One Belt One Road China Investment

Size, Population, location and key bordering jurisdictions

A major part of Bangladesh lies in the Ganges-Brahmaputra-Meghna Delta which is Asia’s largest and world’s most densely populated delta. The area of Bangladesh is 147,570 sq. km. Bangladesh lies in the north-eastern part of South Asia between 20 0 34’ and 26 0 38’ north latitude and 88 0 01’ and 92 0 41’ east longitude. The country is bordered by India on the west, north and north-east, Myanmar on the south-east and the Bay of Bengal on the south. The limits of territorial water area of Bangladesh are 12 nautical miles and the area of the high seas extending to 200 nautical miles measured from the base lines constitutes the economic zone of the country. (Bangladesh Bureau of Statistics, Statistical Year Book of Bangladesh 2017, 37th Edition).

The population of Bangladesh is about 160 million with a growth rate of 1.32% per annum (Bangladesh Investment Development Authority, Investment in Bangladesh Handbook and Guidelines).

Recent Economic progress and development expectations

The economy of Bangladesh has stayed relatively stable compared to its neighbouring countries and has performed well even after slowdown of global economic progress after the recession. The economic progress of Bangladesh has remained strong with a stable GDP growth rate of around 7% for a good number of years. The GDP growth rate targeted for the fiscal year (2017-18) is 7.40% which is expected to be surpassed according to current performance. According to “Vision 2021”, a strategic vision set by Government to reach the middle-income country status by 2021, the economic growth rate is to be increased to 10% by 2021. So, increasing the contribution of industrial sector in the GDP and ensuring higher investment are crucial for such rapid development.

Statistics on Foreign Investment

Recent years have seen a surge in the amount of foreign investment. In the last decade the net inflow of Foreign Direct Investment (FDI) increased from US$ 803.78 million for the fiscal year 2004-2005 to US$ 2454.81 million for the fiscal year 2016-2017, considering the gross inflow and disinvestment in all three components of FDI-equity, reinvested earnings and intra-company loans. Gross FDI inflows during the quarters July-September, October-December, January-March and April-June of the fiscal year 2016-17 were US$ 613.99 million, US$ 853.73 million, US$ 495.84 million, and US$ 987.09 million respectively. The Gross FDI inflow during the 2016-17 fiscal year was around US$ 3307 million while the size of disinvestment was around US$ 583 million. The highest amount of inflow was in the form of re-invested earnings which was around US$ 1253 million in comparison to disinvestment in this component being nil. The most lucrative sector for FDI seems to be the Manufacturing Sector where the gross inflow FDI was worth US$ 1236 million and disinvestment was only close to US$ 367 million. (Bangladesh Bank, Foreign Direct Investment in Bangladesh, Survey Report January-June 2017).

Brief Overview of the legal system 

Bangladesh is a common law country and the modern legal system of Bangladesh like the other countries of the Indian sub-continent has been inherited from British Colonialism. The structure and characterization of the Court remains quite similar to that period. Broadly there are two types of Courts in Bangladesh which can be sub-categorised as explained below:

a)     Criminal Courts

The Code of Criminal Procedure 1898 (“CrPC”), sets out the classes and types of Criminal Courts in Bangladesh. Besides the Supreme Court and the Courts constituted under any law for the time being in force, other than CrPC, there are two classes of Criminal Courts in Bangladesh, namely: -

i)  Courts of Sessions; and

ii) Courts of Magistrates.

There are two classes of Magistrates, namely: -

i) Judicial Magistrate; and

ii) Executive Magistrate.

There are four classes of judicial Magistrate, namely: -

i)  Chief Metropolitan Magistrate in Metropolitan Area and Chief Judicial Magistrate in other areas;

ii)  Magistrate of the first class, who in the Metropolitan area, is known as Metropolitan Magistrate;

iii) Magistrate of the second class; and

iv) Magistrate of the third class.

The Apex court is the Supreme Court of Bangladesh which consists of two divisions with the i) Appellate Division placed at the topmost position and then the ii) High Court Division following it.

b)     Civil Courts

Jurisdiction of the civil courts in Bangladesh may be broadly classified into three categories:-

i)      Territorial jurisdiction - Courts (except the Supreme Court of Bangladesh) have their own territorial limits beyond which they cannot exercise jurisdiction.

ii)    Pecuniary Jurisdiction- The pecuniary jurisdiction of the civil courts is set out in the Civil Courts Act 1887 (the “1887 Act”). Under the Code of Civil Procedure 1908, s 15 (“CPC”), every suit must be instituted in the Court of the lowest grade competent to try it.

iii)  Jurisdiction as to subject matter - Different courts have been empowered to decide different types of suits. Under the CPC s 9, the Courts shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.

