Corporate M&A 2026 Comparisons

Although Bangladesh offers a liberal M&A regime and almost no restrictions on country-specific foreign direct investment (FDI), its M&A market, with around 200 million consumers, remains underdeveloped. Compared to global deals involving M&A of assets in Bangladesh, actual deals in the local context are still outnumbered. However, as the country has become an attractive destination for FDI, which suggests that there is still ample space in the market, rapid growth in the number of mergers and acquisitions transactions in Bangladesh in recent times has been observed.

In the context of the 2024 political upheaval in Bangladesh, which ultimately led to regime change, the country saw an immediate decline in deal completions as investors adopted a “wait and see” strategy. The credit ratings of Bangladesh were lowered by major rating agencies, including Fitch, S&P, and Moody’s, amid concerns about political instability. Nevertheless, recent deal trends indicate that investor confidence is returning, with transaction activity expected to surpass pre-turmoil levels in the near term.

While quieter than 2023, the M&A market in Bangladesh in 2025 is showing impressive levels of deal-making, aided by a better regulatory environment and driven by continued business confidence and investor optimism about reduced corruption and long-term political stability following the turmoil in 2024. Some major trends in recent times have been outlined below.

Asset-Based Deals

In Bangladesh, most acquisitions are led by mid-market and conglomerate buyers, and the share acquisitions have been the most widely adopted structure. However, asset-based acquisition has been gaining popularity in recent years due to stronger enforcement of bad-debt provisions by local banks and a reduction in transaction costs for asset-based deals. The sale of business undertakings is also gaining popularity.

An Off-Market Negotiated Sale

It is a less common method of acquiring publicly listed shares, but it has gained popularity in recent years as an off-market investment instrument in Bangladesh. The increased interest in such deals raises new regulatory issues, such as valuation.

Start-Ups

Start-ups in Bangladesh have always been a major focus for both local and cross-border private equity funds and private investors. However, recently there has been a renewed interest in local start-ups by development organisations such as Asian Development Bank (ADB) Ventures, Investment Fund for Developing Countries (IFU), and Responsibility Investments, albeit the acquisition of stakes in such businesses is more driven by sustainability interests than returns.

Diversification of Investor Portfolio

Deal-making across several sectors continued, driven by growing interest from multinationals and foreign investors due to the restoration of a more competitive regulatory framework for investors from diverse countries, such as the United States and Europe. This is also sometimes driven as part of diversification strategies to reduce over-reliance on countries like China and India.

Infrastructure

Infrastructure development through PPP was introduced in 2010, before which only power projects were allowed to be developed in this manner. The PPP Act, 2015, further facilitated the development of infrastructure by the private sector. Accordingly, there has been a recent trend of mergers and acquisitions of private-sector infrastructure and power projects. For example, the first toll road project, ie, the First Dhaka Elevated Expressway, was acquired by new investors in 2021 and 2024 to the extent of 49% and 100%, respectively.

M&A activity in Bangladesh in 2024 was mostly focused on the energy and power sector; however, certain other industries also stood out. Major industry concentration in the past 12 months for M&A includes the following.

Healthcare and Pharma

Driven by increased healthcare spending and traditional strengths in pharma manufacturing. Several pharmaceutical players, such as Gulf Pharma, GSK, Sanofi and Novartis, partially or fully exited the market due to strong local manufacturing capabilities and competition. On the other hand, amid renewed Chinese, Turkish and Saudi interests in the healthcare sector, IFU has invested in a local business to support its nationwide expansion. Evercare acquired two of the largest hospitals in Bangladesh in 2020, followed by its 2023 acquisition by Blackstone, which, in late 2024, merged with Aster to create the second-largest healthcare facility in South Asia.

Financial Services/Fintech

With the central bank enacting a framework for merging weak banks with strong ones, several measures have been put in place. Following the footsteps of predecessors, another Sri Lankan conglomerate, CAL, entered the merchant banking and brokerage market. In the fintech arena, Softbank entered the market with a USD250 million investment in fintech unicorn Bkash.

Infrastructure & Energy

Surge was led by renewables, with investor interest driven by the demand potential of renewable energy, low production costs and encouraging policies and financial incentives, such as the government’s production-linked incentives and a plan to produce 10% of power from renewables by 2041. Also, investors like General Electric continued to procure significant stakes in local power plants. On the other hand, Chinese investors have continued leading investments in the energy sector.

Start-Ups

Local start-ups continued to impress cross-border investors. ADB Venture invested in Tiger New Energy to expand its countrywide network of battery-swapping stations. Digital start-ups such as Loop Freight, Pathao, Paperfly and others have raised significant FDIs from venture capital and angel investors.

Manufacturing

There has been an increasing trend of acquisitions of manufacturing plants in Bangladesh, led by foreign investors acquiring significant stakes in manufacturing entities such as garments, accessories, footwear, yarn, etc. Japan Tobacco acquired Akij’s business for USD1.47 billion. There have also been extended activities in the chemical and cement manufacturing sectors.

Technology

There has also been a surge in the acquisition of licensed telecom operators, especially in the areas of gateway operators. In addition to renewed interest in datacentres, a number of deals are in the pipeline and several demergers of data centres for potential joint collaboration with cross-border players are under consideration.

