Special Purpose Vehicle (SPV): Legal, Commercial and Transactional Guide for Bangladesh
A Special Purpose Vehicle, commonly known as an SPV, is one of the most important legal and financial structures used in modern business transactions. It is used in project finance, real estate development, infrastructure investment, securitisation, asset holding, joint ventures, foreign investment, fund structuring, public-private partnership projects, banking transactions, offshore investment structures, and risk-isolated commercial ventures.
For Bangladeshi companies, foreign investors, banks, non-bank financial institutions, fintech businesses, real estate developers, infrastructure sponsors, private equity investors, and family offices, the SPV is not merely a technical corporate term. It is a practical legal tool that allows a business group or investor to isolate risk, ring-fence assets, create a transaction-specific structure, attract financing, manage ownership, and implement a project with greater clarity.
At Tahmidur Remura Wahid (TRW) Law Firm, SPV structuring is often considered in connection with company incorporation, shareholder arrangements, project financing, investment documentation, regulatory approvals, asset acquisition, banking security, tax planning, and dispute prevention. In Bangladesh, the legal treatment of an SPV depends on how it is created, what it is used for, who owns it, how it is financed, what assets it holds, and whether any sector-specific approval is required.
This guide explains SPVs in detail from a Bangladesh law perspective, while also addressing international commercial practice.
What Is a Special Purpose Vehicle?
Special Purpose Vehicle (SPV) law firm in Bangladesh
A Special Purpose Vehicle is a legally separate entity created for a specific, limited, and clearly defined purpose. The SPV may be incorporated as a private limited company, public limited company, trust, partnership, fund vehicle, offshore entity, or another legal structure depending on the jurisdiction and transaction.
In Bangladesh, the most common form of SPV is a private limited company incorporated under the Companies Act, 1994. The SPV is usually formed to own a project, hold an asset, enter into a financing arrangement, act as a borrower, acquire a business, undertake a joint venture, participate in a tender, or isolate a specific business line from the wider liabilities of the sponsor.
The essential feature of an SPV is separation. The SPV is separate from its parent company or sponsor. It has its own legal identity, its own assets, its own liabilities, its own bank accounts, its own contracts, and its own statutory obligations. This separation allows the SPV to operate as a dedicated legal container for a specific transaction or project.
For example, if a Bangladeshi infrastructure group wishes to develop a power project, it may incorporate a separate SPV for that project. The SPV will enter into the relevant land documents, construction contracts, financing agreements, security documents, regulatory applications, insurance policies, and revenue contracts. The sponsors may own shares in the SPV, but the project assets and liabilities remain inside that SPV.
Why Businesses Use SPVs
Businesses use SPVs because large commercial transactions often require legal clarity, risk isolation, asset separation, financing discipline, and governance control. Without an SPV, the assets and liabilities of a project may become mixed with the wider business of the sponsor. This can create legal uncertainty for lenders, investors, regulators, buyers, and contractual counterparties.
An SPV allows parties to identify exactly which entity owns the project, who controls it, what assets are available for financing, what liabilities are ring-fenced, and what rights each shareholder or lender has.
The main purposes of an SPV include:
▪ isolating project risk from the sponsor’s main business ▪ holding assets separately for financing or sale ▪ creating a clean investment vehicle for foreign or local investors ▪ enabling project finance where lenders rely on project cashflows ▪ structuring joint ventures between multiple parties ▪ facilitating real estate development projects ▪ supporting securitisation or receivables-based financing ▪ separating regulated and non-regulated activities ▪ improving transparency in ownership and governance ▪ simplifying due diligence for investors and lenders ▪ preparing an asset or business line for acquisition or divestment
In commercial practice, an SPV is often used where a transaction is significant enough to justify a separate legal entity. It may also be required by lenders, regulators, concession authorities, foreign investors, or tender conditions.
SPV as a Separate Legal Entity
The legal foundation of an SPV is separate legal personality. Once incorporated, a company becomes a separate juristic person. It may own property, sue and be sued, enter into contracts, open bank accounts, borrow money, issue shares, and incur obligations in its own name.
This separate personality is central to SPV structuring. The SPV is not merely an internal project name or accounting unit. It is a legally distinct person.
In Bangladesh, a company incorporated under the Companies Act, 1994 enjoys separate corporate personality. Its shareholders are generally not personally liable for the company’s obligations beyond their agreed liability, subject to exceptions under law. This is why SPVs are commonly incorporated as limited liability companies.
However, separate legal personality must be respected in practice. If an SPV is used improperly, if it is undercapitalised, if its funds are mixed with the parent company’s funds, if it is used to defraud creditors, or if corporate formalities are ignored, courts and regulators may examine the true nature of the arrangement. In extreme cases, the corporate veil may be challenged.
Therefore, the legal independence of the SPV must be supported by proper governance, documentation, accounting, board decisions, banking arrangements, and compliance records.
SPV in Bangladesh: Common Legal Forms
Although the phrase SPV is widely used, Bangladeshi law does not always treat “SPV” as a separate statutory category. Instead, an SPV is usually created using an existing legal form.
The most common forms are:
Private Limited Company
This is the most common SPV form in Bangladesh. A private limited company is suitable for joint ventures, asset holding, real estate projects, trading structures, infrastructure projects, technology ventures, acquisition vehicles, and operating businesses.
A private limited company offers limited liability, shareholding flexibility, relatively simple governance, separate bank accounts, and a familiar regulatory framework.
For many investors, especially foreign investors, this is the preferred SPV structure because ownership can be clearly reflected through shares, and governance rights can be documented through the memorandum, articles, shareholders’ agreement, board resolutions, and investment agreements.
For professional assistance with incorporation and corporate structuring, TRW Law Firm’s company setup resources may be reviewed here: Company Registration in Bangladesh.
Public Limited Company
A public limited company may be used where the SPV is intended to raise capital from a wider pool of investors, issue securities, or eventually list on a stock exchange. This structure is less common for ordinary private SPVs but may be relevant for large-scale infrastructure, capital market, or public investment structures.
Trust Structure
A trust structure may be used in certain asset holding, financing, securitisation, or investor protection arrangements. However, trust-based SPVs require careful legal analysis in Bangladesh, especially regarding ownership, transferability, tax, enforceability, and regulatory treatment.
Partnership or Contractual Joint Venture
Some projects are structured through partnerships or contractual joint ventures rather than incorporated companies. These may offer flexibility but may not provide the same level of limited liability or separate corporate personality as a company.
For most high-value projects, lenders and investors prefer a company-based SPV because it is easier to diligence, finance, secure, govern, and transfer.
Offshore SPV
Foreign investors sometimes use offshore SPVs to hold shares in a Bangladeshi operating company. The offshore SPV may be incorporated in Singapore, Dubai, the British Virgin Islands, Mauritius, Hong Kong, the United Kingdom, or another jurisdiction depending on tax, investment, treaty, regulatory, banking, and investor considerations.
Offshore SPVs must be structured carefully. Bangladesh foreign exchange rules, remittance procedures, beneficial ownership disclosure, tax implications, reporting requirements, and anti-money laundering compliance may all become relevant.
SPV and Project Finance
SPVs are central to project finance. In project finance, lenders usually finance a specific project based on its projected cashflows, assets, contracts, licences, and revenue stream. The project is often separated from the sponsor’s wider business by placing it inside an SPV.
The SPV becomes the borrower. It signs the loan documents. It owns or controls the project assets. It enters into the construction contract, operation and maintenance contract, supply contract, offtake contract, concession agreement, land lease, insurance documents, and security package.
This structure gives lenders a clearer view of the project. Instead of lending to a large conglomerate with mixed assets and liabilities, lenders can evaluate the project-specific entity. They can review its revenue model, project contracts, security package, bank accounts, cash waterfall, debt service capacity, and sponsor support obligations.
In Bangladesh, project finance SPVs are common in power projects, economic zones, roads, bridges, ports, telecom infrastructure, renewable energy, logistics, industrial parks, and large real estate developments.
A typical project finance SPV may involve:
▪ sponsors as shareholders ▪ lenders as secured creditors ▪ engineering, procurement and construction contractors ▪ operation and maintenance contractors ▪ government authorities or concession grantors ▪ landowners or lessors ▪ offtakers or purchasers ▪ insurance providers ▪ escrow account banks ▪ security agents or trustees
The SPV structure allows each party to understand its rights and obligations in relation to a specific project.
SPV and Real Estate Development
Real estate is one of the most common sectors where SPVs are used. A developer may create a separate SPV for each project. This helps isolate land risk, construction risk, buyer claims, financing obligations, and revenue streams.
For example, a developer may create one SPV for a residential tower in Gulshan, another SPV for a commercial building in Banani, and another SPV for an industrial warehouse project near Dhaka. Each SPV may have its own land agreements, construction contracts, approvals, financing, buyer agreements, bank account, and accounts.
This structure is commercially useful because real estate projects often involve different landowners, financiers, contractors, buyers, timelines, approval risks, and revenue models.
However, real estate SPVs must be structured carefully. Key legal issues include:
▪ whether the SPV owns the land or has development rights ▪ whether the land is properly mutated and recorded ▪ whether RAJUK, CDA, RDA, or other authority approvals are required ▪ whether the SPV has authority to sell units or enter into buyer agreements ▪ whether mortgage or charge creation is permitted ▪ whether landowner-developer agreements are enforceable ▪ whether VAT, tax, registration fees, and stamp duties are properly considered ▪ whether buyers are contracting with the correct entity ▪ whether project funds are separated from other business accounts
A real estate SPV may also help investors participate in a project without becoming directly involved in the developer’s wider corporate affairs.
SPV and Joint Ventures
SPVs are frequently used for joint ventures. In a joint venture, two or more parties collaborate for a specific commercial objective. The parties may be local companies, foreign investors, government entities, technology providers, landowners, contractors, or financial investors.
Instead of merely signing a collaboration agreement, the parties may incorporate an SPV and become shareholders in that SPV. The SPV then becomes the operating or project company.
This approach offers several advantages. The parties can define their shareholding percentages, board representation, reserved matters, funding obligations, deadlock resolution mechanisms, transfer restrictions, exit rights, confidentiality obligations, non-compete duties, intellectual property rights, and dispute resolution clauses.
A joint venture SPV usually requires detailed documentation, including:
▪ memorandum and articles of association ▪ shareholders’ agreement ▪ subscription agreement ▪ investment agreement ▪ technology licensing agreement ▪ management services agreement ▪ loan or shareholder funding agreement ▪ asset transfer agreement ▪ intellectual property assignment or licence ▪ non-disclosure agreement ▪ dispute resolution clause
In Bangladesh, careful alignment is needed between the articles of association and the shareholders’ agreement. If the articles do not reflect key governance arrangements, enforceability and implementation may become difficult.