Under the 1887 Act s 3, the following are the classes of Civil Courts (in descending order):-

(i)     the Court of the District Judge;

(ii)   the Court of the Additional District Judge;

(iii) the Court of the Joint District Judge;

(iv) the Court of the Senior Assistant Judge; and

(v)   the Court of the Assistant Judge.

In respect of subordination of the civil courts, the CPC s 3 provides as follows:

“For the purposes of this Code, the District Court is subordinate to the High Court Division, and every Civil Court of a grade inferior to that of a District Court and every Court of Small Causes is subordinate to the High Court Division and District Court.”

Thus, the District Court is subordinate to the Supreme Court of Bangladesh. The Supreme Court of Bangladesh has two Divisions, namely-

(i)    High Court Division; and

(ii)   Appellate Division.

The Appellate Division has jurisdiction to hear and determine appeals from judgments, decrees, orders or sentences of the High Court Division. It has rule making power for regulating the practice and procedure of each division and of any court subordinate to it. The High Court Division has both appellate as well as original jurisdiction. It hears appeals from orders, decrees, and judgments of subordinate courts and tribunals. It has original jurisdiction to hear Writ Petitions (i.e. judicial review applica-tions) under the Constitution art. 102. It also has original jurisdiction under statutes, inter alia, in respect to company and admiralty matters. The High Court Division has super-intendence and control over all courts and tribunals subordinate to it.

There are certain specialised courts established by various statutes for specific matters, includ-ing the Money Loan Court, Bankruptcy Court, Customs Excise and VAT Appellate Tribunals and the Labour Court.

What Bilateral Trade Treaties exist between your jurisdiction and China?

Bangladesh appears to be taking one step forward in signing of a Free Trade Agreement with China. In September 2016, China had formally proposed a study to examine the suitability of the formation of an FTA. Beijing had then forwarded a draft of the MoU, which was inked in October. However, the Free Trade Agreement is yet to be officially signed.

There are other treaties and MOUs existing between Bangladesh and China including the Memorandum of Understanding on Chinese Support in the field of Electric Power (2012), and the Agreement on Economic and Technical Cooperation (2014).

Business Set Up, Registration, and Approvals

What are the most common business vehicles?

A foreign entity looking to set up business in Bangladesh has mainly three vehicles to choose from:

i)     Companies; or

ii) A branch office; or

iii)    A liaison office

If the foreign entity targets to engage in commercial and/or trading activities in Bangladesh and thereby aims to earn income locally, then opting to form a Company or setting up a branch office would be the way forward. On the other hand, setting up a liaison office will restrict the activity of the entity as it would only be able to engage in promotional activities in Bangladesh for the Principal and nothing else. Therefore, for any foreign entities interested to invest and involve itself in the lucrative sectors like manufacturing, infrastructure, industrial, energy and other service sectors, the most preferable approach would be to invest through incorporating a local company which would also provide better safeguard to its interest in Bangladesh.

How long do they take to set up?

Incorporating a company does not take more than 24 hours provided all documents relating to incorporation are submitted in proper form. Setting up a branch or liaison office may take around 4-6 weeks as it requires permission from the Bangladesh Investment Development Authority. However, to officially initiate business operation and commercial operation in Bangladesh, after setting up the vehicle, the entity also will have to obtain license and clearance certificates depending on the type of business it is engaging in, on behalf of the vehicle (which is likely to be a company). The time required there may vary depending on the number of documents it has to obtain and the complexity of the activity it is engaging in.

Key Requirements for the establishment and operation of these vehicles?

The procedures can be divided into two categories i) for branch and liaison office and ii) for companies.

i)                  Branch/liaison office

For setting up branch/liaison office, the office shall have to bring inward remittance of at least US$ 50,000 within two (2) months from the date of issue of permission letter by Bangladesh Investment Development Authority (“BIDA”) in order to meet establishment costs and operational expenses for 6 months. The permission has to be renewed from time to time. Other than these requirements, the branch office will have some filing requirements with various regulators which have to be done from time to time.

ii)                Company

The Register of Joint Stock Companies and Firms (“RJSC”) under the Companies Act 1994 has to issue a certificate of incorporation for the company to be incorporated. In order to be incorporated a private limited company must have at least two shareholders and two directors under Companies Act 1994. However, it is possible for the local company to be 100% foreign owned. To fulfil the requirement of minimum two shareholders it is perfectly acceptable if the foreign entity or investor holds the entire number of shares in a company except for one share, which must be held by another person/entity thus allowing that investor to effectively hold complete control of the Company. The company will have to comply with periodic return requirement like annual return, increase of paid up capital, registration of mortgages and securities etc.

