REPATRIATION, WINDING UP, INSOLVENCY AND BANKRUPTCY

What is the process for repatriation of dividends and other income to foreign shareholders?

Full repatriation is allowed for capital invested in Bangladesh from foreign sources. Similarly, profits and dividends accruing to foreign investment can be transferred in full.

Profits:

Branches of foreign firms, companies incorporated in Bangladesh and having foreign investment including foreign banks, insurance companies, are free to remit post-tax profits to their head offices through an authorised dealer. However, branch offices other than banks and insurance companies need permission from BIDA and the Bangladesh Bank for remaining profit.

Dividend:

Remittance of dividend income to non-residents in respect of their investments in Bangladesh can be made through an authorised dealer. The remittable dividend is permissible to be credited to foreign currency accounts maintained by non-resident shareholders in Bangladesh as per FE Circular No. 29 of Bangladesh Bank, dated 21 July 2020. The investors can invest balances in their FC accounts for purchasing securities or can remit it.

Remittance of royalty and technical assistance fees:

Industrial enterprises may enter into agreements with entities outside the country about payment of royalty, technical know-how / technical assistance fees if the total fees and other expenses do not exceed:

a.              6% of the previous year’s sales as declared in the tax return.

b.              6% of the cost of imported machinery in case of new projects.

These agreements must be registered with BIDA. Agreements that do not conform to the above guidelines will require prior permission of BIDA.

Are there any incentives provided to the foreign shareholders in case of reinvestment?

When foreign investors reinvest their dividends or retained earnings, those are treated as new investments.

Which act of the parliament provides the law for bankruptcy and are there easy exit schemes for dormant companies?

The law providing for bankruptcy is the Bankruptcy Act, 1997. Dormant companies may opt for voluntary winding or winding up by court order in accordance with the relevant provisions of the Companies Act.

What is the process for repatriation of residual money to foreign shareholders in case of voluntary or involuntary winding up of a company?

To remit residual money payable to foreign shareholders by the court or subject to supervision of the court, the authorised dealer must submit an application to the Foreign Exchange Investment Department (“FEID”) of the Bangladesh Bank. The application must contain a relevant court order, a certificate issued by liquidator / official receiver or such other eligible person and other necessary documents confirming that all liabilities in Bangladesh have been fully paid.

In case of voluntary winding up of a company, the authorised dealer shall also apply to FEID with all relevant documents to remit money abroad payable to foreign shareholders.