Background and Overview of ICB

Background and
Overview
Of
Investment Corporation
of Bangladesh
Background of ICB
Investment Corporation of Bangladesh (ICB) was established on 1 October 1976 under the
Investment Corporation of Bangladesh Ordinance No 40 of 1976. The primary objective behind
its establishment was to accelerate the pace of industrialization and economic development of the
country through development of the capital market by mobilizing savings, encouraging and
improving the investment environment with particular emphasis placed on broadening the base
and scope of investments as well as tapping marginal investors a sound securities market in
Bangladesh. Through the enactment of the Investment Corporation of Bangladesh (Amendment)
Act, 2000 (No. 24 of 2000), reforms in operational strategies and business policies have been
implemented by establishing and operating subsidiary companies under ICB. At present the
Corporation is being operated under the "Investment Corporation of Bangladesh Act, 2014".
(icb.portal.gov.bd) The primary authorized and paid-up capital of the corporation was Tk 200
million divided into 2 million shares of Tk 100 each. As an investment bank, ICB has been
performing its merchandising and financial assistance operations since its inception. ICB plays
an important role for financial and other activities for capital market development and
industrialization. The achievement of such developments requires:
 Direct participation in equity

 Purchase of shares
 Lease financing
 Venture Capital financing
 Advance against equity
 Acting as trustee as well as custodian to the issue of debentures, bonds, mutual funds; etc.
The headquarter of ICB is in Dhaka. ICB has altogether eight branch office one each in Dhaka,
Chittagong, Rajshahi, Khulna, Barisal, Sylhet and Bogra. 31 departments of the headquarter are
now in operation under four principal wings run by the leadership of the Managing Director, its
chief executive. A ten-member Board of Directors is entitled to carry out for the overall
management and policy formulation of ICB. Currently, the chairman of ICB is Professor Dr.
Suborna Barua. There are three subsidiaries of ICB established after the amendment of the ICB
Ordinance 1976 and the introduction of the Investment Corporation of Bangladesh (Amendment)
Act 2000 (Act 40 of 2000), and the Capital Market Development programme (CMDP), a joint
initiative of the Asian Development Bank and the government of Bangladesh.
The subsidiary companies are:
1. ICB Capital Management Limited

2. ICB Asset Management Company Limited
3. ICB Securities Trading Company Limited
These companies started operation 2002 through merchant banking, mutual fund management
and security exchange.
Activities of ICB
The initial activities of ICB were very limited. Those activities included underwriting of primary
issue of shares and debentures of various companies, granting loans and management of
investors portfolio. Later on, considering the raising importance of capital markets, ICB started
to increase its range of activities in managing the capital markets and financing to set up new
industries through its investment banking activities under government assistance.
Three categories of reserve fund are maintained by ICB. These are general reserve, building
reserve and profit equalization reserve funds. ICB has made reforms in its strategy and policy
required in its commercial activities after forming and managing a subsidiary company under the
Investments Corporation of Bangladesh (Amendment) Act 2000 (the Act No 24 of 2000). ICB is
enlisted in both Dhaka and Chittagong stock exchanges.
Along with activities mentioned above, the additional activities are
(i) Debenture loan to trading houses and industrial units

