Bangladesh Gazette

Extraordinary Issue
Published by Authority

Sunday, June 10, 2018

[ Notifications issued in exchange for money by private persons and corporations ]

Bangladesh Securities and Exchange Commission
Securities Commission Building
E-6/C Agargaon
Sher-e-Bangla Nagar Administrative Area
Dhaka-1207.

Notification

Date: 20 Jeishtha 1425 Bangabda / 03 June 2018 AD

No.-BSEC/CMARRCIDI/2001-25/206/Admin/79—The Commission, under the powers conferred by Section 24 of the Bangladesh Securities and Exchange Commission Act, 1993 (Act No. 15 of 1993), after previous publication, hereby makes the following rules, namely:

Chapter I

Preliminary

1. Short Title — These rules shall be called the Bangladesh Securities and Exchange Commission (Acquisition of Substantial Number of Shares, Takeover and Acquisition) Rules, 2018.

2. Definitions — (1) Unless the context otherwise requires, in these rules,

(a) "Acquirer" means any person who acquires or proposes to acquire voting shares or securities convertible into voting shares of a company, either alone or together with persons acting in concert;

(b) "Act" means the Bangladesh Securities and Exchange Commission Act, 1993;

(c) "Substantial Number" means 10 (ten) percent or more, or any number determined by the Commission from time to time for this purpose;

(d) "Negotiated Deal" means transactions conducted through the method designated as Negotiated Deal by the Exchange.

(2) The words or expressions used but not defined in these rules shall have the same meanings as assigned to them in the Securities and Exchange Ordinance, 1969, the Bangladesh Securities and Exchange Commission Act, 1993, the Companies Act, 1994, the Digital Act, 1999, and the Exchange Dematerialization Act, 2013, or any rules or regulations made thereunder.

3. Scope of Application of Rules — (1) These rules shall apply to the case of voting shares or securities convertible into voting shares listed on the Exchange.

(2) None of the specific rules of these rules shall apply to the acquisition, takeover, or acquisition of voting shares or securities convertible into voting shares through the following methods:

(a) Application on the basis of following the share allocation prospectus to the general public;

(b) As a legatee;

(c) Daily business operations on behalf of any client by any registered Market Banker, Stock Broker, or Stock Dealer with the Commission:
Provided that the relevant client shall not be exempted;

(d) As a registered Market Maker with the Commission;

(e) As a registered Alternative Investment Fund with the Commission;

(f) In the case of asset management of any Mutual Fund approved by the Commission;

(g) On the basis of Right or Bonus Issue;

(h) Through inheritance;

(i) Through transfer by order or decision of the court;

(j) Through transfer by order of the Commission or approval by the Commission under any other law; or

(k) If shares are transferred through an approved gift.

Chapter II

Acquisition or Takeover of Substantial Number of Shares

4. Acquisition or Takeover of Substantial Number of Shares in Exchange for Cash — (1) If any shareholder or shareholders of a company holding less than a substantial number of shares, or any person or persons who do not hold any shares, wish to acquire or take over any shares of such company from the Exchange, and the total amount of shares held after acquisition or takeover reaches 10 (ten) percent or more, or if any shareholder or shareholders holding 10 (ten) percent or more wish to acquire or take over further shares of such company through the Exchange, they shall submit a declaration in the manner described in Schedule-1 to the Exchange on which the company is listed, through the relevant Acquirer's Stock Broker or Market Banker.

(2) Upon receipt of the said declaration, the Exchange shall immediately disseminate it as online news.

(3) No share transaction shall be carried out before the dissemination of the online news by the Exchange.

(4) The share acquirer or acquirer shall pay a commission to the Stock Broker at the prevailing market rate.

