as that term is generally
understood, and includes such market place and facilities;

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(n) “sub-underwriter” means a person who has made a contract with an underwriter to take up a
part of the securities not fully subscribed by the public issue;
(o) “transfer agent” means a person appointed by the issuer to assist in the maintenance of record
for issuance and transfer of securities and to perform functions of persons commonly known as
Registrar;
(p) “underwriter” includes a person who has made a contract with an issuer to subscribe and pay
in cash for those securities as are not fully subscribed by the public issue or a person who has
initially bought the securities from an issuer for the purpose of selling such securities by means
of a public offer; and
(q) “venture capital company” includes a company which is engaged principally in financing
through direct equity investment in another company and provides managerial expertise thereto;

Depositary Act,1999
“An Act to provide for regulation of depositories”
Whereas it is expedient to provide for regulating depositories established for the purpose of
maintenance of securities and effecting and recording transfer thereof;
It is hereby enacted as follows:-
Short title and commencement –
(1) This Act may be called the Depositories Act, 1999.
(2) It shall come into force on such date as the Government may, by notification in the official
Gazette, appoint.
Definitions – In this Act, unless there is anything repugnant in the subject or context,-
(a) “participant” means a person entitled to participate in a depository in accordance with the
regulations;
(b) “issuer” means an issuer as defined in section 2 (g) of the Securities and Exchange
Ordinance, 1969 (XVII of 1969);
(c) “bye-laws” means bye-laws made by a depository under this Act;
(d) “Commission” means the Commission as define in section 2 (1) (a) of the Securities and
Exchange Commission Act,1993 (XV of 1993);
(e) “Companies Act” means the Companies Act, 1994 (XVIII of 1994);
(f) “company register” means the register of members as mentioned in section 34 of the
Companies Act; (g) “depository” means a company constituted with the institutions specified by
regulations for the purpose of maintenance and transfer of securities through book entry and
registered under the Companies Act;

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(h) “ depository register” means the legal ownership register maintained by a depository relating
to securities recorded in the name of the depository in the depository part of the company
register;
(i) “direct account holder” means a person who opens and maintains an account with the
depository but is not a participant; Page 2 of 2
(j) “regulations” means regulations made under this Act;
(k) “book entry” means recording of securities in the depository register in accordance with the
regulations;
(l) “person” includes any company, institution or organization;
(m) “eligible securities” means securities eligible for recording in the depository register under
the bye –laws ;
(n) “securities” means securities as defined in section 2(1) of the Securities and Exchange
Ordinance, 1969 (XVII of 1969); (o) “account” means an account relating to legal ownership of
securities recorded in the depository register;
(p) “ account holder” means a person who opens and maintains an account with the depository
either himself or through any participant.

Companies Act,1994
An Act to consolidate and amend the law relating to companies and certain other
associations.The company must be registered in accordance with provisions of the Company Act
1994, and the Certificate of Incorporation must be obtained. In case of Public Company,
Certificate of Commencement is also need to start business.
A license must be obtained under the Company Act 1994.
Public Company must register its name as a member of stock exchange otherwise it cannot issue
shares. To start business a company has to issue a certain amount of share in public.

Trust Act,1882
An Act to define and amend the law relating to Private Trusts and Trustees.
This Act may be called the Trusts Act, 1882: and it shall come into force on the first day of
March, 1882.
It extends to the whole of Bangladesh. But nothing herein contained affects the rules
of 2[ Muslim] law as to waqf, or the mutual relations of the members of an undivided family as
determined by any customary or personal law, or applies to public or private religious or
charitable endowments, or to trust to distribute prizes taken in war among the captors; and
nothing in the second Chapter of this Act applies to trusts created before the said day.
A “trust” is an obligation annexed to the ownership of property, and arising out of a confidence
reposed in and accepted by the owner, or declared and accepted by him, for the benefit of
another, or of another and the owner: the person who reposes or declares the confidence is called

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the “author of the trust”: the person who accepts the confidence is called the “trustee”: the person
for whose benefit the confidence is accepted is called the “beneficiary”: the subject-matter of the
trust is called “trust-property” or “trust-money”: the “beneficial interest” or “interest” of the
beneficiary is his right against the trustee as owner of the trust-property; and the instrument, if
any, by which the trust is declared is called the “instrument of trust”:
a breach of any duty imposed on a trustee, as such, by any law for the time being in force, is
called a “breach of trust”:
And in this Act, unless there be something repugnant in the subject or context, “registered”
means registered under the law for the registration of documents for the time being in force: a
person is said to have “notice” of a fact either when he actually knows that fact, or when, but for
wilful abstention from inquiry or gross negligence, he would have known it, or when information
of the fact is given to or obtained by his agent, under the circumstances mentioned in
the Contract Act, 1872, section 229; and all expressions used herein and defined in the Contract
Act, 1872, shall be deemed to have the meanings respectively attributed to them by that Act.

