BANGLADESH Law and Practice Contributed by: A B M Nasirud Doulah and Amina Khatoon, Doulah & Doulah
Bangladesh law mandates that directors dis - close their interests in other entities before any decision making in a meeting in relation to such related entities. For listed companies, and non- listed companies which are public limited com - panies, directors are required to ensure that their interests do not conflict with those of the com - pany, 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 judgement rule is not a recognised concept in Bangladesh. While there is no specific mechanism requiring a board of directors to form a judgement in rela - tion to a merger/acquisition or takeover in the case of non-listed companies, unless otherwise agreed contractually among the shareholders, the directors in general reserve a right to reject any share transfer proposal in private compa - nies. Given that directors are nominees in most cases in non-listed companies, such takeover proposals are ultimately decided by shareholder consensus. While for listed companies, the directors may make recommendations only, the board would not be able to implement any of the commonly used takeover avoidance mechanisms without the consent of the shareholders. In Bangla - desh, 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 Bang - ladesh are engaged to validate the structure and feasibility of an acquisition or merger or take matters forward with the BSEC in relevant instances, and in the case of non-listed com -
panies, advising on future prospects of public listings and returns. Other independent advice procured from outside includes valuation certifi - cates from independent auditors, due diligence reports and opinions from legal counsel on com - pliance with applicable laws and due issuance of shares, and tax advice from tax advisors. 8.5 Conflicts of Interest As mentioned in 8.2 Special or Ad Hoc Com- mittees, directors are required to disclose their interests in other entities. Directors are required to ensure that their interests do not conflict with those of the company, and any interested direc - tor is not allowed to participate in meetings or vote on matters in which they have an interest. The BSEC (Prohibition of Insider Trading) Rules, 2022 imposes stringent disclosure rules for insiders (directors, managers, shareholders or advisers) to address any concerns around con - flicts of interest, including the framing of internal policies, limitations on trading and disclosures on conflicts of interest. Bangladesh regulations do not expressly recog - nise the term “hostile offer” , which is understood to be an unsolicited bid without any agreement with the persons in control of the target com - pany. Hostile tender offers are not prohibited but are not common, due to complications in their implementation as compared to negotiated transactions. Under the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules, 2018 there is another mechanism prescribed for the acquisition of 9. Defensive Measures 9.1 Hostile Tender Offers
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