BANGLADESH Law and Practice Contributed by: Nasirud Doulah and Amina Khatoon, Doulah & Doulah
7.3 Producing Financial Statements As of now, bidders are not required to produce finan - cial statements unless so agreed contractually. Financial statements in Bangladesh need to be pre - pared in accordance with the Bangladesh Financial Reporting Standards (BFRS), which are substantially based on IFRS. 7.4 Transaction Documents While full disclosure of transaction documents is not required, the details of any executed memorandum of understanding or agreement, including the terms contained therein relating to the purchase of the tar - get shares, must be disclosed as part of the public announcement, as outlined in 7.1 Making a Bid Public . The directors are responsible for the duties and care of the company. The general doctrine under company law and in Bangladesh is that a director has a fiduci - ary duty to act in good faith in the best interest of the company and for the benefit of its shareholders as a whole. In addition to acting in good faith in the best interests of the company, the directors also need to act in the interests of the company’s employees and the wider community, considering areas such as the environment, financial dealings, etc. As to a acquisition or business combination, there is no express obligation imposed, but in line with the above, in general, the board of directors of the tar - get company are required to ensure the running of the business in its ordinary course and that there is no alienation of material assets or change in capital structure, etc, when a takeover offer is open. Also, directors must not cause the company to enter into any contract which such directors reasonably believe that the company would be able to fulfil. 8. Duties of Directors 8.1 Principal Directors’ Duties Directors of publicly listed target companies who may be related to the acquirer (or its persons acting in con - cert) are precluded from being involved or voting in relation to the acquirer’s offer.
8.2 Special or Ad Hoc Committees In Bangladesh, boards of directors do not commonly establish special or ad hoc committees for business acquisitions or combinations, as this is not mandated by local regulations. However, listed companies are obliged to constitute certain special committees of the board with certain duties prescribed by BSEC regulations. Bangladeshi law mandates that directors disclose their interests in other entities before any decision- making in meetings regarding those entities. For listed companies and non-listed companies which are pub - lic limited companies, directors are required to ensure that their interests do not conflict with those of the company and any interested director is not allowed to participate in meetings or vote on matters in which they have an interest. 8.3 Business Judgement Rule The business judgment rule is not a recognised con - cept in Bangladesh. Whereas there is no specific mechanism requiring a board of directors to form a judgment on a merger/ acquisition or takeover in the case of non-listed com - panies, unless otherwise agreed contractually among the shareholders, directors generally reserve the right to reject any share transfer proposal in private compa - nies. Given that directors are nominated in most cases in non-listed companies, such takeover proposals are ultimately decided by shareholder consensus. Whereas, for listed companies, the directors may make recommendations only, the board cannot imple - ment any of the commonly used takeover avoidance mechanisms without the shareholders’ consent. In Bangladesh, the board is ultimately answerable to the shareholders and a sale or merger needs to be approved by the shareholders of the company. 8.4 Independent Outside Advice Generally, licensed merchant banks in Bangladesh are engaged to validate the structure and feasibility of an acquisition or merger, or to attend to taking matters forward with the BSEC in relevant instances and, in the case of non-listed companies, to the future pros - pects of public listing and return. Other independ -
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