RE: LEGAL OPINION ON Bank 1 GROUP PEOPLESOFT SERVICES AGREEMENT.
We refer to your email dated 02 November 2006 on the above subject.
You require our legal opinion on the BANK 1 Group People soft Services Agreement. You specifically require us to advice on the following issues:
a) Whether there is a need to obtain regulatory clearance in Bangladesh prior to sub-contracting by a foreign company taking place; and
b) Clarification of the privacy/data protection, outsourcing or other regulatory requirements applying to the provision of the People soft Services in Bangladesh.
From perusal of the Agreement it appears that BANK 1 (USA) Inc. (“BANK 1”) shall recruit or select and make available the services of an adequate number of full-time employees of BANK 1 or of any other Group Member on a full- time secondment basis (Clause 3(a)). And according to Clause 1 (vii), “Group member” means any entity other than BANK 1 which is a subsidiary (direct or indirect) of BANK 1 Holdings Plc. (“HGHQ”).
For our purpose, we have to consider what the legal position is if BANK 1 selects and makes available the services of employees of a subsidiary of HGHQ which is situated in Bangladesh. According to Clause 3(f), if BANK 1 selects and makes available the services of such designated employees, then those employees shall be dedicated to the performance of the services of BANK 1 only and shall not perform any other services with the exception of similar BANK 1 own account work unless and to the extent agreed by HGHQ in writing.
The designated employees, according to Clause 3(j), shall be the employees of BANK 1 if recruited from BANK 1, if selected from a group member – they will be the employees of that group member. BANK 1 will be solely responsible for determining the hours of work, compensation and termination arrangements applicable to the designated employees.
After consulting the relevant laws of Bangladesh, we find that there is no specific legal requirement or need to obtain any regulatory clearance in Bangladesh prior to the sub-contracting taking place. However, the law regulating agency contained under sections 182 – 238 of the Contract Act 1872 shall apply.
Moreover, as BANK 1 will be solely responsible for the compensation of the employees, there is the question of inward remittance into Bangladesh by way of salary or payment for the services. Foreign Exchange Regulation Act 1947, sections 5 (b), 18.A (1), 18.B (1) have to be followed in this regard and the necessary permission of Bangladesh Bank has to be sought before appointing the employees in accordance with these sections.
Moreover, according to Para 2, Chapter 8 of Bangladesh Bank “Guidelines for Foreign Exchange Transactions” – The Authorised Dealers may freely purchase foreign currencies or raise debits to non-resident Taka Accounts of the respective bank branches and correspondents. Remittances equivalent to US$ 2000 and above should be reported to Bangladesh Bank on Form C attached to the appropriate schedule (Schedule J). The purpose of remittances should be clearly stated on the Form C.
So the payment for services by BANK 1 which will involve inward remittance has to be through an Authorised Dealer. But the Authorised Dealer is under no restrictions if the Remittance is less than US$ 2000. If the Remittance is more than US$ 2000 then the approval of Bangladesh Bank will be needed. Approval should be sought in Form C by clearly mentioning the purpose of the Remittances.
There is a possibility that, the fact that, BANK 1 will select and make available the services of employees of a Bangladeshi subsidiary of HGHQ could be held to mean that BANK 1 is in effect opening an office in Bangladesh or BANK 1 is appointing agents in Bangladesh. As such, according to Para 1, Chapter 24 of Bangladesh Bank “Guidelines for Foreign Exchange Transactions”, BANK 1 should seek the permission of Bangladesh Bank before setting up any place of business for trading commercial activities. The persons appointed in Bangladesh by BANK 1 and the Bangladeshi subsidiary of HGHQ shall also need, according to Para 1, Chapter 24 of Bangladesh Bank “Guidelines for Foreign Exchange Transactions”, to get the permission of Bangladesh Bank before accepting such appointment. All other regulations contained in Chapter 24 of Bangladesh Bank “Guidelines for Foreign Exchange Transactions” should have to be followed as well.
b) Privacy/Data Protection Law:
At present no statute has been passed in Bangladesh regulating privacy or data protection. As such, privacy or data is protected and preserved according to the terms and conditions contained in the relevant agreement.
There is no specific law regulating outsourcing in Bangladesh. But the Contract Act 1872 shall apply to an outsourcing contract in the same way it applies to any other contract.
If you have any further query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”