BANGLADESH Law and Practice Contributed by: Nasirud Doulah and Amina Khatoon, Doulah & Doulah
directors may hold such a right unless otherwise pre- agreed by the shareholders, there is no such defensive measure available to the board of a listed company.
Shareholders have the following protection under the Companies Act of Bangladesh. • It provides for the institution of class action suits (by at least 10% of the shareholders in that class) against any mismanagement or misconduct in the affairs of a company. • If the affairs of a company are being conducted in a manner that is prejudicial to the public interest or the interest of any member or depositor of the company, according to the opinion of 10% share - holders • If any person or group of persons are affected by any misleading statement or the inclusion or omis - sion of any matter in the prospectus • In case of an approved (by 75% of the) restructure (including merger), if there is a forced acquisition of the dissenting shareholders’ shares and such shareholders believe that their rights are preju - diced. Under such circumstances, proceedings may be instituted under the provisions of the Companies Act. However, in most cases, the end result is divestment of shares against appropriate compensation. 11.2 Aims of Activists Activism is mostly directed toward better governance, positive outcomes, improved company performance, addressing inefficiencies and increasing minority rep - resentation on the board. However, in connection with M&A deals, the views of activist shareholders depend on whether there has been prejudicial treatment of minority shareholders. However, in most cases, the end result is divestment of shares against appropriate compensation. On the other hand, when shareholder activism is met with a deadlock with management or the sponsors, M&A becomes an option to resolve by way of divest - ment, keeping the company in operation. 11.3 Interference With Completion Interference with completion by shareholder activists is very uncommon in Bangladesh.
10. Litigation 10.1 Frequency of Litigation
In general, litigation is not very common among par - ties in connection with M&A deals in Bangladesh. However, there have been frequent actions brought by employees in connection with M&A deals announced for the provisioning of employment-related benefits to which such employees are entitled. 10.2 Stage of Deal At the deal-making stage, term sheets are typically non-binding and parties can walk away if there is no consensus on the final deal terms. The employment claims, as stated in 10.1 Frequency of Litigation , are generally brought once binding agreements are exe - cuted, but they are instituted before closing. There are instances where acquirers discover undis - closed liabilities, such as tax arrears, regarding the tar - get after the acquisition. It is very common to include arbitration clauses in deal documents and the parties present their disputes before selected arbitration fora rather than litigate in court. 10.3 “Broken-Deal” Disputes Broken deal disputes are very uncommon in Bangla - desh, as parties generally agree that the agreement shall terminate if the condition precedents are not sat - isfied before completion or a long stop date.
11. Activism 11.1 Shareholder Activism
Shareholder activism in Bangladesh is not as impor - tant a factor for listed companies as it is for non-listed companies. Most cases of activism arise when the majority shareholders proceed with a deal that is unfairly prejudicial to the minority shareholders.
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