MOHAMMAD MUFAZZAL |
Aug 25, 2021 8:29:50 AM
Aug 25, 2021 8:32:51 AM
Local companies wishing to invest abroad will also need to obtain the approval of the securities regulator if the transactions are carried out in the form of a “capital issue”.
The third claim to authority over these offshore investments comes after reports that the Bangladesh Bank (BB) and the Bangladesh Investment Development Authority (BIDA) apply parallel drafting rules in this regard.
Bangladesh Securities and Exchange Commission (BSEC) officials say they also have authority over overseas equity investments as part of the development of separate guidelines by the central bank and the investment regulator.
“The issuance of capital can be executed in the form of cash, bonds or bonds. A company must obtain the consent of the BSEC if the equity investments relate to a“ issuance of capital ”,” he said. said Dr Shaikh Shamsuddin Ahmed, BSEC Commissioner. .
Asked whether companies that have so far made investments abroad have received BSEC’s consent, the commissioner said they did not know the exact type of investments made at the foreigner.
Pursuant to subsection (1) of Section 2A of the Securities and Exchange Ordinance 1969, no issuer or company incorporated in Bangladesh, except with the consent of the commission, may make an issue of capital outside of Bangladesh.
The term “issue of capital” means the issue of all securities, whether in cash or otherwise, defined by the ordinance.
“The commission may, on request, issue an order recognizing a capital increase carried out or to be done outside Bangladesh,” according to the BSEC order.
“While giving its consent under subsection (1), the commission does not fix the price of the issue.
BB and BIDA sources said their draft equity investment rules were in the final stages of drafting.
Asked about BSEC’s consent for equity investment, BIDA executive chairman Md Sirazul Islam said that existing laws, if any, regarding equity investment cannot be overridden by the rules in place. Classes.
“We have formulated detailed rules to facilitate and facilitate overseas equity investments by local companies,” Islam told FE.
He said companies should comply with the provision, if it is actually mentioned in existing laws, regarding obtaining consent from the securities regulator.
Preferring anonymity, a former BSEC commissioner said companies should obtain the consent of the securities regulator if equity investments are made in exchange for securities.
He said the gray area of investing in stocks is that sometimes companies deposit money in stocks and stocks are issued at a convenient time.
“The consent of the securities regulator is not required for investments in shares until the shares are issued against money deposited by a company,” said the commissioner.
BB and BIDA recently began discussions following their separate preparation on drafting guidelines for equity investments to be made outside the country by local businesses.
In this regard, BIDA Executive Chairman Islam said that they formulated the draft rules by discussing with relevant parties and organizations, including the central bank.
He said the central bank has a role to play in facilitating foreign exchange issues, and their draft guidelines have been formulated with this role in mind.
“Now it is up to the government to make the final decision,” said the executive chairman of BIDA.
Previously, nine companies had received central bank approval to make offshore investments.
The companies are Akij Jute Mills, MJL Bangladesh, Incepta Pharmaceuticals, DBL Group, Square Pharmaceuticals, Spectrum Engineering Consortium, ServicEngine, Beximco Pharmaceuticals, ACI HealthCare and Bangladesh Steel Re-Rolling Mills.
When asked, a central bank official said on condition of anonymity that a company was not required to obtain BSEC’s consent if it wished to invest in stocks overseas under the Regulation Act 1947 foreign exchange.
An official from Mr. JL Bangladesh said he had not obtained the consent of the securities regulator for overseas investment.
“Approval is not required from any regulator if a company makes investments abroad by submitting detailed information to the central bank,” the official said.
He said that previously a large number of companies had invested overseas without obtaining approval from any of the regulators.
“A one-stop-shop should be provided for companies wishing to invest abroad,” the official said.
Square Pharmaceuticals chief financial officer Mohammed Zahangir Alam said he had formed a subsidiary in Nairobi, Kenya, subject to shareholder approval at the annual general meeting.
“Square Pharmaceuticals has not raised capital from anyone issuing shares. In this case, BSEC’s consent is not required as our company has invested in its wholly-owned subsidiary,” Mr. Alam said.