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Bangladesh Bank has simplified the process of repatriating dividends for foreign investors, allowing companies to remit dividends of up to 5 percent against preference shares abroad without prior approval from the central bank.
The central bank issued a circular on Tuesday and sent it to all authorised dealer (AD) banks across the country dealing in foreign exchange.
According to the circular, investment funds against the issuance of such shares must be brought into Bangladesh in foreign currency through legitimate banking channels.
Under the new guidelines, companies will not require prior approval from Bangladesh Bank to remit dividends if the rate does not exceed 5 percent of the face value of preference shares.
However, prior approval will be required if the dividend rate exceeds 5 percent, including participating or adjustable dividend rates.
In such cases, companies will have to submit applications through their nominated AD banks, providing appropriate justifications.
The circular also requires the concerned AD bank to submit a report, along with necessary documents, to the Foreign Exchange Investment Department within 14 days of the issuance of preference shares.
Similarly, a post-facto report must be submitted within 30 days after the proceeds from the redemption of such shares are remitted abroad.
The circular further stipulates that dividend payments and redemption proceeds must be remitted to the relevant countries through the same AD bank or channel through which the original investment funds were brought into Bangladesh.
Preference shares are a type of share that provides holders with certain advantages over ordinary shareholders, including priority in receiving dividends at a specified rate and recovering their investments in the event of company liquidation. However, preference shareholders generally do not enjoy voting rights.