SPV and Foreign Investment in Bangladesh
Foreign investors may use SPVs to enter the Bangladesh market. The SPV may be incorporated in Bangladesh as a foreign-owned or joint venture company. It may also be owned by an offshore holding company.
Foreign investment SPVs are common in manufacturing, infrastructure, fintech, logistics, garments, pharmaceuticals, energy, telecommunications, software, construction, consultancy, and trading.
Important considerations include:
▪ whether the business activity is open to foreign investment ▪ whether any sector-specific approval is required ▪ whether the SPV requires BIDA registration ▪ whether any Bangladesh Bank reporting is necessary ▪ whether foreign loans are being introduced ▪ whether share capital will be remitted through proper banking channels ▪ whether profit repatriation is contemplated ▪ whether royalty, technical fee, management fee, or service fee payments are expected ▪ whether tax and transfer pricing issues arise ▪ whether beneficial ownership must be disclosed ▪ whether the SPV will employ foreign nationals
Foreign investors often prefer an SPV because it allows them to invest in a ring-fenced Bangladeshi entity rather than directly into a sponsor’s existing company with legacy liabilities.
SPV and Asset Securitisation
An SPV is also central to securitisation. Securitisation is a financing technique where income-generating assets, such as receivables, loan portfolios, lease rentals, consumer payments, or other cashflow rights, are transferred to a dedicated vehicle. The SPV may then issue securities or otherwise raise financing backed by those assets.
The purpose is to separate the asset pool from the originator. If the transfer is legally effective, investors or financiers can look primarily to the asset pool rather than the originator’s general credit risk.
In Bangladesh, securitisation is still developing compared to more mature financial markets. However, the commercial logic is increasingly relevant, especially for banks, non-bank financial institutions, microfinance institutions, consumer finance businesses, leasing companies, BNPL providers, fintech companies, and infrastructure receivables.
A securitisation SPV requires careful legal analysis of:
▪ whether the receivables can be legally assigned or sold ▪ whether borrower or customer consent is required ▪ whether the transfer is a true sale or secured financing ▪ whether stamp duty or registration requirements apply ▪ whether Bangladesh Bank approval is required ▪ whether securities law applies ▪ whether tax leakage arises ▪ whether servicing arrangements are enforceable ▪ whether insolvency remoteness can be achieved ▪ whether investors have sufficient protection
In a securitisation transaction, the SPV should not be treated as a mere paper entity. It must be properly established, documented, governed, and capitalised.
Insolvency Remoteness and Ring-Fencing
One of the most important concepts in SPV structuring is insolvency remoteness. This means the SPV is structured to reduce the risk that it will be affected by the insolvency of the sponsor, originator, parent company, or related group entities.
In project finance and securitisation, lenders and investors often require the SPV to be insulated from unrelated liabilities. This can be achieved through:
▪ limited corporate objects ▪ restrictions on additional borrowing ▪ restrictions on asset disposal ▪ independent governance arrangements ▪ separate bank accounts ▪ no commingling of funds ▪ arm’s-length contracts with affiliates ▪ clear accounting records ▪ limitations on guarantees for group companies ▪ restrictions on mergers or restructuring ▪ negative pledge provisions ▪ debt service reserve accounts ▪ escrow mechanisms ▪ direct agreements with key counterparties
Insolvency remoteness is not absolute. No structure can guarantee complete protection from every legal risk. However, careful drafting and disciplined corporate conduct can significantly improve the legal and commercial robustness of the SPV.
SPV and Limited Liability
Limited liability is one of the key reasons SPVs are used. If an SPV is incorporated as a limited company, shareholders are generally liable only to the extent of their unpaid share capital or agreed contribution.
This allows sponsors to participate in projects without exposing their entire corporate balance sheet to project-specific risks.
However, limited liability does not mean absence of responsibility. Sponsors may still become liable if they provide guarantees, indemnities, completion support, shareholder loans, performance undertakings, or sponsor support obligations. Directors may also face statutory, fiduciary, tax, labour, environmental, regulatory, or criminal liability in appropriate circumstances.
Therefore, when structuring an SPV, it is important to distinguish between:
▪ liability of the SPV ▪ liability of shareholders ▪ liability of directors ▪ liability under guarantees ▪ liability under sponsor support agreements ▪ liability under regulatory law ▪ liability under tax law ▪ liability under labour law ▪ liability under environmental law ▪ liability under fraud, misrepresentation, or wrongful conduct
A properly drafted SPV structure should make these liability boundaries clear.
Key Documents Required for an SPV
An SPV is only as strong as its documentation. Incorporation alone is not enough. Depending on the transaction, the SPV may require corporate, financing, commercial, regulatory, tax, and security documents.
Typical SPV documents include:
Constitutional Documents
The memorandum and articles of association define the legal foundation of the company. They should be drafted to support the purpose of the SPV, governance structure, share rights, transfer restrictions, board powers, reserved matters, and dispute mechanisms.
Shareholders’ Agreement
A shareholders’ agreement is essential where there are multiple sponsors or investors. It regulates control, funding, governance, transfer of shares, deadlock, exit, confidentiality, non-compete obligations, minority protection, reserved matters, and dispute resolution.
Board and Shareholder Resolutions
SPVs must act through proper corporate approvals. Board and shareholder resolutions are required for major transactions, including borrowing, asset acquisition, contract execution, security creation, appointment of officers, share issuance, and opening bank accounts.
Financing Documents
If the SPV borrows money, it may need loan agreements, facility agreements, security documents, sponsor support undertakings, intercreditor agreements, escrow agreements, account control arrangements, and direct agreements.
Asset Transfer Documents
If assets are being transferred into the SPV, the parties must document assignment, sale, novation, contribution, lease, licence, or transfer depending on the nature of the asset.
Regulatory Approvals
The SPV may require approvals from BIDA, Bangladesh Bank, RJSC, BEPZA, BEZA, BSEC, NBR, local government authorities, environmental authorities, sector regulators, or licensing bodies.
Tax and Accounting Documents
Tax registration, VAT registration, withholding arrangements, transfer pricing documentation, accounting records, audit records, and financial reporting must be properly maintained.
Corporate Governance of an SPV
Many SPV disputes arise not because the idea was flawed, but because governance was weak. Good governance is essential for maintaining the separateness, credibility, and enforceability of the SPV.
Important governance matters include:
▪ clear board composition ▪ appointment rights of shareholders ▪ reserved matters requiring special approval ▪ quorum rules ▪ voting thresholds ▪ conflict of interest rules ▪ related-party transaction controls ▪ accounting and reporting obligations ▪ information rights of shareholders ▪ bank signing authority ▪ dividend policy ▪ annual compliance calendar ▪ audit requirements ▪ director duties ▪ recordkeeping obligations
Where foreign investors are involved, governance documents should also address language, governing law, dispute forum, reporting format, international accounting expectations, and compliance standards.
SPV and Banking Security
Lenders financing an SPV often require security over the assets, shares, receivables, bank accounts, project documents, insurance proceeds, and contractual rights of the SPV. Security arrangements must be carefully structured under Bangladeshi law.
Possible security instruments include:
▪ mortgage over immovable property ▪ charge over movable assets ▪ hypothecation over inventory, machinery, or receivables ▪ pledge over shares ▪ assignment of project receivables ▪ charge over bank accounts ▪ security over insurance proceeds ▪ corporate guarantees ▪ personal guarantees where commercially required ▪ sponsor support undertakings ▪ escrow arrangements
Registration of charges with RJSC is often relevant for Bangladeshi companies. Failure to properly register security may create enforceability and priority issues.
A lender will usually conduct legal due diligence before financing an SPV. This includes reviewing incorporation documents, ownership, constitutional restrictions, board approvals, licences, tax status, land documents, existing debt, related-party arrangements, litigation, and regulatory compliance.
SPV and Tax Considerations
Tax planning is a major issue in SPV structuring. While an SPV may help organise a transaction, it should not be used for artificial tax avoidance. The structure must be commercially justified, properly documented, and compliant with applicable law.
Key tax considerations include:
▪ corporate income tax ▪ withholding tax ▪ VAT ▪ stamp duty ▪ registration fees ▪ capital gains tax ▪ dividend tax ▪ transfer pricing ▪ thin capitalisation concerns ▪ tax treatment of shareholder loans ▪ tax treatment of management fees ▪ tax treatment of royalties or technical fees ▪ tax implications of asset transfer ▪ tax implications of share transfer ▪ permanent establishment risk for foreign sponsors
In Bangladesh, tax treatment may vary depending on the nature of the SPV, the sector, the asset, the transaction, and the parties involved. SPV documentation should therefore be reviewed together with tax advice before implementation.
SPV and Regulatory Compliance in Bangladesh
An SPV may be subject to multiple regulators depending on its business. Incorporation with RJSC is only the first step. The SPV may also need operational licences, registrations, approvals, renewals, filings, and sector-specific compliance.
Relevant authorities may include:
▪ RJSC for company incorporation and corporate filings ▪ BIDA for investment facilitation and foreign investment matters ▪ Bangladesh Bank for foreign loans, remittances, payment systems, banking matters, and foreign exchange compliance ▪ BSEC for securities and capital market matters ▪ NBR for tax, VAT, customs, and duties ▪ BEPZA for export processing zone projects ▪ BEZA for economic zone projects ▪ Department of Environment for environmental clearance ▪ city corporations or local authorities for trade licences ▪ sector regulators for telecom, power, energy, insurance, banking, pharmaceuticals, and other regulated activities
Before forming an SPV, sponsors should map the regulatory path. Otherwise, a company may be incorporated but remain unable to operate.
SPV and Foreign Exchange Issues
Foreign exchange rules are crucial where foreign shareholders, foreign loans, offshore payments, profit repatriation, or cross-border services are involved.
Common foreign exchange issues include:
▪ inward remittance of share capital ▪ reporting of foreign investment ▪ foreign shareholder documentation ▪ outward remittance of dividends ▪ remittance of technical fees or royalties ▪ foreign loans and approval requirements ▪ repayment of offshore debt ▪ import payments ▪ service payments to offshore affiliates ▪ exit proceeds on share sale ▪ valuation of shares for transfer ▪ compliance through authorised dealer banks
Foreign exchange compliance should be addressed early. Many transactions face delays because the SPV is formed without considering banking documentation, inward remittance evidence, valuation reports, tax certificates, regulatory approvals, or authorised dealer bank requirements.
SPV and Beneficial Ownership
Modern corporate compliance increasingly focuses on beneficial ownership. Regulators, banks, investors, and counterparties want to know who ultimately owns or controls a company.
For an SPV, beneficial ownership transparency is especially important because SPVs may be owned through multiple layers of holding companies, nominees, funds, trusts, or offshore entities.
