BANGLADESH Law and Practice Contributed by: Nasirud Doulah and Amina Khatoon, Doulah & Doulah
Demerger This structure is adopted to avoid the tax inefficiencies of an itemised sale of assets. The target’s undertaking or division is demerged from the target under a court order and then transferred to the buyer. Asset/Liability Transfer (Itemised Sale of Assets and Liabilities) Specific assets and liabilities are sold under a sale and purchase agreement with an itemised list of assets and liabilities to be transferred. Asset Transfer (Sale as a Going Concern) All assets and liabilities of an entity, a business divi - sion, or a plant are sold as a going concern under this structure. Similar to amalgamation, this may require approval from the court. Joint Venture with Retained Control In industries where foreign investment is capped at a prescribed threshold, foreign investors hold shares up to that limit while separately retaining contractual authority to nominate the majority of board members, thereby preserving effective control. 2.2 Primary Regulators Bangladesh Competition Commission The Competition Commission of Bangladesh, consti - tuted under the Competition Act, 2012, is responsible for supervising M&A activity in Bangladesh. However, the provisions, including merger clearance, set out in the Competition Act are currently operating only in a reactive mode upon complaint from third parties, pending the incorporation of the underlying competi - tion rules needed to impose proactive measures, such as merger filing. Office of the Registrar of Joint Stock Companies & Firms It regulates incorporation and all corporate govern - ance requirements for incorporated companies in Bangladesh. In addition, it maintains a share regis - ter of incorporated companies in Bangladesh. Non- listed companies need to record any new allotment of shares by way of filing Form-XV. Change of any shareholder is recorded by way of filing Form-117 and a change in the director by way of filing Form-XII and the relevant consents.
Stock Exchanges The two stock exchanges of Bangladesh, ie, the Dha - ka and Chittagong Stock Exchanges, maintain trading platforms, issue trading rights entitlement certificates (brokerage licences) in accordance with BSEC rules and supervise certain corporate governance aspects of publicly listed companies. Issuers need to comply with the relevant rules to be listed on the corresponding exchange. In addition, in case of substantial acquisi - tion of shares, those have been authorised to unfreeze relevant shares and/or give effect to such substantial acquisition as per BSEC (Substantial Acquisition of Shares and Takeovers) Rules, 2018, as long as such transfer does not result in reducing the shares held by the sponsors of the directors of the issuer below 30%. Bangladesh Securities & Exchange Commission (BSEC) It is the main regulator of publicly listed securities, including shares and other debt securities, with the power to enforce the underlying rules and regula - tions. Among its wider governance functions, it issues directives and rules on matters of public interest in the capital markets, grants licences to brokers, deposi - tories and other market participants in accordance with the underlying regulations and approves initial public offerings and direct listings of securities and debt instruments by issuers. In the M&A landscape, approval from the BSEC is required to implement any deal that may result in reducing the shares held by the sponsors or directors of the issuer below 30%. Bangladesh Bank It supervises the foreign exchange-related aspects of M&A deals, such as the valuation of share transfer deals involving non-residents, repatriations and the operational aspects of cross-border investment in public securities, among others. In addition, compa - nies need to keep it updated on foreign investment, debt and beneficiary-owner-related information by fil - ing periodic reports. It also imposes clearance require - ments from lender banks for a change in the board or shareholding of any director in a company. Investment Authority The authority within the jurisdiction of which an indus - try/establishment is established and/or registered may need clearance from such authority for a change in
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