BSEC Compliance

by Tahmidur Remura Wahid | Aug 31, 2025 | Uncategorized | 0 comments

BSEC Compliance (2025): Bangladesh Securities and Exchange Commission (BSEC)- A Complete, Practical Guide for Issuers, Intermediaries, and Boards in Bangladesh

By TRW Law Firm — Capital Markets, Corporate Governance & Regulatory Practice

Why this guide

If you’re listed, planning to list, issuing debt or sukuk, running a brokerage, a merchant bank, a mutual fund/AIF manager, or serving as a trustee/custodian in Bangladesh, you live under the Bangladesh Securities and Exchange Commission (BSEC) rulebook. Getting “BSEC-ready” is less about memorising regulations and more about building a repeatable operating system: disclosures that are timely and consistent, governance that actually works, documented internal controls, and an evidence trail strong enough for audits, inspections, ratings, and deals.

This guide is a detailed, field-tested playbook covering:

Who BSEC regulates and what permissions/registrations they need
Listing and public offering pathways (equity, debt, sukuk)
Corporate Governance Code implementation (board, committees, C-suite roles)
Continuous disclosure (financials, price-sensitive information, corporate actions)
Insider trading & market abuse prevention
Related-party transactions (RPT) controls
Mutual funds and alternative investment (AIF/VC/PE) compliance
Intermediaries (broker/dealer, merchant bank, DP, AMC, trustee, custodian, CRA) obligations
Debt & sukuk ongoing duties (trustee, covenants, rating surveillance)
Takeover/tender offers, delisting, and buy-backs (where permitted)
Enforcement, inspections, penalties, and remediation
A practical compliance calendar and templates checklist

Regulations evolve. Use this as your operating blueprint, then plug in the latest circulars and exchange notices when you execute.

Part A — The BSEC “universe”: who’s in scope

1) Issuers

Listed companies on DSE/CSE (equity and/or debt/sukuk)
Prospective issuers (IPO/QIO/rights/bonus, bonds/sukuk, perpetuals)
Closed-end mutual funds (listed)
Open-end mutual funds (NAV disclosure & advertising rules apply; not listed by nature)

2) Market intermediaries (licensing/registration required)

Broker/Dealer (trading & client asset segregation)
Merchant Bank/Issue Manager (public issue management, underwriting, portfolio management)
Asset Management Company (AMC) and Fund Manager (mutual funds)
Alternative Investment Fund (AIF) Manager (VC/PE/Impact funds)
Depository Participant (DP) (BO accounts, demat flows)
Trustee (mutual funds, debt/sukuk) & Custodian
Credit Rating Agency (CRA)
Research Analyst (where specific registration applies)
Registrar to Issue/Transfer Agent (RTI/RTA)

3) Market institutions

Stock exchanges (DSE/CSE)
Central Depository
Clearing & Settlement entities (where applicable)

Part B — Permissions, licences, and fit-and-proper

Every intermediate role above is permission-based. Core elements repeat across applications:

Fit-and-proper: promoter and key personnel integrity, competence, and financial soundness; absence of disqualifications; conflict-of-interest mapping.
Capital & net worth: prescribed minimum paid-up/net capital; capital adequacy ratios (brokers/ dealers) and risk management framework.
Infrastructure: trading/back-office systems, cyber-security, BCP/DR, secured data retention, and audit trails.
Policies: KYC/AML/CFT, RPT handling, insider trading prevention, research independence (if applicable), complaint redressal, whistleblowing, code of conduct, and risk appetite statement.
Reporting: periodic returns to BSEC/stock exchanges/depository, auditor certifications, and event-driven notifications (management changes, control changes, breaches).
Fees: initial and annual renewal fees; inspection facilitation.

Build a Licence Dossier template per licence type: governance charts, resumes, SOPs, SLAs, internal audit plan, system architecture, policy library, specimen disclosures, and sample client agreements.