Banks and regulators may require information about:
▪ ultimate beneficial owners ▪ shareholding structure ▪ source of funds ▪ source of wealth ▪ politically exposed persons ▪ sanctions screening ▪ group structure chart ▪ parent company documents ▪ board control ▪ voting rights ▪ nominee arrangements ▪ trusts or fund structures
Failure to provide clear beneficial ownership information may delay bank account opening, financing, licensing, investment approval, and transaction closing.
SPV and Risk Management
An SPV can reduce risk, but it does not eliminate risk. Poorly designed SPVs may create additional problems.
Common SPV risks include:
▪ unclear ownership ▪ weak articles of association ▪ missing shareholders’ agreement ▪ failure to register charges ▪ commingling of funds ▪ inadequate capitalisation ▪ regulatory non-compliance ▪ tax leakage ▪ unenforceable asset transfers ▪ unapproved foreign loans ▪ weak board approvals ▪ shareholder deadlock ▪ disputes over funding obligations ▪ hidden liabilities ▪ related-party conflicts ▪ lack of proper accounting ▪ bank account restrictions ▪ inability to repatriate funds ▪ mismatch between commercial intention and legal documentation
The best way to manage these risks is to structure the SPV properly from the beginning. Retrofitting legal solutions after funds have moved, contracts have been signed, or assets have been transferred is usually more expensive and more uncertain.
SPV and Due Diligence
Before investing in, lending to, acquiring, or partnering with an SPV, parties should conduct due diligence. The scope of due diligence depends on the transaction, but it should usually cover corporate, financial, legal, regulatory, tax, land, litigation, employment, environmental, and contractual matters.
Key due diligence questions include:
▪ Is the SPV validly incorporated? ▪ Who owns the shares? ▪ Are there any nominee or side arrangements? ▪ Are the articles consistent with the transaction documents? ▪ Has the SPV issued shares properly? ▪ Are all RJSC filings up to date? ▪ Does the SPV have tax and VAT registrations? ▪ Does the SPV hold the relevant licences? ▪ Are there any pending disputes or claims? ▪ Has the SPV borrowed money or created security? ▪ Are charges properly registered? ▪ Does the SPV own the relevant assets? ▪ Are land documents clean and enforceable? ▪ Are contracts entered into by the correct legal entity? ▪ Are related-party transactions documented? ▪ Are there undisclosed liabilities? ▪ Are employees properly engaged? ▪ Are environmental obligations complied with? ▪ Are foreign exchange rules complied with?
Due diligence should not be treated as a mere checklist. It should identify transaction risks and propose practical solutions.
SPV and Shareholder Disputes
SPVs are often formed with optimism, but disputes can arise when the project faces delays, cost overruns, regulatory obstacles, funding pressure, or disagreements over control.
Common SPV shareholder disputes include:
▪ failure to contribute capital ▪ disagreement over additional funding ▪ misuse of company funds ▪ deadlock at board level ▪ transfer of shares without consent ▪ breach of reserved matter provisions ▪ related-party transactions without approval ▪ diversion of business opportunity ▪ failure to provide information ▪ appointment or removal of directors ▪ dilution disputes ▪ valuation disputes ▪ exit disputes ▪ breach of non-compete obligations ▪ deadlock over project sale or refinancing
A well-drafted shareholders’ agreement can significantly reduce these risks. It should include clear deadlock mechanisms, funding rules, default provisions, transfer restrictions, valuation methods, dispute resolution clauses, and exit rights.
SPV and Dispute Resolution
SPV-related disputes may be resolved through litigation, arbitration, mediation, expert determination, or negotiated settlement depending on the documents.
For cross-border SPVs, arbitration is often preferred because it allows parties to select a neutral forum, experienced arbitrators, confidentiality, and enforceable awards. Arbitration clauses may be included in shareholders’ agreements, investment agreements, construction contracts, financing documents, and project agreements.
However, not all disputes are suitable for arbitration. Certain company law matters, regulatory issues, insolvency matters, criminal allegations, tax disputes, and public law matters may require court or regulatory proceedings.
SPV documents should therefore be drafted carefully so that dispute resolution clauses are consistent, enforceable, and aligned across all transaction documents.
SPV and Mergers and Acquisitions
SPVs are commonly used in acquisition transactions. A buyer may incorporate an acquisition SPV to purchase shares or assets of a target company. This allows the buyer to separate acquisition financing, investor participation, and post-closing obligations from its existing business.
In some cases, sellers also transfer assets into an SPV before selling the SPV’s shares. This is sometimes done to create a cleaner transaction perimeter. However, pre-sale restructuring must be carefully reviewed for tax, regulatory, creditor consent, labour, environmental, and transfer restrictions.
The legal structure should match the commercial objective. A poorly structured SPV may create unexpected tax, stamp duty, licensing, or liability issues.
SPV and Public-Private Partnership Projects
SPVs are frequently required in public-private partnership projects. A concessionaire may be required to incorporate a project company to implement the PPP project.
The SPV may enter into the concession agreement, financing documents, construction contracts, operation and maintenance agreements, and government support arrangements.
PPP SPVs are useful because they allow the government, lenders, and private sponsors to monitor project performance through a dedicated entity. They also make it easier to regulate equity lock-in, change of control, performance security, tariff collection, termination compensation, step-in rights, and lender protection.
For large infrastructure projects, SPV structuring is often a condition of bankability.
SPV and Fintech, Payment and Digital Businesses
SPVs are increasingly relevant in fintech, payment systems, digital lending, e-commerce, BNPL models, software platforms, and digital asset-holding structures.
A fintech group may use separate SPVs to separate regulated payment activities from technology development, data services, merchant acquisition, lending partnerships, or software licensing.
This separation may be commercially useful, but it must not be used to evade regulatory requirements. If an activity requires approval from Bangladesh Bank or another regulator, placing that activity into a separate SPV does not remove the need for approval.
Key issues for fintech SPVs include:
▪ payment system licensing ▪ data protection and cybersecurity ▪ outsourcing agreements ▪ customer fund handling ▪ merchant settlement obligations ▪ consumer protection ▪ anti-money laundering compliance ▪ technology infrastructure ownership ▪ intellectual property ownership ▪ API and platform contracts ▪ bank integration ▪ e-money or wallet restrictions ▪ regulatory reporting
Fintech SPVs must be structured with a clear understanding of both corporate law and financial regulation.
SPV and Intellectual Property Holding
Some businesses create SPVs to hold intellectual property such as trademarks, software, patents, copyrights, designs, brand assets, licences, and technology rights.
An IP holding SPV may licence intellectual property to operating companies. This can help centralise ownership and protect valuable intangible assets.
However, IP holding structures must be genuine and properly documented. Important issues include:
▪ whether IP has been validly assigned to the SPV ▪ whether trademarks are registered in the correct name ▪ whether software ownership is clear ▪ whether employee-created IP has been assigned ▪ whether licensing agreements are arm’s length ▪ whether royalty payments are tax-compliant ▪ whether offshore remittance is permitted ▪ whether transfer pricing applies ▪ whether infringement enforcement can be brought by the SPV
For technology companies, IP ownership can be the most valuable part of the business. The SPV structure should be designed accordingly.
SPV and Asset Holding for Family Offices
Family offices and high-net-worth individuals may use SPVs to hold real estate, shares, investment assets, family businesses, or specific commercial projects.
This may assist in succession planning, family governance, asset separation, risk management, financing, and investment participation.
However, family SPVs must be carefully structured to avoid future disputes among heirs, nominees, directors, and beneficial owners. In Bangladesh, family-owned SPVs often require clear documentation regarding ownership, funding source, control rights, succession intention, dividend policy, and transfer restrictions.
Where Islamic inheritance, family settlement, or cross-border assets are involved, additional legal planning may be necessary.
When an SPV Is Not Appropriate
An SPV is useful, but it is not always necessary. Creating too many SPVs may increase cost, compliance burden, accounting complexity, tax filings, bank account management, and governance obligations.
An SPV may not be appropriate where:
▪ the transaction is small and low-risk ▪ the sponsor does not intend to separate assets or liabilities ▪ regulatory approval would be harder through a new company ▪ tax cost outweighs commercial benefit ▪ the business lacks capacity to maintain compliance ▪ the SPV would be undercapitalised ▪ banks will not finance the SPV without full sponsor guarantees ▪ the structure creates confusion rather than clarity ▪ the purpose is artificial or lacks commercial substance
The decision to create an SPV should be based on legal, commercial, tax, regulatory, and financing analysis.
Steps to Create an SPV in Bangladesh
The process of creating an SPV in Bangladesh generally involves several stages.
Step 1: Define the Purpose
The first step is to define why the SPV is being created. Is it for a project, asset acquisition, financing, joint venture, foreign investment, securitisation, real estate development, or regulatory separation?
The purpose determines the structure.
Step 2: Choose the Legal Form
Most SPVs in Bangladesh are incorporated as private limited companies. However, the legal form should be chosen after considering ownership, liability, financing, tax, regulatory, and exit requirements.
Step 3: Determine Shareholding
The shareholders, share percentages, capital contribution, nominee arrangements, foreign ownership, and beneficial ownership must be clearly determined.
Step 4: Draft Constitutional Documents
The memorandum and articles should be drafted to reflect the SPV’s purpose and governance requirements. Standard template articles are often inadequate for serious SPV structures.
Step 5: Incorporate the Company
The SPV is incorporated through RJSC procedures. Name clearance, incorporation forms, memorandum, articles, director information, shareholder information, and fees must be handled properly.
Step 6: Prepare Shareholders’ Agreement
Where there are multiple shareholders, a shareholders’ agreement should be prepared before significant funds or assets are transferred.
Step 7: Open Bank Account
The SPV should open its own bank account. Funds should not be mixed with sponsor accounts.
Step 8: Obtain Licences and Registrations
Depending on the activity, the SPV may need trade licence, TIN, BIN, BIDA registration, environmental clearance, sector licence, import/export registration, or other approvals.
Step 9: Transfer Assets or Contracts
Assets, contracts, licences, employees, intellectual property, or receivables should be transferred only through legally valid documentation.
Step 10: Implement Governance and Compliance
The SPV must maintain board meetings, statutory registers, accounts, tax filings, RJSC filings, audits, and regulatory compliance.
Common Mistakes in SPV Structuring
Common mistakes include:
▪ incorporating the SPV before finalising the commercial structure ▪ using generic articles of association ▪ failing to prepare a shareholders’ agreement ▪ ignoring foreign exchange rules ▪ underestimating tax implications ▪ transferring assets without proper documentation ▪ failing to register security ▪ mixing SPV funds with sponsor funds ▪ using the SPV for unrelated business activities ▪ ignoring beneficial ownership disclosure ▪ failing to obtain sector approvals ▪ not documenting related-party transactions ▪ appointing directors without understanding their duties ▪ creating an SPV without a clear exit mechanism
These mistakes can lead to disputes, financing delays, regulatory problems, tax exposure, and transaction failure.
