Banking, Finance Litigation
Legal service the area of banking finance and institutional investment is in high demand in Bangladesh. Our Central bank in specific situations allowing international bank and international agencies to give loans to local entrepreneurs. Legal service is often required on regulatory banking for such international banks and agencies. Beside syndicated loan, project finance local and foreign bank needs strong legal support. On the other hand, entrepreneurs often require legal support for regulatory issues, for example, foreign exchange, credit inflammation, general banking and finance regulation related matters. Bank and financial institutions take legal support from lawyers for security documentation, for example, mortgage, hypothecation, etc. and registration of the same. Specialized financial institutions take expert legal support for venture capital financing, equity investment, Islamic finance, offshore banking etc. Complex transactions and investments for e.g. factoring are now slowly becoming popular due to the liberal approach taken by the central bank in recent years. Expert legal support is crucial for such transactions. For both borrower and lender recovery, related litigation is a common issue where they both require continuous legal support.
“Rahman’s Chambers handles foreign investment and disputes involving corporate transactions, finance… The ‘very responsible, responsive and knowledgeable’ Mohammed Forrukh Rahman heads the firm.”
– Legal 500, 2018
Mr. Rahman has in-depth and specialized knowledge on banking laws and regulations pertinent to his two years working experience in central bank as a member of legal counsel for A Hossain & Associates with lawyers from leading law firm of France, Gide Loyrette Nouel and leading law firm of India, Fox Mondol in a world bank-financed project on Banking laws.
As one of the leading firm, in this area, Rahman’s Chambers provides all short of legal support ranging from international banking, complex trade finance, factoring, regulatory matters to security documentation and recovery cases etc.
The Chambers has in-depth knowledge, resources and years of expertise in different critical banking and finance matters. The Chambers for more than ten years advised clients on project finance, bank documentation and handled litigation both in higher and lower court.,
In particular with regard to Credit Information Report (CIB) of Bangladesh bank, as a counsel, Mr. Rahman successfully argued before Hon’ble court in a landmark case explaining the legal position of the guarantor.
Anwar Cement Limited vs. Bangladesh Bank reported in 40CLC(HCD) 2011, 65 DLR (2013) 97
Mr. Rahman successfully argued the legal position as the guarantor, as per Bank Company Ain 1991 and Bangladesh Bank Order 1972 and was successful in its submission that name of the third party guarantor may appear in the CIB report however this will not stop them from taking loan from Bank.
On foreign exchange matter, Mr. Rahman successfully handled litigation on money changing license:
Amjad Hossain vs. Bangladesh Bank reported in 17 BLC (HC) 188 and 41CLC(HCD)2012
This is an important decision on the right to fair hearing principles. Mr. Rahman successfully argues on the exception to such right in suitable circumstances.
The Chambers also handled several project finance e.g. Biman Bangladesh Airlines Limited for purchased of Aircraft.
In recent times, the Firm advised a leading bank over factoring agreement on International trade-related receivable purchase signed with Prima dollar.
The capacity of our Chambers in dealing with banking matters is unparalleled because:
- We have collections of very old but valid circulars of central banks.
- We have advised on many aspects of banking e.g. regulatory, off-site and on-site supervision etc.
- We were involved in drafting major laws and circulars on banking.
- We have provided legal services for both conventional and Islamic banking
- We have significant experience of working on equity finance, project finance and corporate finance.
- We have advised a number of venture investment companies.
- We have advised on cross border claims and on international lending.
- We have experience in dealing with offshore banking and FOREX issues.
Our services include as follows:
While working in the central Bank strengthening project for A Hossain & Associates in 2004 to 2006, Mr. Rahman was involved in drafting of several circulars, regulation and guidelines along with other renowned lawyers from Fox Mandal, India & Gide Loyrette Nouel, France on several matters including banking regulatory, money laundering, credit information, supervision, foreign exchange, Islamic banking etc. This in-depth knowledge and experience of Mr. Rahman clearly give an extra edge compared to other competitors in the market.
The Chambers have deep knowledge as to banking laws as it was involved in translating the proposed Bank Company Act 2009, Bangladesh Bank Act 2009 and Financial Institution Act 2009 from English to Bengali for Bangladesh Bank.
We have acted as legal counsel for proposed issuance of Bond for Grameen Danone Foods Limited and First Security Islami Bank Ltd and drafted finance documents against issuance of Preference shares for few of our clients. Similarly, we were also involved in the process of financing in bond issued by Banglalink i.e. Orascom Telecom Bangladesh Limited.