Part C — Equity capital markets: IPO/QIO/Rights/Bonus

1) Pre-IPO readiness checklist (12–18 months out)

Track record & financial hygiene: three years’ audited financials (or as prescribed); no qualified/adverse opinions; clean revenue recognition and related-party balances; tax filings current.
Share capital & lock-in: sponsor holdings locked per rules; no unpaid calls; ESOP/trust structure (if any) aligned to regulations.
Corporate governance: board size and structure aligned to the Code; committees constituted; Company Secretary, CFO, and Head of Internal Audit & Compliance (HIAC) in post; charters adopted.
Internal controls: documented processes for sales cut-off, inventory, bank reconciliations, treasury, procurement, FX, credit control; internal audit and management letters with actioned findings.
Legal & title: clear asset/title chains, IP ownership, subsidiary control docs, and absence of unresolved litigations likely to be material.
Use of proceeds: realistic capex/opex plan; project agreements and feasibility; environmental/land permissions (if relevant).
Investor relations (IR): website with statutory sections prepared, disclosure policy drafted, authorised spokespersons designated.

2) Public issue routes & key actors

Fixed-price IPO or book-building (rules differ on eligibility, valuation, and investor allocation); QIO for qualified investors in smaller deals; Rights issues for existing shareholders; Bonus/scrip dividends under corporate action rules.
Issue Manager (merchant bank): due diligence, valuation/price band, prospectus preparation, coordination with exchanges and depository, and marketing.
Underwriters (if required): underwriting agreement and capacity proof.
Credit rating (where required): initial rating and surveillance cycle.
Auditors & legal: comfort letters, legal due diligence, and opinions.
Trustee (only for debt/sukuk/mutual fund issues): investor protection throughout life of the instrument/fund.

3) Prospectus/offer document essentials

Company, risk factors, use of proceeds, MD\&A, corporate governance, capital structure, related-party transactions, litigations, industry & competition, financials and notes, auditors’ report, material contracts, and responsibilities of each actor.

4) Post-issue, pre-listing

Subscription and allotment reconciliation; refund and allotment communications; BO credit of shares for successful applicants; final listing approval; commencement of trading.

Part D — Corporate Governance Code (CGC): building it into the machine

The CGC sets minimum governance standards for listed issuers. Key elements:

1) Board composition & independence

A board of an appropriate size, with independent directors meeting criteria on experience, independence, and non-association. The Code prescribes a minimum proportion of independents and their qualifications; confirm current ratios when appointing.
Clear rotation/re-appointment cycles; disclosure of attendance; prohibitions on executives holding concurrent compliance roles.

2) Board committees

Audit Committee (AC): chaired by an independent director; oversees financial reporting, internal control, risk, compliance, and external audit relationships; approves internal audit plan; reviews RPTs; monitors whistleblower matters.
Nomination & Remuneration Committee (NRC): also chaired by an independent; oversees board skill matrix, succession planning, KPIs, and remuneration frameworks for directors and senior management.

3) Key officers and certifications

CEO/MD and CFO certify the financial statements’ truth and fairness to the board/exchanges.
Company Secretary (CS) ensures compliance with the Code, meeting formalities, and filing discipline.
Head of Internal Audit & Compliance (HIAC) reports functionally to the AC, not to management.
Compliance certificate: annual external certification (by a practising professional) confirming Code compliance and disclosure of departures with explanations.

4) Policies you must adopt (publish on website and implement)

RPT Policy and approval thresholds
Insider Trading & UPSI Policy (unpublished price-sensitive information) & trading window/blackout rules
Dividend/Capital Allocation Policy
Risk Management Policy (with risk register and KRIs)
Whistleblower & Investigation Policy
Board Diversity & Director Selection Policy
Communication/Disclosure Policy (IR playbook)
Cyber-Security & Data Protection Policy

Treat the CGC as a living control system. Minutes, working papers, checklists, and action trackers are as important as the high-level policy text.

Part E — Continuous disclosure & corporate actions

1) Price-sensitive information (PSI)

Define PSI categories relevant to your business (earnings, dividend decisions, M\&A, major contracts, default/closure, legal orders, production disruptions).
Immediate disclosure to exchanges and BSEC upon board/authorised decision; ensure trading window closure before board meetings considering PSI.
Maintain a UPSI list and “Chinese walls” for persons with access; log recipients and dates.