How TRW Law Firm Assists with SPV Structuring
Tahmidur Remura Wahid (TRW) Law Firm assists local and foreign clients with SPV structuring, incorporation, transaction documentation, regulatory analysis, project finance support, due diligence, investment planning, shareholder arrangements, and dispute prevention.
Our SPV-related legal support may include:
▪ advising on the suitable SPV structure ▪ incorporating Bangladeshi companies ▪ drafting memorandum and articles of association ▪ preparing shareholders’ agreements ▪ advising on foreign investment issues ▪ reviewing Bangladesh Bank and BIDA implications ▪ drafting investment and subscription documents ▪ preparing loan and security documentation ▪ advising on asset transfer and assignment ▪ reviewing project finance structures ▪ conducting due diligence on SPVs ▪ advising on real estate SPV structures ▪ supporting joint venture negotiations ▪ preparing board and shareholder resolutions ▪ advising on regulatory approvals ▪ assisting with dispute resolution clauses ▪ advising on exit and share transfer mechanisms
TRW Law Firm’s approach is practical. We do not treat SPV structuring as a purely theoretical exercise. We assess the transaction objective, financing requirements, regulatory path, tax implications, banking expectations, and dispute risks.
Practical Example: Infrastructure Project SPV
Assume three sponsors want to develop a solar power project in Bangladesh. Instead of implementing the project through one sponsor’s existing company, they form a new SPV.
The SPV signs the land lease, applies for approvals, enters into the EPC contract, borrows from lenders, opens project accounts, signs the power purchase-related documents where applicable, and maintains project-specific accounts.
The shareholders’ agreement states that major decisions require approval of all sponsors, additional funding must be contributed in proportion to shareholding, shares cannot be transferred without consent, and disputes will be resolved through arbitration.
This structure allows the project to remain separate from the sponsors’ other businesses. Lenders can evaluate the project company directly. Investors can understand exactly what they are investing in. If the project is later sold, the buyer can acquire shares in the SPV.
Practical Example: Real Estate SPV
A landowner and developer agree to develop a commercial building. They incorporate an SPV where the landowner contributes development rights and the developer contributes construction expertise and funding.
The SPV enters into contractor agreements, buyer agreements, bank financing documents, and regulatory applications. The shareholders’ agreement regulates profit sharing, board control, sale of units, cost overruns, project delays, dispute resolution, and exit.
This avoids mixing the project with the developer’s other real estate ventures and gives the landowner better transparency.
Practical Example: Acquisition SPV
A foreign investor wants to acquire a Bangladeshi manufacturing business with local co-investors. The parties form a Bangladeshi acquisition SPV. The SPV receives equity from the foreign investor and local investors, obtains financing, and purchases shares in the target company.
The shareholders’ agreement sets out board rights, reserved matters, transfer restrictions, dividend policy, deadlock mechanism, and exit rights. The acquisition SPV becomes the holding company for the target investment.
This structure allows multiple investors to participate through a single acquisition vehicle.
Summary Table: SPV in Bangladesh
Issue
Practical Meaning
Legal Importance
Definition
Separate entity created for a specific purpose
Establishes project or transaction separation
Common Form
Private limited company
Most familiar and practical Bangladeshi structure
Main Use
Project finance, real estate, joint ventures, acquisitions, securitisation
Enables asset and liability ring-fencing
Key Benefit
Risk isolation
Protects sponsors from direct exposure, subject to guarantees and law
Creates enforceable governance and transaction framework
Main Regulator
RJSC for incorporation
Additional regulators may apply depending on sector
Foreign Investment
May be locally incorporated or offshore-owned
Requires foreign exchange, banking, and regulatory compliance
Financing Role
SPV may act as borrower
Lenders rely on project assets, cashflows, and security
Common Risk
Weak documentation and poor governance
May undermine separation and create disputes
Best Practice
Structure before funds or assets move
Reduces tax, regulatory, and ownership complications
Dispute Prevention
Clear shareholder and funding rules
Reduces deadlock and exit disputes
TRW Support
Structuring, incorporation, documentation, due diligence, regulatory advice
Helps align legal structure with commercial objective
Final Thoughts
A Special Purpose Vehicle is one of the most flexible and powerful legal tools in commercial structuring. In Bangladesh, it can be used for project finance, foreign investment, real estate, securitisation, acquisitions, joint ventures, asset holding, fintech, infrastructure, and family investment structures.
However, an SPV is not useful merely because it exists. It must be properly designed, documented, capitalised, governed, financed, and regulated. A weak SPV can create confusion, while a well-structured SPV can make a transaction more bankable, investable, enforceable, and commercially efficient.
For businesses, investors, lenders, and sponsors in Bangladesh, the correct question is not simply whether to create an SPV. The correct question is what type of SPV should be created, how it should be owned, how it should be governed, what assets it should hold, what liabilities it should assume, what approvals it requires, and how the parties should exit if the project succeeds or fails.
Tahmidur Remura Wahid (TRW) Law Firm assists clients in answering these questions with practical legal structuring, transaction documentation, regulatory guidance, and dispute-sensitive planning.
Contact TRW Law Firm
Tahmidur Remura Wahid (TRW) Law Firm
Dhaka Office: House 410, Road 29, Mohakhali DOHS, Dhaka, Bangladesh Dubai Office: Rolex Building, L-12 Sheikh Zayed Road, Dubai, United Arab Emirates UK Office: 330 High Holborn, London WC1V 7QH, United Kingdom
Agentic AI and Liability: What Businesses in Bangladesh Need to Know Before Deployment
Artificial intelligence is no longer confined to drafting text, answering prompts, or summarising documents. A more consequential class of systems is now entering real business operations: agentic AI. These systems do not merely recommend. They act. They can send messages, trigger workflows, access databases, negotiate with vendors, route approvals, generate and deploy code, and in some cases move money or alter records with limited or no human intervention. That change in operational authority creates a corresponding change in legal exposure.
For businesses in Bangladesh, this development matters immediately. Financial institutions, telecom operators, startups, e-commerce platforms, manufacturers, logistics companies, and large corporate groups are all exploring AI-assisted or AI-driven automation. The commercial benefits are obvious. Costs may fall. Response times may improve. Customer handling may become faster. Procurement, compliance, HR screening, and internal reporting may become more efficient. But as soon as a system is empowered to act independently within a business environment, the legal analysis changes.
That is the central problem. Most legal and contractual frameworks were designed for software that was passive and predictable. Agentic AI is neither. It introduces autonomy, adaptive conduct, and decision-making within complex business environments that cannot be fully reduced to simple rule-based programming. When that system causes harm, the most exposed party is often not the developer, but the business that deployed it.
Tahmidur Remura Wahid (TRW) Law Firm views this as one of the most important emerging risk areas for companies operating in Bangladesh and across borders. The issue is not only whether AI is useful. The issue is whether your organisation can deploy it in a manner that is contractually protected, technically bounded, operationally supervised, and legally defensible.
Why agentic AI is different from ordinary AI tools
Many organisations use AI today without stepping into full agentic deployment. A chatbot that drafts an email, a model that summarises a contract, or a tool that proposes a due diligence checklist may create errors, but it normally does not itself change the outside world. A human still decides what to do next.
Agentic AI is different because it is built to pursue a goal and execute a sequence of actions in order to achieve that goal. In the source article, the authors distinguish between three broad levels: AI assistants, AI agents, and fully agentic AI systems. Assistants are reactive. They respond to instructions and produce outputs for humans to review. AI agents operate with more independence and can act through external tools or interfaces. Agentic AI represents the highest level, where reasoning, memory, and autonomous decision-making are combined to manage multi-step workflows with minimal human involvement.
A useful legal definition offered in the source text is this: an AI agent is a software system that, after receiving a high-level objective from a human principal, autonomously selects and executes a sequence of external actions through tools, APIs, or system privileges, and adapts those actions based on feedback, without requiring human approval at each step.
That definition matters because it focuses on function rather than branding. It does not matter whether a vendor calls its product a copilot, orchestrator, assistant, platform, or digital worker. The legal question is simpler. Can the system act? Can it decide how to act? Can it continue acting without stepwise approval? If the answer to those questions is yes, the system is functionally agentic and the organisation should treat it as such from a governance and liability perspective.
The legal turning point: from recommendation to delegated discretion
The most important legal shift occurs when the business delegates judgment rather than mere execution. Traditional software follows a script. A procurement system may be programmed to reject invoices above a certain threshold. A payment system may require matching fields before processing. The logic is explicit.
An agentic system, by contrast, may receive an instruction such as “reduce Q3 procurement costs” or “clear low-risk customer complaints within policy” and decide for itself which suppliers to contact, which terms to propose, which information to retrieve, which databases to consult, and which messages to send. That is delegated discretion. And once discretion exists, the business must confront the reality that it cannot fully predict every intermediate step the system may take.
This is why liability becomes difficult. The organisation may not have intended the specific harmful act, yet it created the framework in which the system was permitted to act. From a regulator’s, counterparty’s, or claimant’s perspective, that often makes the deployer the natural target.
What is excluded from agentic AI, and why that matters
The source article also usefully explains what should not be confused with agentic AI.
The first excluded category is recommendation-only systems. These tools may influence decisions, but they do not operate external systems directly. A human remains the decision-maker.
The second is rule-based automation. A static script or decision tree may execute external actions, but it usually does not infer its own plan from a broad objective or adjust its strategy in an open-ended environment.
The third is human-in-the-loop execution at every step. If every consequential action requires human approval, the system resembles an assistant with execution features rather than a genuinely agentic system. The risk profile is very different when humans approve each step instead of merely auditing after the fact.
This distinction is highly practical for businesses in Bangladesh. Many companies wrongly assume they are “safe” because a human supervisor exists somewhere in the workflow. But the real question is whether that human meaningfully approves each consequential step, or whether the human is simply reviewing reports after the system has already acted.
The role of the harness, scaffolding, and orchestration layer
One of the strongest insights in the source article is that agency does not arise from the model alone. It is engineered through the surrounding scaffolding or harness. That scaffolding determines whether the system can plan, remember, call tools, access APIs, use credentials, interact with internal systems, and continue operating across multiple steps.
This point has direct legal importance. Two companies may use the same underlying AI model, but their legal exposure may be radically different. One may use the model in read-only mode to summarise internal policies. Another may connect it to ERP systems, payment rails, customer communication channels, and document repositories with write permissions. The first may face low operational exposure. The second may face substantial financial, regulatory, privacy, and reputational risk.
The source article identifies several key components of the harness:
Planning and execution logic, which creates the loop of interpreting objectives, selecting the next action, invoking tools, and adjusting behaviour based on results.
