BANGLADESH Law and Practice Contributed by: A B M Nasirud Doulah and Amina Khatoon, Doulah & Doulah
8. Duties of Directors 8.1 Principal Directors’ Duties
confirmation as to their declaration such as maintenance of 30% shares by sponsors and directors; • the acquisition offer date and date until which the offer is valid; • the settlement process including date, time and method; • for non-cash settlement, the valuation report should include details of the consultant, the valuation date and the method; • the planned share acquisition proportion from each class of shareholders such as sponsors, directors, placement holders, other significant shareholders or public; • declaration of approval from the board of the company, if applicable; and • any pertaining terms as to other laws such as foreign exchange regulations. Another declaration from broker is needed confirming the availability of the fund. These are disclosed as public disclosure through the exchange. 7.3 Producing Financial Statements As of now, bidders are not needed to produce financial statements unless so agreed contrac - tually. Financial statements in Bangladesh are needed to be prepared as per the Bangladesh Financial Reporting Standards (BFRS), which are substan - tially based on the IFRS. 7.4 Transaction Documents While the disclosure of any transaction docu - ment is not required in full, details of any memo - randum of understanding or agreement already executed and terms contained therein in con - nection to the purchase of the target shares are required to be disclosed with the announcement, as outlined in 7.1 Making a Bid Public .
The directors are responsible for duties and care to the company. The general doctrine under company law and in Bangladesh is that a direc - tor has a fiduciary duty to act in good faith in the best interest of the company and for the ben - efit of its shareholders as a whole. In addition to acting in good faith in the best interest of the company, the directors also need to consider the interests of employees, the wider commu - nity, and certain factors such as the environment and financial dealings. As to the acquisition or business combination, there is no express obligation imposed but in line with the above, the board of directors of the target company is required to ensure the run - ning 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 a contract which they rea - sonably believe the company would be unable to fulfil. Directors of publicly listed target companies who may be related to the acquirer (or persons acting in concert with the acquirer) are precluded from being involved in or voting on the acquirer’s offer. 8.2 Special or Ad Hoc Committees In Bangladesh, it is not common for boards of directors to establish special or ad hoc commit - tees in business acquisitions or combinations as this is not mandated by local regulations. How - ever, listed companies are obliged to constitute certain special committees of the board with certain duties prescribed by the BSEC regula - tions.
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