What are the registration requirements?

i)                  For branch/liaison office

a)     Among various approvals and permissions required by the investor, firstly permission for setting up a branch/liaison office has to be obtained from BIDA.

b)     A notification would need to be made with the Bangladesh Bank under the Foreign Exchange Regulations Act 1947 (“FERA”)

c)     The office would need to be registered with RJSC.

d)     Obtaining trade license from relevant City Corporation, Tax Identification Number from Tax Authority and permission from other regulators depending on the activity it seeks to pursue.

ii)                Company

The Registration or incorporation of the Company is solely undertaken by the RJSC. For ease of investors most of the procedures for incorporating a company can be completed online. The process is explained in detail below:

a)      “Name Clearance”- The proposed company will have to obtain “Name clearance” from the RJSC. Getting the clearance would depend on the fact that the name of the proposed company is not similar or closely identical to any of the existing companies or any entity which has applied previously for incorporation or is in the process of being incorporated. The process of searching whether the name matches with any existing or proposed company can be conducted online and after confirming that it does not match, the application can also be made online and a nominal fee need to be submitted in the designated bank account of RJSC.

b)     Bank Account opening- The sponsors of the Company will have to open a bank account with any bank in Bangladesh in the name of the Company by submitting the Name Clearance Certificate. This will facilitate remittance of the investment amount for incorporating the local entity.

c)     Memorandum and Articles of Association- The promoters will also have to prepare Memorandum and Articles of Association of the proposed Company based on their own needs.

d)     Application for registration- Application for registration can be done online by creating an online account using the RJSC website. After creating the account, the MoA, AoA along with the relevant forms such as Form 1,9,10,12 will have to uploaded for RJSC to consider. Finally based on the authorized capital of the proposed company, fees or stamp duty will have to be deposited in the designated bank account of RJSC to complete the process.

e)      Other Regulatory Requirements- Trade Licence from City Corporation, VAT Registration Certificate, Tax Identification Number from Tax authority etc.

Under what circumstances is the Chinese Investment subject to Government approvals?

Chinese Investment will be classed as foreign investment which will be subject to similar rules, regulation and approvals like any other foreign investment. No separate requirements exist for Chinese approvals.

What is the process and timeline for approvals?

Not Applicable as there are no separate requirements of taking approvals for Chinese Investment.

Any processes that can block Chinese Investment?

According to industrial policy there are certain sectors where investment is wholly “restricted” (meaning that no investment is possible in such sectors) for both domestic and foreign investors and sectors where it is “controlled”. Otherwise if the investment is made following all relevant legal procedures and through proper banking channel then there should not be any process which will block Chinese or any foreign investment for that instance.

What sectors are heavily regulated or restricted?

As mentioned above there are certain sectors which are “restricted”. The Industrial Policy 2016 has restricted investment in certain sectors for both local private and foreign investors:

a)     Arms and ammunition and other defence equipment and machinery;

b)     Forest Plantation and mechanized extraction within the bounds of reserved forests;

c)     Production of nuclear energy; and

d)     Security printing (currency notes) and minting.

The heavily regulated or controlled sectors include:

1.     Fishing in the deep sea;

2.     Bank/financial institutions in the private sector;

3.     Insurance companies in the private sector;

4.     Generation, supply and distribution of power in the private sector;

5.     Exploration, extraction and supply of natural gas/oil;

6.     Exploration, extraction and supply of coal;

7.     Exploration, extraction and supply of other mineral resources;

8.     Large-scale infrastructure project (e.g. flyover, elevated expressway, monorail, economic zone, inland container depot/container freight station);

9.     Crude oil refinery (recycling/refining of lube oil used as fuel);

10. Medium and large industries using natural gas/condensed and other minerals as raw material;

11. Telecommunication service (mobile/cellular and land phone);

12. Satellite channel;

13. Cargo/passenger aviation;

14. Sea-bound ship transport;

15. Sea-port/deep seaport;

16. VOIP/IP telephone; and

17. Industries using heavy minerals accumulated from sea bed

What are the competition clearance procedures (filing, process and notification)?

