Comprehensive guide on Foreign Company Registration in Bangladesh
Foreign Company Registration in Bangladesh
Bangladesh has emerged as a top alternative for international investors seeking to establish a foreign company due to its booming economy and large local clientele base. The implementation of several policies aimed at attracting foreign investment, such as tax breaks, simplified processes, and a slew of other changes, has transformed Bangladesh into a business-friendly environment.
Furthermore, Bangladesh allows firms with 100% foreign value to be established (BIDA). This is why international company registrations in Bangladesh have increased dramatically in recent years. This blog digs deeply into the process of registering a foreign company in Bangladesh, as well as the legal aspects of doing so.
A Comprehensive Guide for Foreign Company Registration in Bangladesh
The current state of investment policies makes Bangladesh an appealing place to do business. One of the most important things you can do to build your business here is to register your company. Now, the registration process is a little complicated. But do not worry! This article provides a step-by-step instruction for international company registration in Bangladesh.
With Bangladesh’s fast increasing economy, now is the ideal time to expand your business in Bangladesh. Foreign corporations can explore establishing a variety of entities in Bangladesh, including:
- Liaison/Representative Office
- Branch Office
- Subsidiary/Private Limited Company
- The Liaison Office
A liaison office primarily acts as a representation for the parent corporation. They serve as a liaison between the parent firm and its partners in Bangladesh. Their operations are often small. They coordinate, collect, and evaluate business data pertaining to their field. They primarily stimulate trade and involvement, both technically and financially.
Factors to Consider for establishing a Liaison Office in Bangladesh:
Age of the Parent firm: The parent firm must be at least two years old and properly registered outside of Bangladesh.
Minimal Investment Requirement: The parent firm must pay at least $50,000, or six months of operations costs, including the first office setup cost.
No Income Generating Operation: The parent firm is responsible for all operational costs. The liaison office shall not have a source of income in Bangladesh.
Name and Approval of the Liaison Office: The name must be identical to the parent firm and approved by BIDA (Bangladesh Investment Development Authority).
Taxation in Bangladesh: The Liaison office in Bangladesh is subject to all types of taxes, with the exception of profit taxes, as the office does not generate any money.
Prerequisite Documents for Setting Up the Liaison Office:
For BIDA permission:
- Foreign Company Incorporation Certificate
- Memorandum and Articles of Association.
- Audited Financial Statements of the Parent Company (Previous Two Years).
- Board Resolution for establishing the Liaison Office in Bangladesh
- Perfect Details of Directors
- Complete information about the shareholders of the applicant company
- A declaration explaining the nature of the parent company’s activity.
- A declaration explaining the nature of the planned Liaison Office’s activities.
- Total Employee List for the Proposed Liaison Office
- Authorization Letter to the Consultant, who will process the application on behalf of the applicant.
- The prerequisite documents listed in points 1–4 must be translated into English and confirmed by the Bangladesh High Commission of the respective country.
For Bank Account Opening:
- Foreign Company Incorporation Certificate
- Memorandum and Articles of Association.
- Audited Financial Statements of the Parent Company (Previous Year)
- Board Resolution for Opening a Bank Account
- Share Tree Analysis for the Foreign Parent Company
- Complete information about the shareholders of the applicant company
- BIDA approval letter
- Tax Registration Certificate for the Bangladesh Liaison Office
- Passport Copy and Photograph of Bank Signatories
- Passport copy and photograph of the parent company’s directors and shareholders.
Step-by-Step Liaison Office Setup
Step 1: Obtain BIDA permission.
The following procedure must be followed to obtain BIDA permission:
Creating an Account with the BIDA Web Portal: After paying the government charge for account creation, you must generate a user ID.
Fill out the BIDA Applicant- Online, submit your liaison office’s application to BIDA.
Approval of Application by EC- The BIDA’s executive committee meets twice a month. After checking the documentation and the executive committee’s decision, BIDA will approve the application. The average time it takes to gain permission is one month.
BIDA Permission Letter- BIDA issues an e-letter granting BIDA permission, which is the primary legal document required to be recognized as an approved liaison office. BIDA licenses are good for three years. To renew, reapply two months before the current term expires.
Step 2: Tax ID Number
Bangladesh’s Income Tax Department issues an exclusive 12-digit number known as TIN (Tax Identification Number). Once the E-TIN is obtained, the liaison office can open a bank account.
Step 3: Open a bank account.
Opening a bank account with any bank in Bangladesh is required.
Step 4: Initial Investment.
An initial investment of $50,000 must be made within two months following the BIDA approval. In the event of noncompliance with the mentioned two-month period, an additional 5% of the total remittance must be brought to Bangladesh as punishment.
Step 5: VAT Registration.
Following the initial investment, a 13-digit online VAT registration/BIN (Business Identification Number) will be issued.
