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Overview

Bangladesh’s capital market comprises organised equity and debt trading platforms, central depository arrangements and a domestic regulator. In 2023 the market continued to be characterised by a relatively small capitalisation in regional terms, episodic volatility and ongoing efforts to strengthen governance, market infrastructure and investor protections. For UK and other international participants assessing opportunities or structuring exposure, the environment calls for careful due diligence across corporate disclosure, settlement mechanics and foreign exchange and repatriation frameworks.

Market structure and recent developments

The market is typically described in three layers: primary issuance (IPOs and debt placements), secondary trading on the recognised exchanges and the supporting post‑trade infrastructure (central depository and settlement). Recent developments through 2023 included measures focused on enhancing transparency, improving market surveillance and upgrading electronic trading/clearing capabilities. Market depth and liquidity remain variable across sectors; some issuers and instruments attract concentrated investor interest while others trade thinly.

Cross‑border considerations for UK and international participants

International investors and arrangers should evaluate a number of cross‑border issues before committing capital or advising clients on issuance/listing strategies. Key areas to consider include:

• Legal and regulatory framework: the applicable corporate and securities laws, the role of the domestic regulator and the procedural requirements for public offers and listings.
• Market access and distribution: rules governing underwriters, bookrunners and placement agents, and any limitations on foreign participation.
• Settlement, custody and transferability: operation of the central depository, dematerialisation requirements and timelines for settlement.
• Foreign exchange and repatriation: currency convertibility, approval regimes for offshore transfers and potential timing or documentation constraints.
• Tax and fiscal considerations: withholding taxes on dividends and interest, corporate tax treatment of issuers and any tax incentives relevant to cross‑border investors.
• Corporate governance and minority investor protections: disclosure standards, related‑party transaction rules and avenues for shareholder remedies.

Practical checklist for transactions and listings

1. Confirm the regulatory steps required for primary issuance and any approvals or filings with the market regulator.
2. Engage local counsel and a reputable local custodian or central depository participant to verify clearing and settlement processes.
3. Run focused financial and corporate due diligence on target issuers, with emphasis on related‑party transactions, audit continuity and contingent liabilities.
4. Assess FX and repatriation mechanics with banking partners to test timing and documentary requirements for non‑resident investors.
5. Consider structuring alternatives (direct investment, GDR/ADR arrangements where available, or dual listings) and associated tax implications.
6. Document investor protections and exit mechanisms in offering materials and shareholder agreements where appropriate.

Jurisdiction and sources

Primary official sources for market regulation, corporate filings and infrastructure information include the country’s securities regulator, the principal stock exchanges and the central securities depository. For cross‑border matters, consider relevant guidance from HM Treasury and HM Revenue & Customs on foreign investment and tax implications under England & Wales law.

• Bangladesh Securities and Exchange Commission (SEC)
• Dhaka Stock Exchange (DSE)
• Chittagong Stock Exchange (CSE)
• Central Depository Bangladesh Limited (CDBL)
• HM Treasury; HM Revenue & Customs (UK)

When considering activity in Bangladesh’s capital markets, frame decisions around robust local due diligence, clear transactional documentation and an understanding of market‑specific operational risks. For tailored advice on a particular transaction, seek jurisdiction‑specific legal and tax counsel.

General information only; not legal advice and not a substitute for advice on a particular matter.