A long-pending legal petition has been hindering foreign companies entering into the Bangladesh’s Commercial Service sector, including the areas of freight forwarding and logistic services, shipping agencies, airlines GSA, distribution and travel agencies alike.

The Bangladesh High Court on September 26, 2012 imposed an injunction on granting registration, licence, permission or work permit to any new foreign and/or joint-venture company in the Commercial Service sector. Any foreign or joint-venture investment or operation in this sector remains impossible since then.

The court passed the rule in response to a public-interest litigation (PIL) filed by a petitioner on September 25, 2012.

The petitioner claimed that many foreign or joint-venture companies, with nominal paid-up capital as little as BDT 200 (or 2€), were operating in Bangladesh. They were enjoying all benefits, including bank loan facilities and other commercial privileges, under the existing law by making such a nominal amount of investment.

They were also remitting large amount of profits abroad, the petitioner said. There was no legal bar to forming foreign or joint-venture companies with such a paltry amount of paid-up capital under the existing law, he added.

Following the petition, an HC bench comprising Justice Salma Masud Chowdhury and Justice Quazi Reza-Ul Hoque issued a rule asking the authorities concerned to explain as to why they should not be directed to finalise the guideline by incorporating some relevant terms and conditions on operation of foreign or joint-venture companies or industries in Bangladesh.

It also sought explanation as to why the respondents concerned should not be directed to bring necessary amendments to the Companies Act 1994 to this effect.

Respondents made in the HC rule are the commerce secretary, the finance secretary, the law secretary, the education secretary, the shipping secretary, the civil aviation and tourism secretary, the home secretary, Bangladesh Bank governor, the National Board of Revenue (NBR) chairman, the Registrar of Joint Stock Companies and Firms (RJSC) in Dhaka, executive chairman of the BoI and the commissioners of the Customs House in Dhaka, Chittagong and Mongla.

It is unclear as to why disposal of this petition takes such a long time, particularly hindering foreign direct investments (FDI) flow into Bangladesh and most importantly who have been benefitting from the injunction on foreign companies for more than last two years.

Mrs. Ivonne Stein is a German Legal Advisor with nearly two decades of professional experience both in the private sector and government institution. She gained professional skills in Frankfurt, Zurich, London, New York and Brussels before moving from Islamabad to Dhaka. She advises foreign companies doing business in and with Bangladesh in compliance with the local legislations, labour, social and environmental standards working towards implementation of the relevant UN and ILO conventions as well as the OECD Guidelines for Multinational Enterprises. Mrs. Stein can be reached by email at to[at]bangladeshinside.com

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