Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an investment bank. As an investment bank is a financial institution, which mobilized fund from the surplus economic units by savings securities and developed funds to the deficit economic unit also by buying or underwriting securities After liberation in view of social economic changes, the scope for private sector investment in the economy was kept limited by allowing investment in projects up to Tk. 25 lacs. The new investment policy, which was announced in July, 1972 provides for an expanded role of private sector by allowing investment in a project up to Tk. 3 crores. The ceiling has further being raised to Tk. 10 crores in spite of the adequate facilities and incentives provided to the private sectors encouraging response was not for the coming. One of the reasons among other was the lack of institutional facilities, which provides underwriting support (Like former ICB) to industrial enterprise that was required to raise much need equity fund. Thus, the need for reactivation for capital market, stock market was keenly feel.
The Investment Corporation of Bangladesh (ICB) was established on 1st October 1976, under “The Investment Corporation of Bangladesh Ordinance, 1976” (No. XL of 1976). The establishment of ICB was a major step in a series of measures undertaken by the Government to accelerate the pace of industrialization and to develop a well-organized and vibrant Capital Market particularly securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity gap of the industrial enterprises. In view of the national policy of accelerating the rate of savings and investment to foster self-reliant economy, ICB assumes an indispensable and pivotal role. Though the enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000 (No. of XXIV of 2000), reforms in operational strategies and business polices have taken place by establishing and operating subsidiary companies under ICB.
Institutional Framework of ICB:
Investment Corporation of Bangladesh is a Corporate body as per section 3 of Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE.
Objectives of ICB:
The objectives of the corporation are-
• To encourage and broaden the base of investments.
• To develop the capital market.
• To mobilize savings.
• To promote and establish subsidiaries for business development.
• To provide for matters ancillary thereto.
Business Policies of ICB:
The business policies of ICB in the following-
• To act on commercial consideration with due regard to the interest of industry, commerce, depositors, investors and to the public in general.
• To provide financial assistance to projects subject to their economic and commercial viability.
• To arrange consortium of financial institutions including Merchant banks to provide equity support to projects.
• To develop and encourage entrepreneurs.
• To diversify investments.
• To induce small and medium savers for investment in securities.
• To create employment opportunities.
• To encourage investment in Agro-based and ICT sectors.
Functions of ICB:
In order to achieve the previously mentioned objectives, the corporation may carryout the following functions-
• Direct purchase of shares and debentures including placement and equity participation.
• Participating in and financing of joint-ventures companies.
• Providing lease finance singly and through syndication.
• Managing existing Investor’s Accounts.
• Managing existing Mutual Funds and Unit Funds.
• Managing Portfolios.
• Conducting computer training program.
• Providing advance against ICB Unit and Mutual Fund certificates.
• To act as Trustee and Custodian.
• Providing Bank Guarantee.
• Providing investment counseling to investors.
• Participating in Government divestment program.
• Introducing new business products suiting market demand.
• Dealing in other matters related to Capital Market.
Businesses of ICB:
A. Private Placement:
ICB is authorized to act as an agent of issuers and investors for private placement of securities. Under this arrangement, ICB places securities to individuals or institutions on behalf of the issuer for which it charges fees. ICB also acquires shares or securities for its own portfolios.
In order to raise long term debt equity from the primary market, the Government bodies, enterprises, corporation or companies may seek intermediary assistance from ICB in the form of underwriting. Because of its long and proven experience, reputation, asset back up and established network of regional offices, ICB is in an excellent position to attract the potential investors to the proposed issue of shares, debenture and other securities for successful floatation of IPO & placement.
C. Custodian and Bank to the Issues:
To act as the custodian to the public issue of open-end & mutual Funds, ICB provides professional services. It also acts as the Banker to the issues and provides similar services through the network of its branches. Fees in this regard are negotiable.
D. Merger and Acquisitions:
Companies willing to expand their business through mergers or acquisitions or to divest projects that no longer fit into present scale of operation contact the corporation. ICB provides professional services & advice in respect of shaping up the cost and financial structures to ensure best possible operation results.
E. Corporate Financial Advice:
Companies and Government enterprises intending to go public often seek professional & financial advice on corporate restructuring & reengineering. ICB through its expertise provide such services.
F. Lease Financing:
ICB provides lease finance mainly for machinery, equipment and transport. ICB is in a position to provide professional advice and financial to the intending clients. The period of lease, rental, and changes and other terms and conditions are determined on the basis of assets and the extent of assistance required by the applicants.
