6/11/24, 8:36 PM M-and-A-Law-Guide Bangladesh
Jurisdiction: Bangladesh
Firm: Syed Ishtiaq Ahmed & Associates
Authors: Syed Afzal Hasan Uddin and Imtiaz Bin Hafiz
1. What are the key laws and regulations similar public procurement transactions, are
that govern mergers and acquisitions in your also required to comply with share transfer
jurisdiction? restrictions and shareholding obligations under
the project agreements executed with the
The key legislation governing mergers and Government.
acquisition in Bangladesh is the Companies Act
1994 and Companies Rules 2009. Separate Cross-border acquisitions involving offshore
regulatory procedures apply for mergers payments are subject to the provisions of the
and acquisition. For merger of companies, an Foreign Exchange Regulations Act 1947 and the
application for amalgamation of the companies Guidelines for Foreign Exchange Transactions
is required to be made to the High Court 2018. For any payment to an offshore seller,
Division of the Supreme Court of Bangladesh. being the shareholder of a company in
Acquisition of shares of a company is effected Bangladesh, prior permission of the Bangladesh
by the execution of statutory share transfer Bank would be required for determination of
instruments and regulatory filings under the price of the share sale to ensure that the
the Companies Act 1994. Depending on the price is a fair market value. The abovementioned
nature of the company and licenses held by foreign exchange laws also prescribe various
the company from local regulators, mergers reporting obligations for cross-border
or acquisition of the company may also be acquisition of shares of companies in
subject to other laws and regulations. Merger of Bangladesh.
acquisition of listed companies are also subject
to the provisions of the Bangladesh Securities 2. What are the government regulators and
And Exchange Commission (Acquisition of agencies that play key roles in mergers and
Substantial Shares, Merger and Take-over) acquisitions?
Rules 2018 which imposes various disclosure
obligations and procedures for acquisition of For merger of companies in Bangladesh, the key
shares over 10% in a listed company. approving authority is the High Court Division
of the Supreme Court of Bangladesh. The
For companies holding licenses from regulatory High Court ensures that the creditors of the
authorities, prior permission of such regulators companies and the general public have no
may be required as per the terms and conditions objection to the proposed scheme of
of the licenses. For example, prior permission amalgamation of the companies. Upon
of the Bangladesh Bank may be required for hearing the application for amalgamation,
merger of banking companies and permission the High Court approves the merger of the
of Bangladesh Telecommunication Regulatory companies and directs the Registrar of Joint
Commission for merger/acquisition of Stock Companies and Firms (the “RJSC”) to
telecommunication operators. Companies record the merger and issue certified copies
providing infrastructure construction services revised constitutional documents of the merged
or energy supply to the Government, or entity.
providing goods/services under any other
Jurisdictional Q&A – Bangladesh
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The government agency that plays the key role specifically restricted under the laws
in acquisition of companies in Bangladesh is of Bangladesh. The management of the
the RJSC. Under the Companies Act 1994, company would comprise of the Board of
the obligation of the RJSC is to register the Directors and the Managing Director.
transfer of shares upon being satisfied that the The Directors, being the nominees of the
applicable stamp duty has been paid. However, shareholder entities, are required to approve
it is a customary practice of the RJSC to the acquisition of the shares. Furthermore,
conduct basic due diligence on the share the Managing Director is also required to sign
transfer to ensure that the parties have and approve the share transfer instrument
complied with the provision of the articles of failing which the RJSC will not register the
transfer of shares. Therefore, acquisition of
association of the company and the Companies
Act 1994 in order to give effect to the proposed a company can prove to be difficult without
management approval. However, as the
acquisition. Recently, the RJSC has passed
Directors are the nominees of the shareholders
a direction requiring shareholders selling and the Managing Director is appointed by
their shares to be present before an officer the Board of Directors, theoretically it is still
of the RJSC. The shareholder is required to possible for the shareholders to replace the
provide sufficient evidence of his/her identity management with a favourable management
to confirm that he/she is the true shareholder of for approving the acquisition of the company.
the company or the authorized representative
of the corporate shareholder, and execute the In addition to the abovementioned challenges,
share transfer instruments before the officer the law does not automatically impose any
of the RJSC. Where the seller is a non-resident drag-along rights to the majority shareholders.
foreign shareholder, the share transfer Minority shareholders, holding at least 10%
instrument must be signed before the of the shares in the company, can object to a
Bangladesh High Commissioner in the country hostile bid on the ground that such acquisition
of execution, notarized, and then sent to would be unfairly prejudicial to the minority
the Ministry of Foreign Affairs, Government shareholders, by filing a petition before the
of Bangladesh, for verification. The verified High Court Division of the Supreme Court
instrument is then filed with the RJSC for of Bangladesh. Shareholders holding shares
registration of the share transfer. below 10% can also disrupt an acquisition by
refusing to waive pre-emption rights. While
The Bangladesh Bank is responsible for there are no statutory pre-emption rights for
approving the price of the shares to be transfer of shares, it has become a customary
practice of the RJSC as part of their own due
remitted outside Bangladesh where a local
diligence to ensure that remaining shareholders
buyer buys shares from a foreign shareholder.
waive pre-emption rights for transfer of shares
For mergers and acquisition of listed
by other exiting shareholders.
companies, various roles are played by the
Bangladesh Securities And Exchange
Due to the aforementioned challenges to
Commission and the Dhaka/Chittagong Stock acquisition of shares in a company without
Exchange. In other cases where the company management approval, hostile bids are in
is operating under special licenses, the license practice difficult to execute in Bangladesh and
issuing government agency will be responsible therefore very uncommon here.
for approving the merger or acquisition of
the licensee company. 4. What laws may restrict or regulate certain
takeovers and mergers, if any? (For example,
3. Are hostile bids permitted? If so, are they antimonopoly or national security legislation).
common in your jurisdiction?
There are certain sectors where foreign
Hostile bids are not specifically recognized
investment is not permitted or foreign
by the laws of Bangladesh. Therefore, they are
LexisNexis® Mergers & Acquisitions Law Guide 2020
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