5. Acquisition or Takeover of Substantial Number of Shares in Exchange for Cash through Exchange Negotiated Deal — (1) If any shareholder or shareholders of a company holding less than a substantial number of shares, or any person or persons who do not hold any shares, wish to acquire or take over any shares of such company through the Exchange Negotiated Deal, and the total amount of shares held after acquisition reaches 10 (ten) percent or more, or if any shareholder or shareholders holding 10 (ten) percent or more wish to acquire or take over further shares of such company through the Exchange Negotiated Deal, they shall submit a declaration in the manner described in Schedule-1 to the Exchange on which the company is listed, through the relevant Acquirer's Stock Broker.

(2) Upon receipt of the said declaration, the Exchange shall immediately disseminate it as online news.

(3) No share transaction shall be carried out with anyone according to the declaration before the dissemination of the online news by the Exchange.

(4) In such transactions, the consideration or exchange value shall be determined through mutual agreement between the share acquirer or acquirer and the seller.

6. Acquisition or Takeover of Shares in Exchange for Something Other than Cash Outside the Exchange's Trading System — (1) If any shareholder or shareholders of a company holding less than a substantial number of shares, or any person or persons who do not hold any shares, wish to acquire or take over any shares of such company in exchange for something other than cash outside the Exchange's trading system, and the total amount of shares held after acquisition or takeover reaches 10 (ten) percent or more, or if any shareholder or shareholders holding 10 (ten) percent or more wish to acquire or take over further shares of such company in exchange for something other than cash outside the Exchange's trading system, they shall submit a declaration in the manner described in Schedule-1 to the Exchange on which the company is listed, through the relevant Acquirer or Acquirer's Stock Broker or Market Banker.

(2) In the case of such acquisition or takeover, the acquirer or acquirer shall execute a detailed contract with the seller.

(3) The relevant seller shall issue an irrevocable sell order to their respective Stock Broker.

(4) The seller's Stock Broker shall freeze the specified amount of shares in the sell order and provide a certificate in the format specified in Schedule-2 to the Exchange.

(5) The share acquirer or acquirer shall duly fill out the declaration form mentioned in Schedule-1 and deposit a bank draft or pay order equal to 20 (twenty) percent of the total exchange value in favor of the Exchange along with a copy of the contract.

(6) Upon receipt of the said declaration, the Exchange shall immediately disseminate it as online news.

(7) No share transaction shall be carried out with anyone according to the declaration before the dissemination of the online news by the Exchange.

(8) If the said transaction is not completed for any reason, the Exchange shall dishonor the said bank draft or pay order and transfer it to the Investor Protection Fund of the relevant Exchange.

(9) If the transaction is completed according to the declaration, the Exchange shall return the said bank draft or pay order to the depositor.

7. Subject Matter of Declaration of Share Acquisition or Takeover Proposal — The subject matter of the share acquisition or takeover declaration shall be determined in the manner described in Schedule-1.

8. Proposal Price — The proposed price for share acquisition or takeover under Rules 4, 5, and 6 shall necessarily be:

(a) In cash; or
(b) Through share transfer; or
(c) Through a combination of the two methods mentioned in clauses (a) and (b); or (d) Through any other method acceptable to the seller:
Provided that if a contract or memorandum of understanding mentions payment in cash for the transfer of a certain class of shares, the cash value for the remaining share transfers shall be payable to the beneficiaries.

9. Completion of Proposal — Transactions shall be completed in response to the declaration according to Schedule-1 for the purpose of share acquisition or takeover, and within 01 (one) week thereafter, a receipt according to Schedule-3 shall be submitted to the relevant Exchange and the Commission.

10. Withdrawal of Share Acquisition or Takeover Proposal — (1) Any proposal for share acquisition or takeover shall not be withdrawn, unless an event arises in the case of the proposer that, including Act of God, is beyond his control and makes it impossible to implement the share acquisition proposal.

(2) Subject to sub-rule (1), a published share acquisition proposal shall be considered withdrawn if any of the following occurs:

(a) If the proposer is a natural person, he dies, or if the legal heir of the deceased person is unwilling to implement the relevant Exchange proposal;

(b) If the proposer is declared bankrupt;

(d) If the proposer is a company and the said company is subsequently acquired by another company, and the acquiring company is unwilling to implement the proposed share acquisition or takeover;

(e) In the case of acquisition through the Exchange, there is no seller of the said securities;

(f) For any other reason at the discretion of the Commission.