2) Periodic financial reporting

Quarterly/half-yearly unaudited financials within prescribed timelines; annual audited financial statements within the stipulated period after year-end.
MD\&A with material variances and segment data; reconciliation explanations.
Board and CEO/CFO certifications as required.

3) Shareholding pattern & insider disclosures

Periodic shareholding pattern (sponsors/directors, institutions, public); immediate disclosure of changes beyond thresholds.
Insider holdings and trades reported within the set time; pre-clearance mechanism for KMPs.

4) Corporate actions (dividend, bonus/scrip, rights, split/consolidation)

Board decision with record date; exchange notifications; credit of cash/bonus via depository and bank within timelines; rights issue timetable and abridged prospectus (if applicable).
Maintain a Corporate Actions SOP: step-by-step approvals, disclosures, banking, BO credit, reconciliations, and investor communications.

5) Website & investor relations

A compliance-ready website: financials, Code compliance status/certificate, board/committee charters, policies, shareholding pattern, contact points, and grievance redressal process.
Appoint one authorised spokesperson for public statements; script Q\&As for earnings calls.

Part F — Insider trading & market abuse

1) Definitions & prohibited conduct

Insider trading: dealing while in possession of UPSI; tipping others; procuring deals through intermediaries.
Market manipulation: wash trades, matched orders, ramping, spoofing, disseminating false information, cornering supply, circular trading.

2) Controls that actually work

Designated persons list (directors, KMP, finance, strategy, M\&A, audit, advisors).
Trading window: closed during sensitive periods; only pre-cleared trades allowed when window is open; cooling-off post clearances.
UPSI handling: label documents; limit access; log and encrypt; need-to-know only.
Surveillance: periodic review of trades vs. disclosures; exception reports to AC.
Disciplinary protocol: from show-cause to board-approved sanctions; report material breaches to BSEC/exchanges.

Part G — Related-party transactions (RPT)

Define related parties aligned to accounting standards and regulation (directors/KMPs, relatives, significant shareholders, group entities).
Materiality thresholds and approval matrix: management → AC review → board approval; shareholder approval for certain classes where required.
Documentation: contemporaneous benchmarking or third-party pricing; contract summaries; conflict disclosures; abstentions recorded in minutes.
Disclosure: in financials and immediate announcements if material; ongoing monitoring through an RPT Register reviewed by AC.

Part H — Debt & sukuk: before and after issuance

1) Before issuance

Trustee appointed early; security package structured (charge over assets/receivables/shares; mortgage; escrow; DSRA).
Credit rating obtained; covenants and events of default clearly drafted; intercreditor and subordination documented; for sukuk, Shariah governance, asset selection (asset-based vs asset-backed), and Shariah certification.
Offer document/IM includes use of proceeds, risk, covenants, financials, project details, trustee reporting, and monitoring.

2) Ongoing duties

Covenant compliance: DSCR, interest coverage, leverage caps; periodic certificates to trustee.
Information undertakings: financial statements, material events, project progress/use of proceeds updates.
Security perfection & monitoring: RJSC charge filings; insurance assignments; valuation updates.
Rating surveillance: maintain rating, respond to queries; disclose rating changes promptly.
Investor communications: payment notices, meeting procedures, consent solicitations, and default handling protocols.

Part I — Mutual funds (open-end & closed-end)

1) The triangle: AMC–Trustee–Custodian

AMC: licensed; investment management agreement; investment policy; risk and compliance functions independent; research and dealing separation; valuation & pricing policies.
Trustee: oversight of AMC, NAV calculations, unit-holder interest protection, approval of key actions.
Custodian: holds assets, ensures settlement, corporate actions processing, reconciliations.

2) Product governance

Scheme documents: trust deed, prospectus/placement memorandum, KIM (key information memorandum) for open-end funds.
Investment limits: exposure caps (single issuer, sector, derivatives, unlisted limits where allowed).
NAV & pricing: frequency, methodology, cut-off timings, error rectification policy, and investor notice of deviations.
Sales & advertising: fair, clear, and not misleading; performance presentation standards; risk warnings.

