Merger Procedure in Bangladesh 2026: Schemes of Amalgamation, Court Sanction and Regulator Approvals

Merger procedure Bangladesh: how a scheme of amalgamation becomes law in 2026

The merger procedure Bangladesh law provides for is a court process, not a filing. A merger or amalgamation takes effect through a scheme of compromise or arrangement under sections 228 and 229 of the Companies Act 1994, approved by the members and creditors at court-convened meetings and sanctioned by the company bench of the High Court Division.[1] [2] Around that court process sit a set of regulators whose consent can make or break the timetable: the Bangladesh Securities and Exchange Commission for listed companies, Bangladesh Bank for banks and finance companies, the Competition Commission for combinations that affect a market, and the National Board of Revenue for tax neutrality.

This guide is the procedural playbook: the scheme, the petition, the meetings, the regulators, the tax conditions, the employees and the filings with the Registrar of Joint Stock Companies and Firms. For deal structuring, share purchases, foreign exchange and valuation for cross-border acquisitions, read it alongside our wider guide to mergers and acquisitions law in Bangladesh.

Summary: A merger in Bangladesh is implemented by a scheme of amalgamation sanctioned by the High Court Division under sections 228 and 229 of the Companies Act 1994. The court orders meetings, the scheme needs three-fourths in value of each class present and voting, and the sanction order vests the transferor's undertaking in the transferee and can dissolve the transferor without winding up. Listed companies, banks and finance companies need regulator involvement before sanction, and the scheme must be built around the Income Tax Act 2023 conditions if it is to be tax-neutral.

Key point: The 2026 change to watch is the draft BSEC (Corporate Restructuring) Rules 2026, published for comment on 23 May 2026. If adopted, a listed company would have to submit its draft scheme to BSEC and the stock exchanges within 30 days of board approval and before going to court, obtain an independent valuation using at least two absolute and two relative methods, and secure at least 75 per cent approval from general shareholders, excluding sponsors, directors and 5 per cent holders.[10]

At a glance

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Table of Contents

Legal requirements for mergers in Bangladesh

Bangladesh has no standalone merger statute. The legal requirements for mergers come from the Companies Act 1994, which supplies the court procedure; sector statutes, which add regulator approval for banks, finance companies and other licensed businesses; securities law, which governs listed companies; the Competition Act 2012, which controls combinations; and the Income Tax Act 2023, which decides whether the transaction triggers tax. The skill lies in sequencing those layers so that no approval arrives after it was needed.

Merger, amalgamation and acquisition distinguished

In Bangladeshi usage, "merger" and "amalgamation" are used interchangeably to describe one company absorbing another, or two or more companies combining into a new one.[4] The Income Tax Act 2023 adopts the same idea, defining amalgamation as the merger of one or more companies with another company, or of two or more companies to form a new company.[13] An acquisition is different. A buyer that purchases shares acquires the company with its history intact, and no court sanction is needed unless the buyer wants to use the statutory squeeze-out. Share purchases, asset purchases and their documents are covered in our M&A guide and our note on share transfer in Bangladesh.

Why a scheme rather than a contract

A contract binds only those who sign it. A sanctioned scheme binds every member and creditor in each class, including those who voted against it, and the sanction order itself transfers property and liabilities without separate conveyances.[1] [2] It is the only way to move an entire undertaking, including contracts and litigation, in one step and dissolve the transferor without a winding up.

The scheme of amalgamation under sections 228 and 229

The scheme of amalgamation is the central document in the merger procedure Bangladesh law prescribes. Everything else in the process exists to test whether it is fair, workable and lawful.