(3) If any of the reasons for withdrawal of the share acquisition or takeover proposal arises, the acquirer or acquirer shall apply to the relevant Exchange for withdrawal of the share acquisition or takeover proposal through his Stock Broker, showing due cause.

(4) Upon receipt of the application for withdrawal of the proposal from the Exchange according to sub-rule (3), the withdrawal of the share acquisition or takeover proposal shall be disseminated in the same manner as the share acquisition or takeover proposal was disseminated as online news.

Chapter III

Takeover for Rescue

11. Takeover for Rescue — (1) This chapter shall apply in the case of acquisition or takeover of a substantial number of shares of a financially weak company by a financial institution, scheduled bank, or any other persons or institutions, alone or jointly, for the purpose of rehabilitating the financially weak company:

Provided that the initiative taken in this matter shall be considered the Lead Institution:

Further provided that the Lead Institution shall be a Market Banker or Fund Manager.

(2) The Lead Institution shall be responsible for ensuring that the rules of this chapter are followed correctly.

(3) The Lead Institution shall determine the price in the rescue process considering the financial viability of the financially weak institution, determine the amount of money required for the rescue buyback, and formulate a rehabilitation package based on the principles of preserving the interests of minority shareholders, efficient management, successful buyback, and transparency.

(4) If there is any change in management, the rescue scheme must explicitly describe the rescue in detail.

(5) The rehabilitation package for the acquisition of shares of a financially weak company shall include the following methods—

(a) Direct share acquisition, or
(b) Share exchange, or
(c) A combination of both methods.

Explanation: The term "financially weak company" mentioned in this chapter means a company that has negative net worth at the end of the year, or whose share market price has been below the face value for the last three consecutive years, or which has not paid any dividend in the past five years, or any other company determined by the Commission from time to time.

(6847)
Price: Taka 16.00


12. Method of Share Acquisition or Takeover for Rescue.—(1) Before implementing the full-scale plan, the payer or Lead Institution shall invite proposals for share purchase by publishing a notice in two widely circulated national daily newspapers (one in Bengali and one in English).

(2) After receiving proposals under sub-rule (1), the Lead Institution shall officially select one proposer considering the efficiency of management, adequacy of financing, and technical capability in the case of fully rehabilitating the officially weak company.

(3) The Lead Institution shall provide all necessary information regarding the said company to any person interested in proposing the acquisition or takeover of shares of the officially weak company, which shall specifically include the company's current management, technology, scope of produced products, nature of shareholders (shareholding pattern), financial position and performance, assets and liabilities for the five years preceding the date of invitation of proposals, and the minimum financial and other commitments expected from the proposer for the purpose of fully rehabilitating the said company.

(4) The Lead Institution shall also mention conditions in the share purchase proposal to ensure corporate governance of the acquiring company—
(a) The Board of Directors of the company, consisting of at least seven and at most fourteen members, including at least one-third minority shareholders and outside professional directors, shall be formed, and the Chairman shall be elected from among the outside professional directors;
(b) The Board of Directors shall not interfere in the daily operations of the company except for policy-making activities;
(c) There shall be an Audit Committee in the company including professional independent directors, and a Remuneration Committee for directors and employees; and
(d) The company shall have a professional Company Secretary who shall be responsible to the Board of Directors for matters related thereto.

13. Method of Evaluation of Bids.—(1) The Lead Institution shall evaluate the bids based on the appropriate value of share exchange, the buyer's financial assets, reputation of management, etc., and ensure fairness and transparency in this process:
Provided that a Chartered Financial Analyst, Cost and Management Accountant, or a Chartered Accountant with a reputation for professionalism and financial expertise shall be included in the Bid Evaluation Committee, with the recommendation of the relevant authority.

