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Mergers and Acquisitions

  1. Merits and demerits of M&A in Bangladesh
  • Merits of M&A
  • One of the merits of M&A in Bangladesh is that the salary of employees is cheap so that the cost can be reduced. And besides that the motivation of labors is also very high. Furthermore, they can do work hard.
  • Bangladesh is the No.2 country in the world, which exports the apparel. And because of the mergers and acquisitions of many companies from different countries, Bangladesh became the No.2 country of exporting the apparel in the world. Recently, the production of material and thread has been possible in Bangladesh, thus Bangladesh has also become the attractive country for the industry of apparel.
  • Demerits of M&A
  • The demerit of M&A in Bangladesh is that the development of economic in Bangladesh is not enough. Therefore, the base of management of companies in Bangladesh is still weak. However, if the minute research can be conducted, it is possible to find out the promising companies.
  • Another demerit of M&A is in Bangladesh is that the infrastructure of companies is still weak and also districts or streets in Bangladesh are also not in good condition. So that in order to start the business after the acquisition of companies, there is a case that the companies need improve the environment of infrastructure of target corporations.
  1. Limitations of investment environment in Bangladesh

The basic law of foreign investment in Bangladesh is The Foreign Private Investment Act of 1980. The purpose of this act is to protect and promote the foreign private companies in Bangladesh. And the followings are also the laws related to foreign investment.

  • The Bangladesh Export Processing Zones Authority Act of 1980
  • The Companies Act 1994
  • The Bangladesh Private Export Processing Zones Act of 1996
  • The Industrial Policy 2009
  • The Import Policy Order 2009-2012
  • The Export Policy Order 2009-2012
  • The Tax Act of Income tax and VAT
  • The Guideline of Bangladesh Bank
  • Limitations depend on industry

Industries that need permission of government:

Fishing; bank and financial company; insurance; electricity; natural gas; oil; infrastructure of large scale; mineral recourses of large companies; telecommunication service; etc.

  • Limitations of investment proportion

The shipping business and the distributive trades are limited less than 49%.

  • Limitations of least capital

In general, there is no limitation of least capital, but for the financial industry it has the requirement of least capital. And if the capital of private company exceeds 400,000,000 BDT, it is required to change to be a public company. And it is also required to change within 6 months.

  • Limitations related land

It enables for foreign companies to own land in Bangladesh. However, for the industry of manufacturing for exporting, it is possible to obtain the right to use to pay fees. The following procedures to purchase land are necessary.

  • Purchase of revenue stamp equivalent to 5.0% of total amount of land
  • Payment of tax equivalent to 5.0% of total amount of land
  • A deposit of registration fee equivalent to 4.5% of total amount of land 
  1. Points of M&A in Bangladesh

When companies plan to do the M&A in Bangladesh, there are some points should be paid attention to.

① First, the problem of language should be noted. The usage of English is not common in Bangladesh so that when do the negotiation of M&A and business after acquisition, the language will be a problem. Thus, to arrange the position of interpreter is necessary.

② Because Bangladesh is the developing country, so the system of education is still not formed. As a result, in order to expand the business after acquisition, it is important to nurture human resources to do the field overseer. Since labors in Bangladesh have a high motivation to work so that if the education system can be formed and then the training will be gone well.

4. Processes of our services

Detection of risks of management and financial

Estimation of valuation of target corporations

Price negotiation with target corporations

Response to financial due diligence with a project team

To learn more about our incorporation assistance and a range of services related to M&A in Bangladesh, send us a message or call us at +81-3-5369-2930.