Section 228: the compromise and arrangement engine

Section 228 applies where a compromise or arrangement is proposed between a company and its creditors or members, or any class of them. On a summary application by the company, a creditor, a member or a liquidator, the court may order meetings to be called, held and conducted as it directs.[1] If a majority representing three-fourths in value of the creditors or members, or the class, present and voting in person or by proxy agrees, and the court sanctions the scheme, it binds all of them and, in a winding up, the liquidator and contributories.[1]

The order has no effect until a certified copy is filed with the Registrar, and a copy must be annexed to every copy of the memorandum issued afterwards. The court may stay suits against the company pending disposal, and an appeal lies from an order under the section as from any other order of the court in its original jurisdiction.[1]

Section 229: the amalgamation toolkit

Section 229 applies where the court is satisfied that the scheme is for the reconstruction of a company or the amalgamation of two or more companies and that the undertaking or property of a transferor company is to pass to a transferee company. The court may then, in the sanction order or a later order, provide for the transfer of the undertaking, property and liabilities; the allotment of shares, debentures or similar interests by the transferee; the continuation of pending legal proceedings by or against the transferee; the dissolution of the transferor without winding up; provision for dissenting persons; and any incidental or supplementary matters needed to carry the amalgamation through fully and effectively.[2]

Property and liabilities transferred by the order vest in the transferee by virtue of the order itself, and where the order directs that property is to be freed from a charge, the charge ceases to have effect. A certified copy must be filed with the Registrar within fourteen days, failing which the company and every officer knowingly and wilfully in default are liable to a fine.[2]

What a well-drafted scheme contains

A scheme that survives scrutiny should identify the transferor and transferee, the appointed date from which the undertaking is treated as transferred, and the effective date on which the order is filed. It should define the undertaking broadly, state the share exchange ratio and the treatment of fractional entitlements, increase the transferee's authorised capital where needed, and explain how creditors, employees, pending litigation, licences and tax liabilities are dealt with.

Practitioners also build in protective clauses. The scheme should provide that the companies accept any modification the court directs, that accumulated income tax and VAT liabilities and any tax benefits of the transferor pass to the transferee, and that the scheme lapses, with the companies continuing as before, if sanction is refused.[4] Missing any of these forces a return to court.

Before the petition: board work, valuation and pre-clearance

Most of the work in the merger procedure Bangladesh companies follow happens before anything is filed. An unexplained exchange ratio, an unconsulted lender or a missing regulator letter is the commonest cause of delay.

Board approvals and the appointed date

Each board approves the scheme of amalgamation, the appointed date, the valuation, the exchange ratio and the authority to apply to court. For a listed company, the board decision is price-sensitive and must be disclosed to the market. The appointed date usually coincides with the start of an accounting period so that audited figures support the transfer.

Valuation and the share exchange ratio

The exchange ratio is the commercial heart of the scheme and the point most likely to be attacked by minority shareholders or the regulator. Use an independent valuer, apply more than one method, document the assumptions and reconcile the outcome. The market now has a clear benchmark: the draft BSEC rules would require at least two absolute and two relative methods, a discount rate no lower than the 10-year treasury bond yield and a fairness opinion from a registered merchant banker for listed company schemes.[10] Private companies are not bound by those rules, but a valuation that meets them is far easier to defend before the court.

Lenders, counterparties and sector regulators

Review every loan, lease, joint venture agreement and licence for change-of-control, anti-assignment and merger restrictions, and comply with them.[4] Lenders should be approached early; in a contested BSRM merger, the court placed weight on the fact that the banks of both companies supported the amalgamation.[6] Sector regulators may need to approve first, with BEPZA and the telecom regulator BTRC given as examples, and licences held by the transferee should be checked so that they are not cancelled after the amalgamation.[4]

The High Court Division approval process

The court for sections 228 and 229 is the High Court Division, and scheme petitions are heard by its company bench in Dhaka as company matters.[4] The High Court Division approval process runs in two stages: an application for directions on meetings, and a later hearing for sanction.

First motion: filing the company matter

The companies file an application, usually jointly, attaching the scheme, board resolutions, constitutional documents, audited accounts and valuation. Under the Companies Rules 2009, the application is verified by a director or principal officer, and on admission the court gives directions on the dates on which the scheme will be placed before members and creditors, the person who will chair each meeting, the time, place and procedure of the meetings, the notice to be given, the deadline for the chair's report and the date of the further hearing.[4]

Second motion: the sanction hearing

After the meetings, the chair reports the results to the court, and the companies file an affidavit confirming compliance with the court's directions at least seven days before the further hearing.[4] At the hearing the court considers the chair's report, any objections from members, creditors or regulators, and the merits of the scheme. It may sanction the scheme as filed, sanction it with modifications, or direct changes before sanction.

