Government paves way for Bangladeshi companies to invest abroad
January 27, 2022 6:34:46 p.m.
January 27, 2022 10:32:39 p.m.
The government has issued a Gazette Notification on Capital Transactions (Overseas Equity Investment) which will allow Bangladeshi companies to invest overseas.
Now, exporters will be able to invest overseas subject to the adequate status of their export retention quota (ERQ), according to the notification issued on Wednesday.
The Foreign Currency Investment Department of Bangladesh Bank (BB) has issued a guideline in this regard titled “Capital Account Trading (Overseas Equity Investment) Rules 2022” and sent it to all licensed foreign exchange brokers on January 26.
The directive states that on January 9, 2022, the Financial Institutions Division of the Department of Finance published the Capital Account Transactions (Overseas Equity Investment) Rules 2022 under Section 26 of the Act. of 1947 on exchange regulations.
Under the rules, exporters will be able to invest capital overseas from their retention quota accounts, UNB reports.
In this case, certain conditions have been set in the rules. The applicant may invest 20% of the organization’s average annual export earnings for five years or less than 25% of the net assets shown in the last audited annual financial report as overseas equity.
According to the rules, the applicant organization must apply to the BB through an authorized dealer bank accompanied by the required documents. A selection committee of 15 members was set up to review the applications.
The committee will be chaired by the Governor of Bangladesh Bank. The commission’s decision will be notified to the authorized dealer bank and a copy of the letter will be given to the requesting body.
Detailed guidelines on setting up businesses overseas are mentioned in the rules.
All debts of the foreign-formed company, such as profit or dividend, interest, proceeds from sale of shares, balance due on liquidation of investment, salary, royalty, technical knowledge fees, consulting fees, commission, etc. must be handed over to Bangladesh. within 30 days of receipt.
The rules state that the misuse of investments will be treated as money laundering under the Prevention of Money Laundering Act.