Mergers and acquisitions between Companies always have a positive impact on the economic performance of the country. Therefore, it is essential that parties interested in mergers and acquisitions are aware of the process for a successful merger and acquisition in Bangladesh. This article will provide a step-by-step guideline for the merger and acquisition process in Bangladesh.


What are mergers and acquisitions? 


A merger means combining, especially two commercial companies into one. In other words, a merger is a combination of two companies wherein one loses its corporate existence. The surviving company, which is also called the amalgamated company, acquires both the assets and liabilities of the merged company, which is also called the amalgamating company. 

A merger may be distinguished from a consolidation, which is a combination of two companies whereby an entirely new combination is formed. In case of a consolidation, both the old companies cease to exist, and shares of their common stock are exchanged for shares in the new company. Another distinction between merger and consolidation is that when two companies of approximately the same size combine, the term consolidation applies, and when two companies differ significantly in size then the merger is the more appropriate term. Mergers are called amalgamation in legal parlance. 

Merger and Acquisition Process


Legal Framework 


There is not one single legislation dealing with mergers and acquisitions in Bangladesh. Instead, there are a number of statutes and by-laws that regulates acquisitions and mergers in Bangladesh. The most significant legislations are the Companies Act, the Securities and Exchange Ordinance 1969, the Bangladesh Securities and Exchange Commission Act 1993, the Foreign Exchange Regulation Act 1947, the Competition Act, and the by-laws made under these statutes.

In addition, there are specific laws that deal with mergers and acquisitions in specific areas. For instance, the Insurance Act 2010 for insurance companies and the Bangladesh Telecommunication Regulation Act 2001 for the telecommunication sector.


Step by Step process for Merger and Acquisition 


Step one: Merger Proposal 


Any company proposing to carry out a merger first have to get suitable resolutions passed by their Board of Directors. By passing the resolution, the Board of Directors will agree in principle, to proceed in accordance with such resolution. The resolution passed may be treated as Price-sensitive Information (i.e. the information if published is likely to materially affect the price of securities of the company). 


Step two: Due Diligence 


To enable Bangladesh Bank to consider the effectiveness of the merger, the transferee company has to seek prior approval to commence financial and legal due diligence of itself and also of the company they are intending to merge with. In order to seek approval for due diligence, the transferee company needs to submit certain documents. 




  • Credentials of the company (background, resources, net worth, etc.) and
  • Information about the team of Lawyers, Financial Advisors, Chartered Accountants, Valuers, etc. for conducting due diligence on the asset and liability of both companies. The transferee company has to ensure that none of the team members engaged in due diligence are actively dealing in shares or have any conflict of interest with either of the companies intending to merge together. 


Step three: Disclosure and Maintain Confidentiality 



Whenever a person/company intends to own, acquire or control 10% or more voting shares in a company listed on any stock exchange in Bangladesh, there is a mandatory obligation of disclosure.  This means that both companies are under an obligation to disclose information about the companies among themselves. 




However, there is also an obligation of confidentiality as well. Upon obtaining approval from Bangladesh Bank for conducting due diligence, the transferee company shall submit an undertaking to Bangladesh Bank. Such an undertaking confirms that all information, in particular, all non-public domain information and documents, etc. shall be kept strictly confidential. 

In addition, such confidential information shall not be disclosed to any person or organization unless advised by Bangladesh Bank or legally required or required to comply with the regulatory requirements. However, this confidentiality requirement does not apply to the due diligence team.

It is to be noted that the members of the due-diligence team will also be bound under the aforesaid undertaking to keep the information, document, etc. confidential. In addition, the due-diligence team shall not demand any information/observations made by Bangladesh Bank in relation to the affairs and the business of concerned companies from the transferee or transferor companies.


Step four: Due diligence report submission 


Upon completion of the task of due diligence, the team will have to submit a copy of the report to Bangladesh Bank. 

The due diligence report must include the following information: 

  1. Debts that are secured and unsecured and in the case of secured debts particulars of the securities and their value. 
  2. The value of the property and the assets of the transferor and the transferee company are calculated. 
  3. The liabilities of the transferor and the transferee companies. 
  4. In view of the above clauses, the financial impact of the merger proposal on the two companies and their creditors, shareholders, and depositors.


Step five: Shareholders’ and creditors’ consent


The next step would be to prepare a scheme of merger by the transferor or transferee companies based on the due diligence report. 

The Board of Directors of the respective companies will have to pass a resolution in this regard. While passing the resolution the scheme shall be considered as so drawn and then, in accordance with the provisions of Companies Act -1994, hold meetings of their respective members to consider and approve the said scheme. 

