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Mergers and Acquisitions in Bangladesh

After experiencing phenomenal economic development, Bangladesh has established itself as one of the most remarkable economies in Asia and is positioned to emerge as the new Asian Tiger. Bangladesh, which Goldman Sachs and JP Morgan have categorized as a Next Eleven emerging market and one of the Frontier Five emerging economies globally, is anticipated to attain middle-income country status by 2021 and the 24th largest economy by 2033, respectively. It is not unexpected that Bangladesh has been experiencing a surge in inbound merger and acquisition (M&A) activities and foreign direct investment (FDI).

An investment-friendly environment, a highly competitive labor force, and an industrialization focused on exports have all contributed to the facilitation of foreign investment in Bangladesh. From 2018 to 2019, Bangladesh witnessed a number of its most significant foreign direct investments (FDIs) ever. The acquisition of Dhaka Tobacco by Japan Tobacco Inc. for US$1.47 billion (approximately 124 billion Bangladeshi taka) with the help of one of the best mergers and acquisition law firm in Bangladesh marked a significant milestone in mergers and acquisitions.

In 2020, Bangladesh experienced a number of the most significant private and public M&A transactions within groups, despite the global impact of the COVID-19 pandemic. This includes the record transaction value of 20.2075 billion Bangladeshi taka for Unilever’s acquisition of GSK Bangladesh on the Dhaka Stock Exchange, as well as the acquisition of Janata Jute Mills by Akij Group for approximately 7 billion Bangladeshi taka.

Due to the COVID-19 pandemic, Bangladesh’s remarkable average GDP growth of over 8% in 2018 and 2019 is anticipated to diminish to 5.2 percent in 2020. However, the country stands to gain greater foreign direct investment (FDI) attention from the European Union, Japan, Korea, the United States, and the United Kingdom, all of which are contemplating the relocation of their manufacturing facilities from China.

Furthermore, Bangladesh continues to receive Chinese investments as part of the Belt and Road Initiative. As a consequence, the inflow of foreign direct investment (FDI) into Bangladesh and the associated M&A activities will not only persist but also intensify, given the significant progress that has already been made in mitigating the effects of the COVID-19 pandemic.

An overview of the legal regime governing M&A in Bangladesh

Here’s a structured table representing various aspects of the M&A process in Bangladesh:

Overview of M&A activity– Bangladesh’s remarkable economic growth and projections – Increase in FDI and M&A transactions – Notable M&A activities: Dhaka Tobacco, Unilever’s GSK acquisition, Akij Group’s Janata Jute Mills acquisitionBangladesh’s growth potential, FDI increase
General Introduction to Legal Framework– M&A governed by Contract Act, Companies Act, and specific industry laws – Compliance with Bangladesh Securities and Exchange Commission Acts – Deal specific laws, e.g., Trademark ActMulti-laws governing M&A, need for comprehensive compliance
Law of Contract– The Contract Act 1872 regulates contract aspects – Defines formation elements and legal requirements for contractsGoverns M&A transaction documentation and validity of agreements
Company Laws– Companies Act 1994 governs companies – Procedures for meetings, share capital, company managementCompliance required in M&A with company laws
Security Laws– Security laws applicable for publicly listed companies and asset transactions – Governed by Bangladesh Security and Exchange Ordinance 1969Regulates public companies and M&A transactions
Foreign Exchange & Central Bank Regulations– Foreign investments need Bangladesh Bank approval – Specific rules for valuation and approvalsBangladesh Bank’s role in foreign transactions
Developments in Corporate and Takeover Law– Introduction of BSEC (Substantial Acquisition of Shares and Takeover) Rules 2018 – Amendments to Companies Act 1994 – Proposed One-Person Company and Bangladesh Bank CircularsChanges in laws for more streamlined transactions
Foreign Involvement in M&A Transactions– Mostly inbound FDI from countries like the UK, Norway, UAE – Foreign investment inflows and major investors in Bangladesh – Few outbound acquisitions by Bangladeshi nationals or investorsFocus on inbound FDI, top countries investing in Bangladesh
Significant Transactions, Key Trends– Notable M&A deals include Evercare and CDC Group, Akij Group’s acquisition of Janata Jute Mills, Unilever’s acquisition of GSK Bangladesh – Hot industries: construction, healthcare, digital commerce, telecommunicationProminent M&A transactions, industries attracting investment
Financing of M&A: Sources and Developments– Debt-based, private borrowings, equity financing – Borrowings from local banks and foreign sources – Tax laws applicable to acquisition and asset sales – Tax incentives related to covid-19Various financing options, impact of tax laws and incentives

This table presents an organized overview of the various facets involved in M&A activities within Bangladesh, covering legal frameworks, notable transactions, foreign involvement, and financing options.