One of the major achievement of the Chambers in 2011 is the reported landmark judgment of Writ Petition no. 6016 of 2008, Anwar Cement and Others vs. Bangladesh Bank and Others 2011, reported in 65 DLR (2013) 97; 40 CLC (HCD), in which Mr. Rahman have successfully represented Bangladesh Bank and Dutch Bangla Bank Limited in the High Court Division and assisted in bringing major amendment in the Credit Information reporting system for guarantor. In recent years, we have advised several high net worth individuals and companies over their banking issues in particular law and regulation involving CIB. (S.M. Akbar and Another vs Bangladesh reported in 70 DLR(2018) 52.5 CLR(HCD)(2017) 307 & 23 BLC(2018) 126 ) Mr. Rahman successfully argued before the Hon’ble court explaining the position on the guarantee in CIB Report of Nominee Director.
The Chambers have deep understanding and practical knowledge of entire foreign exchange regulations as it advised different client on different aspect of it. The Chambers have dealt with several litigation involving LC, cash incentive benefit, repatriation of foreign currency over export, money exchange license etc. The reported decision i.e. 17 BLC (HC) 188; 41CLC(HCD)2012 on application of natural justice in matter involving money changer license demonstrate the ability and volume of work the firm so far handled.
Besides, the Chambers advised its foreign clients over agency and liaison office permission under section 18 A & B of Foreign exchange regulation Act 1947; repatriation of profit; regulation involving foreign loan etc.
Project Finance refers to off-balance sheet/non-recourse financing or sourcing of funds to long-term projects. One of the notable features is non-recourse financing wherein the company that takes up the project offers itself as a Special Purpose Vehicle (SPV). The SPV is formed to procure and manage all the funds that are received towards the completion of the project. Since the SPV is a limited liability entity, the lenders are only entitled to the assets of the project which may be the guarantee of completion and the expected future cash flows, if the company defaults.
General security documentation
The firms as a whole has long experience of working for bank’ s loan security documentation works like verification of Property Documents, search in sub-registry and joint stock, drafting Mortgage deeds, negative mortgage, Bank Guarantee, several Power of Attorneys, revocation of power, Deed of Redemption, letter of Hypothecation, deed of Floating Charges, satisfaction, modification of charges etc and also various lending agreements e.g. term loan agreement, lease agreement etc.
Project finance agreements
Besides, the firm’s senior lawyers have significant experience of drafting/vetting of Project finance related agreements like Escrow Account agreement, syndicated term loan agreement, pari passue security sharing, working capital facility, equity support and share retention agreements etc.
Non PPP off balance sheet projects
The firm acted for lenders, in few, non-PPP, off balance sheet, project finances as follows:
- Procurement, operation of a brand-new Aircraft by Biman Bangladesh Airlines Limited for amount USD$140 million only involving the Eastern bank Ltd, the lead arranger, The City Bank Limited and few other Banks.
- Hydrogen Per Oxide production plant of Fakir Chemicals Limited for Taka one billion ninety-one million for involving One Bank Limited, lead arranger and The City Bank Ltd.
- Poultry feed projects of ACI GODREJ AGROVET (PVT) LIMITED for Taka ninety-five million involving Standard Chartered bank and the City Bank Limited.
Regulation: Project Finance and PPP
The firm’s senior lawyers’ have deep understanding of regulation of projects finance from both banking and Government PPP/ Authority perspectives and due to their full-time work assignments with Central Bank and also Power Division . The related work experiences are as follows:
- Involved in drafting very first Guidelines for Central Bank on Debt Equity Ratio for projects seeking large loan from banks and financial institutions in 2004 based on which later guidelines were issued.
- Involved in drafting of very first Guideline on Public Private Partnership prepared by Power Division in 2007 based on which later guidelines and laws were promulgated.
The firm’s senior lawyers’ have deep understanding of sponsor’s perspectives as they acted for major project sponsor company engaged in projects finance transactions involving BOT/BOO based PPP projects as follows:
- Acted as Project Sponsor’s counsel and Negotiated and concluded Term Loan Facility and other security documentation between Summit Narayanganj Power Company Limited and DEG, FMO for USD 45m
- Negotiated and concluded long term financing of dual fuel power plant for USD 190m between Summit Meghnaghat Power Company Limited and the Infrastructure Development Company Limited (IDCOL), Standard Chartered Bank and a syndicate of European DFIs.
- Advised, jointly with another law firm, on finance documentation and security arrangements works involving takeover of a power project of 450MW combined cycle gas fired AES Meghnaghat Power project as financed by Asian Development Bank, as well as other lenders e.g. Infrastructure Development Company Limited (IDCOL).
- Negotiated and concluded long term financing of dual fuel power plant for USD 68 m for Ace Alliance Power Limited – with IDCOL, OFID and ICD.
- Negotiated and concluded long term financing of USD 210m for Summit Bibiyana II Power Company Limited with ADB, IFC and Islamic Development Bank.
Corporate and Structured Finance
The firm has long experience of advising banks on several corporate and structure finance assignments.
The Chambers successfully acted for and against commercial banks over LC payment disputes as evident from reported cases such as, Freight Management and 16 others vs Bangladesh Bank 2 CLR (HCD) 586; 19 MLR (HCD) 336, a landmark decision on Distinction between Master and House Bill of Lading and legality of House Bill for sea leg of the journey. The lawyers of the Chambers are regularly dealing with cases relating to a letter of credit, related title suit etc. in both higher and lower judiciary.
