All Authorized Dealers in
Foreign Exchange in Bangladesh

Transfer of shares and repatriation of sales proceeds of shares in favor of
non-residents in private/public limited companies not listed with stock exchanges

FEID Circular No. 1 of May 06, 2018 outlines working procedures referring to valuation approaches for submission of applications to Bangladesh Bank in repatriation of sales proceeds of nonresident equity investment in non-listed public limited companies and in private limited companies.

02. To bring further simplification in repatriation of sales proceeds of non-listed shares, it has been decided that:

a. Authorized Dealers (ADs) may effect remittances on account of sales proceeds of shares regardless of amount, fair value of which is determined by the management of the target companies through net asset value (NAV) approach based on latest audited financial statements submitted together with tax returns. ADs shall satisfy themselves from the undertaking of the target companies countersigned by auditors to the effect that in net asset value approach audited financial statements have contained no revalued assets, intangible assets, expenses/losses shown as asset. The certificate should specify that the impairment of assets have been adjusted. The ADs should also be ensured that there is no abnormal growth in total assets in any of last three years, particularly in last year;

b. No permission from Bangladesh Bank is required to repatriate sales proceeds of shares up to Tk 10.00 million equivalent foreign currency without valuation reports from independent valuers;

c. ADs may effect remittances of above Tk 10.00 million upto Tk 100.00 million equivalent foreign currency on account of sales proceeds, fair value of which is determined in terms of valuation methods prescribed in FEID Circular No. 1 dated May 06, 2018. Within 30 days of remittances, ADs shall submit post facto reports detailing the transactions to Foreign Exchange Investment Department at Bangladesh Bank Head Office. Cont’d page 2 -2-

03. (a) ADs shall, before executing the transactions, satisfy themselves to the effect that the target company has complied with the provision of paragraph 2(A) and 2(B), chapter 9 of the Guidelines for Foreign Exchange Transactions-2018 (GFET), Vol-1. On completion of the transactions, ADs shall comply with usual reporting routine and preserve the records of the transactions for eventual inspection, unless under investigation, for a period of 5 years;

(b) ADs shall ensure that the outward remittance under the authorization as noted at 2(c) above is executed one-time against the particular deal. Subsequent deals are, if any, subject to the instructions of FEID Circular No. 1/2018. In case of inconsistencies identified, ADs should seek opinion from Bangladesh Bank;

(c) ADs shall comply with Section 3(4) of The Foreign Exchange Regulation Act, 1947 (Amended upto 2015) before execution of remittance.

04. As usual, ADs shall observe due diligence of KYC, AML/CFT standards, regulations on payment of taxes and so on.

Please bring the instructions of this circular letter to the notice of your concerned clientele.

Source: https://www.bb.org.bd/mediaroom/circulars/feid/jun182020feidl01e.pdf

All Authorized Dealers in
Foreign Exchange in Bangladesh 

Repatriation of residual money payable to foreign shareholders
in case of winding up of a company.

Please refer to the FEID Circular No. 01, dated 6 May, 2018 which outlines operational procedures to repatriate the sale proceeds of share to foreign shareholders against their shares sold to residents.

02. To facilitate transfer of residual money payable to foreign shareholders in case of winding up of the concerned company, it has been decided that:

(a) in case of winding up of a company by the Court or subject to supervision of the Court, for remittance of money payable to foreign shareholders, Authorized Dealers (ADs) shall submit application to  oreign Exchange Investment Department (FEID), Bangladesh Bank, Head Office, Dhaka along with an order of the honorable Court evidencing endorsement of the amount determined to be distributed to the shareholders after paying up all the liabilities and payments as per law and a certificate confirming that all liabilities in Bangladesh including tax claims and other statutory payment obligations have been fully paid, issued by liquidator/official receiver/or such person as the Government may, by notification in the official Gazette, appoint for the purpose.

(b) in case of voluntary winding up of a company, for remittance of money payable to foreign shareholders, ADs shall apply to FEID, Bangladesh Bank, Head Office, Dhaka along with all relevant documents, mutatis mutandis, including but not limited to the list given in Annexure-A.

03. ADs shall forward the permission request for remittance of money payable to foreign shareholders, only after being satisfied that the target company has complied with the provision of Paragraph-2(A)(c) & 2(B), Chapter-9, Volume-I of Guidelines for Foreign Exchange Transactions-2018 or similar guidelines in force at the time of issuance/transfer of share. Please bring the instructions of this circular to the notice of all your concerned clientele.

Enclosure: As stated.

Source: https://www.bb.org.bd/mediaroom/circulars/feid/feb052020feid01e.pdf

Foreign Exchange Investment Department
Bangladesh Bank
Head Office
Dhaka
www.bb.org.bd

FEID Circular No.- 1

Date: May 06, 2018

All Authorized Dealers in
Foreign Exchange in Bangladesh

Dear Sirs,

Transfer of shares and repatriation of sale proceeds of shares in favor of non
resident in private/public limited companies not listed with stock exchanges.