The Competition Act 2012 was enacted by the Government to prevent, control and eradicate collusion, monopoly and oligop-oly, combination, abuse of a dominant position in the market, anti-com-petitive practices and to encourage and ensure competitive business environment to promote economic development of Bangladesh. Based on s 5(1) of this Act, the relevant regulatory authority for these purposes, the Bangladesh Competition Commission (BCC) has been recently established. The first Chairman of BCC was appointed in April 2016.  

Under the Competition Act 2012 s 4, it is mentioned that the Competition Act is applicable to all enterprises involved in sale and purchase, production, supply, distribution or storage, as the case may be, of goods or services for commercial purposes. Further foreign investors should also be aware of the fact that under the Competition Act s 22, if an anti-competition act is committed outside of Bangladesh by any person or enterprise which causes an adverse effect on the relevant market, the Commission may inquire into the matter in accordance with laws, rules, etc. of the both countries.

The Competition Act of 2012 specifically forbids the following acts- i) Anti-Competitive agreements mentioned in section 15 of the Act; ii) Abuse of dominant position mentioned in section 16 of the Act; and iii) Certain combinations mentioned in section 21 of the Act.

Section 2(h) of the Act defines Combination as acquisition, taking control or amalgamation or merger in trade. Section 21 prohibits any combination which causes or is likely to cause an adverse effect on competition in the market of goods or services. However, the BCC can, on an application after conducting an inquiry, approve any combination which shall cause or is likely to cause adverse effect on the competition. Even though it has not been specifically mentioned for which cause of combination, approvals of BCC will be required, s 21 does mention that causes which will require combination will be prescribed by regulations. Currently there are no regulations specifying such, but it is expected that government will formulate such regulations in near future.

Are there any foreign currency controls China investors should be aware of?

The Government of Bangladesh strictly regulates both inward and outward remittance of funds, and in most of cases approval of the Central Bank of Bangladesh (Bangladesh Bank) is required to remit funds in and out of the country. The law governing the flow of funds in and out of Bangladesh is the Foreign Exchange Regulation Act of 1947 (“FERA”) and the Foreign Exchange Regulation Guidelines (“FX Guidelines”) which is updated every year. There are various forms of restrictions imposed in the Act as provided below:

However, in the above-mentioned sections it has also been mentioned that the Bangladesh Bank can provide general or special exemption and can allow conditional or unconditional flow regarding the transactions mentioned above in the table. These have been further provided in Bangladesh Bank Guidelines for Foreign Exchange Transactions.

Are there Special Economic Zones or Free Trade Zones?

Yes, a legislative framework provides for Special Economic Zones and Export Processing Zones. The Bangladesh Economic Zones Act 2010, has been enacted for the establishment of economic zones in all backward and underdeveloped regions with a view to encouraging rapid economic development through increased and diversification of industry, establishment and employment. Special Economic Zones are selected by the Government pursuant to the Bangladesh Economic Zones Act 2010 s 5.

The Bangladesh Government is empowered to grant various benefits to a SEZ or any area of it, which have been detailed below. Government may provide tariff benefits to the economic zones or any area of it and introduce special arrangement to facilitate import and export operations of the organisations established in the economic zones. The Government is further entitled to provide such kinds of financial benefits and incentives to the industrial units within the economic zones as is provided to the industrial units under Bangladesh Export Processing Zones Authority Act 1980 and Bangladesh Private Export Processing Zones Act 1996. Other benefits include the obligation of the authority to facilitate the economic zone developers and industrial units in respect of legal documents, to allot or lease plots suitable for setting up industries, acquiring necessary permission, permit for repatriation of capital and dividends, resident and non-resident visas, work permit, etc. The Government also possess the power to exempt the application of certain laws such as Municipal Taxation Act 1881, Stamp Act 1899, Foreign Exchange Regulations Act 1947, Income Tax Ordinance 1984, Value Added Tax Act 1991, etc, thus reducing monetary burden.

Bangladesh Export Processing Zones Authority Act 1980 (“BEPZA Act 1980”), offers entities located in Export Processing Zones (EPZ) various fiscal and non-fiscal incentives. The EPZs were set up with a view to providing a lenient and a flexible investment climate, which is free from procedural complications. EPZs are export-oriented industrial areas that provide various infrastructural facilities and administrative services to the investors coupled with rewarding incentives including fiscal incentives (concessionary tax, duty free import of machinery and raw materials) and non-fiscal incentives (full repatriation facilities of dividend and capital at the event of exit, warehouse and secured bonded area, etc).