After completing all of the stages, the liaison office will be able to begin its daily operations.
Branch Office by a Foreign Company in Bangladesh
A branch office is an extension of the parent firm that can be established in Bangladesh by a foreign corporation. However, without BIDA approval, a branch office cannot operate. The branch office can conduct business in the same manner as its international parent firm. It can export and import commodities, provide consultancy, strengthen technical and financial alliances, act as a representative of the parent company, provide IT services and software development, and conduct research in all areas where the parent firm operates. However, they are not permitted to participate in manufacturing processes.
Factors to Consider for a Branch Office Setup in Bangladesh:
Age of the Parent firm: The parent firm must be at least two years old and properly registered outside of Bangladesh.
Minimal Investment Requirement: The parent firm must pay at least $50,000, or six months of operations costs, including the first office setup cost.
Operation Expenses: A Branch Office must pay all of its expenditures using remittances from the head office or revenue received from BIDA-approved operations in Bangladesh.
Name and Approval of the Branch Office: The name must be comparable to the parent firm and approved by BIDA (Bangladesh Investment Development Authority).
Taxation in Bangladesh: As a revenue generator, the Branch Office is subject to all ordinary taxes.
Prerequisite Documents to Establish the Branch Office:
BIDA (Bangladesh Investment Development Authority) Permission:
- Foreign Company Incorporation Certificate
- Memorandum and Articles of Association.
- Audited Financial Statements of the Parent Company (Previous Two Years).
- Board Resolution for establishing the Branch Office in Bangladesh.
- Perfect Details of Directors
- Complete information about the shareholders of the applicant company
- A declaration explaining the nature of the parent company’s activity.
- A declaration explaining the scope of the proposed Branch Office’s activities
- Total Employee List for the Proposed Branch Office
- Authorization Letter to the Consultant, who will process the application on behalf of the applicant.
- The prerequisite documents listed in points 1–4 must be translated into English and confirmed by the Bangladesh High Commission of the respective country.
Step-by-Step Process for Branch Office Setup
Step 1: Obtain BIDA permission.
The following procedure must be followed to obtain BIDA permission:
- Creating an Account with the BIDA Web Portal: After paying the government charge for account creation, you must generate a user ID.
- Fill out the application to BIDA online.
- Approval of Application by EC- The BIDA’s executive committee meets twice a month. After checking the documentation and the executive committee’s decision, BIDA will approve the application. The average time to obtain approval is one month.
- BIDA Permission Letter- BIDA issues an e-letter granting BIDA permission, which is the primary legal document required to be recognized as an approved liaison office.
Step 2: RJSC Certificate.
You need to register the Branch Office with the RJSC (Register of Joint Stock Company).
Step 3: Trade Licence.
To perform Branch Office commercial activities in Bangladesh, you must first apply to the local government for a trade license. Obtaining a trade license requires a business office address and a leasing agreement.
Step 4: Tax ID Number
Bangladesh’s Income Tax Department issues an exclusive 12-digit number known as TIN (Tax Identification Number). Once the E-TIN is obtained, the branch office can open a bank account.
Step 5: Open a Bank Account
Opening a bank account with any bank in Bangladesh is required.
Step 6: Initial Investment.
An initial investment of $50,000 must be made within two months following the BIDA approval. In the event of noncompliance with the mentioned two-month period, an additional 5% of the total remittance must be brought to Bangladesh as punishment.
Step 7: VAT Registration
Following the initial investment, a 13-digit online VAT registration/BIN (Business Identification Number) will be issued.
After completing all of the stages, the branch office will be ready to begin everyday operations.
Subsidiary Company
A subsidiary company is a private limited corporation whose most shareholders are corporate entities. It can conduct its relevant business operations and declare earnings in Bangladesh. A foreign corporation can own it entirely.
Statutory Requirements for Subsidiary Companies:
- The lowest number of directors is two, while the highest is fifty.
- The minimum number of stockholders is two, while the maximum number is fifty.
- Each shareholder contributes the smallest amount of share capital, BDT 1.
- Shareholders might be natural or artificial persons (corporate).
- Foreign shareholders and directors may own 100% of the company.
- All directors and members of the company must be at least 18 years old and of sound mind.
- The subsidiary office must have a registered address in Bangladesh.
- Additionally, annual audited account submission, filing of annual returns, and filing of tax returns are required as part of the annual compliance conditions.
The liabilities of a subsidiary company are:
- An Annual General Meeting
- An appointed statutory auditor.
- Submit all financial accounts and board meeting reports.
- Income tax returns are filed every fiscal year.
Prerequisite Documents to Establish the Branch Office:
To create a non-operational bank account in Bangladesh:
- Name clearance certificate from RJSC.
- Draft Memorandum of Agreement and Articles of Association for the new corporation in Bangladesh.