The overarching legal structure

The regulation of mergers and acquisitions in Bangladesh is a composite of industry-specific and commercial legislation. M&A transactions in Bangladesh are primarily regulated by the Contract Act of 1872, the Companies Act of 1994, and the Competition Act of 2012. Furthermore, it is mandatory for public limited companies, including those that are listed, to adhere to the regulations set forth by the regulators from time to time. These regulations include the Bangladesh Securities and Exchange Commission Acts 1993, the Securities and Exchange Ordinance 1969, and the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules 2018. Additionally, the Foreign Exchange Regulations Act of 1947, the Guidelines for Foreign Exchange Transactions, and other regulations, circulars, and guidelines of Bangladesh Bank, the central regulatory bank of Bangladesh, must be adhered to when conducting business involving foreign investments and foreign currencies.

Additionally, compliance with industry-specific regulations is required. Illustrative instances of such legislation comprise the Bangladesh Telecommunication Act 2001, the Petroleum Act 2016, the National Digital Commerce Policy 2018, the Bank Companies Act 1991, the Financial Institution Act 1993, and the National Digital Commerce Policy 2018, along with the corresponding regulations and by-laws that were enacted accordingly.
Acquisitions encompassing rebranding, transfer of design patents, intellectual property rights on innovations, trademark and design acts 1911 and 1933, as well as the Trademark Act 2009, the Trademark Rules 2015, are additionally mandatory.

M&A transactions are therefore governed by a variety of laws and regulations in the absence of a comprehensive M&A statute. The subsequent section provides a general overview of several fundamental laws.

The principles of contract law in Bangladesh

Contract law generally applies to transaction documents in an M&A transaction, such as shareholders’ agreements, share purchase agreements, joint venture agreements, and so forth. The contractual legislation in Bangladesh is regulated and governed by the Contract Act of 1872. The document delineates specific fundamental components that are necessary for the establishment of a contract. These components consist of prerequisites pertaining to the contractual parties, their legal capacity, the nature of the offer and acceptance, lawful consideration, voluntary consent, intentions to establish a legal relationship, lawful purposes and object, certainty, a specific subject matter, performance possibilities, formalities, and the absence of any declaration of nullity by or under any existing laws of Bangladesh.

Organizational legislation

The principal piece of legislation in Bangladesh, the Companies Act 1994, regulates all businesses in the country, including joint venture companies and wholly owned subsidiaries of foreign corporations. Detailed laws governing the majority, if not all, facets of company law are contained in the Companies Act 1994 and the Companies Rules 2009. These regulations and rules govern, among other things, the distribution and reduction of share capital, the management and administration of corporations, the conduct of required meetings, the appointment of company directors, and the management and administration of corporations.

In general, mergers and acquisitions must adhere to the corporate compliance obligations of the target company and its stakeholders. These obligations include those stipulated in the companies’ memorandum and articles of association, as well as the Companies Act and Rules. In particular, mergers necessitate adherence to the procedures outlined in the Companies Act 1994. The authority to issue orders pertaining to these matters resides with the Company Bench of the High Court Division of the Supreme Court of Bangladesh. Prior to being presented for approval, merger proposals are evaluated by the boards of directors of the respective companies. A company bench application must be submitted in accordance with Sections 228 and 229 of the Companies Act 1994, following the board’s proper approval.

The nature of the jurisdiction granted by Sections 228 and 229 is supervisory. The court accords deference to the business judgments pertaining to the proposed M&A transaction, contingent upon adherence to legal obligations. The court order authorizing the subsequent merger must be submitted to the Registrar for Joint Stock Companies and Firms so that the requisite measures can be taken during the implementation phase.
When the court authorized the 2016 merger of Axiata and Bharti Airtel’s Bangladeshi operations, it did so with an awareness of its duty to safeguard the public interest. Considering the combined subscriber base of approximately 32 million for both telecommunications companies, the court took into account socio-economic considerations including employee welfare, government revenue, and consumer interest.

