BB eases preference share rules for non-residents

Bangladesh Bank has eased regulations governing the issuance of preference shares, their conversion into ordinary shares, redemption and dividend repatriation for non-resident investors in Bangladeshi companies. 

The central bank's Foreign Exchange Investment Department (FEID) issued a circular on Tuesday clarifying the procedural requirements for issuing companies, non-resident investors and authorised dealer banks.

Under the new directives, local companies can issue preference shares to non-resident investors at a dividend rate of up to 5 per cent without prior approval from Bangladesh Bank. Following the issuance, the companies must submit a report to the FEID.

However, companies intending to issue preference shares with a dividend rate exceeding 5 per cent may seek prior approval from the central bank by providing proper justification for the proposed rate.

The circular also allows non-resident investors to repatriate dividends earned on preference shares and process the redemption of such shares without prior permission from Bangladesh Bank. 

Additionally, it outlines clear guidelines for converting preference shares into ordinary shares and details a standardised process for reporting and transaction management.

Source:UNB