In a move to simplify foreign investment the Bangladesh Bank (BB) has relaxed regulations on issuing preference shares to Non-Resident Bangladeshis (NRBs).
Under new guidelines issued on Tuesday the local companies no longer require prior approval from the central bank to issue preference shares to overseas Bangladeshi investors, provided the dividend rate does not exceed 5 percent.
The central bank has also streamlined the process for redeeming preference shares and converting them into ordinary equity. Key changes outlined in the circular include:
Waived Approvals: Prior approval is no longer required to repatriate dividends or return invested capital to non-resident preference shareholders.
Simplified Reporting: Issuing companies must simply submit a post-issuance report to the central bank's Foreign Exchange Investment Department to maintain regulatory oversight.
Streamlined Banking Procedures: Authorised Dealer (AD) banks can now process eligible transactions directly without waiting for central bank clearances.
Preference shares offer fixed dividend rights and priority repayment of capital over ordinary shares. They may also carry options for redemption or conversion into ordinary shares after a specified period.
Financial experts expect the policy change to reduce administrative delays, lower transaction costs and broaden funding options for domestic companies by encouraging expatriate Bangladeshis to invest back home.