Besides, the Chambers lawyers have long experience of efficiently handling cases relating to Bank guarantee disputes in both higher and lower judiciary.
The Chambers played a key role in drafting and negotiating factoring agreement involving trade between a Leading local bank and PrimaDollar (a British based Finance Group) and also IFC involving account receivable finance.
The Chambers regularly appear in Artha Rin Adalat in both Arth Rin suit and execution suit. It has remarkable success record. Besides, Mr. Rahman in recent times handled few appeal and revision arising from execution suit in particular body warrant.
Mr. Rahman was involved in Drafting Islamic Banking Act 2006 and Islamic Banking Guidelines along with other reputed lawyers at CBSP. The firms understanding over Islamic mode of finance is notable as it often advised bank over their Islamic Finance policy from legal point of view. Further, Chambers as a pioneer law firm taken a HPSM investment against local vessel to Admiralty court and successfully arrested the vessels.
Mr. Rahman handled litigation for over 5 years and successfully assisted a UAE & Bangladesh joint venture financial institution company to exit from a dredging company by selling its minority shareholder to promoters. The finance was in the mode as equity investment as opposed to a loan. Besides, in recent times the firm successfully recovered both loan and equity investment made by a US-based venture capital company from a local solar company with remarkable return nearly three times of original investment within 3 years only by ADRs. The firm completed entire paperwork & was involved in litigation.
Chambers is currently handling several complex litigations involving equity financing concerning numerous issues ranging from status of the nominee director, NOC from other lenders, approval of transfer of shares, RJSC recording etc.
The Chambers represented Central Bank in a high profile negotiation and mutual consultation involving a million dollar dispute involving the implementation of national payment switch throughout the country by a Singaporean IT company. The Chambers recently advised IQOPTION LTD. over IT Law Bangladesh Forex Regulation.
- Bangladesh Bank Order (Amendment) 2009,
- Bank Company Ain (Amendment) Draft 2009,
- Financial Institutions Act (Draft) (amendment) 2009 and its translation.,
- Money Laundering and Terrorist Finance Act (Draft),
- Secured Transaction Act (Draft),
- Guideline on Islamic Banking,
- Guideline on Debt and Equity Participation & Several circulars for Central bank for CIB, BRPD, FOREX Dept, FID etc.
Our Related Clients
- Giant group
- Bangladesh Bank (Central bank)(2008- 2015)
- The City Bank Ltd (past)
- Janata Engineers
- Prime Bank Ltd.(past)
- Venture Investment and Partners Ltd.
- Nilufa Rice Mills
- Dutch-Bangla Bank Ltd.
- First Security Islami Bank Ltd
- Small Enterprise Assistance Funds (SEAF)
- Infrastructure Development Company Ltd.
- Bangladesh Infrastructure and Finance Fund Limited
- UAE-Bangladesh Investment Company Ltd.
- BD Venture Ltd.
- IQOPTION LTD.
- LC Fraud (Hallmark case) Alvi Spinning Mills Ltd & Others vs Govt of Bangladesh and others 19 MLR(HCD)277
- CIB report (Guarantor): Anwar Cement Limited vs. Bangladesh Bank reported in 65 DLR (2013) 97; 40CLC(HCD) 2011
- Natural justice (Money Exchange License): Amjad Hossain vs. Bangladesh Bank reported in 17 BLC (HC) 188; 41CLC(HCD)2012
- First Security Islami Bank Ltd vs MV Javed and others reported in 69 DLR (2017) 408
- S.M. Akbar and Another vs Bangladesh Reported in 5CLR (HCD)(2017)307
Our Related Links
- Article: Taking “Blank Cheque” as a security for loan (Vol. 1 of 2011)
- Article: Legal Aspects of Social Business (Vol. 2 of 2011)
- Article: Exhaustive Execution of Syndicated Loan (Vol. 2 of 2011)
- Article: House Bill of Lading: Legal Status in Bangladesh (Vol. 2 of 2011)
- Article: Judicial intervention while making payment under a Letter of Credit (Vol. 1 of 2010)
- Article: Object Clause vs. Third Party Mortgage/Guarantee (Vol. 02 of 2010)
- Article: The Role of Non-Bank Financial Institutions in the Growth of New Entrepreneurs (Vol. 1 of 2008)
- Article: Laws and Practice relating to Encashment of Bank Guarantee (Vol. 2 of 2008)
- Article: Loan recovery – Artha Rin Adalat (Vol.1 of 2007).
- Article: Creation of Mortgages (Vol.1 of 2007).
- Article: CIB reporting; List of Defaulters and Related issues (Vol.2 of 2007).
- Case Report: Name of the guarantor may appear as guarantor only in the CIB report (Vol. 1 of 2011)