It depends on the fund's constitution and the BSEC rules that apply to it. Bangladeshi private equity and venture funds are generally constituted as trusts, with a trustee holding the assets and an asset manager running the fund, and their ability to borrow or grant security may be restricted by the rules, the trust deed or the BSEC registration conditions. Some funds may only borrow short term or within limits. We review the documents and current rules, and advise whether a fund finance facility is permitted, who must sign, and which approvals or investor consents are needed first.

In principle, contractual rights such as the right to call capital can be assigned or charged under Bangladesh law, but the effectiveness of that security depends on the fund documents. The trust deed and subscription agreements should permit the assignment, allow the lender or a receiver to issue calls after default, and require investors to pay into a controlled account. Notice to investors, and sometimes acknowledgements, strengthen the lender's position. Stamping and registration requirements must also be met. We review the documents and draft the Bangladesh security so that it fits the fund finance structure agreed offshore.

Shares in private companies are usually pledged through a share pledge agreement with signed transfer forms, powers of attorney and restrictions in the articles, while listed and dematerialised shares are pledged through the central depository system. On default, the lender may sell the shares or have them transferred to itself or a nominee, subject to the articles, any regulator's approval and, where the buyer or lender is a non-resident, foreign exchange rules on valuation and remittance. Court involvement may be needed if the pledgor resists. These steps take time, which should be reflected in the fund finance terms.

Yes, where a Bangladeshi borrower pays interest to a non-resident lender, withholding tax generally applies. The Finance Act 2026 reduced the rate on interest paid to non-residents to 10% from 20%, and a double tax treaty may reduce it further if the lender qualifies and the documentation is in place. Lenders usually require gross-up clauses, so the cost falls on the borrower. Where the borrower is an offshore fund vehicle with no Bangladeshi presence, Bangladeshi withholding does not normally arise, though dividend and gains taxes on the underlying portfolio still affect the NAV available to service a fund finance facility.

Bangladeshi residents and companies generally need permission under the foreign exchange rules to invest abroad, and permission for outbound portfolio or fund investments is granted only in limited circumstances. Non-resident Bangladeshis, foreign nationals and offshore entities owned by them are in a different position. For a lender, this matters because commitments from investors who lack the necessary permission may be unenforceable or impossible to pay. We advise sponsors and lenders on the status of Bangladeshi investors and on how the borrowing base and eligibility criteria in a fund finance facility should treat them.

Charges created by Bangladeshi companies over their assets, including certain share pledges, account charges and assignments, generally need to be registered with the Registrar of Joint Stock Companies and Firms within the period set by the Companies Act 1994, or they may be void against a liquidator and other creditors. Pledges of dematerialised shares are recorded through the depository. Security documents also attract stamp duty, which must be paid for the document to be admissible in court. Trust deeds and some assignments may need registration under the Registration Act 1908. We prepare a perfection checklist for each fund finance transaction.

Bangladesh courts generally respect a choice of foreign law in commercial contracts, but a foreign judgment is only directly enforceable if it comes from a reciprocating territory or is recognised through a fresh suit, and enforcement against Bangladeshi assets still requires local proceedings. Arbitral awards made in New York Convention countries can be enforced under the Arbitration Act 2001. Local-law security over Bangladeshi assets is normally governed by Bangladesh law and enforced locally. We provide enforceability opinions that set out these points clearly, so that credit teams understand how a fund finance claim would be pursued in Bangladesh.

Bangladeshi banks can lend to funds and fund vehicles, subject to the Bank Company Act 1991, Bangladesh Bank prudential rules, single-borrower and large-exposure limits and limits on capital market exposure, which can restrict lending to investment vehicles. The bank will also need comfort on the fund's borrowing powers, the trustee's role and the enforceability of security over call rights. Lending in foreign currency to residents is regulated separately. We advise local and international banks on structuring a compliant facility and on documentation that meets both Bangladesh requirements and international fund finance practice.