Bangladesh: The 'Companies (2nd Amendment) Act, 2020'
The 'Companies (2nd Amendment) Act, 2020' was recently passed in Bangladesh Parliament, keeping provision for formation of one-person companies (OPC), with only one natural shareholder. Even though the provisions in the Act do not incorporate any bar for a foreigner in forming an OPC, the particulars in the prescribed form of memorandum require NID of the shareholder, which will not be available for a foreigner, and thus a foreigner may not be able to form an OPC. The memorandum of an OPC must state the name of nominee (with consent) who would become the shareholder of the company upon death or incapacity of the shareholder. While the Act is aiming to attract greater investment, OPC needs minimum paid-up capital of BDT 2.5 million, which may not be entirely consistent with the objective. In case the paid-up capital exceeds BDT 50 Million, the OPC has to be converted to other form of companies.
Government of Bangladesh is also in the process of improving the investment climate of the country by introducing Secured Transaction (Moveable Collateral) Bill and Asset Management Company Bill. Bankruptcy Act 1997 is also currently being modified for modernizing the insolvency regime, particularly, allowing businesses in financial distress to continue to operate through reorganization, as opposed to previous legal regime, where foreclosure with the view to liquidate the business was the only prescribed legal avenue.
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