BANGLADESH LAW AND PRACTICE Contributed by: Shahwar Nizam, Tarannum Tasnim, Mahboob Aziz, Saif Bhuiyan, Farhan Kabir, Tanzim Ahmed and Rizvi Khan, DFDL Bangladesh
1. Legal System and Regulatory Framework 1.1 Legal System
1.2 Regulatory Framework for FDI Bangladesh has a very strict foreign exchange con - trol regime. Any outward remittance requires prior approval from Bangladesh Bank, the central bank of Bangladesh. However, the foreign investment laws in Bangladesh are very pro-investor, and no approval is required for foreign direct investment (FDI). Foreign and private investment is prohibited for a few sec - tors only (eg, manufacturing of arms and ammunition or other defence equipment, forest plantation and mechanised extraction of reserved forests, produc - tion of nuclear energy, printing of currency notes and minting). The GOB controls foreign investment in certain sec - tors by an administrative licensing process. Foreign investments are subject to government licensing in the logistics, banking, insurance, merchant banking and brokerage, aviation and broadcasting sectors. Regarding logistics businesses, foreigners are not allowed to own more than 40% of such businesses. Separately, there is a single shareholding limit (irre - spective of whether foreign invested or locally invest - ed) in some of the sectors mentioned in the foregoing. There are also some state monopoly businesses, such as transmission of electricity and railways, etc, where only government state-owned enterprises operate and exercise a monopoly. 2. Recent Developments and Market Trends 2.1 Current Economic, Political and Business Climate Geopolitically, Bangladesh is in a very strategic posi - tion between China and India, attracting high levels of FDI for labour-intensive garments and footwear man - ufacturing. There has been a hike in foreign invest - ment in the power, energy and infrastructure sectors in the last decade. The Foreign Private Investment (Promotion & Protection) Act 1980 (the “FPIP Act”) protects investors against nationalisation and expro - priation and guarantees non-discriminatory treatment between foreign and local investors. The World Bank has ranked Bangladesh ahead of India, China and Vietnam in protecting investors’ interests.
Bangladesh is a jurisdiction whose legal system is derived from English common law. Many of the basic civil and criminal laws of Bangladesh, such as the penal code, the civil and criminal procedural codes, contract law and company law, are influenced by Eng - lish laws, and some of those laws date back to the time when Bangladesh (as part of India) was still part of the British Empire. The statutes are short, unlike a civil law system, and set out basic rights and respon - sibilities that are then interpreted by the courts in their application of those laws. The Constitution of the People’s Republic of Bangla - desh is the primary source of all laws, and it is sup - ported by legislations and ordinances enacted by Parliament. The Constitution provides for a single- house parliamentary system. The government is run by a cabinet of ministers headed by the Prime Minis - ter, and the cabinet as a whole is responsible to the Parliament. Statutory corporations or regulatory authorities of the government of Bangladesh (GOB) can also make rules, regulations, orders, circulars, notifications, poli - cies and by-laws to the extent that it is authorised under relevant legislation. Further, where the law does not specifically cover a particular point or where there is no specific law, the courts decide the case on the principles of equity, justice and good conscience. The judgments of the superior courts of the country have binding effect on courts of lower level. The Bangladesh Supreme Court is the apex court and has two divisions, namely the Appellate Division and the High Court Division. The Appellate Division is vest - ed with the power to hear and determine appeals from judgments, decrees, orders or sentences of the High Court Division. The High Court Division has original, appellate and certain other jurisdictions and powers over the lower courts. These lower courts consist of civil courts at district level, criminal courts in the met - ropolitan area and at district level, and special courts and tribunals.
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