Payment systems act as a catalyst to promote financial stability and financial inclusion. The safety and security of these systems is a primary goal of BANGLADESH BANK. As digital payment mechanisms become more popular, it is critical to ensure that payment system infrastructures are not only efficient and effective, but also resilient to traditional and emerging threats, particularly those related to cyber security.
BANGLADESH BANK has specified the essential security measures for banks and credit card issuing NBFIs’ digital payment goods and services.
It is proposed that similar guidelines be issued for Payment System Operators (PSOs), covering a robust governance mechanism for identifying, assessing, monitoring, and managing cybersecurity risks, including information security risks and vulnerabilities, as well as specifying baseline security measures to ensure safe and secure digital payment transactions. The instructions will be released soon.”
A payment system operator is a legal body in charge of running a payment system. The PSO provides services based on certain models. They outsource the majority of their payment and settlement-related tasks to numerous other organizations. PSOs include Google Pay, Amazon Pay, NPCI, Paytm, and others.
Central Bank Guidelines for PSO License
Last year, the Bangladesh Central Bank (BANGLADESH BANK) issued detailed guidelines to strengthen Bangladesh’s digital payments architecture and improve security, control, and compliance among banks, gateways, wallets, and other non-banking entities that are at the forefront of assisting the government in its goal of a ‘less-cash’ economy.
These laws apply directly to scheduled commercial banks, minor financing banks, payment banks, and NBFIs that issue credit cards.
The standards are technology and platform agnostic, with the goal of creating a better and more enabling environment for customers to utilize digital payment products in a safer and more secure manner.
This ‘Approval Procedure of Payment System Operator (PSO)/Payment Service Provider (PSP)’ has been released in line with paragraphs 2 and 3 of section 5.3 of the Bangladesh Payment and Settlement Systems Regulations-2014.
Payment System Operator (PSO): According to the BPSSR 2014, a ‘Payment System Operator (PSO) refers to an entity licensed by the Bangladesh Bank for operating a settlement system for payment activities between/among participants, the principal participant of which must be a scheduled bank maintaining accounts with the Bangladesh Bank for meeting Cash Reserve Requirements.’
A PSO must have the following properties, according to the definition:
a) PSOs must be licensed by Bangladesh Bank; b) PSOs must provide the payment services specified in their license; and c) PSOs must not issue e-money or payment instruments in any form. d) Transactions must be settled through a scheduled commercial bank.
PSO Qualification
PSO must be registered under the Companies Act of 1994;
The company’s paid-up capital cannot be less than BDT. 5,000,000/- (Five Million). However, Bangladesh Bank may adjust the minimum paid-up capital based on services and business exposure; 3. Key staff of the company must have at least three years of experience/exposure in the relevant industry.
Application Procedure Interested institutions should submit an application to Bangladesh Bank in the specified format (Annexure-A) together with the relevant papers (a list of which is provided in Annexure-B). As application fee, a non-refundable demand draft in the amount of Tk. 25,000.00 (Twenty Five Thousand) shall be made payable to the General Manager, Payment Systems Department.
Approval Process
The approval procedure will be divided into two stages. PSD shall give a ‘No Objection Certificate (NOC)’ in the first phase, and in the second phase, PSD may provide final approval to the qualifying organization based on the following method. PSD will conduct a preliminary review of the materials in Phase 1.
Phase 1:
a). Following preliminary review:
i) Bangladesh Bank may request updated or additional document(s). ii) If the documents and/or plan are inconsistent with the requested services, Bangladesh Bank may reject the application with a written notification. iii) If the documents are judged to be satisfactory, they will be forwarded to the evaluation committee(s).
b) The documents will be evaluated and a report will be submitted by the evaluation committee(s).
c) Bangladesh Bank will decide whether to issue or not issue NOC based on the score of the evaluation report(s). This decision will be communicated to the applicant.
Phase 2:
a) The applicant who has received NOC for deploying the system must submit a declaration in prescribed format (Annexure-C) within the stipulated period regarding the readiness of the proposed infrastructure. To conduct the onsite inspection, an onsite inspection team will be constituted.
b) Approval may be granted based on an acceptable inspection report and compliance with all NOC requirements. Fees and Payment Options
Application Fee:
A non-refundable pay order/demand draft in the amount of Tk. 25,000.00 (Twenty Five Thousand only) must be submitted with the application.
A non-refundable pay order/demand draft in the amount of Tk. 1,00,000.00 (One Lac only) would be required to be submitted upon final approval.