3) Ongoing compliance

Periodic reports to BSEC/unit-holders (portfolio, performance, expenses, material changes).
Valuation committee and external audits; soft-dollar/commission policies; gift/entertainment logs; distributor oversight.
AMLCFT programme for distributors and KYC for unit-holders.

Part J — Alternative Investment Funds (AIF): VC/PE/Impact

AIF Manager licence: fit-and-proper, team track record, investment and risk policies, compliance & valuation frameworks, and PPM (private placement memorandum) standards.
Fund registration: trust or company form as permitted; minimum corpus; eligible investors (high-net-worth/institutional); commitment & drawdown mechanics.
Valuation & reporting: methodology, frequency; portfolio company monitoring; LP reports (capital calls, distributions, fees, expenses, conflicts).
Governance: investment committee charter, conflict management, co-investment and related party rules, side letters, key-person events, and suspension/termination provisions.
Marketing: private placement only to eligible investors; communications discipline and recordkeeping.

Part K — Intermediaries’ obligations: the operational core

1) Broker/Dealer (and DP if combined)

Capital adequacy & margins: maintain prescribed net capital; risk-based haircuts; daily computations.
Client asset segregation: separate client funds and securities; reconciliations with exchange/depository.
KYC/AML: robust onboarding, PEP/negative news screening, source of funds, periodic reviews, STR/SAR reporting, and travel rule (where applicable).
Order handling: fair allocation, time stamping, error trade SOPs, algo/auto-trading controls.
Records & reporting: trade confirmations, contract notes, ledger statements; regulatory returns on time.
Tech & cyber: two-factor authentication for clients, secure APIs, DRC/BCP and incident logging.
Complaints & disputes: TAT-bound resolution; investor grievance register; exchange arbitration cooperation.

2) Merchant bank/Issue manager

Due diligence: true and fair prospectuses; site visits; third-party validations; legal and tax checks; financial comfort procedures; valuation justification.
Underwriting: capacity, risk management, exposure caps; reporting.
Portfolio management (if permitted): discretionary/non-discretionary mandates; IPS (investment policy statement); suitability; best execution; fee disclosures and performance presentation.

3) Trustee & Custodian

Monitoring: compliance with deed, offer document, covenants; NAV/asset checks; voting on corporate actions; default handling.
Reporting: exception reporting to BSEC/investors; immediate alerts on breaches.
Independence: manage conflicts, Chinese walls with affiliates.

4) Credit Rating Agency (CRA)

Methodology disclosure; rating committee independence; surveillance schedule; conflict management; analyst trading prohibitions; records and model validation.

Part L — Takeovers, substantial acquisitions, delisting, buy-backs

Substantial acquisition triggers: crossing defined shareholding thresholds or control parameters typically requires a public tender offer; filings include offer price justification, funding proof, and timeline commitments.
Creeping acquisitions: annual limits may apply for increases without a full tender.
Delisting: board and shareholder approvals plus investor protection mechanisms; conditions and exit price discovery standards apply.
Buy-backs (where permitted): sources of funds, limits, tender/screen-based procedures, insider window closures, and post-buyback disclosures.

For M\&A or control deals, construct a Takeover Dossier: SPA/MoU, financing evidence, valuation, shareholder letters, standalone public announcement and detailed public statement drafts, and escrow arrangements.

Part M — Inspections, enforcement & remediation

1) What to expect

Thematic inspections (e.g., RPTs, insider controls, cyber) or full-scope exams.
Requests for working papers, board/committee minutes, registers, logs, system reports, and emails/IM where relevant.

2) Common findings

Late disclosures, inadequate UPSI logs, missing pre-clearance records, unsupported valuations, weak AML KYC files, NAV/pricing errors, back-dated minutes, charge filings missing (for debt issuers), and ratings not kept current.

3) Penalties & measures

Monetary penalties, disgorgement, suspension of trading or licences, debarment of directors/KMPs, directives to rectify and restate, and investor communications.

4) How to remediate

Root-cause analysis; corrective action plan with owners & deadlines; back-filings; investor notices (where needed); external assurance on completion.

Part N — The BSEC Compliance Calendar (model; tune to your facts)

Replace placeholders with your actual fiscal year ends, board cadence, and instrument-specific covenants.