Tool connections and adapters, which give the system the ability to act in the world through APIs, databases, email systems, browsers, payment services, and enterprise platforms.
Memory and context management, which determine what the system remembers and uses in subsequent decisions.
Constraints, permissions, and gating, which define which tools are available, whether the credentials are read-only or write-enabled, and when human approval is required.
Monitoring, limits, and stop conditions, which can impose cost limits, anomaly detection, confidence thresholds, circuit breakers, and policy-triggered shutdowns.
For legal counsel, this means liability analysis cannot be done at the level of marketing claims. It must be done at the deployment level. The scope of permissions, system connectivity, and approval architecture will usually determine where risk actually sits.
The first liability scenario: harm caused to the deployer itself
A major point made in the article is that when an AI agent causes damage, the deploying business often bears the loss itself. This may include lost profits from mispricing, financial harm caused by incorrect transaction handling, reputational damage from faulty communications, regulatory penalties arising from non-compliance, customer loss, or data loss caused by destructive code or system errors.
In theory, the business may look to the software supplier for indemnity or damages. In practice, many technology contracts sharply limit those remedies. Suppliers frequently disclaim warranties relating to accuracy, fitness for purpose, and reliability. Many contracts exclude consequential or indirect losses, which often include the very losses most likely to matter in an AI failure scenario. Some terms even expressly state that outputs should not be relied upon. In the agentic context, the article notes that this disclaimer logic effectively extends to the system’s actions inside the deployer’s own environment.
This is a critical commercial lesson for Bangladeshi companies signing AI vendor agreements. If the platform is purchased off the shelf and deployed into sensitive workflows without negotiated protection, the business may discover too late that it has assumed most of the downside risk while the vendor has capped or excluded its own exposure.
From a Bangladesh perspective, this may become particularly serious in regulated sectors such as banking, NBFIs, telecom, health services, education, logistics, or e-commerce, where a defective or unbounded agent may trigger not only private financial loss but also scrutiny from sectoral regulators, data authorities, tax authorities, or courts.
The second liability scenario: claims by third parties
The source article also emphasises that agentic AI may harm third parties, not merely the deploying organisation. Examples include biased applicant screening, misleading statements to customers, unlawful use of personal data, and infringement of intellectual property rights.
In those circumstances, the third party usually sues or complains against the deployer, not the model vendor. That is because the deployer is the visible business actor that used the system, integrated it into operations, benefited commercially from it, and permitted it to interact with the outside world.
This issue becomes even more complex when multiple AI systems interact. An organisation may use one vendor’s model, another vendor’s orchestration layer, internal tools from its own IT department, and external APIs from third-party providers. If harm emerges from this combined ecosystem, tracing fault becomes difficult. Yet legal responsibility does not disappear merely because causation is technically complicated.
For businesses in Bangladesh, this is especially relevant in four recurring areas.
The first is customer-facing communication. If an AI agent sends misleading, inaccurate, or non-compliant representations to consumers or business clients, the company may face claims based on contract, negligence, misrepresentation, unfair trade practices, or sector-specific compliance obligations.
The second is employment and HR. If AI-driven screening systems reject candidates unfairly or inconsistently, companies may face reputational harm, discrimination-related claims, or internal governance issues.
The third is privacy and data handling. If an AI agent accesses or processes personal data beyond the authorised purpose, or leaks such data through prompts, external tools, or integrated systems, the deployer may face legal and regulatory consequences.
The fourth is intellectual property. If an agent produces, sends, stores, or deploys content that infringes copyright, reveals confidential information, or improperly uses third-party proprietary materials, the deployer may again be the first defendant.
Why explainability and oversight are becoming legal necessities
The article points out a practical reality that many businesses ignore until a crisis occurs: when something goes wrong, the deployer must explain the system’s conduct to regulators, auditors, customers, or courts. Yet doing so may be extremely difficult where the agent operated through multiple steps, changing plans dynamically in response to feedback, retrieved information, or error states.
This creates a dangerous gap. Businesses are expected to justify outcomes, but the underlying systems may be opaque or only partially traceable. The source text notes that some legal regimes already place transparency and explainability obligations on deployers, including under frameworks such as the GDPR and the EU AI Act.
Even where Bangladesh-specific AI legislation remains underdeveloped, the broader legal logic still applies. If a company cannot explain who configured the system, what authority it had, which data it could access, which actions it took, and why it was not stopped sooner, that weakness may undermine its defence in civil, regulatory, employment, banking, corporate governance, or consumer protection contexts.
This is why governance cannot be postponed until after deployment. It must be built before launch.
A practical governance model: “know your agent”
One of the most useful parts of the source article is its governance framework, described as a “know your agent” approach. The idea is straightforward. Before launching an AI agent, a business must understand what mandate it has, what risks may arise during its lifecycle, what contractual protections exist, and what technical and organisational controls are needed.
For TRW Law Firm, this should be understood as a legal and operational due diligence exercise. The business should not ask only whether the system works. It should ask whether the deployment is legally survivable.
1. Risk assessment and contractual review
Before deployment, the company should identify the worst-case scenarios. What is the maximum harm the system could cause if it misfires? Could it expose confidential information? Could it send binding communications? Could it alter pricing? Could it trigger payments? Could it delete records? Could it produce unlawful customer communications? Could it improperly use personal data?
The source article recommends carrying out a risk assessment, quantifying potential liability exposure, checking whether the contract adequately addresses those risks, and stress-testing the workflows in which the agent may act autonomously.
For Bangladesh-based businesses, this stage should involve legal review of:
Vendor limitations of liability
Consequential loss exclusions
Indemnity scope
Service levels for incidents
Change-control rights for model or system updates
Audit and information rights
Security obligations
Data use and retention terms
Subcontracting rights
Termination rights if the model materially changes
If these issues are not negotiated early, the deployer may end up with minimal contractual recourse.
2. Technical controls and access governance
Once the risk is understood, the business must technically constrain the agent. This is not merely an IT exercise. It is a legal control architecture.
The source article recommends limiting the AI agent’s authority, implementing human-in-the-loop review for high-impact decisions, documenting approvals, preventing access to sensitive systems and critical data files, limiting personal data access according to purpose limitation and data minimisation, mapping all internal and external systems the agent can access, and clearly defining which decisions require human authorisation.
In practical terms, this means:
Read-only access should be the default unless strong justification exists.
Sensitive actions should require stepwise human approval.
Irreversible actions should be blocked or heavily gated.
Transaction caps should be hard-coded.
API scopes should be tightly limited.
Credentials should follow least-privilege architecture.
Testing environments should be separated from live systems.
All high-risk actions should be logged with timestamps and identity trails.
These are not optional enhancements. They are core defensibility measures.
3. Organisational governance and ongoing oversight
The article makes clear that technical controls alone are insufficient. Businesses also need internal ownership, trained staff, incident escalation procedures, monitoring, audit processes, and documented allocation of responsibilities.
From a board and management perspective, a minimum governance structure should answer the following questions:
Who approved deployment of the agent?
Who configured it?
Who monitors it daily?
Who reviews incidents?
Who signs off on scope changes?
Who has authority to suspend or terminate the system?
Which committee or executive function receives periodic reports?
How are lessons from failures captured and implemented?
If no one inside the organisation owns these questions, that itself is a governance failure.
The ten immediate priorities for businesses deploying agentic AI
The appendix to the source article offers a condensed checklist of ten priorities that any organisation deploying agentic AI should address. These include authority boundaries, governance controls, monitoring and audit, vendor contracting, cybersecurity posture, intellectual property and confidentiality controls, records and retention, eDiscovery readiness, jurisdictional mapping, and incident response.
Those ten points can be translated into a practical boardroom framework for Bangladeshi and cross-border businesses.
First, define the maximum authority of each agent and make sure technical limits match the written policy.
Second, create pre-deployment risk reviews, testing standards, and override rights for consequential decisions.
Third, implement real-time monitoring and maintain audit logs that are secure, time-stamped, and usable in investigations.
Fourth, negotiate AI-specific clauses in vendor contracts rather than relying on generic software terms.
Fifth, treat AI agents as potential internal threat actors from a cybersecurity perspective.
Sixth, screen outputs for IP, confidentiality, and data leakage risk.
Seventh, preserve records in line with litigation, regulatory, and business requirements.
Eighth, assume that logs may become discoverable in disputes and build logging strategy accordingly.
Ninth, map every jurisdiction where the agent’s actions have legal effect, not merely where the servers are located.
Tenth, create agent-specific incident response playbooks, including shutdown powers, root-cause review, legal privilege strategy, regulator communication, and customer communication.
That checklist is more than compliance housekeeping. It is the foundation of responsible deployment.
What this means for Bangladesh-based companies today
Many companies in Bangladesh are already using AI in fragments, even if they do not call it agentic AI. Internal support tools, automated customer handling, workflow routing, contract summarisation, candidate screening, reporting, procurement support, and finance operations are all likely entry points.
The risk is that organisations treat these systems as ordinary IT tools when they are actually becoming semi-autonomous business actors. Once that happens, the company must update how it contracts, supervises, documents, and controls them.
In the Bangladesh context, this has implications for corporate governance, banking and financial operations, employment processes, privacy handling, commercial contracting, internal controls, litigation preparedness, and regulatory engagement. It also matters for multinational groups using Bangladesh operations as part of a wider data, service, or decision chain.
A company that deploys agentic AI without governance is not simply innovating. It is assuming unseen legal risk.
How TRW Law Firm can assist
For businesses considering AI-enabled workflow automation or agentic deployment, legal review should occur before the system is connected to sensitive environments. In many cases, the most useful intervention is not abstract legal theory but practical structuring.
Tahmidur Remura Wahid (TRW) Law Firm can assist with:
AI deployment risk assessments
Vendor contract review and negotiation
Liability allocation analysis
Data protection and confidentiality controls
Governance framework design
Approval matrix and escalation architecture
Cross-border regulatory mapping
Incident response preparedness
Board and management advisory support
Internal policy and training material preparation
The legal objective is not to stop innovation. It is to ensure that the organisation remains in control of the innovation it deploys.
Commercial Court Ordinance 2026 in Bangladesh: What It Changes for Business Disputes, Investors, Banks, and Commercial Litigation
Bangladesh’s Commercial Court Ordinance, 2026 is one of the most consequential judicial reforms for business litigation in recent years. Issued as Ordinance No. 01 of 2026 and published in the government gazette on 1 January 2026, it creates a specialized commercial-court framework designed to separate high-value and business-sensitive disputes from the ordinary civil docket. The reform was introduced against a long-standing background of delay, procedural congestion, and limited specialization in conventional civil courts.