- Board Resolution/Promoters’ Meeting Minutes
- NID/Passport copies for all shareholders (natural people)
- 3 copies of pictures of all shareholders and directors in the proposed firm
- Signed and completed Bank Account Application Form
Additional documentation required for corporate shareholders include:
- Share tree analysis for a corporate shareholder.
- Passports and photos of all nominee directors.
- Passports and photographs of all shareholders in the parent company/corporate shareholder.
- Corporate shareholders must provide their incorporation certificate, memorandum, and AOA audit report from the preceding fiscal year.
For company registration:
- Copy of the proposed company’s Memorandum of Agreement and Articles of Association
- Signed Form-VI (Declaration of Registered Address)
- signed Form-IX (permission of the directors).
- Signed Subscriber Page
Step-by-Step Process for Establishing a Subsidiary Company
Step 1: Company Name Approval.
Select an appropriate available name.
Apply using the web portal of RJSC.
Deposit the government fees with the bank.
Get the name clearance certificate from RJSC.
Step 2: Creating Requirement Documentation
Memorandum of Association (MoA)
Articles of Association (AOA)
Form-VI (Notice of Situation with Registered Address)
Form IX (permission of the directors to act)
Board Resolution/Promoters’ Meeting Minutes
Step 3: Open a non-operational bank account.
Before applying for company registration with RJSC, a non-operating bank account with any scheduled commercial in Bangladesh must be opened to receive inward remittances, in accordance with the Bangladesh Foreign Exchange Regulations. After receiving the remittance, the recipient bank will provide an Encashment Certificate that includes the purpose of the payment. RJSC will check the Encashment Certificate with the issuing bank before confirming the company registration.
Step 4: Inward Equity Remittance in Bangladesh.
According to the Bangladesh Foreign Exchange Regulations, the procedure of inward equity remittance must be completed before submitting the company registration application to RJSC. The technique goes as follows:
- The shareholders must deposit the original paid-up capital in the non-operating bank account.
- Remittances must be sent using SWIFT.
- In Bangladesh, receiving the payment could take 48-72 hours.
- The bank will provide an Encashment Certificate upon receiving the equity remittance.
- The remittance must be designated as “Equity Investment” on SWIFT.
- Step-5: Online Filing to the RJSC Web Portal
Upload the documents listed below to the RJSC web page.
- MOA and AOA
- Signed Form VI and Form IX.
- Signed Subscriber Page
- Encashment Certificate.
- Finally, the registration process will be completed.
Step 6: Company Registration Documents.
RJSC will send the following documents as evidence of approval of company registration if the online application is approved by the RJSC register:
- Incorporation Certificate
- Certified copy of MOA and AOA
- Certified Copy of Form XII (Particulars of Directors)
Step 7: Other Licenses and Registration
Following the company formation, additional registrations and business permits are required. They are as follows.
- Trade License
- Tax registration (E-TIN
- Vat registration (BIN
- Membership of the Chamber of Commerce (for import and export enterprises)
- Import Registration Certificate (For Import Businesses)
- Export Registration Certificate (For Export Businesses)
- Depending on your sector of employment, you may additionally require additional permits and registrations from the appropriate government agencies.
After completing all of the stages, your subsidiary firm will be ready to start operations.
If you require a dependable hand to guide you through this complex process, Tahmidur Rahman & Co. is more than willing to assist. We assist foreign companies in setting up their operations in Bangladesh, as well as offering conventional accounting and compliance services.
Bangladesh’s constantly increasing economy and valuable geographic location make it an ideal commercial hub. This is why numerous foreign companies are interested in establishing themselves here. However, the legal complexity associated with starting a business may intimidate you. Don’t worry! This blog offers a comprehensive guide on foreign company registration in Bangladesh. Foreign enterprises considering establishing a presence in Bangladesh have three options: liaison office, branch office, and subsidiary company. It provides step-by-step instructions for establishing the liaison office, branch office, and subsidiary firm. If you are still bewildered and hesitant about the process, contact Tahmidur Rahman & Company. We will ensure that your overseas company registration goes smoothly!
To get a free consultation, you can contact us at +88 01713 143 224 (WhatsApp & Direct) or info@trwlaw.co.uk.
Frequently Asked Questions (FAQ)
Is it feasible to register a foreign corporation in Bangladesh?
Any foreign company can conduct business in Bangladesh by following the legal standards outlined in the blog.
What is the minimum investment required for international enterprises to register Liaison Offices in Bangladesh?
The parent firm must invest $50,000, which equates to six months of operations costs, including the initial office setup cost.
Can a branch office established by a foreign corporation operate without BIDA approval?
A foreign company’s branch office cannot operate legally without the consent of BIDA (Bangladesh Investment Development Authority).
