BANGLADESH Law and Practice Contributed by: Nasirud Doulah and Amina Khatoon, Doulah & Doulah
3.2 Significant Changes to Takeover Law There have been no significant changes to takeover law after the enactment of the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules, 2018. Reportedly, the Bangladesh Competition Commission has prepared a draft of the Bangladesh Competition Commission Combination Rules, 2023, but it has yet to be circulated for public consultation. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies For non-listed companies, the acquirer must negotiate directly with the selling shareholders. For listed compa - nies, agreements to purchase sponsors’ shares prior to launching a public offer are a common strategy, given that many listed companies are owned by sponsor groups that also control the board of directors. 4.2 Material Shareholding Disclosure Threshold Under the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules, 2018, the acquisition of shares cor - responding to 10% or more of the issuer’s total vot - ing shares is considered a “substantial acquisition” of shares. The following activities require disclosure in the stock exchange’s online news circular: • any buy order or transaction that would result in this 10% threshold being met or exceeded; or • once an initial shareholding corresponding to a 10% or more of the voting rights in the issuer has been achieved, any further acquisition of shares. 4.3 Hurdles to Stakebuilding For private companies, it is possible to contractually agree or incorporate into its articles that the selling shareholder must first make an offer to the existing shareholders on identical terms to those being offered to the proposed acquirer. This is not possible for pub - lic limited companies, listed or non-listed. It is not possible to introduce different rules, such as disclosure thresholds, in the articles of incorporation
Sections 228 and 229 of the Companies Act, 1994, there has been no noteworthy court decision. Other legal developments include: Offshore Indirect Transfer (OIT) Rules Income Tax Act 2023 (repealed Income Tax Ordi - nance, 1984) imposes 15% capital gain tax on the acquisition/transfer of securities, stocks and assets. In response to the divestment of Warid’s telecom assets to Airtel, the OIT Rules of 2022 have been enacted to outline the methods for computing tax liabilities aris - ing from the offshore indirect transfer of any asset in connection with Bangladesh. Prohibition on Insider Trading Revisited BSEC (Prohibition on Insider Trading) Rules, 2022, have been enacted to replace their predecessor. The new law obligates companies to develop their own policy to restrict insider trading and extends the scope of mat - ters to be treated as price-sensitive/material informa - tion, as outlined in 5.1 Requirement to Disclose a Deal . Disclosure of Beneficial Ownership The Bangladesh Financial Intelligence Unit of the cen - tral bank has enacted Guidelines for Beneficial Own - ers, making it mandatory for any individual beneficiary owner to declare their identity once such a person becomes a beneficiary owner of 20% or more of the shares or control over any business in Bangladesh. New Tax Law The Income Tax Act, 2023, repealed the Income Tax Ordinance, 1984 and additionally outlines the quali - fications for demerger deals to be tax-exempt. The threshold of shareholders of the amalgamating com - pany holding shares in the amalgamated company has been reduced to 75% from 90% for such amal - gamation to be a tax-exempt amalgamation. Restructure of Transaction Costs Stamp duty payable on a share purchase agreement and a share transfer instrument (for a non-listed com - pany) remains the same at 0.2% and 1.5% of the con - sideration, respectively. However, registration fees and stamp duties over the transfer of real properties have both been reduced to 1% and 1.5%, respectively.
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