If a majority in number representing three-fourths in value of members present in the meeting, either in person or by proxy, approve the scheme, the same shall be deemed to have the approval of the members. 


Step six: Scheme Submission to Bangladesh Bank


Thereafter, an application will have to be submitted to Bangladesh bank by the transferee company. In addition to the application, a copy of the Scheme of merger/amalgamation, together with such other documents will have to be submitted. 


Other documents include: 


  1. Name, address, and occupation of the Directors of the transferee company as proposed to be reconstituted after the amalgamation, 
  2. Details of the proposed Chief Executive Officer of the transferee company after the amalgamation, 
  3. Post-merger Branch Plan, Technology Plan, Human Resource Plan, and proposal to address Corporate Governance issues. 
  4. Information relevant for consideration of the scheme and the swap ratio includes the following:
  5. Valuer Report explaining the method of valuation and the justification for it. If the market value of shares has been considered in the computation of the swap ratio, the value so considered,
  6. Last three years’ annual report of each of the companies, 
  7. Financial results, if any, published by companies covering the periods subsequent to the Annual reports
  8. Significant anticipated changes in service and products. 
  9. Pro forma combined balance sheet of the transferee company as it will appear following the amalgamation, 
  10. Computation based on pro forma balance sheets of the following items:
  1. Tier I Capital 
  2. Tier II Capital 
  3. Risk-weighted assets 
  4. Gross and net Non-Performing Loans 
  5. The ratio of tier I capital to risk-weighted assets 
  6. The ratio of tier II capital to risk-weighted assets 
  7. The ratio of tier I capital to total assets 
  8. The ratio of total capital to risk-weighted assets 
  9. The ratio of gross and net NPLs to advances.
  10. Any other information or explanation as sought by Bangladesh Bank.   


Step seven: Draft Scheme Examination


After receiving the draft Scheme, Bangladesh Bank will satisfy itself that the Scheme as proposed by the transferee company can be implemented successfully. In deciding such, Bangladesh Bank will consider various factors through examination of the scheme. The factors that may be considered are the capital of the merged entity, valuation of assets and liabilities, the impact on profitability, etc. 


Step eight: Assets and liabilities valuation


It is upon the merging companies to mutually agree on the valuation of the assets. Bangladesh Bank does not generally interfere in this regard except where there are reasons to believe that the valuation is not fair and reasonable. 

If mutual agreement is not possible in relation to certain items then any of the parties to the merger can seek advice from Bangladesh Bank. The Bangladesh Bank plays the role of a mediator and helps resolve the differences. In case the mediation fails, the Bangladesh Bank will decide the value and the decision of the Bank in this regard shall be binding. The cost of obtaining such advice will be borne by the transferor company


Step nine: Transaction Price 


Again the transaction cost/price is a matter to be mutually agreed upon between the transferor and the transferee on the basis of fair valuation of assets and liabilities proposed to be transferred. Parties have the option to fix the price at a premium or discount to valuation. 

However, Bangladesh Bank has a right to be satisfied that the mutually agreed price is fair and reasonable. For this purpose, Bangladesh bank may ask for pricing rationale to examine the same and accept or suggest an alteration. In order to do so, Bangladesh bank will seek an explanatory note on the price mechanism along with supporting documents.


Step ten: Bangladesh Bank approval 


At this stage, Bangladesh bank will approve the Scheme as proposed if two conditions are satisfied. It can be implemented: 

  1. to the benefit of the company and/or the financial system of the country and 
  2. the scheme is not detrimental to the interest of the depositors

Thereafter, Bangladesh Bank may give its approval to the said Scheme with or without such modifications as deemed necessary.


Step eleven: High Court Petition 


After the scheme of merger/amalgamation has been permitted by Bangladesh Bank, the transferor and the transferee now must comply with other formalities required under the Companies Act 1994. As such, they need to file an application before the High Court and submit the scheme for the merger/amalgamation for approval from the court. In addition, the transferee company will mark a copy of the application as filed before the Court together with annexure, if any, to Bangladesh Bank and will keep the Bank informed from time to time as the progress in the matter. 

If the company, after obtaining approval of the Scheme from the Bangladesh Bank, fails to take these steps within the next three months from the date of approval, the approval so granted lapses, unless otherwise extended on justifiable consideration.

The high court will hear the application for merger/amalgamation and will consider the objections if any, raised by any of the stakeholders. As such, based on that the Court may with or without such modification as it deems fit approve the Scheme.


