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?

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.

In an M&A context, SPVs are used for:

▪ acquisition financing
▪ consortium acquisitions
▪ management buyouts
▪ private equity investments
▪ asset carve-outs
▪ real estate transfers
▪ business division separation
▪ regulatory ring-fencing
▪ warranty and indemnity structuring
▪ post-closing integration planning

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
Main Documents	Articles, shareholders’ agreement, board resolutions, financing documents	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

Phone:
+8801708000660
+8801847220062
+8801708080817

Email:
[email protected]
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