Acquisition of Shares

An acquisition of shares can take place either by purchasing existing equity in the target from another shareholder or by subscribing to fresh equity in a company.

For publicly listed companies, placement of shares by fresh issue (known as PIPE – Private Investment in Public Equity) is subject to regulatory approval. Nonetheless, shares issued to existing shareholders may also be bought either:

• through the stock exchange at market price;
• through the stock exchange at a negotiated price; or
• out of the stock exchange for non-cash considerations.

Merger (Amalgamation)

The target merges into the acquiring entity under a court order and the target is then dissolved. All assets and liabilities of the target vest in the acquiring entity. The consideration is settled either in cash or by share swap. However, to be qualified as an amalgamation within the meaning of tax laws, the shareholders holding not less than 75% in value of the shares in the amalgamating company or companies (other than shares already held therein immediately before the merger by, or by a nominee for, the amalgamated company or its subsidiary) need to become shareholders of the amalgamated company;

Demerger

This structure is adopted to avoid the tax inefficiencies of an itemised sale of assets. The target’s undertaking or division is demerged from the target under a court order and then transferred to the buyer.

Asset/Liability Transfer (Itemised Sale of Assets and Liabilities)

Specific assets and liabilities are sold under a sale and purchase agreement with an itemised list of assets and liabilities to be transferred.

Asset Transfer (Sale as a Going Concern)

All assets and liabilities of an entity, a business division, or a plant are sold as a going concern under this structure. Similar to amalgamation, this may require approval from the court.

Joint Venture with Retained Control

In industries where foreign investment is capped at a prescribed threshold, foreign investors hold shares up to that limit while separately retaining contractual authority to nominate the majority of board members, thereby preserving effective control.

Bangladesh Competition Commission

The Competition Commission of Bangladesh, constituted under the Competition Act, 2012, is responsible for supervising M&A activity in Bangladesh. However, the provisions, including merger clearance, set out in the Competition Act are currently operating only in a reactive mode upon complaint from third parties, pending the incorporation of the underlying competition rules needed to impose proactive measures, such as merger filing.

Office of the Registrar of Joint Stock Companies & Firms

It regulates incorporation and all corporate governance requirements for incorporated companies in Bangladesh. In addition, it maintains a share register of incorporated companies in Bangladesh. Non-listed companies need to record any new allotment of shares by way of filing Form-XV. Change of any shareholder is recorded by way of filing Form-117 and a change in the director by way of filing Form-XII and the relevant consents.

Stock Exchanges

The two stock exchanges of Bangladesh, ie, the Dhaka and Chittagong Stock Exchanges, maintain trading platforms, issue trading rights entitlement certificates (brokerage licences) in accordance with BSEC rules and supervise certain corporate governance aspects of publicly listed companies. Issuers need to comply with the relevant rules to be listed on the corresponding exchange. In addition, in case of substantial acquisition of shares, those have been authorised to unfreeze relevant shares and/or give effect to such substantial acquisition as per BSEC (Substantial Acquisition of Shares and Takeovers) Rules, 2018, as long as such transfer does not result in reducing the shares held by the sponsors of the directors of the issuer below 30%.

Bangladesh Securities & Exchange Commission (BSEC)

It is the main regulator of publicly listed securities, including shares and other debt securities, with the power to enforce the underlying rules and regulations. Among its wider governance functions, it issues directives and rules on matters of public interest in the capital markets, grants licences to brokers, depositories and other market participants in accordance with the underlying regulations and approves initial public offerings and direct listings of securities and debt instruments by issuers. In the M&A landscape, approval from the BSEC is required to implement any deal that may result in reducing the shares held by the sponsors or directors of the issuer below 30%.

Bangladesh Bank

It supervises the foreign exchange-related aspects of M&A deals, such as the valuation of share transfer deals involving non-residents, repatriations and the operational aspects of cross-border investment in public securities, among others. In addition, companies need to keep it updated on foreign investment, debt and beneficiary-owner-related information by filing periodic reports. It also imposes clearance requirements from lender banks for a change in the board or shareholding of any director in a company.

Investment Authority

The authority within the jurisdiction of which an industry/establishment is established and/or registered may need clearance from such authority for a change in shareholding. If such a setup is not within the specialised zone authorities (such as the Bangladesh Economic Zone Authority, the Bangladesh Export Processing Zone Authority, the Hi Tech Park Authority, etc), then it is considered to be within the jurisdiction of the Bangladesh Investment Development Authority.

National Board of Revenue

It supervises tax-related aspects of M&A deals in Bangladesh and the implementation of double taxation avoidance treaties.

The Foreign Private Investment (Promotion and Protection) Act, 1980 grants protection to foreign investments in Bangladesh, including fair and equitable treatment, protection against discrimination, protection against unilateral changes that adversely alter operating conditions and protection against unlawful expropriation.