How the company bench tests a scheme

The court does not simply count votes. It asks whether the scheme harms anyone and whether it conflicts with the public interest, and it may direct the applicant to revise the scheme rather than reject it.[5] In Robi Axiata Limited v RJSC (2016), it tasked the telecom regulator with an expert evaluation and a public hearing and considered effects on consumers, competition and Airtel employees; in Summit Power Limited v Summit Narayanganj Power Ltd (2018), it directed the petitioner to revisit certain clauses.[5]

Regulator opposition is not fatal. In sanctioning the amalgamation of BSRM Steel Mills into Bangladesh Steel Re-Rolling Mills, the court overrode BSEC's objection that general shareholders would lose because of the transferor's liabilities and revaluation-based net asset value, but imposed a three-year bar on past and present directors of both companies transferring shares in the transferee.[6] Expect conditions of that kind where the minority looks exposed.

Shareholder and creditor meetings

Shareholder and creditor meetings are where a scheme of amalgamation is won or lost, and they are governed by the court's directions rather than by the articles alone.

Identifying the classes

Meetings are held for each class whose rights the scheme affects. Members with different rights, such as preference and ordinary shareholders, may form separate classes, and secured creditors are usually treated apart from unsecured creditors. Section 228 provides that unsecured creditors who have sued or obtained decrees are to be treated as one class with other unsecured creditors.[1] Getting the classes wrong exposes the sanction to challenge, so the class analysis belongs in the first application.

Notice, proxies and the majority

Notice goes out in the form and manner the court directs, together with the scheme and an explanatory statement. Votes may be cast in person or by proxy, and the test is three-fourths in value of those present and voting in each class.[1] The value test means a handful of large holders can carry or defeat the resolution, which is why sponsor shareholdings and institutional lenders deserve early engagement. Listed companies typically convene an extraordinary general meeting under the court's order, and the draft BSEC rules would require an independent scrutiniser's report on the vote.[10]

The chair's report and dissenters

The court-appointed chair conducts the meeting, records attendance and votes by value and reports to the court. Dissenters may appear at the sanction hearing, and section 229 allows the court to make provision for persons who dissent.[2] Where a bidder is acquiring shares rather than merging companies, section 230 provides a separate mechanism: once holders of at least three-fourths in value of the shares concerned approve within 120 days, the transferee may, within the next 60 days, give notice to acquire dissenting shareholders' shares on the same terms.[3]

Steps for a successful merger

The steps below set out the merger procedure Bangladesh companies follow from feasibility to completion. The court's list and the regulators drive the timetable, so build contingency into every long-stop date.

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Competition Commission merger notification under section 21

Merger control is the least developed layer of the merger procedure Bangladesh law sets, and the one most often misunderstood by foreign parties used to automatic filing thresholds.

What section 21 provides

Section 21 of the Competition Act 2012 prohibits a combination in the market for goods or services that causes, or is likely to cause, an adverse effect on competition. A combination that does not have that effect may be approved by the Commission on application, and the Commission is to specify by regulation which combinations require approval and the procedure for applications and inquiries.[7] If, after inquiry, the Commission finds an adverse effect, it must refuse approval.[7]

The missing regulations and thresholds

The regulations contemplated by section 21 have not yet been issued. According to the 2026 Chambers guide, the Competition Commission's draft Bangladesh Competition (Combination) Regulation had been sent to the law ministry for vetting with no fixed timeline, and the February 2026 election may leave it to the elected government.[8] A draft Combination Regulations 2025 was circulating for comment in late 2025, with commentators urging mandatory pre-merger notification, a two-phase review and formal coordination with BSEC, BTRC and Bangladesh Bank.[9] There are therefore no notification thresholds in force at the date of writing; figures quoted in drafts are proposals, not law.