LICENSING, REGULATION, AND Licensing:
a) Legal and Regulatory Role:
To enable the seamless operation of the payment and settlement system, a proper legal and regulatory framework is required. The Bangladesh Bank Order 1972 provides the legal foundation for Bangladesh Bank to develop a safe and secure payment system.
The Payment Systems Department establishes regulations and publishes system rules, which specify, among other things, the roles and responsibilities of payment system participants. A proposed Payment and Settlement Systems Act prepared by Bangladesh Bank is now being reviewed by the Ministry of Finance.
Bangladesh Payment And Settlement Systems Regulations (BPSSR), 2014 Electronic Fund Transfer Regulations, 2014
b) MFS (Mobile Financial Services):
Bangladesh Bank launched efficient off-branch Mobile Financial Services (MFS) in 2011 in response to the country’s omnipresent mobile phone network, big number of mobile phone users, and enhanced IT infrastructure. Within ten years, this rapidly expanding Bank-Led MFS model has grown to become the world’s largest MFS market.
Domestically, Bangladesh Bank allows cash in, cash out, person-to-person (P2P), person-to-business (P2B), business-to-person (B2P), person-to-government (P2G), and government-to-person (G2P) payment services via MFS. This service does not permit cross-border money transfers.
Local disbursement of inward foreign remittances received through banking channels, on the other hand, is permissible. With a photo and legal documentation, any adult can open an MFS account with any provider at an agent point or bank branch. In this instance, having multiple MFS accounts with the same supplier is not permissible.
Bangladesh Mobile Financial Services (MFS) Regulations, 2022 Transaction Trend List Of MFS Providers Access To MFS For Women In Bangladesh Comprehensive Study Of Bangladesh’s Female MFS Market
Toolkit for Women Agent Acquisition
Manual for Women Agent Recruitment
Tool for Choosing Female Agents
Women Agent Training Manual
Women’s Agent Training Guide
c) Payment System Operator (PSO) and Payment Service Provider (PSP):
Payment Systems Department (PSD) awards licenses in two major categories, according to the “Bangladesh Payment and Settlement Systems Regulation-2014 (BPSSR-2014)”: Payment Service Provider (PSP) and Payment System Operator (PSO).
It grants a PSP license to a company that facilitates payment(s) or payment processes directly to clients and settles their transactions through a designated bank or financial institution, such as an E-wallet or a Mobile Wallet.
Furthermore, PSD grants a PSO license to a company that manages a settlement system for payment activities between/among participants, the primary participant of which must be a scheduled bank or financial institution, such as a payment gateway or payment aggregator.
PSD examines market demand, business rationale, regulatory requirements, risk management systems, settlement systems, eligibility criteria, and other factors in accordance with BPSSR-2014 before granting a PSP or PSO license.
d) Office of Regulatory FinTech Facilitation (RFFO):
With technological improvements touching every aspect of life, technical and digital breakthroughs have also influenced financial services. Disruptive revolutionary technology is having a huge impact on finance and the way we do business. With the introduction of new technological and financial solutions designed/offered by a variety of financial entities and technology enterprises, financial sectors are taking on a new dimension.
FinTech, or digital innovations, have proven to be a disruptive force in financial markets. FinTech improves efficiency, reduces risk, and expands financial inclusion. It is critical to grasp the granular components of FinTech and its ramifications in order to assess and reorient the regulatory framework effectively and respond to the dynamics of the quickly growing FinTech scenario.
In light of these considerations, a Regulatory FinTech Facilitation Office (RFFO) was established in October of 2019. This might be regarded as a key first step toward allowing additional financial sector innovators to enter the market in order to offer financial services to the general public at a reasonable cost.
OVERSIGHT OF PAYMENT SYSTEMS:
Payment Methods Oversight is a specific sort of oversight of existing and planned payment systems that is one of the most important tasks of all central banks worldwide. It enhances payment system safety, efficiency, and soundness by effectively monitoring and assessing payment systems and then advocating policy adjustments.
With the mandate of the Bangladesh Bank Order 1972, Bangladesh Bank established a number of new and digitalized payment systems and services that have become an essential part of the country’s financial infrastructure.
Effective oversight is the means of stabilizing financial infrastructure by recognizing and controlling the risks associated with payment systems. As a result, Payment Systems Oversight concentrates on the following activities:
For monitoring, collects onsite and off-site data from systems and participants on day-to-day operations, financial flow and transaction patterns, risk exposures, risk management methods and practices, backup and business continuity plan, disruptions and disputes, and so on.
Checks system and participant compliance with applicable laws and regulations, identifies gaps, and makes recommendations with time to follow up.