It may be worth mentioning that the Government of Bangladesh is in the process of setting up special economic zone dedicated to Chinese investors with state-of-the-art facilities for setting up various types of industrial units. 

Where and how do these aid China Investment?

Chinese investment can be directed towards the SEZs and EPZs from which they will be able to extract the benefits of various fiscal and non-fiscal incentives. Given that the Government is keen to attract Chines investors and setting up dedicated economic zone, it would be worth exploring the opportunity.

Tax Obligations and Incentives

What tax incentives or structures that favour China Investment?

There are some generic tax incentives. Multifarious industrial and corporate entities and undertakings can avail the benefit of a tax holiday provided that they fulfil certain criteria. Such benefit of tax holiday is also available to different kinds of vehicles engaged in the business of development of physical infrastructure. Manufacturing companies can also claim tax rebate subject to few conditions. Moreover, tax exemption is provided for several particular heads notably in the power sector, Developers of Economic Zone (under BEZA) and Hi-Tech Park and industrial undertaking established thereon.

Taxation in Bangladesh

The relevant provisions of the laws of Bangladesh which are governing the ambit of income tax is envisaged in the Income Tax Ordinance 1984 (the “ITO 1984”), the Income Tax Rules 1984 (the “ITR 1984”) and the relevant rules, regulations and byelaws enacted thereunder.

What are the rates of corporation tax, personal incomes tax and withholding tax?

The highest rate of personal income tax for individuals other than female taxpayers, senior taxpayers of 65 years and above, retired taxpayers and gazetted war-wounded freedom fighter is 30%.

Publicly traded companies generally are subject to tax at the rate of 25%. Banks, insurance companies and financial institutions except merchant banks are taxed at the rate of 42.5%, while publicly listed and 4 generation banks and financial institutions are taxed at a reduced rate of 40%. Merchants banks are taxed at an even lower rate of 37.5%. Mobile phone operator companies, cigarette manufacturing companies and others are taxed at the highest level of taxation at 45%. All other non-publicly traded companies are taxed at the rate of 35%.

The rates of withholding taxes vary widely depending on the heads of income and the rate of withholding tax in Bangladesh ranges from as low as the rate of 0.05% (Member of Stock Exchange) to the highest rate being 45% for Mobile phone operator company.

Are there any tax agreements between your jurisdiction and China?

Bangladesh and China have entered into an agreement on 12 September 1996 for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, which became effective on 1 July 1998. The agreement broadly followed OECD Guidelines and provides for incentives in respect of business income, dividend payment, capital gain, shipping etc.

Employment Contracts

What are the local employment regulations?

The main legislation that chiefly governs and regulates employment is the Bangladesh Labour Act 2006 (the “Labour Act”) and the Bangladesh Labour Rules 2015. The Labour Act, however, is only applicable to employees who fall within the definition of “worker”. In order to fall within the scope of being a ‘worker’, the Labour Act s 2(65) defines “worker” as follows:

“any person including an apprentice employed in any establishment or industry, either directly or through a contractor, [by whatever name he is called,] to do any skilled, unskilled, manual, technical, trade promotional or clerical work for hire or reward, whether the terms of employment are expressed or implied, but does not include a person employed mainly in a managerial, administrative [or supervisory] capacity;”

However, people who are mainly engaged in managerial, administrative or supervisory capacity are not considered as ‘workers’ with respect to the Labour Act 2006. These kinds of employees are regulated by the individual contract of employment that they have with the particular company. Such employees are governed by the responsibilities and benefits set out in their individual contract of employment.

Employees who are classified as ‘workers’ usually have a contract of service/employment too. In such case, the terms of employment of these ‘workers’ are governed by both the Labour Act and their individual contract of employment. Both can co-exist simultaneously. However, if the contract of employment of a worker contains any provision which is more stringent or less favourable to the worker than that set out in the Labour Act 2006, the provision set out in the Labour Act shall prevail over the contract of service.

There are specific regulations for employees who are working in the Export Processing Zone. Pursuant to the Bangladesh Export Processing Zones Authority Act 1980 s 3A, the Bangladesh Export Processing Zones Authority (“BEPZA”) has issued certain directives regarding service matters of workers and officers who are employed in companies operating within the jurisdiction of the export processing zones of Bangladesh.

