BANGLADESH Law and Practice Contributed by: A B M Nasirud Doulah and Amina Khatoon, Doulah & Doulah
10.2 Stage of Deal At the deal-making stage, term sheets are typi - cally 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 Fre- quency of Litigation , are often brought after the binding agreements are executed and are insti - tuted before closing. There are instances where acquirers discov - er undisclosed liabilities, such as tax arrears, regarding the target after the acquisition. It is very common to have arbitration clauses in deal documents, and the parties present the disputes before selected arbitration fora rather than liti - gate before courts. 10.3 “Broken-Deal” Disputes Broken deal disputes are rare in Bangladesh as parties generally agree that the agreement shall terminate should the conditions precedent not be met before completion or a long stop date. Shareholder activism in Bangladesh is not as important for listed companies as it is for non- listed companies. Most cases of activism arise when the majority shareholders move forward with a deal that is unfairly prejudiced against the minority shareholders. Shareholders have the following protection under the Companies Act of Bangladesh. • It provides for the institution of class action suits (filed by a minimum of 10% of share - holders in that class) against any mismanage - ment or misconduct in the affairs of a com - pany. 11. Activism 11.1 Shareholder Activism
• If the affairs of a company are being con - ducted in a manner that is prejudicial to the public interest or the interest of any member or depositor of the company to the opinion of 10% of shareholders. • If any person or group of persons are affected by any misleading statements or the inclusion or omission of any matter in the prospectus. • In the case of an approved (by 75%) restruc - ture (including merger) if there is forced acquisition of the dissenting shareholders’ shares and such shareholders believe that their rights are prejudiced. Under such circumstances, proceedings may be instituted under the provisions of the Companies Act. However, in most cases, the end result is the divestment of shares in return for appropriate compensation. 11.2 Aims of Activists Activism is mostly aimed at improving govern - ance, enhancing positive outcomes or improving company performance; it often addresses inef - ficiencies and seeks to increase minority rep - resentation on boards. However, in connection with M&A deals, the views of activist sharehold - ers depend on whether there has been prejudi - cial treatment of minority shareholders. In most cases, the end result is the divestment of shares in return for appropriate compensation. On the other hand, when shareholder activ - ism faces a deadlock with management or the sponsors, M&A can become a possible option to resolving the conflict by way of divestment keeping the company in operation. 11.3 Interference With Completion Interference with completion by shareholder activists is rare in Bangladesh.
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