Private investment is allowed in all sectors except arms and ammunition and other defence equipment and machinery, forest plantation and mechanised extraction within the bounds of reserved forests, the production of nuclear energy and security printing. In addition, there are 17 controlled sectors that require prior clearance/permission from the respective line ministries/authorities (by way of public procurement, licensing or public-private partnership) as follows:

• fishing in the deep sea;
• bank/financial institutions in the private sector;
• insurance companies in the private sector;
• the generation, supply and distribution of power in the private sector;
• the exploration, extraction and supply of natural gas/oil;
• the exploration, extraction and supply of coal;
• the exploration, extraction and supply of other mineral resources;
• large-scale infrastructure projects (eg, flyover, elevated expressway, monorail, economic zone, inland container depot/container freight station);
• crude oil refinery (recycling/refining of lube oil used as fuel);
• medium and large industries using natural gas/condensate and other minerals as raw material;
• telecommunications service (mobile/cellular and land phone);
• satellite channels;
• cargo/passenger aviation;
• sea-bound ship transport;
• seaports/deep seaports;
• VOIP/IP telephone; and
• industries using heavy minerals accumulated from sea beaches.

While discrimination against foreign investors is not widespread, the government frequently promotes local industries and some discriminatory policies and regulations exist. For example, the government requires a majority or more than majority local ownership of new shipping, logistics, freight forwarding, banking and insurance companies, etc, albeit with exemptions for existing foreign-owned firms.

As per the Competition Act, 2012, any combination (including any M&A transaction) that would have an adverse effect on competition is prohibited. Bangladesh Competition Commission (BCC) has wide powers, among other things, to investigate any combination, either on its own motion or following a complaint from any third party. Statutory and regulatory authorities can seek a reference from the commission to determine whether a proposed combination is anti-competitive. The commission will issue its decision within 60 days.

The commission has not yet defined the meaning of “significant adverse effect” or established the relevant thresholds for mandatory approval. Pending the introduction of such rules, the commission retains broad discretion to assess the competitive effects of any combination. If, during or after completion of an investigation, the respondent, the commission and the complainant agree on the terms of an appropriate order, the commission will confirm the agreement as a consent order, subject to:

• publication of the order in the Official Gazette within seven working days for comments within a period of 30 days;
• the commission receiving, reviewing and hearing representations from third parties with a material interest;
• the consent order being made as agreed and proposed with or without changes; and
• the commission’s refusal to issue the order if additional information warrants this.

On a separate note, only in the telecom sector has significant market power been determined to have 40% or more subscriber, revenue or spectrum shares.

The primary legislation governing employment in Bangladesh is the Labour Act 2006 (Labour Act), supplemented by the Bangladesh Labour Rules 2015 (Labour Rules), together with the Labour Regulations. A “worker” is defined as any person, including an apprentice, employed in any establishment or industry (either directly or through a contractor) to do any skilled, unskilled, manual, technical, trade, promotional or clerical work, for hire or reward. Employees in administrative, managerial or supervisory positions are considered “non-workers” and their employment is subject to mutual agreement.

There are no statutorily prescribed consultation or consent requirements under the Bangladesh Labour Regulations for undertaking a restructure, such as an M&A deal, unless so specified in any collective agreement. However, from a local perspective, employees generally seek provisioning of their accrued benefits before such a change in control.

When an amalgamation or transfer of undertaking takes place as per Section 229 of the Companies Act, 1994, where the whole or any part of the undertaking and the property of any company concerned is to be transferred to another company, liabilities are also transferred with such transfer and generally include employees unless otherwise agreed among the parties and so ordered by the court. However, even in such a transfer of undertaking, employees are not protected against dismissal unless otherwise agreed or ordered by the court. For workers, the Labour Act has established two forms of redundancy as follows:

• retrenchment – means the termination of the services of workers by the employer on the grounds of redundancy; and
• lay-off – means the failure, refusal or inability of an employer to give employment to a worker on account of a shortage of coal, power or raw material or the accumulation of stock or the breakdown of machinery.

If, by way of transfer, the workplace of an employee shifts within 40 km of the employee’s former usual workplace, the employment contract may be terminated and the employee shall be entitled to benefits as would have been payable for the employee’s voluntary resignation. If the workplace is more than 40 km away, the employment contract may be terminated and the employee shall be entitled to benefits as applicable to a retrenched employee.

In a business transfer by way of an itemised sale of assets and liabilities, where the transferor and transferee retain their identities, there is no automatic transfer of employment. Employee consent is required for a transfer between employers. As a result, the transfer of employment can be implemented through one of the following methods:

• a joint letter issued by both the transferor company and transferee company to the employees, informing them of the transfer of their employment following the Transfer Conditions, which include provisions confirming termination by the transferor, reemployment by the transferee and segregation of severance benefits or carry forwards; or
• voluntary resignation by each employee from the transferor company and simultaneous engagement by the transferee company.

So far, the regulators have not established any such national security review of acquisitions in Bangladesh.

After the Robi-Airtel merger (Robi Axiata Limited and another v Registrar, Joint Stock Companies and Firms and another, 22 BLC (2017) 337) case, which revisited the basic framework for amalgamation (merger) under Sections 228 and 229 of the Companies Act, 1994, there has been no noteworthy court decision. Other legal developments include:

Offshore Indirect Transfer (OIT) Rules

Income Tax Act 2023 (repealed Income Tax Ordinance, 1984) imposes 15% capital gain tax on the acquisition/transfer of securities, stocks and assets. In response to the divestment of Warid’s telecom assets to Airtel, the OIT Rules of 2022 have been enacted to outline the methods for computing tax liabilities arising from the offshore indirect transfer of any asset in connection with Bangladesh.