At Tahmidur Remura Wahid (TRW) Law Firm, we view the Ordinance as a major structural development for Bangladesh’s investment climate and litigation architecture. Properly implemented, it can reduce delay, improve consistency, promote commercially informed judging, and make court-based dispute resolution more realistic for businesses that cannot always afford arbitration. Poorly implemented, however, it could become another promising reform constrained by uneven infrastructure, training gaps, and transitional confusion. That balance between promise and execution is where the real legal conversation lies.
Why Bangladesh moved toward specialized commercial courts
For years, commercial disputes in Bangladesh were generally routed through the broader civil court system, where they competed for time and attention with land disputes, family matters, general money suits, and a wide range of ordinary civil proceedings. That system was never designed to handle the speed, document intensity, technical complexity, and transactional urgency associated with modern banking, infrastructure, shareholder, IP, technology, and cross-border business disputes. The Ordinance responds directly to that institutional mismatch.
The reform also fits a broader policy objective. Public statements around the Ordinance repeatedly linked it to contract enforcement, investor confidence, post-LDC competitiveness, and Bangladesh’s broader effort to present itself as a more reliable jurisdiction for doing business. UNDP-supported work and government messaging before and after the Ordinance both emphasized the connection between timely commercial dispute resolution and a stronger investment climate.
What the Ordinance actually establishes
The Ordinance provides for the establishment of Commercial Courts across Bangladesh, with the number of courts and their territorial jurisdiction to be determined by the appropriate authority in consultation with the Supreme Court. It also provides for Commercial Appellate Benches in the High Court Division, to be constituted by the Chief Justice for hearing appeals and revision petitions arising from Commercial Court decisions. Judges are to be appointed from among District Judges and Additional District Judges, with preference for those having advanced qualifications in commercial law or experience in adjudicating commercial disputes.
That institutional design matters. It signals that commercial justice is no longer being treated as a mere subset of general civil adjudication. Instead, the reform recognizes that business disputes often require different forms of judicial management, including sector familiarity, faster scheduling discipline, and greater comfort with commercial documentation, finance structures, and technically layered pleadings. This specialization is one of the Ordinance’s strongest features.
The scope of “commercial disputes” is intentionally broad
One of the Ordinance’s most important features is the breadth of disputes it brings within the commercial-court umbrella. Reporting on the Ordinance and summaries based on the gazette indicate that the framework covers at least 24 categoriesof commercial disputes. These include matters involving banks, financial institutions, insurance, export-import transactions, transport of goods, construction and infrastructure contracts, joint ventures, subscription and investment contracts, franchise agreements, intellectual property issues, and disputes relating to the use of minerals, gas, natural resources, and even spectrum-like commercial rights.
That broad jurisdiction is significant for two reasons. First, it reflects modern commerce as it actually operates, rather than confining “commercial” litigation to old-style mercantile claims. Second, it may reduce fragmentation. When a dispute touches finance, investment, contracts, technology, and regulatory interfaces at the same time, businesses benefit from a forum that is expressly designed to absorb that complexity rather than treat it as an awkward variation of ordinary civil litigation.
The real attraction: speed and case management
The most widely discussed feature of the Ordinance is its emphasis on time-bound adjudication. The Commercial Courts are expected to conclude the trial of a dispute within 90 days from the date fixed for final hearing. Reporting and legal summaries also indicate a procedural structure built around limited adjournments, stricter pleading timelines, pre-suit mediation, and case management tools aimed at preventing the drift and delay that have historically burdened civil litigation.
This matters enormously in practice. Commercial disputes are often not valuable merely because of the amount at stake. They are valuable because delay itself can destroy value. A dispute over a supply agreement, a shareholder breakdown, a project delay, a financing default, or an IP infringement can become commercially meaningless if resolved only after years of litigation. By pushing courts toward a managed and deadline-driven structure, the Ordinance tries to preserve the economic utility of judicial relief.
Why this is especially important for SMEs
Large multinationals and some major domestic players can turn to arbitration, expert determination, or heavily lawyered negotiated settlements. Small and medium-sized enterprises usually cannot. For many Bangladeshi businesses, the ordinary civil court was too slow, while arbitration could be too expensive, too document-heavy, or too strategically unequal. A functioning commercial-court regime could therefore be particularly valuable for SMEs, because it offers a court-supervised dispute pathway that is supposed to be faster and more commercially responsive than traditional litigation, without necessarily imposing the upfront private costs associated with arbitration.
That is one reason this Ordinance should not be understood only through the lens of foreign investment. Its domestic significance may be just as important. If smaller Bangladeshi businesses begin to believe that contracts can be enforced within a commercially meaningful timeframe, business planning, credit confidence, and transactional discipline can all improve.
How the Ordinance may affect banks, insurers, and financial institutions
Banks and financial institutions are likely to be among the most frequent users of the new system. Reporting on the Ordinance specifically mentions disputes involving banks, financial institutions, and insurance as part of the core commercial-dispute basket. That could reshape litigation strategy for recovery matters, interpretation disputes, structured transactions, security-related conflicts, and complex documentation claims.
For financial actors, speed is not just a convenience. It affects provisioning, recoverability, balance-sheet certainty, and regulatory comfort. A more reliable commercial-court structure could therefore improve not only dispute resolution outcomes, but also the broader risk environment around lending, investment, and trade documentation. That said, the benefits will depend on how well judges handle technical financial instruments and layered commercial records. Without sufficient training, the promise of specialization could remain only nominal.
The appellate structure could improve doctrinal consistency
The creation of one or more Commercial Appellate Benches in the High Court Division is another major strength of the Ordinance. Specialized appellate supervision may gradually produce more coherent jurisprudence on recurring commercial issues such as contractual interpretation, interim relief, shareholder conduct, banking instruments, project risk allocation, and cross-border commercial obligations.
That consistency is critical for investment confidence. Businesses do not need courts to decide every case in favor of commerce. They need courts to decide cases predictably, competently, and in a way that makes transactional risk measurable. Over time, the commercial appellate structure could help move Bangladesh closer to that kind of judicial predictability.
Technology and modern commercial procedure
Legal summaries of the Ordinance indicate that it was framed with a more modern procedural philosophy than ordinary civil practice, including technology-enabled case handling and compatibility with virtual hearing mechanisms under the Use of Information and Communication Technology by Courts Act, 2020. Commentary on the Ordinance also points to an emphasis on more disciplined filing, clearer procedural rules, and modernized case flow.
This is particularly relevant for commercial litigation because business disputes are often document-heavy, geographically dispersed, and time-sensitive. Electronic records, digital service, and virtual procedural steps can significantly reduce friction, especially where parties, witnesses, or commercial records are spread across multiple districts or jurisdictions.
Where the Ordinance could face difficulty
The Ordinance is ambitious, but it will be tested on implementation. Several practical challenges are immediately visible.
Judicial capacity and training
The law prefers judges with advanced qualifications or experience in commercial disputes. That is positive, but Bangladesh still needs a sufficient pool of judges who are genuinely comfortable with complex financial documents, shareholder structures, regulatory overlaps, infrastructure contracts, insurance frameworks, and IP-commercial intersections. Training cannot be ceremonial. It must be technical, repeated, and sector-aware.
Court infrastructure
A fast-track commercial process requires more than legal text. It requires courtroom capacity, filing systems, scheduling discipline, staff competence, digital support, and reliable cause-list management. If the courts are created on paper but not operationally equipped, delay may simply reappear inside a new institutional label. Commentary on the reform has already noted the importance of technology enablement and adequate infrastructure.
Transition from ordinary civil courts
There may also be transitional issues involving pending cases, forum allocation, jurisdictional objections, and overlap with existing civil proceedings. Unless transfer rules and coordination practices are handled carefully, litigants may face preliminary battles over where exactly a dispute belongs instead of moving quickly into resolution.
Uniformity across the country
Because the Ordinance contemplates courts across Bangladesh, uneven regional implementation is a real concern. A strong commercial-court practice in Dhaka but weak or inconsistent operation elsewhere could undermine the promise of a nationally reliable business dispute system.
What this means for foreign investors
Foreign investors and development partners generally look for three things in court-based commercial justice: speed, competence, and predictability. The Ordinance is clearly designed to improve all three. Public policy statements around the reform explicitly connected it to Bangladesh’s readiness for investment, global commercial engagement, and post-LDC competitiveness.
Still, investors will judge the reform by performance, not announcement. They will ask practical questions: How fast are injunctions heard? Are judges commercially literate? Are adjournment limits actually enforced? Are appeals resolved efficiently? Do courts manage technically complex evidence well? Can foreign parties navigate the process without undue procedural uncertainty? Those answers will determine whether the Ordinance becomes a true institutional asset.
TRW Law Firm’s view
At Tahmidur Remura Wahid (TRW) Law Firm, we consider the Commercial Court Ordinance, 2026 a welcome and overdue reform. Bangladesh has needed a specialized commercial forum for years. The ordinary civil justice system, however important, was not built to handle the full demands of modern banking disputes, joint venture breakdowns, high-value contract claims, investor conflicts, infrastructure litigation, and business-sensitive interim relief.
The Ordinance’s strongest features are its specialization, broad commercial scope, 90-day post-final-hearing target, appellate bench structure, and managed-procedure orientation. These elements, taken together, have the capacity to reshape commercial enforcement in Bangladesh.
But the Ordinance should not be romanticized. It will succeed only if the State invests in trained judges, procedural discipline, technology, and consistent administration. Commercial justice is not created by naming a court “commercial.” It is created by making that court capable, trusted, and efficient.
For businesses, the message is clear: the litigation environment in Bangladesh is changing. Contracts, dispute clauses, enforcement strategy, and forum analysis should now be reviewed in light of the new commercial-court architecture.
Summary table
Issue
What the Ordinance does
Why it matters
Institutional reform
Creates Commercial Courts and Commercial Appellate Benches
Separates business disputes from the general civil backlog
Judicial specialization
Prefers judges with commercial-law qualifications or experience
Can improve technical quality and consistency of rulings
Jurisdiction
Covers a broad range of commercial disputes, including banking, insurance, JV, investment, IP, infrastructure and more
Reflects the reality of modern business litigation
Speed
Targets conclusion of trial within 90 days from final hearing date
Makes court relief more commercially meaningful
Procedure
Uses stricter timelines, limited adjournments, mediation, and case management
Reduces delay and tactical procedural abuse
Investor relevance
Aims to strengthen contract enforcement and confidence
Supports Bangladesh’s competitiveness and investment climate
Main risk
Success depends on implementation, training, and infrastructure
Reform may underperform if courts are not operationally equipped
Contact TRW Law Firm
Tahmidur Remura Wahid (TRW) Law Firm Dhaka Office: House 410, Road 29, Mohakhali DOHS, Dhaka UK Office: 330 High Holborn, London WC1V 7QH, United Kingdom Dubai Office: Rolex Building, L-12 Sheikh Zayed Road, Dubai
Indigenous Peoples’ Rights in Bangladesh and the Unfinished Constitutional Promise of the Chittagong Hill Tracts
The question of Indigenous Peoples’ rights in Bangladesh is not a marginal constitutional issue. It is one of the clearest tests of whether the Republic is prepared to accommodate diversity, dignity, land security, and meaningful equality within its constitutional order. The Chittagong Hill Tracts, in particular, continue to expose a deep gap between legal promise and lived reality. The Constitution now contains Article 23A, which requires the State to take steps to protect and develop the unique local culture and tradition of the tribes, minor races, ethnic sects and communities. At the same time, Article 6(2)states that the people of Bangladesh shall be known as Bangladeshis as a nation. These provisions show partial recognition of cultural plurality, but they stop short of expressly recognizing Indigenous Peoples as a distinct constitutional category with corresponding collective rights.
