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Unpaid vat must be Paid: RJSC

On 20.04.2021, RJSC published a notice (the notice is undated) regarding the payment of unpaid VAT for services received from RJSC during the financial year 2014-15 to 2017-18. During this period, though there was provision for VAT on the services of RJSC under the VAT Act 1991 and VAT Rules 1991, RJSC did not impose the VAT on their machine-generated payment slip. Here, you should note that any person who (was and) is preparing and submitting the return of any company cannot generate payment slip on their own or put the amount. The payment slip (as well as the amount) is generated by the system implemented by RJSC. Thus, it was an oversight by RJSC themselves.  

RJSC also published a list of the unpaid amount of VAT for each company. Unless companies pay the unpaid VAT, as per the notice RJSC will not provide any further services to those companies.  

Download – বকেয়া ভ্যাট সম্পর্কিত বিজ্ঞপ্তি.

FRC expands the definition of public interest entities

The Financial Reporting Council (FRC), the newly established regulatory body has issued a notification on 11 Match 2020 (Gazette Published on June 29, 2020). By this notification, FRC extended the range of companies that will be considered as ‘Public Interest Entity’ in addition to what was initially defined in the Financial Reporting Act 2015. Section 2(8)(Ka) allows the FRC Act to make such determination.

As per the notification, if a firm earns annual revenue of Tk 5 crore, it will be treated as a public interest entity.

In addition to that, companies having assets of Tk 3 crore or more, or liabilities of Tk 1 crore apart from the shareholders’ equity, will also be a public interest entity.

Public Interest Entities are required to abide by the rules and regulations of FRC and the Financial Reporting Act (FRA) 2015.

Download: Notification on Definition of the public interest entity.

Share money deposit of public interest entities must be converted into paid up capital within six month – FRC

The Financial Reporting Council (FRC), a regulatory body under the Financial Reporting Act (FRA) 2015 recently issued a notification in this regard on 11 February 2020 (Gazette published on 2 March 2020). This notification was issued as a number of listed companies have misused the share money deposit to manipulate their performance.

According to the notification:

  • the share money deposit received for increasing equity or paid up capital of a company must not be withdrawn or taking back at any means.
  • Share money deposit must be converted into paid up capital within six months of deposit.
  • Share money deposit will be considered as potential share until its conversion into paid up capital, and the company must show the diluted earnings per share in the financial statement or impact of the new shares on EPS.

Public Interest Entities are required to abide by this notification.

Download: Notification on Accounting and Reporting on Share Money Deposit

Share money deposit of foreign investor must be converted into share within 1 year – Bangladesh Bank

Equity investment from foreign shareholders (kept as share money deposit) in a Bangladeshi registered company must be converted into shares within 1 year from the date of receipt. On February 05, 2020, Bangladesh Bank issued FEID Circular No. 02 to this effect. Previously there was no time limit to convert the share money deposit of the foreign shareholders into shares.

In the circular, Bangladesh Bank provided the following guidelines:

  • Bangladeshi companies shall complete the formalities of issuance of shares within 360 days of receiving money for this purpose – meaning the company should file the return with RJSC.
  • Share Money Deposit must not be used for any purpose other than the main business of the company i.e. the fund cannot be used in any interest/profit bearing financial instruments;
  • In case of calculating Debt Equity Ratio for according permission of foreign loan/foreign currency loan to industrial enterprises and of Taka term loan to foreign owned/controlled company as per Para-4(C), Section-1, Chapter-16 of Guidelines for Foreign Exchange Transactions, 2018 etc., share money deposit will not be considered as equity component if the company fails to convert it into share within 360 days of such receipt. However, the company will show Share Money Deposit in their financial statements as per IAS/BAS;
  • If total share capital of the company exceeds the exemption limit as fixed by the Bangladesh Securities and Exchange Commission (BSEC) after receiving Share Money Deposit, consent from BSEC has to be obtained. Since this approval process from BSEC usually takes time, it is our advice that companies will act expediently to make sure they are compliant with this circular.
  • Companies having share money deposit before the issuance of this circular are advised to complete the formalities of share issue within 360 days from the date of this circular.

Download: FEID Circular No. 02 dated February 05, 2020.