Foreigners can now remit money home after liquidation

The Bangladesh Bank has introduced a policy for the first time that allows foreign shareholders of a company to remit money to their countries in case their company winds up.  

Foreigners can now take their money away from Bangladesh by paying liabilities here, said a circular issued by the central bank yesterday.

The Bangladesh Bank has introduced the new policy in line with international standards to encourage foreign investors to come to Bangladesh.

There was no written policy about it till yesterday, and foreign investors had a lot of problems before in remitting their money back home if a company went into liquidation.

From now on, after the court winds up a company, foreign shareholders can remit money back home subject to approval by the central bank, but they have to pay all liabilities and dues including taxes before remitting it abroad.

"This is a good decision as it gives an exit policy for foreign companies operating here," said the chief executive officer of a foreign company.

He said the move will also improve Bangladesh's ranking in the World Bank's ease of doing business index.

Banks will forward the permission request for remittance of money payable to foreign shareholders, only after being satisfied that the target company has complied with the required provisions, according to the circular.

Previously, the Bangladesh Bank would permit foreign shareholders to remit money abroad on a case-to-case basis because there was no written policy that allowed it, said an official of the Bangladesh Bank.

Foreign investors' shares must be issued within a year

In another circular, the central bank has asked local partners of joint venture companies to issue shares in the names of foreign shareholders within a year of receiving money for business purposes.

Earlier, there was no time limit for issuing shares in the name of foreign investors. As a result, foreign shareholders were deprived of benefits on their investments.

If a company fails to issue shares in the name of their foreign partners within the stipulated time, the central bank will not consider the foreign investment portion as a component of the equity.

Moreover, deposited money must not be used for any other purpose other than the main business of the company, according to the circular.