Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has relaxed foreign regulations on repatriation of sale proceeds of non-resident owned equity in unlisted companies purchased by residents to encourage foreign direct investment (FDI) in Bangladesh.
Under the relaxations, the Bangladesh Bank (BB) will accept fair value of the shares as on the date of sale based on appropriate combination of three valuation approaches – net asset value approach, market value approach and discounted cash flow approach – instead of earlier only net asset value approach depending on the nature of the company.
“This is an important change which will contribute to a rise in foreign investment via the private equity channel. This is part of the process of prudently liberalizing our foreign exchange regime and the access to equity capital that this will facilitate will lead to companies expanding and job creation” Chief Economist of the BB Hassan Zaman told BBN in Dhaka.
The BB issued a circular in this connection on Sunday and asked the commercial banks to follow the revised regulations on repatriation of sale proceeds of non-resident owned equity in unlisted companies purchased by residents properly.
Application for repatriation of sale proceeds of shares shall be submitted to Foreign Exchange Investment Department at head office of the BB with a valuation certificate of shares issued by a merchant banker licensed by the Bangladesh Securities Exchange Commission (BSEC) or a chartered accountant experienced in company valuation, according to the circular.
“Full set of audited financial statements of the company will have to be submitted to the BB along with application for remittance approval. If not fully satisfied about appropriateness of the valuation arrived at, the central bank of Bangladesh reserves the right to obtain second opinion from another qualified valuer of its choice,” it noted.
“We want to consider the market value approach and discounted cash flow approach along with currently used net asset value approach in determining the repatriable value of shares of an unlisted company,” another BB official said.
He also said the central bank expects that such relaxation on foreign exchange regulations will help to encourage FDI in the country.
BBN/SSR/AD-01Sept14-7:56 am (BST)