Question Letter regarding capital enhancement.
【Outline】Capital enhancement by USD.
【Back Ground】
TS TECH BANGLADESH LIMITED. (Hereinafter, it will be called “TSBD”) is manufacturing company (private company) which located in Adamjee EPZ. (Attachment ; AOA & MOA)
Currently paid up capital of TSBD is 260,000,000 BDT and authorized capital is 1,000,000,000 BDT. TSBD is planning to increase paid up capital and its amount will be equivalent to 273,000,000 BDT (approx. 400,000,000JPY ). Its newly issued share will be accepted by TS TECH CO.,LTD.( Hereinafter, it TSJP). After capital enhancing, total paid up capital of TSBD will be 533,000,000BDT.
TSBD has USD account in Prime Bank.
For enhancing the capital, TSBD want to follow a step as stated below.
TSBD will receive the capital amount from TSJP in USD account.
TSBD will collect Banker’s Certificate from Prime Bank. The sample of Banker’s Certificate is as attachment.
Mainly the contents of Banker’s Certificate are ;
how much USD was received in USD account,
purpose of remittance, and
how much BDT will be equivalent to its USD amount received as capital
Capital amount of TSBD will be deposited and kept in USD account. And its amount will not convert into BDT. However capital amount will be registered by BDT amount based on the Banker’s Certificate which is stated converted capital amount by rate of arrival date of remittance.
TSBD will apply for capital enhancement to BSEC, RJSCB.
Capital amount of TSBD will be BDT amount based on Banker’s Certificate.
Regarding Ⅳ-5, TSBD raised inquiry to RJSCB. TSBD got following answer from RJSCB.
“In allotment of shares of the registered company Taka will be regarded as currency.”
TSBD cannot get any answer whether TSBD can keep capital amount in USD account or not. Additionally, through the interview to Bangladesh Bank, TSBD got the answer from Bangladesh Bank that paid up capital can enhance without encashing.
In Bangladesh Bank Guideline Chapter9 2(A)-(a), following provision is stipulated.
“foreign exchange thus brought in must be encashed in taka before issuance of shares.”
However, there is no clear notification whether this regulation is applicable for EPZ Type-A company or not.
【Inquiry】
In our understanding, regarding Ⅳ-5 and V, The Companies act 1994 is silent for capital currency. Whether keeping capital amount by USD in USD account is illegal or non-compliance for any law or regulation.
Legal basis of answer of (a)
Whether Prime bank will issue Banker’s certificate which is stated Ⅳ-2 is illegal or non-compliance for regulatory basis or not. Especially whether Prime bank can issue the statement stated “how much BDT will be equivalent to its USD amount received as capital” is illegal or non-compliance for regulatory basis.
Legal basis of answer of (c)
If Banker’s Certificate which was stated in Ⅳ-2 is not illegal or non-compliance for regulatory basis, how much rate should be used for BDT conversion. (Rate of Bangladesh Bank or Prime Bank, remitted date should be used or capital registration date should be used.)
Whether remitted USD will be used before completion of paid up capital registration is illegal or non-compliance.
TSBD wants to book remitted capital amount as “Share money deposit” before completion of registration of RJSCB. After completion of registration of RJSCB, its capital amount will be “Paid up capital” from “share money deposit”. Whether such accounting treatment is non-compliance or violation of accounting standard in Bangladesh.