Monthly

Shareholding pattern update (as applicable)
RPT & insider trade logs review; UPSI register update
Broker/DP net capital & client asset reconciliation certifications
Intermediary returns due to exchanges/BSEC/depository

Quarterly

Unaudited financials + MD\&A; board meeting & trading window controls
AC meeting: internal audit plan progress, exception reports, AML dashboard
RPT approvals & benchmarking review; whistleblower log
For funds: portfolio/expense ratio/NAV disclosures; trustee report
Debt/sukuk: covenant certificate to trustee; rating interaction

Half-Yearly

Limited review financials where prescribed
Policy refreshers & training (insider trading, AML, cyber)
CRA surveillance meeting (debt/sukuk)

Annually

Audited financial statements; CEO/CFO certification; compliance certificate (CGC)
AGM & annual report; Code compliance statement with explanations
Board evaluation & NRC review of remuneration framework
Risk register refresh; BCP/DR drill & cyber incident tabletop
For intermediaries: licence renewals; external system audit (where required)
For funds: scheme financials, trustee attestation, auditor rotation checks

Event-driven (immediate)

PSI events (M\&A, dividends, defaults, material litigations, shutdowns)
Changes in directors/KMP/auditor/CS/CFO/HIAC
Shareholding threshold crossings; pledges; ESOP grants/exercises
Ratings changes; covenant breaches; enforcement actions
Capital actions (rights/bonus/splits); new debt/sukuk issuance steps

Part O — Evidence, registers, and working papers (your audit shield)

Maintain up-to-date, indexed files:

Board & committee minute books with agenda packs, attendance, disclosures of interest, and resolutions
UPSI list & access logs; pre-clearance registers; WH list for blackout periods
RPT register with approvals, benchmarking, and tracking of aggregate limits
Disclosure log (what, when, where, who approved)
Financial close file (checklists, tie-outs, consolidation workings, variance analyses)
IR file (analyst meets, Q\&A scripts, investor queries, responses)
AML KYC files (risk ratings, EDD, STR/SAR copies)
Debt/sukuk (trustee correspondence, covenant certificates, security perfection evidence, DSRA statements)
Mutual fund/AIF (NAV workings, valuation memos, trade tapes, soft-dollar logs, distributor due diligence)
Cyber/BCP (DR drills, pen tests, incident logs, access rights reviews)

Part P — Seven high-impact fixes (if you do nothing else)

Codify PSI for your business and link it to trading window SOPs.
Centralise RPT control under the Audit Committee with a living register.
Strengthen the finance close: monthly checklists, early cut-offs, and MD\&A discipline.
Make HIAC independent with a direct line to the AC and an approved audit plan.
Digitise disclosure: one template pack for board notices, PSI filings, corporate actions, and website posts.
Drill the teams: 60-minute quarterly refreshers on insider trading, disclosure, and cyber hygiene.
Map your entire compliance universe on one dashboard with owners, deadlines, and back-up delegates.

Part Q — Templates & playbooks (what to put in your policy library)

Insider Trading Policy (definitions, UPSI list, trading window, pre-clearance forms, sanctions)
Disclosure/IR Policy (authorised spokespersons, PSI identification, timelines, scripts, Q\&A)
RPT Policy (who is related, materiality thresholds, approval routes, disclosure requirements)
Dividend/Capital Allocation Policy (payout corridors, triggers, constraints)
Whistleblower Policy (confidential channels, investigation SOP, protection against retaliation)
Board & Committee Charters (Board, AC, NRC; annual calendars inside each)
Risk Management Policy (risk taxonomy, appetite, KRIs, reporting cadence)
Cyber-Security Policy (access control, incident response, vendor risk, backups, DRC/BCP)
Debt Investor Communications SOP (trustee/CRA liaison, covenant certificate templates)
Fund Valuation Policy (methodology, price challenges, error correction, escalations)
Research Independence Policy (if applicable — conflicts, IB walls, certification language)

Part R — Special situations: what changes in these scenarios?