How to handle section 21 in 2026

The absence of thresholds does not make the prohibition optional. For any combination between competitors or with a meaningful market share, prepare a short competition assessment, consider a voluntary application for approval, and disclose the analysis in the petition. A horizontal merger in a concentrated sector is the obvious risk. Our guide to competition law in Bangladesh covers the wider enforcement picture.

Listed companies: BSEC approval and the 2026 draft rules

Where a listed company is a party, the Securities and Exchange Ordinance 1969, the BSEC Act 1993 and BSEC rules come into play alongside the Companies Act.[4] Takeovers of listed companies by share acquisition fall under the separate 2018 takeover rules discussed in our securities law guide; this section deals with schemes.

Current practice

BSEC participates in scheme proceedings involving listed companies and can oppose a scheme it considers unfair to public shareholders, as it did in the BSRM case.[6] In practice, a listed transferee also seeks BSEC's consent before issuing new shares to the transferor's shareholders, a post-sanction step the draft rules would formalise, and price-sensitive disclosure obligations apply throughout.[10]

The draft BSEC (Corporate Restructuring) Rules 2026

The draft published on 23 May 2026 would apply to any scheme of arrangement, compromise, merger, demerger, amalgamation or acquisition involving a listed company and any listed or non-listed company.[10] Its sequence is clear. The listed company submits the draft scheme to BSEC and the exchanges within 30 days of board approval; the exchanges comment within 30 working days and BSEC within 45 working days; the board revises the scheme and seeks a special resolution; only then does the company apply to court, where BSEC may be impleaded; and after sanction the company applies for consent to issue capital, copying the consent to the Registrar within 10 days.[10]

The substantive tests are demanding. The valuer must be a panel audit firm or registered merchant banker other than the statutory auditor or adviser; consideration must be fair and must not prejudice any class; the scheme must quantify dilution for public shareholders and explain minority protections; and schemes used for backdoor listing, valuation inflation or price manipulation are prohibited. Approval requires at least 75 per cent of general shareholders present and voting, excluding sponsors, directors and holders of 5 per cent or more.[10]

Banks and finance companies: Bangladesh Bank approval

For banks and non-bank financial institutions, the merger procedure Bangladesh law applies is different in kind: Bangladesh Bank is not one regulator among several; it is the gatekeeper whose certificate the court needs before it can sanction anything.

Bank companies

Section 76 of the Bank Company Act 1991 provides that, notwithstanding any other law, the High Court Division shall not sanction a compromise or arrangement between a bank company and its creditors or members, or any modification of one, unless Bangladesh Bank certifies that it is not unworkable and not prejudicial to the interests of the bank company's creditors.[11] Section 77(16) permits a bank company to merge with another bank or financial institution, or to restructure by transferring part of its business, with Bangladesh Bank's prior approval under its policy, and section 49 allows Bangladesh Bank to assist with amalgamation proposals as an intermediary at the request of the banks concerned.[11]

Section 77 also contains Bangladesh Bank's own power to frame a scheme of reconstruction or amalgamation during a moratorium, with protection for employees' existing pay and terms.[11] Distressed bank mergers in 2025 and 2026, including the five-bank consolidation under the bank resolution legislation, followed a different, resolution-led track that our M&A guide and our note on banking regulations in Bangladesh explain.

Finance companies

Finance companies are now governed by the Finance Company Act 2023. Section 50 allows a finance company to merge with a company, or to restructure by transferring part of its financing business to another finance company or bank company, or by revaluing its assets and liabilities, only with Bangladesh Bank's prior approval.[12] Obtain it before the first motion.