Security regulations in Bangladesh

The applicable security laws of Bangladesh will also apply to an M&A transaction involving one or more entities listed on a stock exchange or otherwise a public limited company, such as share acquisitions, asset acquisitions, amalgamations, and the like. This comprises the Bangladesh Security and Exchange Ordinance of 1969 and the Bangladesh Security Exchange Commission’s (BSEC) periodic enactment of various by-laws thereunder.

The BSEC assumes a critical regulatory function in overseeing and authorizing M&A transactions that pertain to public limited companies, including those that are listed, as well as certain private limited companies. Nevertheless, the BSEC has granted exemptions to the following categories of companies: public limited companies with a total capital not surpassing 10 million Bangladeshi taka; private limited companies with a total capital not exceeding 100 million Bangladeshi taka at any given time subsequent to issuing capital; and public-private partnership (PPP) entities. The BSEC (Substantial Acquisition of Shares and Takeover) Rules 2018 serve as the principal regulatory framework governing M&A transactions in the public sector.

The regime governing foreign exchange and the central bank

Prior authorization is mandated by the Foreign Exchange Regulation Act of 1947 for foreign investors to assume control of a Bangladeshi company owned by Bangladeshi nationals. In addition to granting general or specific exemptions, the Bangladesh Bank, the country’s central bank, and its Banking Regulations and Policy Department regulate financial transactions associated with M&As.

In recent years, the central bank has loosened regulations concerning foreign exchange, including those concerning the repatriation of profits and proceeds from the sale of shares. However, a few rulings by the Bangladesh Bank concerning the approval of foreign transactions involving mergers and acquisitions have set backwards. For example, the Bangladesh Bank deemed the agreed transaction price of US$117 million between the two parties and their respective subsidiaries in Bangladesh as “excessively high” and only authorized the repatriation of US$62.5 million in the global merger between Holcim and Lafarge, two of the world’s largest cement companies.

Notwithstanding the Bangladesh Bank’s retention of discretion in determining the purchase price, the valuation methodology governing the exercise of discretion is subject to some degree of uncertainty, which can occasionally complicate the remittance of sale proceeds.

The effects of developments in corporate and acquisition law

i 2018 BSEC Rules on Substantial Acquisitions of Shares and Takeovers

The replacement of the 2002 rules with the 2018 Rules pertaining to substantial acquisition of shares and seizure is a welcome modification to the M&A laws in Bangladesh. The regulations permit significant acquisitions of shares in a publicly traded company via cash purchases from security exchanges and negotiated transactions, both within and outside the exchange’s trading system. In addition, an application for exemption from the restrictions imposed therein is permitted under the Rules.

ii Amendment to the Companies Act of 2020

On February 25, 2020, an amendment to the Companies Act 1994 was approved by the National Parliament of Bangladesh. The principal legislative objective attained through this amendment is the elimination of the compulsory prerequisite for a company to possess a seal in order to be registered.

iii Companies (Second Amendment) Bill 2020 (Bill No. 23 of the National Parliament of 2020): One-Person Company Proposed

Under the current legislation of Bangladesh, a minimum of two shareholders and two directors are mandated for a corporation. The Second Amendment Bill aims to amend the Companies Act 1994 to incorporate the notion of a One-Person Company (OPC). If the bill is approved, it is probable that foreign direct investment in Bangladesh will increase, and a greater number of M&A transactions will be facilitated. Nevertheless, the proposed requirement that the solitary shareholder of the OPC be a natural person is a limitation of the amendment draft. Nonetheless, such a mandate might serve to prevent money trafficking and shield against the incorporation of shell corporations. However, this may discourage foreign corporations, which frequently prefer to hold the entire shareholding, from incorporating an OPC.

iv. FE Circular No. 01 of the Bangladesh Bank (5 February 2020)

This circular is intended to facilitate the transfer of any remaining funds owed to foreign shareholders in the event that the company in question is dissolved. The authorized dealers shall submit to the Bangladesh Bank, in the event of a court-ordered or court-supervised liquidation of a company, an application accompanied by a court order that verifies endorsement of the amount to be distributed to the shareholders for remittance.