Are visas required for foreign employees? What is the application process like?

Yes, work visas or more generally known as work permit are required for foreign employees. For any foreign employee to work in Bangladesh, work permits are mandatory. After arriving in Bangladesh, a foreign employee needs to apply for a work permit from the BIDA or BEPZA or NGO Affairs Bureau, depending on the nature of the work or service that the foreign employee will be providing.

Subsequently, necessary security clearance needs to be obtained from the Ministry of Home Affairs after the issuance of a Work Permit. For a foreign employee to obtain a work permit, he must first enter and arrive in Bangladesh with ‘PI’, ‘El’ or ‘E’ visa from a Bangladesh Diplomatic Mission abroad. The visa from a Bangladesh Diplomatic Mission must be accompanied by a recommendation from the BIDA. For the purposes of working in Bangladesh, a “PI” visa is issued for foreign investors in the private sector, while "El” visa is issued for employees who seek to work in the field related to the supply, installation, maintenance or supervision of equipment and software, etc. On the other hand, an “E” visa is issued for employees, consultants or experts etc. After arriving in Bangladesh, a foreigner will not be able to change the visa category. The duration of the work permit may be extended from time to time.

Are there any quotas on foreign employees?

There is no quota on the number of foreign employees working in Bangladesh. However, there is a certain limitation on the number of foreign employees working in a single enterprise. The number of the expatriate employees in an industrial enterprise should not exceed the ratio of 1:20 (foreign: local) ratio at any time during regular production and the number of the expatriate employees shall not exceed the ratio for commercial offices is 1:5 (foreign: local).

Do any of these regulations differ in special investment zones?

Yes, the normal labour rules differ for workers working in locations which are recognised as special investment zones. There are specific rules and regulations in place for employees working in the Export Processing Zones. Pursuant to the Bangladesh Export Processing Zones Authority Act 1980 s 3A, the Bangladesh Export Processing Zones Authority (“BEPZA”) has issued certain directives regarding the service matters of workers and officers who are employed in companies operating within the jurisdiction of the export processing zones of Bangladesh for example, Guidelines for the enterprises of CEPZ pertaining labour matters dated 14 November 1988, Instruction No. 1 of 1989 dated 14 June 1989, Instruction No. 2 dated 23th August 1989, etc.

China Investor Protection

What protection mechanisms are available to China Investors?

The main protection mechanism is provided by the Foreign Private Investment (Promotion and Protection) Act 1980 (the “FPI Act 1980”) which advocates for and enforces fair and equitable treatment for foreign private investment and guarantees full protection and security of foreign private investment in Bangladesh. Foreign private investment is defined as “investment of foreign capital by a person who is not a citizen of Bangladesh or by a company incorporated outside of Bangladesh but does not include investment by a foreign Government or an agency of foreign Government.”

The protection and security of foreign investment is ensured by the FPI Act 1980, s 7 which provides as follows:

“7. (1) Foreign private investment shall not be expropriated or nationalised or be subject to any measures having effect of expropriation or nationalisation except for a public purpose against adequate compensation which shall be paid expeditiously and be freely transferable.

(2)       Adequate compensation for the purpose of sub-section (1) shall be an amount equivalent to the market value of investment expropriated or nationalised immediately before the expropriation or nationalisation.”

What contract enforcement options are available?

Parties can enforce their rights and obligations under a contract by bringing legal proceedings before a civil court. On the other hand, the parties may agree to settle disputes by mediation or arbitration. In case of arbitration, the parties must incorporate an arbitration clause in the contract or there must be an agreement regarding resolution of disputes through arbitration. The parties are free to choose the rules of arbitration, governing law, the seat and the language of the arbitration. In Bangladesh, the Arbitration Act 2001 currently governs the recognition and enforcement of arbitral awards including foreign arbitral awards. Bangladesh is a signatory to the New York Convention on enforcement of foreign arbitration award and ratified the same through the Arbitration Act 2001.

Are there any penalties for withdrawing from an investment?

There are no specific or statutory penalties for withdrawing from an investment and an investor can withdraw an investment at any time subject to statutory charges. However, withdrawal of capital is regulated under the laws of Bangladesh.

Disclaimer: The contribution to the Bangladesh Chapter does not constitute our professional advice and is expressed as mere opinion from experience and understanding of local laws. The view expressed above are based on the law prevailing as on 30 October, 2018.

The rights of this article belong to Tanjib Alam & Associates and LexisNexis.