At Tahmidur Remura Wahid (TRW) Law Firm, we consider this unfinished constitutional position to be one of the most important unresolved public-law questions in Bangladesh. The difficulty is not merely semantic. When a legal system avoids naming a people clearly, it often also avoids recognizing the full range of rights that flow from that identity. In the case of the hill communities, that uncertainty affects land, representation, consultation, autonomy, development, security, and remedies.
The identity question remains unresolved
Bangladesh has long struggled with the terminology used for Indigenous communities. In constitutional and statutory language, the State has often preferred terms such as “tribes,” “minor races,” “ethnic sects,” “communities,” “aboriginals,” or “indigenous hillmen,” instead of a clear and consistent recognition of Indigenous Peoples. That drafting choice matters because in international law and comparative constitutional practice, identity is tied to a broader framework of participation, consultation, land protection, and cultural continuity.
Article 23A was a step, but a limited one. It acknowledges protection of unique culture and tradition, not Indigenous self-identification as such. That means the constitutional framework still does not fully settle the question of whether the State sees these communities as merely culturally distinct populations within a uniform national structure, or as peoples entitled to more meaningful protection of land, institutions, and self-governance.
This ambiguity has practical consequences. It makes it easier for the State to speak the language of inclusion while avoiding the harder legal implications of recognition. It also leaves room for selective engagement: protecting festivals, dress, or heritage rhetorically, while leaving more difficult questions of land dispossession, militarization, displacement, and political voice only partially addressed.
Indigenous Peoples’ Rights in Bangladesh best law firm in bangladesh
The Chittagong Hill Tracts remain the constitutional pressure point
The Chittagong Hill Tracts are where these contradictions become most visible. For decades, the region has reflected overlapping tensions involving land, settlement, administration, demography, security, and political recognition. The Chittagong Hill Tracts Accord of 1997 was supposed to mark a historic transition toward peace and institutional accommodation. It led to follow-on legislation such as the Chittagong Hill Tracts Regional Council Act, 1998, intended to provide a structured framework for regional representation and governance.
Yet the story since then has been one of partial implementation and recurring contestation. The Accord has never fully resolved the structural anxieties that surround land, administration, and authority in the hills. Much of the conflict remains rooted in a simple reality: land in the CHT is not merely property. It is identity, memory, livelihood, belonging, and continuity. When land insecurity persists, every other promise becomes fragile.
That is why the constitutional challenge of the CHT is ultimately larger than a regional political dispute. It is about whether Bangladesh can sustain a unitary constitutional system while still recognizing historical difference and collective vulnerability in a meaningful way.
Land is the center of the dispute
Any serious legal discussion of Indigenous rights in Bangladesh must start with land. The hill communities’ relationship with land is not fully captured by ordinary urban or lowland property concepts. Land is tied to community survival, customary use, traditional governance, social organization, and cultural inheritance. Where the law fails to protect that relationship, conflict becomes cyclical.
The historical wounds are deep. The construction of the Kaptai Dam displaced a very large number of people and submerged substantial areas of ancestral land, leaving a legacy of dispossession that still shapes the politics of the region. That episode remains a reminder that development decisions taken without meaningful consultation can produce generational constitutional injury, even where formal legality is claimed.
Today, land remains at the core of almost every major grievance in the CHT. Questions of settlement, occupation, administration, and restoration are inseparable from broader questions of justice. A constitutional order that cannot secure land rights in such a context will struggle to persuade affected communities that citizenship offers equal protection.
The Accord and the courts
The legal fate of the CHT institutional framework has also been uncertain. The Regional Council Act, 1998 was challenged in litigation, and in 2010 a High Court Division bench reportedly declared the Act unconstitutional on the ground that it affected the unitary character of the Constitution. The matter did not end there, however, because the Appellate Division stayed that judgment, which meant the framework was not finally extinguished. The result was preservation without resolution: formal survival, but continued uncertainty about constitutional compatibility and political commitment.
This episode is instructive. It reveals a recurring tension in Bangladeshi public law. The Constitution is often invoked in highly centralizing terms when institutional accommodation is proposed, but less effectively when substantive equality, historical disadvantage, or minority protection require bold implementation. The unitary structure of the Republic is important, but unitary does not have to mean blind to difference. A mature constitutional system should be able to preserve sovereignty and territorial integrity while still recognizing differentiated rights and institutions where history and justice demand them.
Article 6 and the politics of identity
The identity debate is often connected to Article 6(2) of the Constitution. The article now describes the people of Bangladesh as “Bangladeshis” as a nation. That is not the same as the earlier language that equated nationality more directly with Bengali identity, but it has not fully eliminated the historical concern. Indigenous voices have long argued that citizenship and ethnicity are not the same thing. A Chakma, Marma, Tripura, Mro, Bawm, or Santal may be fully Bangladeshi as a citizen while retaining a distinct ethnic and Indigenous identity. The constitutional vocabulary should be capable of holding both truths at once.
This distinction matters because constitutional assimilation can occur not only through coercive policy, but also through the language of uniformity. If the law recognizes only one dominant narrative of peoplehood, then other identities survive in a tolerated but subordinate position. That is not constitutional pluralism. It is hierarchy in softer language.
Bangladesh’s international position is also limited
Bangladesh’s international legal record on Indigenous rights reflects a similar pattern of partial engagement. Bangladesh has ratified ILO Convention No. 107, which concerns Indigenous and tribal populations, and that remains one of the principal treaty instruments relevant to the issue in Bangladesh. But Bangladesh has not ratified ILO Convention No. 169, which is the more modern international instrument specifically focused on Indigenous and tribal peoples in independent countries and is generally seen as providing stronger standards on consultation, participation, and land rights.
Bangladesh also abstained on the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) when the General Assembly adopted it in 2007. While UNDRIP is not binding in the same way as a treaty, it has become a major normative reference point for Indigenous rights globally, especially regarding self-identification, consultation, participation, land, and dignity. Bangladesh explained its abstention at the time, but the abstention still reflects a cautious and limited approach to international recognition.
This selective engagement has consequences. It narrows the range of international standards that Indigenous communities in Bangladesh can invoke as part of domestic advocacy. It also signals that the State prefers a controlled and culturally framed engagement over a fuller rights-based framework.
Security cannot substitute for justice
The State often approaches the hills through the lens of security, order, and administrative management. But security measures cannot resolve a constitutional problem rooted in recognition, land, and trust. When communities experience arbitrary arrest, fear, militarization, or recurring violence, the resulting harm is not simply local disorder. It is evidence that the constitutional compact remains weak in that region.
The rule of law in the CHT must therefore be measured not only by the presence of state institutions, but by whether those institutions act with legitimacy and fairness. Long-term peace cannot be sustained by force alone. It depends on whether communities feel that the law sees them, hears them, and protects them.
What constitutional maturity would actually require
Bangladesh does not need to abandon its constitutional structure to address this problem properly. But it does need to move beyond symbolic inclusion. A serious reform agenda would involve at least five legal and constitutional commitments.
First, the State should adopt clearer and more dignified recognition of Indigenous identity in law and policy.
Second, the implementation of the CHT Accord and related institutional arrangements should be revisited with genuine urgency rather than ceremonial repetition.
Third, land rights and land dispute mechanisms in the CHT must be treated as a constitutional priority, not a peripheral administrative matter.
Fourth, the principle of meaningful consultation must become real in development, security, and governance decisions affecting Indigenous communities.
Fifth, Bangladesh should reconsider its international positioning, especially in relation to the stronger global standards reflected in ILO Convention No. 169 and UNDRIP.
None of these steps would threaten the Republic. On the contrary, they would strengthen it by aligning constitutional practice with justice.
TRW Law Firm’s view
At Tahmidur Remura Wahid (TRW) Law Firm, our view is that the Chittagong Hill Tracts represent Bangladesh’s unfinished constitutional promise. The issue is not only whether the Constitution contains words that refer to cultural diversity. The issue is whether the legal order is willing to protect people whose identity, land relationship, and political experience do not fit neatly within majoritarian assumptions.
Bangladesh has already taken partial steps. Article 23A exists. The CHT Accord exists. The Regional Council framework exists. International obligations under ILO Convention No. 107 exist. But partial recognition without full implementation can become its own form of injustice. It raises hope, then normalizes delay.
The law now needs to move from tolerance to recognition, from symbolism to substance, and from administrative control to constitutional fairness. Until that happens, the hills will continue to remind Bangladesh that pluralism promised but not delivered remains a wound in the Republic.
Summary table
Issue
Present legal position
Why it matters
Constitutional recognition
Article 23A protects culture and tradition of tribes, minor races, ethnic sects and communities
Cultural acknowledgment exists, but Indigenous identity is not expressly recognized as a distinct constitutional category
National identity
Article 6(2) recognizes the people as Bangladeshis as a nation
Citizenship is recognized, but ethnic and Indigenous distinctiveness remains constitutionally underdeveloped
CHT institutional framework
1997 Accord and 1998 Regional Council framework remain only partially implemented
Formal structures exist, but incomplete implementation weakens trust and effectiveness
Land rights
Central source of conflict in the CHT
Without land security, peace and equality remain fragile
International obligations
Bangladesh ratified ILO Convention 107 but not ILO Convention 169
Bangladesh remains within an older and weaker international framework
UNDRIP
Bangladesh abstained on the 2007 UN Declaration vote
Signals a cautious approach to fuller international recognition of Indigenous rights
Constitutional challenge
Tension remains between unitary constitutionalism and meaningful pluralism
This is one of Bangladesh’s most important unresolved public-law questions
Price-Fixing, Cartels, and the “Abnormal Price” Problem in Bangladesh Competition Law
Bangladesh’s competition law framework was enacted to protect markets from collusion, abuse of dominance, and other practices that distort fair trade. Yet one of its most important provisions on price-fixing still raises a difficult interpretive problem: should the law prohibit all horizontal price-fixing among competitors, or only those arrangements that produce or determine an “abnormal” price? The answer matters because in competition law, the difference between banning the act of collusion and debating the “reasonableness” of a collusive outcome can determine whether enforcement is swift and credible or hesitant and ineffective. The Competition Act, 2012 was enacted to promote and sustain competition in trade and to prevent anti-competitive conduct, and section 15 is the core provision dealing with anti-competitive agreements.