FE Circular No. 02, Bangladesh Bank Circular, 5 February 2020

Foreign investors procuring shares in a Bangladeshi company are likely to find this circular’s comprehensive guidelines pertaining to share money deposits to be advantageous. Several guidelines were established in the circular to safeguard the legal interests of foreign investors. They stipulate that the share money deposit from the foreign investor must be repaid in full within 360 days of the company’s receipt of the deposit, and that the funds cannot be used for any purpose other than the company’s primary operations.

v 2018 National Policy on Digital Commerce

The National Digital Commerce Policy 2018, implemented by the government in 2018, imposed limitations on foreign company acquisitions of digital commerce businesses without the establishment of a joint venture with a domestic company. This policy dissuaded prospective participants, including Amazon and Alibaba, from entering the digital marketplace of the nation. Following the proliferation of e-commerce platforms during the coronavirus pandemic, the government implemented the National Digital Commerce (Amended) Policy 2020. This policy eliminated the prerequisite of establishing a joint venture with a domestic firm and permitted wholly foreign-owned e-commerce entities, on the condition that they adhered to the legislation and regulations of the nation.

Foreign participation in M&A transactions

In Bangladesh, outbound acquisitions by Bangladeshi nationals or investors are uncommon, primarily due to the lack of a legal framework for such outward investment and the cautious posture of regulators. The majority of M&A transactions involve foreign corporations acquiring domestic or international firms via FDI inbound remittances.
Based on data from the Statistics Department of the Foreign Investment & External Debt Management Cell of Bangladesh Bank, the United Kingdom topped the list of countries receiving net FDI inflows in the first quarter of 2020, with an amount of US$117.8 million. The primary sectors of investment are energy, food, and financing. With a total of US$68.93 million in FDI, Norway secured the second position, predominantly in the telecommunications industry. Following suit with $51.23 million, the United Arab Emirates invested primarily in the construction and energy sectors.

During the fiscal years 2018–19 and 2019–20, the inflow of foreign investment amounted to $2.88 billion and $3.88 billion, respectively. Uncontracted Foreign Direct Investment (FDI) was valued at $16.4 billion by UNCTAD in 2019. The United Arab Emirates, China, South Korea, India, and Egypt are the primary investors in the nation.

Notable transactions, pivotal trends, and burgeoning sectors

The subsequent transactions constitute a selection of noteworthy M&A activities conducted in Bangladesh.
1.An international direct investment (FDI) of more than 10 billion Bangladeshi taka was recently completed when Evercare and CDC Group, a development finance institution based in the United Kingdom, acquired the controlling interest in STS Holdings Ltd, the infrastructure owner and operator of Apollo Hospitals in Dhaka. In spite of the COVID-19 pandemic, the transaction was finalized in the initial six months of 2020.

2.Janata Jute Mills was acquired by the Akij Group of Bangladesh, which operates the largest jute textile manufacturing facility globally, for an estimated 7 billion Bangladeshi taka amidst the COVID-19 pandemic.
3.Anchorless Bangladesh, a venture capital firm based in the United States, invested $600,000 in May 2020 in digital logistics platform startup Loop Freight, notwithstanding the ongoing COVID-19 pandemic.

4.Unilever obtained an 81.98 percent ownership interest in GlaxoSmithKline (GSK) Bangladesh Ltd from Setfirst, a member of the GSK Group, in June 2020. The transaction, valued at a total of 20.2075 billion Bangladeshi taka, established a Dhaka Stock Exchange record for the highest trade value of a single company.

5.Heidelberg Cement acquired from UltraTech Cement Middle East Investment Limited one hundred percent of Emirates Cement Bangladesh Limited and Emirates Power Company Limited in December 2019 for approximately 1.83 billion Bangladeshi taka. Additionally, they reportedly have an interest in acquiring Meghna Energy, a captive power facility located in the Narayanganj district.

6.Several of Bangladesh’s most significant M&A transactions occurred in 2018 and 2019. In November 2018, Akij Group achieved a historic milestone by divesting its entire tobacco enterprise, Dhaka Tobacco, to Japan Tobacco Inc. for an enormous sum of $1.47 billion.

7.A noteworthy M&A transaction occurred in April 2018 between bKash, an entity affiliated with Alibaba Group, and Alipay, whereby Alibaba Group acquired 20 percent of the latter. Neither bKash nor Alipay provided a monetary amount regarding the transaction.

