On 3 November 2026, Bangladesh Bank issued guidelines on the issuance, conversion and redemption of preference shares. The guidelines set out how Bangladeshi manufacturing and service companies may raise capital from non-resident investors. They also explain what Authorised Dealer (AD) banks must do.
Key points
- Issuance: Companies may issue preference shares to non-resident investors. They must comply with the Companies Act 1994 and Bangladesh Securities and Exchange Commission (BSEC) regulations. Shares are issued at par, against foreign currency remitted through official banking channels.
- Returns and dividends: Bangladesh Bank approval is not required if the dividend rate is 5% of face value or less. Higher rates, participative rights and adjustable dividend rates need approval through the nominated AD bank. Dividends must be repatriated through the AD bank that received the original investment. They go to the country the funds came from. They may also be reinvested in ordinary shares.
- Conversion: If preference shares carry a conversion feature, the company must be valued. The conversion ratio is based on the fair value of the ordinary shares. This follows the method in FEID Circular No. 01 dated 8 March 2026.
- Redemption: No approval is required where the shares were issued in line with the circular. Companies must submit pre- and post-redemption Schedule X and the related financial statements to Bangladesh Bank.
Why it matters: The guidelines give foreign investors and Bangladeshi companies a clearer route for preference share funding. They also set out the approvals, reporting and repatriation steps involved.
These Industry Insights provides businesses, finance professionals and other stakeholders with timely insights into key developments in Bangladesh’s regulatory landscape, including foreign exchange regulations, banking, corporate affairs, import policy and other regulatory matters. Designed to help organisations understand regulatory change, manage risk, strengthen governance and make informed business decisions, the publication reflects Rahman Rahman Huq (RRH)’s 60-year legacy in Bangladesh. As a trusted and leading business consultant and regulatory risk advisor, and formerly the first Big 4/KPMG member firm in Bangladesh, RRH combines deep industry knowledge with practical regulatory insights and support across areas including company incorporation, branch and liaison office setup, licensing and registration, reinforcing its commitment to service excellence and trusted professional advice.