At Tahmidur Remura Wahid (TRW) Law Firm, our view is that Bangladesh should move toward a clearer, stricter, and more enforceable rule against horizontal price-fixing. Competing sellers should not be allowed to jointly decide what the market price will be and then defend that arrangement by arguing that the resulting price was somehow “normal.” That is not how competitive markets are meant to function, and it is not how the leading competition regimes approach cartel behavior. U.S. antitrust law has long treated price-fixing agreements as unlawful per se, and EU law expressly prohibits agreements that directly or indirectly fix purchase or selling prices.
Why price-fixing is treated so seriously
A cartel in competition law is not merely a dramatic media label. It refers to an arrangement among market participants to restrain competition, often by coordinating price, output, market sharing, or bid behavior. Among these, horizontal price-fixing is one of the most serious violations because it strikes at the heart of the competitive process. When rival sellers agree on the price at which goods or services will be sold, consumers no longer benefit from genuine market rivalry. Price ceases to be a product of independent decision-making and becomes a product of agreement.
The danger is not limited to higher prices. Once competitors no longer need to compete on price, incentives to improve quality, innovate, reduce waste, and serve consumers better can also weaken. A fixed-price environment often protects inefficient players, rewards coordination over productivity, and encourages a market culture where business actors look sideways at rivals rather than forward to consumers. That is why courts and regulators in mature jurisdictions usually regard horizontal price-fixing as among the clearest forms of anti-competitive conduct. In United States v. Trenton Potteries, the U.S. Supreme Court held that agreements among sellers to fix and maintain uniform prices violate the Sherman Act whether the fixed prices are reasonable or unreasonable. Later U.S. cases reiterated that price-fixing is unlawful per se.
“Abnormal Price” Problem in Bangladesh Competition Law best law firm in Bangladesh
The structure of section 15 of the Competition Act, 2012
Bangladesh’s Competition Act, 2012 identifies anti-competitive agreements and prohibits conduct that has an adverse effect on competition. Section 15 is particularly important because it addresses arrangements among market participants that distort competition. Commentary and review materials on the Act note that section 15 covers conduct such as price-related collusion, bid-rigging, output restrictions, and market-sharing type arrangements.
The debate arises from the wording around price-fixing. As highlighted in recent commentary, there is a discrepancy between how the relevant rule reads in Bengali and how the authentic English text has been discussed in policy and academic circles. One formulation suggests that a practice is prohibited if it abnormally determines purchase or sale prices. Another suggests it is prohibited if it determines abnormal purchase or sale prices. That is not a small drafting issue. The first focuses on the process of collusion. The second focuses on the result. Those are very different legal ideas.
“Abnormally determining price” versus “determining abnormal price”
This distinction deserves careful attention.
If the law prohibits abnormally determining price, the emphasis is on the conduct of competitors jointly setting the price through an improper process. That approach is closer to mainstream competition law, because the core harm lies in the agreement itself. Competitors are meant to set prices independently, not collectively.
If, however, the law prohibits only determining abnormal price, enforcement becomes much harder. It requires the Competition Commission or an adjudicatory body to decide what counts as an “abnormal” price. That invites uncertainty, expert disagreement, sector-specific disputes, and endless arguments about market conditions, inflation, input costs, import shocks, consumer demand, profit margins, and what a “normal” benchmark ought to be. A price that looks abnormal in one month may appear commercially rational in another.
In practical terms, a result-based test weakens enforcement. Businesses accused of cartel conduct may argue that their agreed prices were not abnormal because of rising costs, global supply disruptions, or local distribution problems. Regulators then become trapped in a valuation and economics exercise before they can even reach the real question: why were competitors discussing and aligning prices in the first place?
That is why the process-based reading makes more legal and economic sense. Competition law should be concerned first with whether rivals coordinated their pricing behavior, not whether the coordinated outcome can later be dressed up as commercially defensible.
Why the “abnormality” qualifier is problematic
There is a deeper issue. Even a process-based reading still leaves the word abnormal in place. But what does abnormality add here? If competing sellers agree on price, that agreement itself is already abnormal from the perspective of competition law. It is the departure from independent rivalry that makes the conduct objectionable.
Many major jurisdictions do not burden cartel enforcement with a normality qualifier. Article 101 of the TFEU prohibits agreements that directly or indirectly fix purchase or selling prices. U.S. antitrust law treats horizontal price-fixing as a per se violation. The Philippine Competition Act also prohibits agreements among competitors that restrict competition as to price, or components thereof, without inserting an “abnormal price” filter.
The comparative lesson is straightforward. Once competitors are found to have coordinated price, the law should not require a second inquiry into whether the coordinated price was too high, too low, or abnormal in some separate sense. The coordination is the offense.
Bangladesh’s law should not normalize cartel defenses
A dangerous side effect of ambiguous drafting is that it normalizes the wrong debate. Instead of asking whether businesses colluded, people start asking whether the agreed price was “fair.” But cartel law is not a fairness-of-price code. It is a market-process code. It protects the conditions under which prices are formed, not merely the numerical output of those conditions.
This matters greatly in Bangladesh, where public concerns around “syndicates” and coordinated market behavior often arise in relation to essential goods and everyday consumer products. Competition law should give the Commission a strong tool to investigate and sanction collusion without requiring it to solve the impossible puzzle of identifying a theoretically normal price for every sector and every period. Review materials on Bangladesh’s framework have already noted implementation weaknesses and the need to strengthen enforcement capacity.
Predatory pricing is not a reason to tolerate price-fixing
One possible defense of the current ambiguity is that markets also face the opposite danger: a firm may cut prices too low, incur losses temporarily, drive out rivals, and later raise prices after gaining dominance. That is the classic predatory pricing concern. Bangladesh’s Competition Act addresses abuse of dominant position separately, and commentary on the Act notes that below-cost pricing intended to eliminate competition can fall within section 16.
But predatory pricing does not justify horizontal price-fixing. The legal answer to one anti-competitive practice is not to create room for another. A market can prohibit collusion among rivals while separately policing abuse of dominance by a powerful firm. These are distinct theories of harm and require distinct legal tools.
In reality, horizontal price-fixing typically presents a more immediate and systemic danger to consumers than predatory pricing. Predatory pricing is difficult, expensive, and risky to sustain. Cartels, by contrast, can distort markets quietly and profitably for long periods if detection is weak.
Enforcement is not just about legal text
Even the best statutory wording will struggle without effective enforcement architecture. That is another area where Bangladesh can improve. One of the most effective anti-cartel tools used internationally is a leniency programme: the first cartel participant to confess and cooperate receives reduced penalties or immunity. This destabilizes cartels from within because every member knows another may defect first.
Bangladesh’s current framework is widely understood to lack a formal leniency programme of that kind. Multiple review and diagnostic materials have recommended introducing one to improve detection of complex anti-competitive conduct and to encourage whistleblowing.
For Bangladesh, a meaningful anti-cartel reform agenda should include at least the following:
■ clearer statutory wording on horizontal price-fixing; ■ stronger investigative powers and technical capacity within the Competition Commission; ■ a formal leniency regime; ■ protection for whistleblowers and cooperating parties; ■ sector guidance on trade associations, parallel conduct, and prohibited competitor communications; ■ faster adjudicatory pathways for core cartel cases.
The role of the Competition Commission
Bangladesh’s Competition Commission was established to enforce the Act and take action against anti-competitive practices. Yet policy reviews and institutional studies have repeatedly pointed out that enforcement has been slower and weaker than the market requires, especially against coordinated conduct affecting consumers. That does not mean the law is useless. It means the institution needs sharper tools, greater confidence, and statutory clarity.
Cartel enforcement cannot be purely symbolic. If businesses conclude that price coordination will be debated endlessly as a matter of “abnormality” rather than condemned as a market-rigging practice, the deterrent effect of the law will shrink.
What Bangladesh should do next
In our view, Bangladesh should seriously consider amending section 15 to remove the ambiguity around “abnormal” price-fixing and bring the law closer to the mainstream rule: horizontal price-fixing among competitors should be prohibited as such, without requiring proof that the agreed price itself was abnormal. That would better protect consumers, simplify enforcement, and align with comparative practice.
A sensible amendment could do three things at once.
First, it could clarify that any agreement, understanding, concerted practice, or decision among competitors to fix, maintain, stabilize, raise, lower, or coordinate purchase or sale prices is prohibited.
Second, it could preserve careful treatment of vertical restraints and resale-price issues, which are often more nuanced and may require effects analysis depending on the circumstances.
Third, it could add a leniency framework and stronger investigatory provisions so that the law is not only well-drafted but operational.
TRW Law Firm’s view
At Tahmidur Remura Wahid (TRW) Law Firm, we believe Bangladesh’s competition law should protect the market process, not invite excuses for cartel conduct. The stronger legal principle is simple: competitors should compete. They should not jointly decide what the market price will be and then force consumers, retailers, or downstream businesses to live with that decision.
The current “abnormal price” wording debate shows why precision in statutory drafting matters. A poorly framed cartel rule can weaken an entire enforcement system. Bangladesh does not need to reinvent the law of price-fixing. The better path is to clarify the statute, strengthen the Competition Commission, add leniency protections, and treat hard-core horizontal price-fixing as the serious anti-competitive offense it already is in economic reality.
Summary table
Issue
Present concern
Better approach
Horizontal price-fixing
Ambiguity around “abnormal” pricing language
Ban competitor price-fixing clearly and directly
Legal interpretation
Risk of focusing on outcome instead of collusive process
Focus on the agreement or concerted practice itself
Enforcement difficulty
Hard to define “abnormal price” across sectors and time
Avoid requiring a “normal price” benchmark
Comparative alignment
Bangladesh wording appears less clear than major regimes
Align more closely with EU, U.S., and regional practice
Predatory pricing concern
Sometimes raised as a counterpoint
Address separately under abuse of dominance rules
Detection of cartels
Weak without insider cooperation mechanisms
Introduce a formal leniency programme
Institutional capacity
Enforcement remains challenging
Strengthen Commission powers, expertise, and procedures
Contact TRW Law Firm
Tahmidur Remura Wahid (TRW) Law Firm Dhaka: House 410, Road 29, Mohakhali DOHS London: 330 High Holborn, London WC1V 7QH, United Kingdom Dubai: Rolex Building, L-12 Sheikh Zayed Road