Prohibition on Insider Trading Revisited

BSEC (Prohibition on Insider Trading) Rules, 2022, have been enacted to replace their predecessor. The new law obligates companies to develop their own policy to restrict insider trading and extends the scope of matters to be treated as price-sensitive/material information, as outlined in 5.1 Requirement to Disclose a Deal.

Disclosure of Beneficial Ownership

The Bangladesh Financial Intelligence Unit of the central bank has enacted Guidelines for Beneficial Owners, making it mandatory for any individual beneficiary owner to declare their identity once such a person becomes a beneficiary owner of 20% or more of the shares or control over any business in Bangladesh.

New Tax Law

The Income Tax Act, 2023, repealed the Income Tax Ordinance, 1984 and additionally outlines the qualifications for demerger deals to be tax-exempt. The threshold of shareholders of the amalgamating company holding shares in the amalgamated company has been reduced to 75% from 90% for such amalgamation to be a tax-exempt amalgamation.

Restructure of Transaction Costs

Stamp duty payable on a share purchase agreement and a share transfer instrument (for a non-listed company) remains the same at 0.2% and 1.5% of the consideration, respectively. However, registration fees and stamp duties over the transfer of real properties have both been reduced to 1% and 1.5%, respectively.

There have been no significant changes to takeover law after the enactment of the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules, 2018.

Reportedly, the Bangladesh Competition Commission has prepared a draft of the Bangladesh Competition Commission Combination Rules, 2023, but it has yet to be circulated for public consultation.

For non-listed companies, the acquirer must negotiate directly with the selling shareholders. For listed companies, agreements to purchase sponsors’ shares prior to launching a public offer are a common strategy, given that many listed companies are owned by sponsor groups that also control the board of directors.

Under the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules, 2018, the acquisition of shares corresponding to 10% or more of the issuer’s total voting shares is considered a “substantial acquisition” of shares. The following activities require disclosure in the stock exchange’s online news circular:

• any buy order or transaction that would result in this 10% threshold being met or exceeded; or
• once an initial shareholding corresponding to a 10% or more of the voting rights in the issuer has been achieved, any further acquisition of shares.

For private companies, it is possible to contractually agree or incorporate into its articles that the selling shareholder must first make an offer to the existing shareholders on identical terms to those being offered to the proposed acquirer. This is not possible for public limited companies, listed or non-listed.

It is not possible to introduce different rules, such as disclosure thresholds, in the articles of incorporation or bylaws; the disclosure requirement stated in 4.2 Material Shareholding Disclosure Threshold must be adhered to. The major hurdle to stakebuilding is that approval from BSEC is needed to implement any deal, which may result in reducing the shares held by the sponsors of the directors of the issuer below 30% or the acquisition of locked-in shares, as required for post-initial public offer (IPO) lock-in.

In Bangladesh, derivatives and hedging are currently allowed only for genuine business needs and cannot be used for speculative purposes. However, only banks can participate in derivative transactions to profit from such business. Such products include raw material and commodity derivatives, foreign currency options, forward rate agreements and interest rate swaps. Private companies must avail these facilities through a scheduled bank licensed by the Central Bank of Bangladesh.

Although the Bangladesh Securities and Exchange Commission (Exchange Traded Derivatives) Rules, 2019, have already been enacted, trading of derivatives through stock exchanges has not yet been formalised in Bangladesh. Short sales and/or blank sales effected to manipulate the price of listed securities or derivative contracts are also prohibited.

Banks are required to submit prescribed reports and related statements to the central bank in respect of their and their clients’ derivative transactions from time to time, including disclosing the risks, losses and profit variations of their derivative business, as well as any extraordinary situations, in accordance with the financial disclosure requirements in force.

Currently, there is no express requirement that shareholders disclose their intentions regarding control of the company, but the purpose of the acquisition must be disclosed in the public announcement if it triggers substantial acquisition rules.

Non-listed companies are not subject to disclosure requirements except under antitrust laws or in a court/tribunal-approved scheme of arrangement/merger/amalgamation, in which case such disclosures become mandatory to the tribunal and to members and creditors for the approval of such scheme.

For listed companies, the disclosure mandate is based on the principle of materiality as outlined in the BSEC (Prohibition of Insider Trading) Rules, 2022. The company’s board is required to frame a policy for determining materiality in accordance with the criteria and guidelines prescribed by the BSEC and to make it available online. In addition, the following events are required to be disclosed by the company within 2 hours from the occurrence of the event:

