Dhaka, Bangladesh (BBN)– The central bank has revised the sale process of foreigners’ equity investment in both public and private entities to attract more foreign direct investment (FDI) in Bangladesh.
Under the amendments, buyers and sellers will have to sign a memorandum of understanding (MoU) prior to seek approval from the Bangladesh Bank (BB) for transferring fund, according to officials.
“We’ve simplified and rationalised the sale process to attract foreign nationals to invest more in Bangladesh,” a senior official of the Bangladesh Bank (BB) told the BBN while explaining the main objective of the amendment.
Earlier foreign nationals sought fund transfer approval from the BB after completing executing their sale-purchase deal that had created difficulties in some cases for transferring the fund, the central banker explained.
“In case of transfer of shares from non-resident to resident in non-listed public limited companies and private limited companies, the MoU for share sale-purchase agreement between buyers and sellers needs to be concluded on receipt of approval from Bangladesh Bank regarding determination of the fair value of shares,” the central bank said in a 10-page notification, issued on Sunday.
Under the new revised procedures, the central 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 three valuation approaches or any of the suitable approaches depending on the nature of the company, having justified ground.
The valuation approaches are net asset value approach, market value approach and discounted cash flow approach.