(2) The bids received according to the fairness of sub-rule (1) shall be officially listed, and among them, a bid that is generally appropriate after discussion with the persons involved in the management of the officially weak company shall be accepted for consideration.

14. Submission of Bid by the Person Purchasing Shares.—After being informed by the Lead Institution of the share purchaser fixed by the Lead Institution following Rule 13, the entrepreneurs or the persons responsible for managing the operations of the officially weak company, from economic institutions, and from other shareholders, shall formally announce the proposal to purchase shares at a mutually agreed price between them and the Lead Institution.

Explanation: As part of the full-scale plan, no further analysis shall be done regarding the Lead Institution's right to acquire shares of the officially weak company.

15. In What Cases Shall the Share Acquirer or Acquirer Provide Information.—(1) Except for the persons employed in managing the operations of the officially weak company, other shareholders shall express their intention through the share purchaser's information.

(2) Such information shall include details of the share purchaser's identity and background, proposed bid, the company's full-life plan, the period during which the proposal remains open, and all other matters related to the proposal.

(3) The terms of the purchase proposal shall be sent to each shareholder of the officially weak company, and the record date for submission of the proposal and the date of the proposed purchase shall be explicitly mentioned.

(4) When any share acquirer accepts proposals for the sale of shares from others, he shall first propose to purchase all shares from the smallest number of shareholders.

16. Exemption from the Effectiveness of Acquisition or Takeover of Substantial Number of Shares.—(1) Each purchase proposal under Rule 14 shall submit an application to the Commission for exemption from the provisions of Rules 4 to 10 of these rules.

(2) For the consideration of such application, the Commission may direct the company and the Lead Institution to provide information regarding the verification procedure for approval of the purchase proposal, its evaluation, and other similar matters.

Fourth Chapter
Miscellaneous

17. Investigation or Inquiry Procedure and Punishment.—If anyone violates any rule, sub-rule, or directive mentioned in these rules, an investigation or inquiry procedure determined by law shall be conducted in his case, and the punishment determined by law for violation of rules and regulations shall be applicable.

18. Compliance with Orders or Directives.—The enforceable provisions mentioned in these rules shall be considered compliance with directives and orders issued under the Securities and Exchange Commission Act, 1993:
Provided that the Commission may issue any other order or directive from time to time under these rules.

19. Repeal and Saving.—(1) The Securities and Exchange Commission (Acquisition of Substantial Number of Shares, Takeover and Acquisition) Rules, 2002 are hereby repealed.

(2) Notwithstanding such repeal, any act done, measure taken, order given, directive issued, application filed, application submitted, fee deposited, record or document kept, investigation conducted, investigation report submitted, or notice issued under the repealed rules shall be deemed to have been done, taken, given, filed, deposited, kept, conducted, submitted, or issued under these rules.

Schedule-1
Affidavit
[See Rules 4, 5, and 6]

(a) Name of the company and the number of shares intended to be acquired or taken over;

(b) Proposed price of share purchase along with the purpose and terms of the proposal regarding share acquisition or takeover;

(c) Full identity of the share acquirer or acquirer including nationality;

(d) Full information regarding the share ownership of the share acquirer or acquirer with the said company and the relationship with the shareholders, entrepreneurs, or directors of the said company;

(e) Detailed description of the contract or memorandum of understanding regarding share acquisition or takeover made under Rule 5 and Rule 6, and all matters mentioned therein regarding share purchase;

(f) Description of whether the affidavit has been provided for the entrepreneurs, directors, or presidents of the relevant company of the share acquirer or acquirer;

(g) Mention of the date of the share acquisition or takeover proposal and the period during which the acquisition or takeover proposal will be accepted;

(h) Description of when and how the share acquisition or takeover price or exchange will be paid;

(i) In the case of share acquisition or takeover under Rule 6(1), the method of valuation and the name, address, and experience of the valuer of the assets or anything for which the said share acquisition or takeover is being made shall be provided;

(j) Other terms and conditions related to the share acquisition or takeover proposal, including the following matters—

(i) Number of shares intended to be acquired or taken over from entrepreneurs, directors, or the public;

(ii) Description of any conditions imposed under the Companies Act, 1994, the Bank Company Act, 1991, the Financial Institutions Act, 1993, and the Foreign Exchange Regulation Act, 1947; and

(iii) Information regarding obtaining approval from the shareholders of the relevant company (if there is a legal obligation).