• price sensitive information:
1. report in respect of the financial position, financial performance or any basic information in respect thereof;
2. information relating to dividends and corporate declarations;
3. information relating to changes in corporate structure (namely, merger, demerger, acquisition, disposal, conversion or transfer);
4. information regarding changes in capital structure;
5. information regarding expansion of business activities, changes, etc;
6. any other rules or regulations, orders, instructions or circular/notification prescribed as price sensitive information (PSI) made, approved, or issued by the Commission;
7. any other information determined by the Commission by notification published in the Official Gazette from time to time;
8. disclosure of modification opinion and emphasis of matters (if any) in the auditor’s report of audited financial statements shall be disseminated as PSI; and
9. credit rating result shall be disseminated as PSI; and
• material information:
1. factors related to changes in financial conditions;
2. information relating to the corporate declaration; and
3. information regarding changes in corporate structure, such as:
1. acquisition or disposal of any assets of 5% or more of the existing assets;
2. merger with another company or substantial acquisition of shares of any company, or acquisition of any company, etc;
3. demerger of any unit of the company;
4. conversion or winding up of any unit of the company;
5. changes of corporate activities through capital reorganisation, merger, or demerger;
6. proposal to take over the authority of any company or proposal for the acquisition of internal services;
7. change of ownership, which may affect the control of the company; and
8. change of name or address, etc; and
4. information regarding changes in capital structure, such as:
1. any decision relating to private or public rights, offer of securities, or changes in its capital structure;
2. systematic repurchase or redemption of securities;
3. any decision relating to consolidation of shares, exchange of shares, conversion of any security into equity security or conversion of debentures into shares; and
4. significant changes relating to the rights of security-holders, etc.

In line with the above requirements outlined in 5.1 Requirement to Disclose a Deal, market practice on the timing of disclosures conforms with the legal requirements. Companies disclose the deal upon entering into binding definitive agreements.

Purchasers generally engage separate teams to perform legal, business and financial due diligence on the target. Legal due diligence in general covers the following aspects:

• share capital and corporate governance;
• indebtedness and financial arrangements;
• regulatory matters and compliance with public listing regulations (for listed companies);
• licenses and authorisations from the government ;
• material contracts;
• tax;
• IP;
• employment and pensions;
• real estate;
• environment;
• information technology and data management ;
• litigation and disputes; and
• insurance.

Exclusivity is usually demanded during negotiations of the term sheet through closing. Unless multiple bidders are involved, parties generally agree to exclusivity for an agreed time. In general, once definitive agreements are executed, parties to such agreements undertake not to:

• take any action other than in the ordinary course of business;
• deal in any asset or contract beyond a pre-agreed pecuniary threshold
• effect any substantial change in the financials of the company;
• do anything that would have a material adverse effect on the business of the company; or
• act in derogation of the obligations undertaken under the definitive agreements.

For M&A transactions and tenders involving non-listed companies, as well as negotiated deals involving listed companies, it is standard practice for parties to execute a definitive agreement setting out the agreed terms and conditions. Such agreements, however, are not applicable to purely open public offers.

Non-Listed Companies

The time required to acquire or sell a business depends on the type of transaction (an acquisition of shares or an amalgamation), the scope of due diligence, negotiations and regulatory approvals (industry-specific and/or competition-related).

Listed Companies

With regard to listed companies, with the generic timeline as described below, a takeover bid may take twelve to twenty weeks from the date of definitive agreements if such acquisition deals with Post IPO locked shares belonging to sponsors or institutional investors or minimum maintenance of 30% shareholding by sponsors and directors, as express BSEC approval is required in such cases.

Purchase through the exchange at market price

The typical timetable for an offer is one to two weeks, as follows:

• once an irrevocable offer has been filed, together with the relevant documents, with a corresponding stockbroker or merchant bank, this notice will be circulated immediately; and
• the corresponding stockbroker or merchant bank will complete the purchase, per the offer and report to the regulator within a week of completion. The offer may be cancelled if there is no seller for the shares.

Purchase through the exchange at negotiated price

The typical timetable of an offer is twelve weeks, as follows:

• a detailed sale and purchase agreement is executed between the seller and the purchaser;
• the seller gives an irrevocable sell order to the corresponding broker or merchant bank;
• the broker freezes the shares and sends a confirmatory notice to the exchange;
• the purchaser deposits 20% of the purchase price at the exchange by cheque (for non-cash consideration);
• the exchange immediately circulates the news;
• once the news has been circulated, the broker will complete the transaction;
• on completion, the purchaser shall report to the regulator within a week; and
• if applicable, upon completion, the cheque as stated above will be returned to the purchaser.

BSEC has discontinued mandatory takeovers under its latest enactment of the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules, 2018 and, accordingly, there is no mandatory offer threshold at present.

Non-Listed Companies

There are no restrictions on consideration for general acquisitions and the issue of shares of a target. However, all transfers involving foreign shareholders must take place at a fair price under valuation by a chartered accountant/merchant bank. For foreign sellers, up to BDT10 million in sale proceeds may be repatriated without valuation and up to BDT100 million in sale proceeds may be repatriated by the bank based on valuation by a chartered accountant/merchant bank, without central bank approval. Prior approval must be sought from the central bank for repatriable sale proceeds over BDT100 million. In other cases involving local shareholder to foreign buyer transfer and foreign seller to foreign buyer transfer, a simple post-closing notification to the central bank, along with the valuation report, shall suffice.

The fair market valuation must be conducted by an accredited chartered accountant or a licensed bank, following an approximate mix of the following:

• the asset-based approach;
• the market value approach and
• the income approach.

