Equity and Entrepreneurship Fund (EEF) was introduced in the fiscal year 2000-2001 to encourage

the investors to invest in the risky but otherwise promising two sectors, viz. software industry and
food processing and agro-based industry. Bangladesh bank is authorized by the Government to
manage the EEF. This fund was started to increase investments in two promising industrial sectors
viz. Software industry and Food processing and agro-based industry (excluding the conventional sub-
sectors such as rice mills/flour mills/fishing trawlers, cold storage of potato etc.) and also to
encourage entrepreneurs in these sectors.

Eligibility for equity support from the EEF:

1. The project will have to be a new one and belong to either of the sectors viz., software
industry or food processing and agro-based industry.

2. The sponsors/entrepreneurs applying for EEF support will have to be a private limited
company registered under the Companies Act, 1994 and established old companies can also
apply for EEF support by setting-up a subsidiary new private limited company. But in case of
a software company registered on or after 01 January, 1997 will be treated as a new
company.

3. The total project cost ( including net working capital ) of the proposed project will have to be
of minimum 0.50 (half) core for both IT and agro-based industries and that of the maximum
is Taka 5.00 Crore for IT& Taka 10.00 Crore for agro –based industries . Project proposal
with bank loan is not allowed for agro –based industries but allowed for IT industries.

4. The project shall have to be viable technically & financially .It should be environment
friendly. Importance shall be given on the appraisal of the entrepreneurship such as
educational qualification in the relevant discipline, knowledge in the technology/ process
operating such project, track records in financial conduct specially with Banks/FI. In case of
ratio analysis the project has to offer minimum IRR (Internal Rate of Return) of 15%, Return
on equity (ROE) of 15% Debt service coverage Ratio 1.50:1 Current ratio 1.50:1 and Fixed
asset coverage ratio 1.50: 1 and SWOT analysis should have to be acceptable.

5. The non-resident Bangladeshis will be given preference subject to the fulfillment of the terms
& conditions mentioned in the above paragraphs.

6. Any defaulter (as defined by Bangladesh Bank) cannot apply for EEF.

7. Where a sponsor of a project needs term-loan and /or working capital loan from any Bank/FI
and also equity support form the EEF, he has to submit application to the Bank/FI concerned.
The Bank/FI will have to be satisfied that the project has fulfilled all the terms and conditions
required. Where the sponsors/entrepreneurs need only equity support from EEF without any
bank loan a Bank/FI will be nominated as representative of EEF for appraisal of the project
by Bangladesh Bank (EEF). To nominate such Bank/FI, previous business relationship of
entrepreneur with the Bank/FI will be considered. The concerned Bank (which will also act
as monitoring bank) will make thorough appraisal of the project in accordance with EEF
 rules and guidelines and if the bank is satisfied about the viability of the project they shall
send the project proposal with specific recommendation to Bangladesh Bank. The Bank/FI
may determine their project examination fee according to their existing rules. Bangladesh
Bank, EEF Unit will re-examine the project appraisal and perform pre-sanction visit if
necessary. Then EEF Unit will place it with specific recommendation before the Technical
Advisory Committee (TAC). TAC is a four member expert Committee under the
chairmanship of the Governor of the Bangladesh Bank. This Committee is the ultimate
authority to approve the projects. When a project is approved by the TAC, EEF Unit will
issue a sanction letter to the concerned entrepreneur instructing them to invest their portion of
equity within a certain period of time.

Amount of EEF assistance:

The amount of equity support from the EEF to the project, which needs finance from a Bank/FI, will
be of max.49% of the total equity of the company provided that such percentage of equity support
will not exceed 33.33% of the total cost of the project (including net working capital ) of the
company concerned. But if the company does not take any loan from Bank/FI, EEF support will be
of max 49% of the total project cost from EEF.

What to be done by the entrepreneurs:

1. Apply for EEF through submission of Expression of Interest (EOI) form to the EEF Unit of
Bangladesh Bank

2. Short listed companies will prepare Project Proposal and will appraise that Project Proposal
by a Bank/FI. Then appraising Bank/FI will forward that Project Appraisal Report to
Bangladesh Bank EEF Unit for immediate next action.

3. Execute Investment Agreement with the Bank/FI after approval of the project.

4. Entrepreneurs will have to amend Memorandum & Articles of Association as per

requirement of the conditions of Bangladesh Bank.

5. Issue share in favor of GOB, EEF Unit Bangladesh Bank before fund is disbursed.

6. Buy-back the issued shares within eight years:

a. At the face value within three years starting from the date of 1st disbursement.

b. For the remaining five years at the break-up value or at the face value whichever is
higher.

Steps to be taken by the Bank/FI:

1. Bank/FI will appraise the project and if it seems acceptable to Bank/FI, they will send the
project appraisal with their recommendations including relevant papers to Bangladesh Bank
EEF Unit. In appraising the project profile Bank/FI. will constitute a minimum three member
Project Appraisal Committee and will send the project appraisal report to EEF Unit with
specific recommendations of the members of the committee as to whether the project is
eligible to get EEF assistance or not. The project appraisal report should also be signed by all
the members of the committee.

2. Bank/FI will preserve the issued share certificates received form the company on behalf of
Bangladesh Bank.

3. The Bank/FI shall nominate its representative, on behalf of the Bangladesh Bank (EEF Unit)
on the company’s Board of Directors to attend the meetings as well as in the meetings of the
company’s shareholders.

4. The Bank/FI will monitor the business of the company regularly and send quarterly report to
EEF.