(k) Description of whether there is any relationship with the share acquirer or acquirer with the said company or its entrepreneurs, directors, or 10 percent shareholders, or with any company associated with the said company, or with potential sellers.

(l) This schedule shall be informed to the relevant Exchange and Commission within the next day after the execution of the contract or memorandum of understanding regarding share acquisition or takeover under Rules 5 and 6.

Signature of Witness and
Name……………………………
Date: ————————
Address: ————————

Signature and Name of
Share Acquirer or Acquirer
Date: ————————
Address: ————————

(1)
(2)

Schedule-2
Stock Broker's Certificate
[See Rule 6]

**For Acquisition or Takeover (For Share Acquirer or Acquirer):**

I/We, Stock Broker of Dhaka/Chittagong Stock Exchange (TRA No. ————————), hereby affirm that the share acquirer or acquirer (Name mentioned ————————) has deposited the required amount (Amount) for the acquisition or takeover of ———————— number of shares of ———————— Company (Name to be mentioned) with me, and has given such orders that I will execute it after displaying it on the Exchange's online monitor without any contact with the share acquirer or acquirer.

Signature, Name and Designation
Date: ————————
Address: ————————
Stock Broker's Seal.

**For Seller under Rules 5 and 6**

I, Stock Broker of Dhaka/Chittagong Stock Exchange (TRA No. ————————), hereby affirm that in the relevant acquisition or takeover, the seller ———————— (Name, Address, Nationality, etc.) has ———————— number of shares of ———————— Company in my account No. ————————, and I have frozen it according to the provisions of Rule 6(4) of the Bangladesh Securities and Exchange Commission (Acquisition of Substantial Number of Shares, Takeover and Acquisition) Rules, 2018 (if not applicable, delete). After the relevant affidavit is disseminated online by the Stock Exchange, I will complete the transaction without any contact with the seller.

Signature, Name and Designation
Date: ————————
Address: ————————
Stock Broker's Seal.

Schedule-3
Receipt
[See Rule 9]

**Applicable for Share Acquirer or Acquirer**

According to the affidavit dated my ………………………………………… (copy attached), I completed the transaction on ………………… date. In this case, was there any discrepancy between the affidavit and the transaction/was there no discrepancy (if there is a discrepancy, provide details and attach with this affidavit).

Signature and Name of
Share Acquirer or Acquirer
Date: ————————
Address: ————————

**Receipt of Stock Broker of Share Acquirer or Acquirer:**

The transaction has been completed according to the share acquisition or takeover proposal. In this case, was there any discrepancy between the affidavit and the transaction/was there no discrepancy (if there is a discrepancy, provide details and attach with the affidavit).

Signature, Name and Designation
Date: ————————
Address: ————————
Stock Broker's Seal.

**Receipt of Seller's Stock Broker:**

Share transfer has been completed according to the sell order. In this case, was there any discrepancy between the sell order and the transaction/was there no discrepancy (if there is a discrepancy, provide details and attach with the affidavit).

Signature, Name and Designation
Date: ————————
Address: ————————
Stock Broker's Seal.

By Order of
Bangladesh Securities and Exchange Commission
Dr. M. Khairul Hossain
Chairman.

Printed by Md. Lal Hossain, Deputy Director, Bangladesh Government Printing Press, Tejgaon, Dhaka.
Published by Md. Herayer Hossain (Additional Charge), Deputy Director, Bangladesh Forms and Publications Office, Tejgaon, Dhaka. website : www.bgpess.gov.bd

Bangladesh Securities and Exchange Commission (Acquisition of Substantial Number of Shares, Takeover and Acquisition) Rules, 2018