Tax neutrality under the Income Tax Act 2023

Tax is where a well-run merger procedure Bangladesh deal can still go wrong. The Income Tax Act 2023 deals with business restructuring in Part I of the Eighth Schedule, applied through section 25, and the definitions there decide whether the transaction is tax-neutral.[13]

The amalgamation conditions

No tax is charged on a capital gain arising from the transfer of a capital asset in a scheme of amalgamation.[13] To qualify, the process must result in all the assets and all the liabilities of the amalgamating company becoming those of the amalgamated company, and shareholders holding not less than 75 per cent in value of the shares in the amalgamating company must become shareholders of the amalgamated company. Where the amalgamated company or its subsidiary already holds shares in the amalgamating company, the 75 per cent is computed after excluding that holding.[13]

The exemption is not unlimited. Any consideration received by shareholders of the amalgamating company other than shares of the amalgamated company is taxable at the applicable rate.[13]

Losses, depreciation and asset values

Subject to section 70, the amalgamated company may set off and carry forward the accumulated losses and unabsorbed depreciation of the amalgamating companies as its own. But the value of the capital assets in its hands cannot exceed their written down value in the amalgamating companies' accounts, and no depreciation or amortisation may be claimed on any revaluation surplus.[13] Parallel rules apply to demergers, where the 75 per cent continuity test also applies and assets must move at book value as an active business.[13]

Tax holidays and other taxes

Section 76(8) provides that a person granted a tax exemption for a definite period is not entitled to tax exemption on reconstitution by amalgamation, demerger or acquisition.[13] A target with an unexpired tax holiday should be modelled on the assumption that the holiday will not survive. Beyond income tax, the scheme should expressly vest the transferor's VAT and income tax liabilities and benefits in the transferee, and the sanction order should direct the revenue authorities to give effect to it.[4] [6] See our corporate income tax guide.

Employee transfer in a merger

Employees are often the least represented stakeholders in the merger procedure Bangladesh companies run, and the company bench has shown it will protect them. In the Robi and Airtel amalgamation, the court considered the interests of Airtel employees as part of its public-interest review.[5]

Who employs the workforce after sanction

The Bangladesh Labour Act 2006 defines an employer to include a successor by transfer of the person who employs workers, so the transferee steps into the employer's shoes.[14] The sanction order, by vesting the undertaking, carries employment contracts with it. The scheme should provide expressly for transfer of employment, continuation of accrued benefits such as provident fund and gratuity, and, where relevant, voluntary retirement with adequate compensation.[4]

Redundancies after the merger

A merger is not itself a ground for dismissal. If roles become surplus, retrenchment under section 20 of the Labour Act requires, for a worker with at least one year of continuous service, one month's written notice stating the reason or wages in lieu, copies to the inspector and any collective bargaining agent, and compensation of 30 days' wages for each year of service or gratuity, whichever is higher.[14] Our guide to termination of employees in Bangladesh covers the full regime. For bank mergers, section 77 of the Bank Company Act protects employees' existing pay and terms in a Bangladesh Bank scheme.[11]

After sanction: RJSC filings and implementation

Sanction is not completion. The order takes effect only on filing, and the work of making the combined business operate under one name often takes longer than the court process.

Filing with the Registrar

The certified copy of the order must be filed with the Registrar within fourteen days and annexed to every subsequent copy of the transferee's memorandum.[1] [2] The transferor is then dissolved without winding up and struck from the register, and the order typically directs the RJSC not to register another company under the transferor's name.[4] Post-closing filings include Schedule X and Form XII to update the transferee's shareholding and board records, and certified copies should be obtained to confirm that the register is correct.[4]

Implementing the vesting order

Although property vests by force of the order, third parties need to see it. Update land records, bank mandates, licences, tax registrations and insurance, and notify counterparties. Mortgages and charges continue against the surviving company, and personal guarantees given by directors or shareholders are unaffected.[4] Where a non-resident receives shares in the transferee, the foreign exchange reporting described in our M&A guide applies. The company law side of ongoing compliance is covered in our guide to company law in Bangladesh.

Merger procedure Bangladesh approvals compared

The table summarises who approves what, and when that approval is needed.