However, such valuation is exempt from repatriation of sale proceeds if the fair value of the shares is determined using the net asset value (NAV) approach, based on the latest audited financial statements and tax returns, without any consideration of intangible assets. Under such circumstances, an undertaking is issued by the target specifying that the impairment of assets has been adjusted in arriving at the NAV and the remitting bank is satisfied that there is no abnormal growth in total assets in any of the last three years, particularly in the last year.

Listed Companies

With regard to listed companies, consideration is based on the following.

Purchase through exchange at market price

Consideration is simply based on the current market price.

Purchase through exchange at negotiated price

The regulation has not imposed any valuation method for this purpose. However, in the case of the acquisition of shares subject to BSEC approval, as stated in 4.3 Hurdles to Stakebuilding, BSEC may seek the basis of the consideration and may require a valuation certificate.

Non-Listed Companies:

There are no conditions that are mandated by regulations. The main substantive clauses in an acquisition agreement include:

• purchase considerations and modality of payment;
• interim adjustment, hold-back and escrow arrangement;
• conditions precedent to the acquisition;
• conditions subsequent to the acquisition, including perfection;
• closing and closing-related actions;
• post-closing obligations;
• representations, warranties and covenants;
• indemnities, particularly tax indemnities;
• governing law and dispute resolution process;
• non-compete restrictions; and
• payment of costs and expenses.

Listed Companies

For public takeover offers, the only conditions mandated by regulation are:

• disclosure by way of public disclosure through the exchange of the intention to purchase, which would include conditions of the purchase offer; and
• irrevocable instruction to the broker or merchant bank to acquire shares up to the target limit at market price.

Common conditions for a takeover offer include a minimum level of acceptance. The acquirer is bound to disclose all such conditions in the detailed public statement and the letter of offer for a takeover offer.

There are no minimum acceptance conditions mandated by regulations. An open offer should be for at least 26% of the target company, ensuring that the acquirer acquires a simple majority if all shareholders who are made an offer accept it.

However, in the case of a voluntary offer for a listed company, the acquirer would be required to acquire at least the number of shares that would entitle them to exercise 10% of the voting rights in the target company.

Small-scale transactions are primarily financed by equity, while larger transactions are financed by a mix of debt and equity.

Non-Listed Companies

Although not mandatory, a business combination may be conditional on the bidder obtaining financing, provided the parties agree to such an arrangement.

Listed Companies

There is no obligation for the acquirer to obtain financing for the public offer (at market price or through a negotiated deal); however, the acquirer must ensure that firm financial arrangements for the fulfilment of the obligations under the public offer are in place and suitable disclosures in this regard have been made in the public announcement. The broker firm is also responsible for ensuring that adequate funds have been provisioned.

In the case of the acquisition of shares off the exchange for non-cash consideration, such as a share swap, a valuation of the assets used as consideration must be conducted and 20% of the consideration must be deposited with the stock exchange as security, to be returned upon completion.

However, for schemes requiring express approval from BSEC, it is possible to propose a scheme conditional on the bidder obtaining financing by a predefined time and, if approved by BSEC, the public offer may be floated once that condition is fulfilled. The same approach is taken for the takeover of distressed companies as outlined in 9.1 Hostile Tender Offers.

Non-solicitation and confidentiality clauses, along with standstill provisions, are commonly employed as deal security measures in acquisitions in Bangladesh. “Material adverse effect” clauses are also widely adopted, enabling a party to walk away under specified circumstances. Support clauses that require seller and/or target company assistance with regulatory approvals are also very common.

Break fees are not common practice, though in some cases, a break cost payment obligation is incorporated into the sale and purchase agreement. Generally, when a sale and purchase agreement is short of closing, the defaulting party is required to pay the non-defaulting party the break cost. In the case of the purchase of shares from other shareholders, the seller and/or the buyer assumes such liability. In the case of an asset sale and a share issue, the target and/or the buyer assumes such liability. However, as "break cost" as a term is not defined in the foreign exchange regulations, it is difficult to make such arrangements for cross-border deals in practice. In such cases, the parties often agree to pay accrued management fees in the form of consultancy or legal fees.

Representation and Warranties (R&W) insurance as security is also gaining popularity in large-scale transactions, where either the seller procures it or the parties share the cost.

In Bangladesh, proportional representation on the board is not mandated. For listed companies, the BSEC has stipulated the minimum and maximum number of board members, as well as the required number of independent directors. Whereas voting is the generic tool for members to appoint/remove directors, entitlement to extra representation on the board can also be granted under a contractual agreement.

Acquirers of majority shareholdings are also well placed to appoint their own nominee as chief executive officer (who is also a deemed director). Whereas, under local regulations, the right to appoint the majority of the board without a majority shareholding is not prohibited and does not need approval from BSEC, as long as other requirements, such as the following, are met, this may be considered a change in control subject to relevant competition regulations:

• mandated board composition;
• mandatory 2% shareholding by each non-independent director (or its nominee); or
• composite 30% shareholding by sponsors and directors.

Shareholders of a company are allowed to be represented by a proxy in any general meeting of members. Companies are also allowed to hold shareholder meetings by audiovisual means.

