RE: Legal Opinion on Asset Purchase Agreement between Company 1 and Company 2.
We refer to your email dated 22 December 2006 on the above subject.
You have provided us with the following:
1. A marked version of the revised draft Asset Purchase Agreement incorporating the comments of Mr. x & Mr. y; and
2. A clean version of the draft Asset Purchase Agreement.
You have asked us to provide our legal opinion on the clean version of the draft Asset Purchase Agreement.
Our comments on the said Agreement are as follows:
In Clause 5 it is described how the Relevant Employees will be transferred to Company 2 from COMPANY 1, BUT nothing is stated regarding how Key Employees (specified in Part B of Schedule 1) will be transferred.
In Clause 5.1 it is stated that:
“The Vendor shall by notice in writing terminate the employment of each of the Relevant Employees with effect from the close of business on the day before Completion…”
Relevant Employees will be specified in Part A of Schedule 1. But Schedule 1 is at the moment left blank as such it is not clear to us whether or not Relevant Employees include non-workers (i.e. employees who are mainly employed in managerial or administrative capacity) or workers or both. If Relevant Employees only include non-workers then COMPANY 1 will be able to terminate the employment of each of the Relevant Employees by giving them notice in writing in accordance with their letter of appointment. But if Relevant Employees include workers then as COMPANY 1 wants to terminate the employment of workers, they will in effect be retrenching the workers and as such COMPANY 1 will have to following the conditions in Section 20 of the Bangladesh Labour Act 2006. As such, firstly, COMPANY 1 will have to give the worker (worker means a worker who has been in service for not less than one year under COMPANY 1) one (1) month’s written notice indicating the reasons for retrenchment or pay wages in lieu of notice; secondly, COMPANY 1 has to send that notice to the Chief Inspector or any other officer authorised by him; and thirdly, the worker has to be paid at the time of retrenchment compensation which shall be equivalent to thirty days wages for every completed year of service or for any part thereof in excess of six months, or gratuity, if any, whichever is higher.
As stated in our previous opinion to COMPANY 1, terminating the employment contracts of workers will not be economically feasible for COMPANY 1. As such it is still our legal opinion that COMPANY 1 should hire out the workers to Company 2. So in our opinion there should be separate provisions in the Agreement in relation to non-workers and workers. In relation to the non-workers the existing provisions are satisfactory. In relation to workers, the Agreement should state that COMPANY 1 will be hiring out the workers to Company 2. In case phase two licenses could not be obtained by Company 2, then the workers hired out to Company 2 could easily come back to COMPANY 1.
We suggest that Schedule 4, Article 1.3 be deleted and be replaced as follows:
“1.3 (to the extent available) the written consents of the Head Lessors for the sub-lease of the Sub-Let Premises, and if applicable, the Sub-Lease Agreements in respect of the Sub-Let Premises executed by the Vendor in favour of the Purchaser.”
If you have any further query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”