Please refer to Paragraph 3(B), Chapter 9 of the Guidelines for Foreign Exchange Transactions- 2018 (GFET) Volume 1 on the captioned subject.

02. Paragraph 3(B), Chapter 9 of GFET stated that the sale proceeds of nonresident equity investment in public limited companies not listed with the stock exchanges and private limited companies are repatriable abroad with prior Bangladesh Bank approval as on the date of share sales, based on latest audited financial statements. In accordance with GFET Bangladesh Bank would accept fair value of the shares as on the date of sale based on appropriate combination of three valuation approaches (viz. net asset value approach, market value approach and discounted cash flow approach) depending on the nature of the company.

03. To bring rationalization and simplicity in valuation process, it has been decided that-
a) In case of transfer of shares from non-resident to resident in public limited companies not listed with the stock exchanges and private limited companies, the Memorandum of Understanding (MoU) for share sale-purchase agreement between buyer and seller needs to be concluded on receipt of approval from Bangladesh Bank regarding determination of the fair value of shares. Bangladesh Bank will accept the fair value of the shares as repatriable abroad /or for re-investment in Bangladesh determined as on the date of MoU for share sale-purchase agreement based on the latest audited financial statements of the target company. The fair value of the shares shall be determined by weighted average calculation of all the 3 (three) valuation approaches (viz. net asset value approach, market value approach and discounted cash flow approach) or on any of the suitable approaches depending on the nature of the company, having justified ground.The MoU shall be executed at the fair value approved by Bangladesh Bank, subject to observance of the following instructions-
(i) Permission requests for transfer of shares and repatriation of sale proceeds of shares shall be submitted to the Foreign Exchange Investment Department, Bangladesh Bank, Head Office, Dhaka with a Valuation report issued by a Merchant Banker licensed by Bangladesh Securities and Exchange Commission (BSEC) or a Chartered Accountant experienced in company valuation and listed by Bangladesh Bank and/or BSEC for auditing banks, financial institutions and listed companies;
(ii) Professional valuation report is not mandatory if the applied value for the repatriation does not exceed BDT 1.00 (One) million. Also such report is not mandatory in case the net asset value is higher than the deal value. In such cases Bangladesh Bank will work out the fair value of share based on the audited financial statements and the documents enclosed in Annexure-B of the target company;
(iii) The valuation certificates by eligible valuer will have to be supported by full explanation justifying the fair value arrived at. If not fully satisfied about appropriateness of the valuation arrived at, Bangladesh Bank reserves the right to reassess the value, based on financial statements submitted along with the application;
(iv) Authorized Dealer (AD) shall forward the permission request for repatriation of sale proceeds of shares in favor of non-resident only after being satisfied that the target company has complied with the provision of Paragraph 2(A) and 2(B), Chapter 9 of GFET regarding issue and transfer of shares in favor of or by non-resident.
b) Sale of shares owned by resident shareholder to non-resident is subject to fair value determined by Merchant Banker licensed by BSEC or a Chartered Accountant, for sales/transfer value of shares exceeding BDT 1.00 (One) million. Resident shareholder receiving payment against sales of shares shall submit valuation report to the AD and MoU for share sale-purchase agreement together with Form-C for encashment of inward remittances on account of sales proceeds of shares. AD shall report the share transactions to the Foreign Exchange Investment Department, Bangladesh Bank, Head Office, Dhaka giving details of documents within 14 days of transfer of shares as per Paragraph 2(B), Chapter 9 of GFET.
c) Transfer of shares from non- resident to non-resident is also subject to fair value of shares as pursuant to ‘b’ above. Within 14 days of the transfer of shares, target company shall arrange through AD to report to the Foreign Exchange Investment Department, Bangladesh Bank, Head Office, Dhaka as per Paragraph 2(B), Chapter 9 of GFET with copy of valuation report of shares and MoU for share sale purchase agreement.
d) The valuer shall maintain requirements regarding valuation in particular, though not exclusively, such as:
(i) A report and fairness opinion confirming that the valuation has been undertaken in accordance with the internationally best practices and that they have maintained the fundamental principles of ethical conduct namely integrity, objectivity, competence, confidentiality and professional behavior regarding the valuation;
(ii) The revalued amounts of assets and liabilities shall be included in the financial statements in accordance with the applicable provisions of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted in Bangladesh;
(iii) The valuer shall be independent from the target company, its directors, auditors and other stakeholders;
(iv) The valuer shall be responsible for any anomalies in the valuation.
e) Annexure-A to this circular provides indicative guidelines for arriving at fair value.
f) Application to Bangladesh Bank shall also be supported by documents as noted in Annexure-B.
g) With the issuance of this circular, FE Circular No. 32, dated August 31, 2014 as contained at appendix 6/3 of GFET shall stand amended.

Please bring the instructions of this circular to the notice of all your concerned clientele.

Yours faithfully,

(Md. Ali Akbar Faraji)
Deputy General Manager
Phone : 9530352

Source: https://www.bb.org.bd/mediaroom/circulars/feid/may062018feid01e.pdf