Step twelve: file a certified copy of the High Court order to RJSC 


Upon approval of the scheme by the High Court, the petitioner company will have to file a certified copy of the order with the Registrar of Joint Stock Companies (RJSC).  Filing such makes the scheme binding on all creditors/shareholders and also on the company. In addition, the transferor and the transferee companies will have to take such steps as necessary to implement the approved Scheme. 

A copy of the approved scheme will have to be forwarded to the Securities and Exchange Commission by the transferee company for its consent for the issue of capital if required. If no change of name is proposed, the transferee company will continue to carry on its business under the existing name and license. However, if the change of name is proposed, then approval from Bangladesh Bank will have to be sought.


Robi Axiata Limited and Ors. Vs. RJSC 


The merger between Robi and Airtel is a merger of such a scale that has been proposed for the first time in Bangladesh. Therefore, in the absence of any particular statute for merger and acquisition, the case, Robi Axiata Limited, and Ors. Vs. RJSC is an appropriate guide for any merger and acquisition in Bangladesh. 

The Judgment of this case has touched on all these issues and read as a comprehensive elaboration of an entire range of substantive issues affected by the merger and sets the tone for a holistic evaluation of the scheme. Therefore, our discussion will also highlight the key points from the above-mentioned judgment. 


Guideline on the merger from the case 


  • In case of a merger between telecommunication companies, prior approval has to be obtained from the Ministry of Posts, Telecommunications and Information Technology (MOPT) acting upon BTRC’s recommendation before the merger may take place under a proposed scheme of amalgamation (section 37 of Bangladesh Telecommunication Regulation Act 2001 (BTR Act)).


  • The BTR Act makes it imperative under section 37(2) for the MOPT’s prior approval to be secured as per the BTRC’s recommendation. 


  •  The BTR Act does not specifically provide the objective standards against which the BTRC may gauge the sufficiency of the scheme. 


  • The court is apprised of the BTRC’s need to evaluate the scheme from a development and welfare perspective, ascertain the extent to which the scheme may contribute to the efficiency of the domestic telecommunication system and its effect on consumer rights in terms of charges imposed, and access, quality, and variety of services available deter unfair practices of operators to secure and promote healthy competition, ensure market accessibility of new operators, etc. 


  • In this case, the court has directed BTRC to conclude the expert evaluation by seeking opinions from other mobile operators and to conduct a public hearing. In addition, BTRC has also been directed to ensure that its recommendations are forwarded to the MPOT.     


  • The court also needs to consider the range and diversity of interests that fall to be impacted by the proposed merger. The significance, therefore, of a whole host of factors like the social and economic effect of such merger, accruals to government revenue through spectrum auction, employment security, share pricing in the amalgamated company, etc. are not lost in this court even at this preliminary stage of application admission. 


  • In this case, it was stated that public interest clearly emerges as a vital and co-equal contender for this court’s attention in that regard. 


  • Generally, in the case of merger and amalgamation, the issue of employment security and employee interests is given priority of consideration to gauge the acceptability of any merger plan. This case proves no exception in that regard. The University of Dhaka Expert Report, emphasizes the retention of service of employees of both entities in the amalgamated company, in particular, as well as devising a Voluntary Retirement Scheme (VRS) for them. With regard to the latter, the expert report recommends that employees desiring to leave their jobs shall be offered a VRS ‘’following policy clearance by BTRC and all relevant government bodies making not only the decision on allowing VRS but also developing the detailed framework for its implementation based on a review of the practice of national and international organizations having similar options. ‘’ There is, therefore, a clear implication in such a report of the need for detailed elaboration of a retirement scheme as a necessary corollary to the scheme’s implementation. 


  • In this case, the court is of the view that there is no reason why Airtel’s workforce, and indeed this court, may not insist upon a properly and fairly devised VRS/VSS to be firmly put into place at the earliest in order that any given airtel employee has an existing option in hand from the effective date onwards to make a considered decision whether to be a participant or not of this amalgamation exercise. As deduced by this court, a severance or retirement plan is firmly entrenched at the very outset. 


  • The court has directed Airtel to further increase its paid-up capital and issue ordinary shares to the extent of equity brought in by airtel Bangladesh ltd from its shareholder or other shareholding companies. 


  • The court has also directed that an additional certified copy of this Judgment and Order, is to be served on BIDA to facilitate the absorption of Airtel’s expatriate workforce within the amalgamated company through the issuance or renewal of relevant work permits. 





The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly CLP experienced in dealing with Mergers and Acquisitions. In addition to handling various issues related to domestic clients on a regular basis, it also has experience in consulting and assisting numerous international clients with utmost care and attention throughout their legal troubles.  For queries or legal assistance, please reach us at:
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