Group reorganisations/M\&A: PSI, fair valuation, fairness opinions (where used), shareholder/creditor consents; post-deal float and governance maintained.
Distress/default (debt/sukuk): immediate disclosure, trustee engagement, standstill agreements, consent solicitations, and information packs; avoid selective disclosure.
Cyber incident: triage, trading window closure (if PSI arises), disclosure decision by AC/board, forensic and law-enforcement liaison, investor FAQs.
Significant management churn (CEO/CFO/CS/HIAC): expedited appointment process; gap coverage; immediate disclosure.
ESG/Climate reporting: even where not mandated, expect investor scrutiny on governance, emissions baselines, and social metrics. Start with a materiality map and board-level ESG oversight.

Part S — For boards & CEOs: the two-page oversight routine

Page 1: Quarterly Board Dashboard

Compliance heat-map (green/amber/red by topic)
Top 10 risks & KRIs (with trend arrows)
Financial close status (quarter and YTD)
Disclosures made & pending (with owners/dates)
RPT summary (new/renewed; values; approvals)
Insider trading control metrics (window breaches, pre-clearances)
Litigation/investigation updates
Debt/sukuk covenant status & rating outlook
Fund/AIF KPIs (if relevant)

Page 2: Action Register

Open items by owner & due date
Items escalated to AC/NRC/board
Regulatory interactions (inspections, notices) and response status

Part T — “Day-1 to Year-1” roadmap (issuers and intermediaries)

Days 1–30 (Stabilise)

Appoint/confirm CS, CFO, HIAC; approve charters (Board/AC/NRC).
Adopt policy suite (insider, disclosure, RPT, whistleblower, risk, cyber).
Create UPSI list, trading window calendar, and PSI register.
Build compliance dashboard and allocate owners.

Days 31–90 (Institutionalise)

AC approves internal audit plan; first audits of financial close, RPT, UPSI.
Website compliance push; investor relations page launched.
RPT register populated; benchmarking memo for top 5 RPTs.
For intermediaries: client asset segregation reconciliations automated; AML KYC risk scoring deployed.

Days 91–180 (Optimise)

Dry-run of quarterly reporting & disclosure cadence; MD\&A templates refined.
Board/NRC run skill matrix and succession review; training calendar launched.
Debt/sukuk issuers: covenant certificate cycle & trustee MI pack tested.
Funds/AIF: valuation committee cadence, error policy drill, distributor due diligence.

Days 181–365 (Assure)

External compliance certification (CGC) obtained; audit issues cleared.
Pen test & BCP/DR drill; close loop on findings.
Board evaluation and refresh; policy revisions; market-abuse surveillance enhancements.
Mock inspection: assemble inspection room files; fix gaps before a real one.

Part U — TRW’s BSEC compliance package (what we do)

Governance design: Board/AC/NRC formation, charters, policy suite, disclosure grid.
Issuer readiness: IPO/QIO/right/bonus, debt/sukuk IMs, trustee/covenant packs, rating engagement.
Continuous disclosure: PSI mapping, trading-window automation, filing templates, website content.
Internal controls: finance close playbooks, internal audit plan, RPT bench-marking and approvals.
Intermediary operations: client asset segregation, AML/KYC frameworks, cyber/BCP, compliance returns.
Fund/AIF governance: valuation policies, trustee liaisons, NAV controls, distributor oversight.
Remediation & investigations: show-cause responses, settlement strategy, and corrective action management.
Training: directors/KMP bootcamps and quarterly refreshers (insider, disclosure, AML, cyber).

Contact TRW Law Firm
Phones: +8801708000660 · +8801847220062 · +8801708080817
Emails: [email protected] · [email protected] · [email protected]
Offices: Dhaka — House 410, Road 29, Mohakhali DOHS • Dubai — Rolex Building, L-12 Sheikh Zayed Road

Final note

BSEC compliance is not a binder on a shelf; it’s a rhythm. When your board cadence, disclosure muscle, internal controls, and evidence trail move in sync, you reduce regulatory friction, lower the cost of capital, and increase strategic degrees of freedom. Use this guide to install that rhythm—then keep tuning it as your business and the rules evolve.

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Loading… | 5 MIN READ | BY TAHMIDUR REMURA WAHID