Non-Listed Companies

In an acquisition, there is no way to acquire the remaining shares belonging to dissenting shareholders unless there are drag-along or call option agreements among the shareholders.

In the event of a merger after the court approves the scheme and at least 75% of the shareholders approve, the transferee company may give 21 days’ notice to acquire the shares of dissenting shareholders. Unless the dissenting shareholders apply otherwise to the court on the grounds that their individual rights have been prejudiced, within 30 days from receipt of the notice, the transferee company can acquire the shares.

Listed Companies

There are no provisions on the squeeze-out of any remaining minority shareholders and there is no possibility for minority shareholders to "sell out" in general. However, according to listing regulations of the current active stock exchanges, once a consortium ends up owning 90% of the shares in the target, it can forcefully purchase the remaining 10% at the price below (whichever is highest):

• the last trade price;
• the weighted average price over the last six months; or
• NAV per share, as per the latest financial statements.

Non-Listed Companies

There are no restrictions on a purchasing company obtaining irrevocable commitments to tender or vote from the principal shareholders of the non-listed target companies.

Listed Companies

Although such commitments are not common for listed companies, as regulators do not view them favourably, in a negotiated deal (whether on or off the exchange), parties may negotiate to have such provisions incorporated into the share purchase agreement before a public offer/notice is floated. This may include arrangements regarding board composition within the BSEC-provided framework, as well as certain reserve matters critical to the business and the composition of the company.

If an acquisition of shares in a publicly listed company triggers the 10% threshold under the Bangladesh Securities and Exchange Commission (Substantial Acquisition of Shares and Takeovers) Rules, 2018, as outlined in 4.2 Material Shareholding Disclosure Threshold, the public announcement of an open offer must be made before acquiring any further shares in the company. In the event of a negotiated deal, such an announcement must be made within the following day, as soon as a definitive agreement is entered into with any sponsor or other shareholder, before acquiring any further shares in the company.

Such a public announcement must be made by sharing information in the prescribed format with the relevant stock exchanges, which then publicise it instantly upon receipt. The announcement is also required to be sent to BSEC.

The announcement, as stated in 7.1 Making a Bid Public, is required to contain the following:

• target and targeted number of shares;
• purpose, conditions and proposed value of shares;
• detailed identification of the purchaser, including nationality;
• relationship with sponsors, directors and other significant shareholders and with the capitalisation of the company;
• details of any memorandum of understanding or agreement already executed and terms contained therein in connection with the purchase of shares;
• where the purchaser is a sponsor, director, placement holder, or other significant shareholder, a declaration must be provided confirming compliance with applicable requirements, including the obligation to maintain a minimum 30% aggregate shareholding by sponsors and directors;
• acquisition offer date and the date until which the offer is valid;
• settlement process, including date, time and method;
• in case of non-cash settlement, the valuation consultant details, including experience, date and method;
• planned share acquisition proportion from each class of shareholders, such as sponsors, directors, placement holders, or other significant shareholders or from the public;
• declaration as to approval from the board of the company, if applicable; and
• any terms pertaining to other laws, such as foreign exchange regulations.

Another declaration from the broker is required to confirm the funds’ availability. These are disclosed publicly through the exchange.

As of now, bidders are not required to produce financial statements unless so agreed contractually.

Financial statements in Bangladesh need to be prepared in accordance with the Bangladesh Financial Reporting Standards (BFRS), which are substantially based on IFRS.

While full disclosure of transaction documents is not required, the details of any executed memorandum of understanding or agreement, including the terms contained therein relating to the purchase of the target shares, must be disclosed as part of the public announcement, as outlined in 7.1 Making a Bid Public.

The directors are responsible for the duties and care of the company. The general doctrine under company law and in Bangladesh is that a director has a fiduciary duty to act in good faith in the best interest of the company and for the benefit of its shareholders as a whole. In addition to acting in good faith in the best interests of the company, the directors also need to act in the interests of the company’s employees and the wider community, considering areas such as the environment, financial dealings, etc.

As to a acquisition or business combination, there is no express obligation imposed, but in line with the above, in general, the board of directors of the target company are required to ensure the running 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 any contract which such directors reasonably believe that the company would be able to fulfil.

Directors of publicly listed target companies who may be related to the acquirer (or its persons acting in concert) are precluded from being involved or voting in relation to the acquirer’s offer.

In Bangladesh, boards of directors do not commonly establish special or ad hoc committees for business acquisitions or combinations, as this is not mandated by local regulations. However, listed companies are obliged to constitute certain special committees of the board with certain duties prescribed by BSEC regulations.

Bangladeshi law mandates that directors disclose their interests in other entities before any decision-making in meetings regarding those entities. For listed companies and non-listed companies which are public limited companies, directors are required to ensure that their interests do not conflict with those of the company and any interested director is not allowed to participate in meetings or vote on matters in which they have an interest.

The business judgment rule is not a recognised concept in Bangladesh.

Whereas there is no specific mechanism requiring a board of directors to form a judgment on a merger/acquisition or takeover in the case of non-listed companies, unless otherwise agreed contractually among the shareholders, directors generally reserve the right to reject any share transfer proposal in private companies. Given that directors are nominated in most cases in non-listed companies, such takeover proposals are ultimately decided by shareholder consensus.