8.In 2018, a Chinese consortium comprising the Shenzhen and Shanghai stock exchanges paid $125 million for 25% stakes in the Dhaka Stock Exchange.

9.In the same year, Beximco Pharmaceuticals Limited successfully acquired an approximate 85 percent stake in Nuvista Pharma Limited.

10.In recent times, the telecommunications industry has witnessed several noteworthy acquisitions: Axiata of Malaysia acquired Aktel, a telecom operator that subsequently underwent a name change to Robi; Airtel of India acquired Warid Telecom; and Orascom Telecom of Egypt acquired Sheba Telecom. Prominent acquisitions in the sector included NTT DoCoMo’s purchase of Aktel’s shares and SingTel’s substantial acquisition of City Cell.

11.Reportedly valued at over $100 million, Pathao, a ride-sharing application beginning in Bangladesh, secured equity financing from multiple investors, including Go-Jek of Indonesia.

12.One of the largest cement manufacturers in Thailand, Siam City Cement, acquired Cemex Cement Bangladesh Ltd. in 2016.

13.The leading conglomerate in Bangladesh, Transcom, acquired the local Philips and Pepsi operations from their previous foreign proprietors.

14.M&A transactions are relatively uncommon in the financial sector. Three local business groups have reportedly been in dialogue with Bangladesh Bank regarding the possibility of assuming management of People’s Leasing and Financial Services (PLFS). Oriental Bank was previously acquired by ICB Financial Group, an additional Malaysian conglomerate. Summit obtained a stake from ICB Bank in 2010. B Banking Group, which rebranded Oriental Bank as ICB Islamic Bank Bangladesh, has now reached the decision to sell its complete shareholding for US$55 million.

15.Increasingly, intragroup M&As are being utilized for commercial strategy and group restructuring in an effort to maximize profits and reduce operational expenses. As an illustration, the publicly traded United Power Generation and Distribution Company Limited has received approval from its board of directors to procure United Jamalpur Power Ltd. and United Anwara Power Ltd., both of which are power plants owned by the United Group.

At present, the sectors that are generating the most interest for potential M&A transactions are construction and engineering, healthcare, power development, digital commerce, telecommunication, communication, ready-made garments, and banking and finance, according to trends. Moreover, there has been a recent surge in the level of attention from international investors towards the electricity, energy, and petroleum industries.

Principal sources of financing for M&A and developments

Debt-based financing is anTo finance acquisitions, the acquiring company may obtain debt-based financing from local banks and NBFIs. Such financing may be utilized by foreign investors via their subsidiary companies located in Bangladesh. Nevertheless, this is contingent upon the provision of adequate collateral. After obtaining the target company, the acquiring party may utilize a diverse array of debt-based financing options to facilitate the realization of their aspirations.

This consists of working capital loans as well as a variety of funded credit facilities.
Additionally, structured finance and syndication loans are accessible in Bangladesh. Restructuring debt is frequently a factor in M&A transactions. In addition, non-funded credit facilities, such as bank guarantees, may be applicable and utilized contingent upon the structure of the transaction.

Collateral borrowings from international origins

Industrial enterprises operating in the private sector have the option to secure credit or borrowings from internationally renowned lenders, such as capital markets, export credit agencies, equipment suppliers, and international banks. Additionally, foreign equity proprietors may be lent funds for bridge financing.
However, prior authorization from the Bangladesh Investment Development Authority and the central bank’s scrutiny committee will be necessary for foreign borrowings. For the applicable term, the proposed interest rate must be competitive with prevalent lending rates on international markets denominated in the relevant currencies. In general, a country risk premium of a reasonable magnitude should be added to the prevailing government treasury bond rate in that currency for that term, which should serve as the basis for the interest rate.

Investing in equity

Additionally, investors may contemplate equity-based financing through the capital market of Bangladesh, which comprises two stock exchanges. Investors are obligated to adhere to the securities legislation of Bangladesh and are contingent upon obtaining prior authorization from the Bangladesh Securities and Exchange Commission.


The corporate bond market in Bangladesh is currently in its nascent stage, characterized by a scarcity of publicly traded corporate bonds. Due to the dearth of demand for these debt instruments, corporations have been dissuaded from offering the option to the public.

