BANGLADESH Law and Practice Contributed by: A B M Nasirud Doulah and Amina Khatoon, Doulah & Doulah
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 corresponding to 10% or more of the issuer’s total voting shares is considered “substantial acquisition” of shares. The follow - ing activities require disclosure in the stock exchange’s online news circular: • any buy order or transaction that would result in the 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 acquisi - tion of shares. 4.3 Hurdles to Stakebuilding For private companies, it is possible to con - tractually agree or incorporate in their articles that the selling shareholder must first offer their shares to the existing shareholders on identical terms to the terms being offered to the proposed acquirer. This is not possible for public limited companies, listed or non-listed. It is not possible to introduce different rules such as disclosure thresholds in the articles of incor - poration or by-laws, and the disclosure require - ment as stated in 4.2 Material Shareholding Disclosure Threshold needs to be adhered to. The possible major hurdle to stakebuilding is that approval from the BSEC is needed to imple - ment any deal which may result in reducing the shares held by the sponsors of the directors of the issuer below 30% or the acquisition of locked in shares such as required for post initial public offer (IPO) lock in.
• New tax law – the Income Tax Act, 2023 repealed Income Tax Ordinance, 1984 and additionally outlines the qualification of demerger deals to be tax exempted. The threshold of shareholders of the amalgamat - ing company holding shares in the amalga - mated company has been reduced to 75% from the previous 90% for such amalgama - tion to be considered tax-exempt. • Restructure of transaction costs ‒ the stamp duty payable on a share purchase agreement and share transfer instrument (for non-listed company) remain the same at 0.2% and 1.5% of the consideration respectively. However, the registration fee and stamp duty over the transfer of real properties have both been reduced to 1% and 1.5% respectively. 3.2 Significant Changes to Takeover Law There have been no significant changes to take - over law since the enactment of the Bangladesh Securities and Exchange Commission (Substan - tial Acquisition of Shares and Takeovers) Rules, 2018. Reportedly, the BCC has prepared a draft Bang - ladesh Competition Commission Combination Rules, 2023 but the draft is yet to be circulated for public consultation. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies For non-listed companies, the acquirer needs to directly negotiate with the selling shareholders. For listed companies, agreements on the pur - chase of shares of the sponsors prior to launch - ing any public offer are a common strategy, giv - en that a substantial number of listed companies are owned by sponsor groups who also have control of the board of directors.
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