(ii) Loan support against unit certificates
(iii) Improve capital market development and capital flow by lease financing for
procuring capital machinery of instructive
(iv) Manage unit fund and mutual fund
(v) Participate directly in transaction of shares and securities in the stock market
The Role of ICB in the Development of Mutual Funds in Bangladesh
Mutual funds consisting of a wide range of securities allows the participants to obtain the benefit
of lower transaction costs in purchasing securities enabling the shareholders to hold more
diversified portfolios. Among the 17 mutual funds of Bangladesh, nine are handled by the
Investment Corporation of Bangladesh (ICB). Thus, 50% of the Mutual Funds of Bangladesh are
managed by ICB. There are two stock exchanges in Bangladesh. ICB holds about 3 percent in
the total market capitalization of Dhaka Stock Exchange (DSE), and in Chittagong Stock
Exchange (CSE), 10 percent is constituted by it. Provision for reserve of 10 percent quota of
each IPO for mutual funds also makes scope of profitability for other private mutual funds. The
demand for mutual funds is increasing as there are many small investors in the markets who lack
the ability to invest individually. But the increasing price in the market presents the imbalance
between demand and supply. Thus, the situation represents that the demand for mutual funds is
higher than the supply of mutual funds. Now it is necessary to float more mutual funds in the
capital market to make a balance between supply and demand. The ICB funds can be used as a
profitable instruments of stabilizing savings and providing investment opportunities in small
investors.
Leasing and Mutual funds

ICB started its lease financing program in 1999. Until 2009, it made a market for eight mutual
funds amounting Tk 175 million out of the 24 mutual funds of Tk 10,996 million in the stock
exchange. The investment in the mutual funds of ICB was 31,733 till 31 December 2009. Since
1998 ICB provides advance credit against ICB unit and mutual fund, and ICB AMCL certificate.
Under this scheme, unit holders can keep their unit certificates as lien and take advance on easy
condition. ICB Securities Trading Company Limited started its activities on 13 August 2002. It is
considered now as the leading broker in terms of the volume of transaction in Dhaka and
Chittagong stock Exchanges.
Subsidiary Companies
ICB Asset Management Company Limited
ICB Asset Management Company Limited, a subsidiary company of ICB was registered under
the Companies Act 1994 as a public company limited by shares on 5 December 2000. The
objectives of the company are to manage the asset of any trust or fund of any type and/or
character and hold, acquire, sell or deal in such asset or any trust or fund. It can maintain various
schemes of different types for trust funds, take part in the management of any mutual fund
operation, operate, conduct, accomplish and establish services for industrial trading and
commercial activities, invest funds in shares and securities, carry on business, and act as
financial and monetary agent and merchandise shares and securities.
ICB Capital Management Limited
ICB Capital Management Limited, a subsidiary company of ICB was registered under the
Companies Act 1994 as a public company limited by shares on 5 December 2000. The Company
obtained registration from Bangladesh Securities and Exchange Commission as a Merchant Bank
on 16 October 2001. As a part of restructuring program of Investment Corporation of
Bangladesh (ICB) under CMDP (Capital Market Development Program) initiated by the Govt. of
Bangladesh and the Asian Development Bank, the Company has been created as a subsidiary
company of ICB conducting merchant banking activities and plays a more active role in capital
market of Bangladesh. The principal functions of the company are issue management,
underwriting, portfolio management and corporate advisory services.
ICB Securities Trading Company Limited
ICB Securities Trading Company Limited, a subsidiary company of ICB was registered under
the Companies Act 1994 as a public company limited by shares on 05 December 2000. The
address of the registered office is in Dhaka. The Company is an active member of Dhaka Stock
Exchange and Chittagong Stock Exchange. Among many other functions the company primarily
provides brokerage service for buying and selling securities listed with stock exchanges and
provides brokerage service for buying and selling securities over-the-counter markets by the
company itself and by appointing sub-brokers, sub-agents, bond brokers, specialists and odd-lot-
dealers. Furthermore, the company also works as a full service Depository Participant in the
Central Depository Bangladesh Ltd.(CDBL).
(icb.poral.gov.bd)

Background and Overview of ICB

Uploaded by

Copyright:

Available Formats

Background and Overview of ICB

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Background and Overview of ICB

Uploaded by

Copyright:

Available Formats

Background and

 Direct participation in equity

The subsidiary companies are:

1. ICB Capital Management Limited

Along with activities mentioned above, the additional activities are

(i) Debenture loan to trading houses and industrial units

Leasing and Mutual funds

ICB Capital Management Limited

ICB Securities Trading Company Limited

You might also like