ShareReporter

Executive Summary

Securities Laws and Regulatory Issues:
Awards made by an overseas Company under an employee Plan are not considered to be a public offering, provided the Awards are made for no consideration. Where any payment is required to be made in connection with Awards, a prospectus must be prepared and filed with BSEC. It is unlikely that the prospectus would be approved in these circumstances.
Exchange Controls:
Approval from the Central Bank is required where funds are remitted abroad in connection with Awards, which is generally difficult to obtain. You may need support on local lawyers.

Participants must report any change in holding of securities in an overseas Company to the central bank within 30 days of such change.
Other Filings and Reports:
There are no particular reporting requirements (not covered elsewhere in the legal report) that are likely to impact on the Company’s operation of the Plan.
Award Documents and Communication:
- Plan Documentation:
  It is common practice that the Plan documentation is made available to Participants.
- Award Document Wording:
  It is recommended to have a local version of the Award documents which includes wording to deal with local tax and legal issues.
- Translations:
  There is no legal requirement to provide a translated version of the Plan documentation. However, if there are any concerns that the Participants will not understand the Plan, consideration should be given to providing a translated version of the key Plan documents (for example, the Award certificate and any FAQs). Translations are recommended where the Plan documents are in a language other than Bengali or English.
- Electronic Communications:
  There are no issues with the use of electronic communications.
- Acceptance by Participants:
  Whether Award documents need to be counter-signed by Participants will be determined by the laws of the country in which the Plan is stated to be subject.
- Jurisdiction Issues:
  The local courts will generally respect the laws under which the Plan documents are stated to be subject.
- Salary Deductions:
  The Local Company may make deductions from Participants' salaries in connection with the Plan. These deductions must be agreed to by Participants.
Consultation and Employment Rights:
- Works Councils:
  Any agreements with local works councils or trade unions must be respected in connection with the implementation of the Plan.
- Local Laws:
  There are no particular local laws (not covered elsewhere in the legal report) that are likely to impact on the Company’s operation of the Plan.
- Exclusion of Liability:
  It is permissible to exclude liability for compensation for the loss of Awards on the termination of employment.
- Compensation:
  Participants may be able to make a claim for compensation for the loss of Awards on termination of employment.
- Clawback Provisions:
  Clawback provisions are generally permissible.
- Restrictive Covenants:
  The forfeiture of Awards as a consequence of the breach of restrictive covenants is generally permissible.
PEO & EoR:
If a Participant is engaged via a Professional Employer Organisation (PEO) or other Employer of Record (EoR) they may not be regarded as an employee of the Company’s group, therefore care needs to be taken if the Company is relying on any legal exemption that is only available to directly engaged employees.
Consultants:
If a Participant is engaged as a consultant or contractor, they will not be regarded as an employee of the Local Company therefore care needs to be taken if the Company is relying on any legal exemption that is only available to employees.
Data Privacy:
The Local Company needs to ensure compliance generally with applicable local data privacy laws.
Other Issues:
There are no legal issues specific to the provision of Awards to employees (not covered elsewhere in the legal report) that are likely to impact on the Company’s operation of the Plan.

Legal Report

Securities Laws and Regulatory Issues

Public offers of securities are subject to the prospectus requirements of the Bangladesh Securities & Exchange Ordinance and approval from the Bangladesh Securities & Exchange Commission (BSEC).

Awards made by an overseas Company under a Plan for employees are not considered to be a public offering and so are outside the scope of the BSEC requirements and any requirements to prepare a prospectus, provided the Awards are made for no consideration.

Where any payment is required to be made in connection with Awards, a prospectus must be prepared and filed with the BSEC. The BSEC will also require copies of the Plan documents. It is unlikely that a prospectus would be approved by the BSEC in these circumstances.

Consideration should therefore be given to structuring Awards in Bangladesh as nil-cost Awards.

Time: Before grant.

Cost: EUR 500 - For providing advice on prospectus requirements.

Exchange Controls

Approval from the Central Bank is required where funds are remitted abroad in connection with Awards, which is generally difficult to obtain. You may need support on local lawyers.

Time: Before grant, exercise.