Employment and labour law:

Significant portions of Bangladesh’s labor and employment legislation are codified in the Labour Act of 2006, as amended, and the Labour Rules of 2015. The Labour Act 2006 encompasses a range of pertinent provisions, including but not limited to the following: terms of employment and service conditions, maternity benefits, worker health, safety, and hygiene, working hours, leave, wages and payment thereof, compensation for accident-related injuries, trade unions and industrial relations, dispute resolution, worker participation in company profits, provident funds, apprenticeships, dismissal, termination, and separation.

The Labour Act 2006 and related regulations do not contain any provisions that are specifically applicable to M&A transactions. In contrast, there have been few concerns regarding intra-group M&A transactions that would require legislative intervention. However, the impact of M&A transactions on employees and the protection of their rights and interests must be considered in both public and private transactions. At present, the High Court assumes a critical role in safeguarding the rights and interests of employees in M&A transactions that may potentially infringe upon employee rights, as evidenced by the Robi merger case. The parties to an M&A transaction are obligated to conduct thorough due diligence regarding the target company’s compliance with employment law.

Tax legislation in Bangladesh

The primary legislation that regulates income tax in Bangladesh is the Income Tax Ordinance, 1984 (ITO). Each year, amendments and enhancements to the ITO are implemented via the Finance Acts that are promulgated annually. The ITO is supplemented by the Income Tax Rules 1984, which were promulgated by the regulatory authority for tax administration in Bangladesh, the National Board of Revenue (NBR). Furthermore, on occasion and as needed, the NBR issues general orders and statutory regulatory orders.

i Taxes associated with M&A transactions

Acquiring entails the procurement of shares. A stamp duty equal to 1% of the purchase price agreed upon is owed upon the transfer of shares. On the contrary, the transmission of dematerialized shares is exempt from stamp duty. It is the responsibility of the vendor to remit capital gains tax @15 percent. The deduction of acquisition and development expenses from the sale consideration yields the capital gain.

Capital gains realized by corporations and organizations through the transfer of publicly traded company shares are subject to a reduced tax rate of 10%. Additionally, sponsor shareholders and directors of financial institutions, banks, brokerages, insurance companies, merchant banks, leasing companies, portfolio management companies, and stock dealers are eligible for a tax rate of 5%. Other individuals are not subject to tax on these gains. Capital gains generated by a non-resident assessee through the transfer of stocks or shares in a publicly traded company are exempt from taxation, provided that the assessee is eligible to utilize comparable exemptions in their country of domicile.

The transfer of any immovable or movable property is subject to a stamp duty of 3 percent of the purchase price for the sale of other assets during an M&A transaction. Additionally, a 1% local government tax and a 2% registration charge on the value of the property are required to be paid when transferring immovable property. With the exception of demergers, asset sales and transfers do not qualify for exemptions from stamp duty.

If specific conditions are met, an asset transfer structured as a merger in accordance with the income tax rules may be tax neutral for the parties. A demerger’s structure renders it tax neutral. The transfer of the undertaking is handled similarly to a share transaction subsequent to a demerger.

A 15% capital gains tax is levied on all selling of other assets, including downturn sales and item-wise sales. In addition, the sale of an asset may subject the seller to a prospective 15% VAT obligation. For assets held for a duration of less than five years, individuals are obligated to remit capital gains tax at the maximum income tax rate that is applicable. Meshing and demergers constitute the sole exceptions.

ii Tax on corporate income

As per the tax legislation of Bangladesh, non-publicly traded companies are subject to corporate income tax (CIT) rates of 35%, while publicly traded companies are subject to CIT rates of 25%. Certain industry-specific enterprises, including cigarette manufacturers (45%) and banks and NBFIs (37.5 percent to 42.5 percent), are subject to higher CIT rates. A 10% tax rebate is applicable to non-publicly traded companies that transfer a minimum of 20% of their paid-up capital shares via an initial public offering in the year of the transfer.

iii Incentive income taxes

In order to foster and advance export-oriented trade, industry decentralization, and foreign direct investment (FDI) in Bangladesh, a variety of income tax incentives are extended to potential investors. The aforementioned incentives comprise a tax holiday designated for industrial enterprises established within Export Processing Zones, tax incentives for investment in Special Economic Zones, tax rebates extended to manufacturing companies established outside of city corporation areas, and specific industrial enterprises granted tax holidays. Foreign investment-funded industries and projects are also eligible to receive presumed export tax refunds and benefits. Bonded warehousing facilities can be utilized by export-oriented industries to store imported packaging and basic materials.