Merger guidelines and best practices

The legal steps are fixed; execution is not. These merger guidelines for the merger procedure Bangladesh courts supervise separate schemes sanctioned at the first hearing from those that return to court.

Design for the court from day one. Explain the commercial rationale, show that creditors and employees are protected, attach regulator letters and include a defensible valuation.

Sequence the regulators. Bangladesh Bank's certificate, BSEC observations and any sector approval should precede the first motion.

Model tax before fixing consideration. The 75 per cent continuity test and the treatment of non-share consideration should shape the exchange ratio.

Engage creditors early. Lender support carried weight in the BSRM sanction.[6]

Plan integration in parallel. The transferor ceases to exist once the order is filed, so licences, titles and people must be ready to move.

Merger procedure Bangladesh mistakes to avoid

The same errors recur in Bangladeshi schemes.

Treating the scheme as a template. A generic scheme of amalgamation omits the clauses that matter: acceptance of court modifications, vesting of tax liabilities and lapse on refusal.

Misidentifying classes. A meeting of the wrong class, or a missing class, can undermine the sanction.

Ignoring section 21. A combination that harms competition is unlawful whether or not thresholds exist.[7]

Breaking tax neutrality by accident. Cash consideration, excluded liabilities or continuity below 75 per cent can make the transfer taxable.[13]

Missing the fourteen-day filing. Late filing attracts a fine for the company and its officers.[2]

What to watch in late 2026

Three developments will reshape the merger procedure Bangladesh businesses use. First, the BSEC (Corporate Restructuring) Rules 2026 are likely to be finalised, bringing mandatory pre-court regulator review and minority-protective voting to every listed company scheme.[10] Second, the Competition Commission's combination regulation remains with the government, and its adoption would introduce, for the first time, an approval process and possibly notification thresholds under section 21.[8] [9] Third, the government's proposed amendments to the Companies Act, discussed in our company law guide, could change filing practice with the Registrar.

Parties planning a merger in 2027 should build to the draft rules now. To plan a scheme, contact TRW.

Frequently asked questions

Which law governs the merger procedure Bangladesh companies follow?

Statutory mergers and amalgamations proceed by a scheme under sections 228 and 229 of the Companies Act 1994, sanctioned by the High Court Division, with sector, securities, competition and tax rules layered on top.[1] [2]

What majority is needed to approve a scheme of amalgamation?

Three-fourths in value of the members or creditors, or each class of them, present and voting in person or by proxy at the court-convened meeting.[1]

Which court approves a merger in Bangladesh?

The company bench of the High Court Division. It orders the meetings, hears objections and decides whether to sanction the scheme, with or without modification.[4] [5]

Does the transferor company have to be wound up?

No. Section 229 allows the court to dissolve the transferor without winding up once its undertaking vests in the transferee.[2]

How soon must the sanction order be filed with the RJSC?

Within fourteen days of the order. The order takes effect only once a certified copy is filed with the Registrar.[1] [2]

Is Competition Commission approval mandatory for a merger?

Section 21 prohibits combinations that harm competition and allows approval on application, but the regulations setting notification thresholds have not yet been issued. Assess competition effects in every case and consider applying where there is overlap.[7] [8]

What does BSEC require for a listed company merger?

BSEC participates in the court process and its consent is needed to issue new capital. Under the May 2026 draft rules, the scheme would go to BSEC and the exchanges within 30 days of board approval and before the court petition.[10]

Can a bank merge without Bangladesh Bank approval?

No. The High Court Division cannot sanction a bank company's scheme without Bangladesh Bank's certificate, and finance companies need its prior approval to merge.[11] [12]

Is a merger tax-free in Bangladesh?

Capital gains on an amalgamation are exempt if all assets and liabilities pass and holders of at least 75 per cent in value of the shares become shareholders of the amalgamated company. Non-share consideration is taxable.[13]

What happens to employees in a merger?

Employment passes to the transferee as successor employer. Any later retrenchment must follow section 20 of the Labour Act, including notice and compensation of 30 days' wages per year of service or gratuity, whichever is higher.[14]