Remittance of Dividends to Non-Resident Shareholders in Bangladesh

Introduction

Remitting dividends to non-resident shareholders is a critical aspect of international investment and corporate finance in Bangladesh. The regulatory framework governing these transactions has evolved to facilitate seamless foreign exchange operations while maintaining compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. This article provides a comprehensive overview of the remittance process, key regulatory provisions, and recent liberalizations introduced by Bangladesh Bank.

Regulatory Framework

The Guidelines for Foreign Exchange Transactions (GFET)-2018, Vol-1, issued by Bangladesh Bank, outline the rules and procedures for remitting dividends to non-resident shareholders. Specifically:

  • General Authorization for Outward Remittances: Under GFET, Authorized Dealers (ADs) are permitted to process most outward remittances either fully or within specific limits set by Bangladesh Bank. This follows the declaration of the Bangladeshi Taka as convertible for current account transactions in March 1994.
  • Remittance of Dividends: GFET explicitly permits ADs to remit dividends to non-resident shareholders abroad. The dividends can also be credited to foreign currency accounts maintained by non-resident shareholders within Bangladesh, as per Foreign Exchange (FE) Circular 2020.
  • Post-Remittance Compliance: ADs must submit details of remitted dividends to the Foreign Exchange Investment Department at Bangladesh Bank’s Head Office within one month of execution for post-facto verification.

 

Special Provisions for Enterprises in Specialized Economic Zones

Enterprises operating in Economic Zones (EZs), High-Tech Parks (HTPs), and Export Processing Zones (EPZs)benefit from relaxed documentation requirements.

  • In terms of FET, FE Circular 2019 and FE Circular  2020, the submission of supporting documents for remittance of dividends has been waived for enterprises in these zones.
  • This move aligns the regulatory treatment of specialized zones with that of non-specialized zones, ensuring uniformity and streamlining processes for businesses.

 

Recent Regulatory Changes

As part of ongoing financial liberalization, Bangladesh Bank has introduced further relaxations to facilitate efficient dividend remittances:

  • Elimination of Documentation Submission to Bangladesh Bank:
    • ADs are no longer required to submit dividend remittance documents to Bangladesh Bank as per paragraph 31(e), Chapter 10 of GFET.
    • However, ADs must ensure strict compliance with all relevant regulations and retain all documentation for future inspection by Bangladesh Bank and other regulatory authorities.
  • Compliance Requirements for Authorized Dealers:
    • ADs must adhere to the existing instructions under  GFET.
    • They are required to maintain comprehensive dividend remittance files for periodic regulatory audits.
    • ADs must observe due diligence regarding Know Your Customer (KYC) and AML/CFT compliance, ensuring adherence to standard reporting routines to Bangladesh Bank.

Conclusion

The liberalization of dividend remittance regulations in Bangladesh reflects the government’s commitment to fostering a business-friendly environment for foreign investors. By eliminating unnecessary documentation and simplifying compliance requirements, Bangladesh Bank aims to enhance the ease of doing business while maintaining financial security and regulatory oversight.

Foreign investors and corporate entities are advised to work closely with legal and financial professionals to ensure compliance with all applicable laws and optimize their investment strategies. If you require expert assistance regarding dividend remittances or foreign investment regulations in Bangladesh, feel free to contact our experienced legal team for personalized guidance.

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