IV Federal Covid-19 Tax Credits

A number of tax incentives have been announced by the government in the wake of the COVID-19 pandemic, with the intention of stimulating economic growth and fostering progress in the power sector. These incentives comprise:
1.Until December 31, 2034, the income of private power generation companies (PPGCs) is exempt from tax obligations.
2.Foreign nationals’ income is exempt for a period of three years.
3.Foreign loan interest payments are exempt from withholding tax (WHT); and
4.Payments for royalties, technical assistance, and technical know-how can be processed without the use of WHT.
Gains on capital generated through divestment are exempt.
In the event that commercial production of a PPGC commences between January 1, 2023 and December 31, 2024, the exemption from tax for the initial five years is 100 percent, then 50 percent for the subsequent three years, and finally 25 percent for the final two years; certain exemptions are valid for a total of ten years.
Furthermore, in light of the COVID-19 pandemic, the NBR granted exemptions from import duties and taxes until 30 June 2020 for twelve distinct categories of safety products and test kits on 22 March 2020. Furthermore, measures are being implemented to prolong the deadline for submitting essential VAT and tax returns. In accordance with the extended deadlines, taxpayers shall not incur penalties or accrue interest.
The NBR has devised a strategy to update the Bangladesh Integrated Tax (BiTAX) system of the tax department, which will incorporate online tax return submission and digital tax payment capabilities.

Law of competition

As a developing nation with promising economic characteristics, Bangladesh has always recognized the need for a legal framework to maintain a free, open, and sustainable market and foster an amicable environment for trade competition. The enactment of the Competition Act 2012 was motivated by the objective of preventing, controlling, and eliminating activities that are detrimental to competition.

Anticompetitive agreements and the abuse of a dominant position are unequivocally proscribed by the Competition Act of Bangladesh, as they potentially impede the fair competition of trade. Additionally, the regulation prohibits individuals from engaging in agreements or collusions that impede competition, establish a monopoly or oligopoly in the market regarding the production, supply, distribution, storage, or acquisition of goods or services, either directly or indirectly. Such agreements or collusions may have detrimental consequences for competition.
Parties to an M&A transaction are required to conduct due diligence in accordance with the competition laws of Bangladesh. Various anticompetitive agreements are referenced in the Competition Act, such as resale price maintenance, exclusive supply agreements, exclusive distribution agreements, refusal to deal, and tie-in arrangements.

Particularly significant in the context of mergers, combinations that induce or have the potential to induce an unfavorable impact on competition in the market for products or services are explicitly forbidden under the Competition Act. As defined in the aforementioned Act, “combination” pertains to any trade-related acquisition, takeover, amalgamation, or merger. Consequently, combination transactions may necessitate the prior authorization of the applicable regulator, contingent upon their ability to ascertain that such a combination does not have the potential to detrimentally impact competition.

In accordance with the Competition Act, the Bangladesh Competition Commission was created to investigate complaints lodged under the Act and to promulgate additional regulations in this area. Although the Competition Commission has not yet commenced full operations, it is anticipated that in the near future it will eradicate anti-competitive practices and foster competition in order to safeguard the freedom of trade.

Prospects for M&A in Bangladesh

As previously stated, Bangladesh has experienced a number of its most significant M&A transactions in 2020, despite the impact of the COVID-19 pandemic. While the pandemic has introduced complexities to the procedures associated with M&A transactions, it has not in any way impeded the completion of agreements. While smaller enterprises may not receive significant media attention, Bangladesh is witnessing a multitude of acquisitions on a daily basis.
As of now, there exists no standardized collection of laws or regulations governing M&A transactions; thus, the existing body of knowledge on the subject is rather fragmented. The government ought to initiate the provision of guidance pertaining to M&A without delay, as it is an imperative endeavor. Potential reforms could consist of implementing a unified code or legislation for M&A that consolidates the numerous fragmented provisions and guidelines pertaining to industry-specific legislation. This would significantly impact the way in which the sufficiency of the legal framework is perceived.
Legal and financial due diligence is until then the utmost importance prior to entering into a transaction. In addition, structuring a transaction in a compliant, enforceable, and tax-efficient manner is critical.


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