The Insurance Act, 1938

This Act contained provisions regarding matters like definition of insurer and insured,
commission payable to agents, licensing of agents, appointments of staff, register of policies and
register of claims powers of the controller of insurance, acquisition of surrender value by policy,
actuarial report, deposits, investments, loans, valuation of assets and liabilities, account and
balance sheets etc. The Act also contained provisions relating to co constitution, management
and winding up of insurance company. It was applicable to both in life and general insurance
business.

The Bank Companies Act 1991:

This is the act which is meant for Commercial Banks and the Central Bank of the country as
well. It is mandatory for all banks to abide by the provisions of this Act. This Act has given
necessary power to the Central Bank to control the Commercial Banks and Specialized Banks in
line with its monetary policy. This Act has 124 Sections.

Financial Institution Act,1993

An Act made to provide for the granting of licenses to financial institutions, their control and to
make other incidental provisions relating thereto

Whereas it is expedient to provide for the granting of licences to financial institutions, their
control and to make other incidental provisions relating thereto;

ACT to provide for the regulation of banks and other financial institutions which engage in the
business of banking and business of a financial nature, for matters incidental and related thereto,

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for the repeal of the Banking Act (Chap. 79: 01) and the Financial Institutions (Non-Banking)
Act, 1979 (Chap. 83: 01) and the re-enactment of certain provisions of those Acts in consolidated
form.

Anti-Money Laundering Act 2002

 Money laundering is now a widely used term. It denotes money acquired by unlawful means and
hiding the source, generally in overseas banks, or otherwise invested but not accounted for in
accordance with law. Black money is the term also used in a more or less similar context. The
legally accepted definition of money laundering is somewhat broader than is ordinarilly
perceived. To prevent money laundering in Bangladesh, the Prevention of Money Laundering
Act, 2002 (Act No. VII of 2002) was enacted. 

The Money Laundering Prevention Act 2002 received the consent of President to became a law
on 5 April 2002. The act was amended in 2003(BB, 2003). The act understands ‘Money
Laundering’ as illegally earning or gaining resources directly or indirectly and as perpetrating or
assisting in illegal transfer, conversion or concealing position of legal or illegal resources earned
or gained directly or indirectly. Responsibilities and powers of BB in prevention: The BB is
entrusted with the responsibility of suppressing and preventing money laundering crimes by
implementing the act. Bangladesh Bank has an Anti-Money Laundering Department who has the
following responsibilities:

Intermediaries, Infrastructure and service provider of Capital Market

I have selected BRAC EPL Securities Limited as a broker. BRAC EPL Securities Limited
provided products are:

Equity
We are your one-stop capital markets investments solution provider. While brokerage is
perceived as an execution-only business, we believe we owe far more than that to our valuable
clients.
Inspired by this notion, we have developed a dynamic team of relationship managers, traders and
analysts to provide you with holistic, personalized services.
We Provide:
 Opening Beneficiary Accounts(BO) for individuals

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  Providing margin lending
 Trading for institutional investors, both domestic and international
 Providing stop-gap liquidity support, especially to foreign institutional investors
 Assisting to create and follow an investment strategy
 Providing corporate finance advisory services
 Facilitating investment by the Non-resident Bangladeshis (NRBs)

BESL PROBASHI BINIYOG

Probashi Biniyog provides Non-Resident Bangladeshis (NRBs) the opportunity to invest in the
Bangladeshi Capital Market through a Beneficiary Owner's (BO) account which will be funded
by a Non Resident Investor's Taka Account (NITA). Both BO account and NITA will be held
with BRAC Bank Limited.

NRBs can invest into the Bangladeshi Capital Market from anywhere in the world
Arrange purchases and sales of securities of your choice through BRAC EPL Stock Brokerage
Limited.
100% repatriation of capital, dividend and investment profits
NRBs can apply for IPOs as well as buy and sell shares in the Secondary Market through BRAC
Bank Limited. They can use e-mail, fax or phone to issue trade orders to BRAC Bank Limited.
Aparajita – A Specialized Booth for female investors. Aparajita provides you with a unique
platform targeted specially for females. They will have access to a female only trading booth,
designed to enhance and provide an ambient atmosphere. The female investors will also have
exclusive professional female service manager and traders to execute trades efficiently. Our
services:
 Female only trading booth
 Exclusive female service manager and traders catering to your trades
 Equity research from international award winning research team
 Regular Portfolio report
 Mobile app service
 Free Wi-Fi zone.
BESL Full DP Service:

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BRAC EPL Stock Brokerage Limited is a Full-service depository participant at Central
Depository Bangladesh Limited (CDBL) and provide the all necessary services. The services are
as follows:
 BO Account Open and Maintain
 Dematerialisation
(Dematerialisation is a process by which physical certificates are converted into electronic form.)
 Rematerialisation
(Rematerialisation is a process by which Instruments in electronic form are converted into
physical certificate upon account holders request.)
 Transfer
 Transmission
 Pledge
 Unpledged
 Change of Ownership
RETAIL BROKERAGE SERVICE
Any individual who is a Bangladeshi national above the age of 18 or any Bangladeshi
Institutions qualify as a Local Investor.
BO A/C Opening
Bangladeshi National
 A complete set of account opening forms (pdf)
 Three copy of passport size photograph
 Copy of bank statement
 National ID card/Passport/Ward Commissioner's certificate/Employee ID
 One copy of photograph of Nominee/Authorized/POA
Bangladeshi Institutions
 A complete set of account opening form (pdf)
 Copy of Memorandum and Articles of Associations
 Copy of trade license (if any)
 Board regulations

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  Three copy of passport size photograph of authorized person
Depository Services
We extend full depository services that comprise opening and maintenance of BO account,
dematerialization and re-materialization of instruments, transfer and transmission of instruments,
pledging-unpledging through CDBL.
Trading Services
As we aspire to be one of the leading Brokerages in the country, we have dedicated all our
endeavors in developing a solid trading infrastructure. Being founded upon the urge to be the
market leader, we have already taken some big strides towards success by establishing spacious
trading floor, female trading booths, multiple VIP Trading booths and separate Tele-trading
booths.
Margin facility - We also arrange margin facilities for clients by teaming up with BRACEPL
Investments. In a nutshell, any investor who wants to trade on margin account can avail the same
via BRAC EPL Stock Brokerage Limited.
Institutional help desk - Any institution or large investor can avail customized client service
through a separate institutional help desk at BRAC EPL Stock Brokerage Limited.
Tele/E-mail Trading -  As it is not always possible for an investor to visit physically and submit
his order, we allow placement of order over Phone and via E-mail.
 
Female trading booth - BRAC EPL Stock Brokerage Limited maintains separate female trading
booths to facilitate trading for women investors.
 
VIP trading Booth - Since institutional investors' need seclusion while making their investment,
BRAC EPL Stock Brokerage Limited has established separate VIP Trading booth in every outlet.
 
Client Services
We believe that "Quality makes a sale but Salesmanship Makes a resale". Holding this belief as
the key criterion, we have formed a fine tuned team of customer service that is composed of a
group of fresh business school graduates and veteran customer care personnel who are amiable,
efficient and receptive to customers' queries.
Fees & Charges
 BO account opening Charge "Free"
 Settlement and Transaction costs are inclusive of brokerage commission

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  Brokerage commission: 0.40%
NRB BROKERAGE SERVICE
BRAC EPL will provide Non-Resident Bangladeshi's (NRB) the option to subscribe for IPO and
trading shares in the secondary market through BRAC Bank/HSBC.
Features
The features of the product will be as follows:
 NRBs can invest into the Bangladeshi Capital Market from anywhere in the world
 Custodian Service will be provided by HSBC/BRAC Bank
 100% repatriation of capital, dividend and investment profits
 NRBs can apply for IPOs as well as buy and sell shares in the Secondary. They can use e-
mail, fax or phone to issue trade orders to BRAC Bank Limited
Who are eligible?
All Bangladeshi nationals (Bangladeshi passport holders) who are working/living abroad can
open NITA. Foreign passport holders who are originally from Bangladesh are also eligible to
open an account.
Required documents - for new customers
 The following documents will be required while opening an account:
 Completed BO account form
 Completed BO account nominee form
 Completed Trade account opening form (provided by securities company)
 Power of Attorney
 Tripartite Agreement
 Completed NITA account form
 Custodian Agreement
 A certified copy of the valid passport, valid visa
 Four passport size photographs of the applicant
 Proof of address (utility bill/bank statement copy etc.)
 Proof of income (such as last tax return/employment certificate/contract/recent pay slip)
 Completed application form and duly signed signature card

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  Three copies of passport size photos of the nominee which must be attested on the back
by the primary account holder

BESL SMS Service:

BRAC EPL Stock Brokerage Limited provide the following SMS Service to their Investors.
 Buy & Sell Share through SMS Module
 SMS Notification: Buy & Sell transaction notification, Deposit & Withdrawal
notification.

BRAC EPL Stock Brokerage Limited provide the fastest and most comfortable way of fund
transfer to investors in several ways.
 BEFTN: Bangladesh Electronic Fund Transfer Network
 EFTN: Electronic Fund Transfer Network
 RTGS: Real Time Gross Settlement.

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