Cost: USD 2000

Foreign Assets Reporting

Participants must report any change in holding of securities in an overseas Company to the central bank within 30 days of such change.

Time: 30 days grant, exercise, sale.

Other Filings and Reports

There are no particular reporting requirements (not covered elsewhere in the legal report) that are likely to impact on the Company’s operation of the Plan.

Award Documents and Communication

Plan Documentation

There is no legal requirement to provide Participants with a copy of the Plan documentation. However, it is common practice that the Plan documentation (for example, the rules of the Plan) is made available to Participants in order to avoid misinterpretation of the rights and restrictions under the Plan.

Award Document Wording

It is recommended that the following is included in the Award documents:

wording to state that the Award is separate from and does not form part of the Participant’s employment benefits to exclude any liability on the part of the Company or Local Company for the loss of an Award as a result of the Participant’s termination of employment;
a full indemnity in respect of income tax and social security obligations;
language to confirm that the Local Company is operating the Plan in accordance with the applicable data privacy laws, including consent language in relation to personal information; and
where deductions are to be made to Participants' salaries in connection with the Plan, that Participants agree to such deductions being made.

In addition, any dispute resolution clauses must be compliant with local contract laws.

Time: Grant.

Cost: EUR 2000 - Per Award type.

Translations

There is no legal requirement to provide a translated version of the Plan documentation. However, if there are any concerns that the Participants will not understand the Plan, consideration should be given to providing a translated version of the key Plan documents (for example, the Award certificate and any FAQs). Translations are recommended where the Plan documents are in a language other than Bengali or English.

Time: Grant.

Electronic Communications

There are no issues with the use of electronic communications.

Acceptance by Participants

Whether Award documents need to be counter-signed by Participants will be determined by the laws of the country in which the Plan is stated to be subject.

Jurisdiction Issues

The local courts will generally respect the laws under which the Plan documents are stated to be subject.

Salary Deductions

The Local Company may make deductions from Participants' salaries in connection with the Plan. These deductions must be agreed to by Participants.

Consultation and Employment Rights

Works Councils

There is no legal obligation to consult works councils before implementing the Plan unless the Local Company is bound to do so under the terms of a collective agreement or trade union arrangement. Where such agreements are in place these must be respected, and the Local Company should consult with the employees or their representatives before implementing the Plan.

Local Laws

There are no particular local laws (not covered elsewhere in the legal report) that are likely to impact on the Company’s operation of the Plan.

Exclusion of Liability

It is permissible to exclude liability for compensation for the loss of Awards on the termination of employment.

Compensation

Participants may be able to make a claim for compensation for the loss of Awards on termination of employment.

Clawback Provisions

It is possible to provide that value derived from Awards may be clawed back in certain circumstances, but the enforceability will depend on how the specific clawback provisions are worded.

Restrictive Covenants

It is possible to provide that Awards may be forfeited in certain circumstances, but the enforceability will depend on how the specific restrictive covenants are worded.

PEO & EoR

If a Participant is engaged via a Professional Employer Organisation (PEO) or other Employer of Record (EoR) they may not be regarded as an employee of the Company’s group, therefore care needs to be taken if the Company is relying on any legal exemption that is only available to directly engaged employees.

Other points the Company should consider are:

whether the Plan itself allows Awards to be made to Participants engaged via a PEO or EoR; and
whether the engagement with the PEO or EoR adequately deals with the operation of the Plan.

Consultants

If a Participant is engaged as a consultant or contractor, they will not be regarded as an employee of the Local Company therefore care needs to be taken if the Company is relying on any legal exemption that is only available to employees.

Care should also be taken that Participants in this category are genuine consultants or contractors and not viewed as an employee under local laws.

Data Privacy

There are no specific requirements to make an external filing or registration for data protection purposes in respect of the Plan or the making of Awards. The Local Company needs to ensure compliance generally with applicable local data privacy laws and it is recommended that Participants consent to the transfer of personal data abroad in connection with the Plan.

Time: All phases.

Other Issues

There are no legal issues specific to the provision of Awards to employees (not covered elsewhere in the legal report) that are likely to impact on the Company’s operation of the Plan.

Legal Report / Stock Option Plan / Bangladesh