Whereas, for listed companies, the directors may make recommendations only, the board cannot implement any of the commonly used takeover avoidance mechanisms without the shareholders’ consent. In Bangladesh, the board is ultimately answerable to the shareholders and a sale or merger needs to be approved by the shareholders of the company.

Generally, licensed merchant banks in Bangladesh are engaged to validate the structure and feasibility of an acquisition or merger, or to attend to taking matters forward with the BSEC in relevant instances and, in the case of non-listed companies, to the future prospects of public listing and return.  Other independent advice procured from outside includes valuation certificates from independent auditors, due diligence reports and opinions from legal counsel on compliance with applicable laws and due issuance of shares and tax advice from tax advisors.

As mentioned in 8.2 Special or Ad Hoc Committees, 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 director is not allowed to participate in meetings or vote on matters in which they have an interest.

The BSEC (Prohibition of Insider Trading) Rules of 2022 impose stringent disclosure rules for insiders, including directors, managers, shareholders, or advisers, to address concerns about conflicts of interest and prescribe the framing of internal policies, limitations on trading and disclosures on conflicts of interest.

Bangladeshi regulations do not expressly recognise the term “hostile offer”, which is understood to mean an unsolicited bid made without the agreement of the persons in control of the target company. Hostile tender offers are not prohibited, but they are also 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, another mechanism is prescribed for the acquisition of listed distressed businesses. Distressed businesses have been defined as those companies which:

• are as financially weak;
• have a negative net worth;
• share price below face value for a continuous three years;
• have not paid any dividend for five years; or
• any other company so listed by BSEC.

For such a bailout takeover mandated for the acquisition of listed distressed businesses, shares may be purchased in cash, swapped, or a mix of both.

The bailout scheme was publicly announced in a newspaper by a financier with provisions for a future corporate governance framework. Thereafter, the financier (or the lead institution in the case of a consortium) needs to evaluate share purchase tenders to select an appropriate offer or, in the case of purchase from existing shareholders, negotiate a purchase price to implement the scheme.

A bail-out takeover may be exempted from certain substantial share acquisition requirements, such as the requirement to purchase shares through an exchange for cash.

Whereas there may be limited defences available to non-listed companies (as stated in 8.3 Business Judgement Rule), none are available to listed companies. As soon as a consortium acquires a 75% or more shareholding in the target, it can control the board.

As stated in 9.2 Directors’ Use of Defensive Measures, there are no common defensive measures available to the board of a listed company. The only way could be to convince the sponsors and directors with frozen shares not to sell their shares and find a friendly new investor.

As stated in 9.3 Common Defensive Measures, available defensive measures are very limited. Nonetheless, as per 8.1 Principal Directors’ Duties, the board of directors of the target company is required to ensure the running of the business in its ordinary course and that there is no disposal 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 any contract which such directors reasonably believe that the company would not be able to fulfil.

As stated in 9.2 Directors’ Use of Defensive Measures, whereas for non-listed private companies, directors may hold such a right unless otherwise pre-agreed by the shareholders, there is no such defensive measure available to the board of a listed company.

In general, litigation is not very common among parties in connection with M&A deals in Bangladesh. However, there have been frequent actions brought by employees in connection with M&A deals announced for the provisioning of employment-related benefits to which such employees are entitled.

At the deal-making stage, term sheets are typically 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 Frequency of Litigation, are generally brought once binding agreements are executed, but they are instituted before closing.

There are instances where acquirers discover undisclosed liabilities, such as tax arrears, regarding the target after the acquisition. It is very common to include arbitration clauses in deal documents and the parties present their disputes before selected arbitration fora rather than litigate in court.

Broken deal disputes are very uncommon in Bangladesh, as parties generally agree that the agreement shall terminate if the condition precedents are not satisfied before completion or a long stop date.

Shareholder activism in Bangladesh is not as important a factor for listed companies as it is for non-listed companies. Most cases of activism arise when the majority shareholders proceed with a deal that is unfairly prejudicial to the minority shareholders.

Shareholders have the following protection under the Companies Act of Bangladesh.

• It provides for the institution of class action suits (by at least 10% of the shareholders in that class) against any mismanagement or misconduct in the affairs of a company.
• If the affairs of a company are being conducted in a manner that is prejudicial to the public interest or the interest of any member or depositor of the company, according to the opinion of 10% shareholders
• If any person or group of persons are affected by any misleading statement or the inclusion or omission of any matter in the prospectus
• In case of an approved (by 75% of the ) restructure (including merger), if there is a 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 divestment of shares against appropriate compensation.

Activism is mostly directed toward better governance, positive outcomes, improved company performance, addressing inefficiencies and increasing minority representation on the board. However, in connection with M&A deals, the views of activist shareholders depend on whether there has been prejudicial treatment of minority shareholders. However, in most cases, the end result is divestment of shares against appropriate compensation.

On the other hand, when shareholder activism is met with a deadlock with management or the sponsors, M&A becomes an option to resolve by way of divestment, keeping the company in operation.

Interference with completion by shareholder activists is very uncommon in Bangladesh.