G. Advanced against ICB Mutual fund Certificates Scheme:
Advanced against ICB Mutual Fund Certificates Scheme was introduced in 2003, designed for the ICB Mutual Fund certificate holder to meet their emergency fund requirement. One can borrow maximum of 50% value of last one year’s weighted average market price of certificates at the time of borrowing by deposing his or her certificates under lien arrangement from any of the ICB’s offices. The rate of interest on the loan is reasonable and also competitive.
H. Bank Guarantee Scheme:
As part of ICB’s business diversification Program, the corporation introduced bank guarantee scheme during the year 2002-2003 ICB provides (i) bid bond for enabling the business people to participate in any tender or bidding, (ii) performance bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients, (iii) customs guarantee to solving different disagreements between the customs authority and the business classes at the initial stage. The maximum limit of guarantee is tk.2.00 Corer and would be issued against at least 20% cash and 820% easily excusable securities or against 100% cash margin. Re-guarantee from other financial institutional is required for guarantee against the amount exceeding Tk. 2.00 Corer.
I. ICB Mutual Fund:
ICB has so far floated eight close-ended Mutual Funds. The first ICB Mutual Funds was floated on 25 April 1980, while the Eight ICB Mutual Fund was floated on 23 July 1996. The aggregate size of these funds is Tk. 17.5 Corer. As on 30 June 2004, 33646 certificate holders own these funds. Dividends declared on the funds were very attractive ranging from 14.0 to 200.0 per certificate for 2003-2004. Investors show overwhelming interest in all the ICB mutual funds. One can invest in such funds through the stock exchanges with which these funds are listed. Through corporate restructuring, new mutual funds are being floated through “ICB Asset Management Company Ltd.” –a subsidiary of ICB.
J. ICB Unit Fund:
It is on open-end mutual fund scheme launched in April 1981, through which the small and medium savers get opportunities to invest their savings in a balanced and relatively low risk portfolio. ICB has so far declared attractive dividends on units every year ranging from Tk. 11.5 to Tk. 25.0 per unit. Investment in units enjoys tax benefits, amount being applicable as per law. However, under the ICB’s restructuring programmed new unit certificates are being sold by ICB’s subsidiary company, the ICB Asset Management Company Ltd.
ICB’s Organizational Structure and Management
Institutional Framework of ICB:
Investment Corporation of Bangladesh is a corporate body as per section 3 of Investment Corporation of Bangladesh Ordinance, 1976 and deemed to be a banking company within the meaning of the Banking Companies Ordinance, 1962 (L VII of 1962). The shares of corporation are listed with the stock exchange. ICB is an authorized broker of DSE.
Regulatory Framework of ICB:
As the mentioned earlier the regulatory framework of ICB is the, Investment Corporation Bangladesh Ordinance, 1976. This ordinance and regulations laid under the authority of the ordinance is the source of all power and authority of ICB. Through the recent enactment of “The Investment corporation of Bangladesh (Amendment) Act, 200” (XXIV) of 2000, scope of ICB’s activities through the formation of subsidiaries have been expanded. In addition to these, to resume its duties and functions, it has to compel by Companies Act 1994, Trust Act 1882, Insurance Act 1983, Security and exchange commission Act 1993, banking companies Act 1993, Foreign exchange regulation 1974, Income Tax act etc.
It is to note that no provision of law relating to the winding up of companies or bank shall apply to the corporation and the corporation shall not be wound up save by order of the government and in such manner as it may direct.
Management of ICB:
The head office of the corporation as per the requirement of the ordinance of ICB is located at Dhaka. The general direction and superintendence of the corporation is created in a board of directors, which consist of 11 persons including the chairman and managing director of ICB. The board of directors consists of the following directors:
• The chairman to be appointed by the government.
• The directors to be appointed by the government from among persons serving under the government.
• One director to be nominated by the Bangladesh Bank.
• The managing directors, Bangladesh Shilpa Bank, Ex-Office.
• The managing directors, Bangladesh Shilpa Rin Sangstha, Ex-office.
• Four other directors to be elected by the share holders other than the government, BB, BSB, & BSRS.
• The managing directors of ICB to be appointed by the government. The board in discharging its functions acts on commercial consider rations with due regard to the interests of industry and commerce, investment climate, capital market, depositors, investors and to the public interest generally and is guided in question policy by the institutions, if any, given to by government which shall be sole judged as to whether a question is a questio9n of policy or not.
The managing director is the chief executive of the corporation. The corporation has an executive comprised of 5 people including managing director.