The government has issued a gazette notification on “Capital Account Transaction (Overseas Equity Investment) Rules 2022 that will permit Bangladeshi businesses to invest abroad.
From now on, exporters will be able to invest abroad subject to adequate status of their Export Retention Quota (ERQ), according to the notification issued on Wednesday.
The Foreign Exchange Investment Department of Bangladesh Bank (BB) issued a directive in this regard titled 'Capital Account Transaction (Equity Investment Abroad) Rules 2022' and sent it to all the authorized dealers of foreign exchange transactions on 26 January.
The directive states that on January 9, 2022, the Financial Institutions Division of the Ministry of Finance has issued the Capital Account Transaction (Equity Investment Abroad) Rules, 2022 under Section 26 of the Foreign Exchange Regulation Act, 1947.
Under the rules, exporters will be able to invest equity abroad from their retention quota accounts.
In this case certain conditions have been laid down in the rules. The applicant will be able to invest 20 per cent of the average annual export earnings of the organization for five years or less than 25 per cent of the net assets shown in the latest audited annual financial report as equity abroad.
According to the rules, the applicant organization has to apply to the BB through the authorized dealer bank along with the required documents. A 15-member selection committee has been set up to scrutinize the applications.
The committee will be chaired by the governor of Bangladesh Bank. The decision of the committee will be notified to the approved dealer bank and a copy of the letter will be given to the applicant organization.
The detailed guidelines on setting up companies abroad are mentioned in the rules.
All the debts of the company formed abroad, such as profit or dividend, interest, proceeds of sale of shares, balance due to liquidation of investment, salary, royalty, technical knowledge fee, consultation fee, commission, etc. must be remitted to Bangladesh within 30 days of receipt.
The rules state that investment misuse will be treated as money laundering under the Prevention of Money Laundering Act.