Analyzes the flaws of systems, participants, or schemes and highlights areas that require improvement or BB intervention.
Performs trend analysis on data from systems and participants, calculating market share for each to prioritize the segment for monitoring.
Performs and facilitates’Self-Assessment’ of systems and participants in accordance with regulatory requirements and International Standards.
Here’s a comprehensive table summarising the Approval Procedure of Payment System Operator (PSO)/Payment Service Provider (PSP) in Bangladesh:
Section
Content
Objectives
This procedure aims to:
– Define the process and required documents for PSO/PSP license application.
– Establish eligibility criteria for obtaining PSO/PSP license.
– Outline the approval process for PSO/PSP.
Payment System Operator (PSO)
According to BPSSR 2014, a PSO is:
– An entity licensed by Bangladesh Bank to operate a settlement system for payment
activities between/among participants, with the principal participant being a
scheduled bank maintaining accounts with Bangladesh Bank for meeting Cash Reserve
Requirements.
Characteristics of a PSO:
– Licensed by Bangladesh Bank.
– Provides approved payment services.
– Does not issue e-money or payment instruments.
– Settlement of transactions done through scheduled commercial bank.
Payment Service Provider (PSP)
According to BPSSR 2014, a PSP is:
– An entity licensed and approved by Bangladesh Bank that provides payment service(s)
to its participants or to a payment system for facilitating payment(s) or payment
processes and settling their transactions through a scheduled bank maintaining
accounts with Bangladesh Bank for meeting Cash Reserve Requirements.
Characteristics of a PSP:
– Licensed by Bangladesh Bank.
– Provides approved payment services.
– May issue e-money or payment instrument under terms and conditions of its license and
subsequent rules and regulations of Bangladesh Bank.
– Maintains a ‘Trust Cum Settlement Account’ with a scheduled commercial bank.
Eligibility
Eligibility criteria for PSO:
– Must be a company incorporated under the Companies Act of 1994.
– The paid-up capital of the company shall not be less than BDT 5,000,000/- (Five Million). However, Bangladesh Bank may refix the minimum paid-up capital based on services and business exposure.
– Key personnel of the company shall have a minimum of 3 years experience/exposure in
the relevant field.
Eligibility criteria for PSP:
– Must be a company incorporated under the Companies Act of 1994.
– The paid-up capital of the company shall not be less than BDT 200,000,000/- (Two Hundred Million). However, Bangladesh Bank may refix the minimum paid-up capital based on services and business exposure.
– Key personnel of the company shall have a minimum of 3 years experience/exposure in
the relevant field.
– Appropriate technology infrastructure shall be maintained within Bangladesh.
Application Procedure
Interested institutions should:
– Apply in the prescribed format (Annexure-A) to Bangladesh Bank.
– Submit required documents (List given in Annexure-B).
– Pay a non-refundable application fee of Tk. 25,000.00 (Twenty Five Thousand) in favor
of General Manager, Payment Systems Department.
Approval Procedure
The approval process is conducted in two phases:
Phase 1 – Preliminary Scrutiny:
– PSD conducts a preliminary scrutiny of the documents.
– Bangladesh Bank may ask for revised or additional document(s) if necessary.
– Bangladesh Bank may reject the application with a written notice if documents and/or
proposal are not consistent with proposed services.
– If the documents are found satisfactory, they are forwarded to evaluation committee(s).
– The evaluation committee(s) evaluate the documents and submit reports.
– Bangladesh Bank takes a decision on issuing/not issuing the NOC based on the evaluation
report(s) and communicates it to the applicant.
Phase 2 – Final Approval:
– The applicant with NOC for deploying the system submits a declaration in the prescribed
format (Annexure-C) within the stipulated period, indicating the readiness of the
proposed infrastructure.
– An onsite inspection team conducts an onsite inspection.
– Approval may be granted based on a satisfactory inspection report and if all the
requirements of the NOC are met properly.
Fees and Payment Method
Application Fee: A non-refundable pay order/demand draft of Tk. 25,000.00 (Twenty Five
Thousand only) should be submitted with the application.
License Fee: A non-refundable pay order/demand draft of Tk. 1,00,000.00 (One Lac only)
should be submitted during the final approval.
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Complete the application form with accurate and pertinent information regarding your news website and its proprietors.
Include the necessary documents, such as your driver’s license, passport, and bank statement.
Pay the required registration fee to the government.
Submit the application form along with the required documents to the Bangladesh Ministry of Information.
Wait for the ministry to assess your registration application and grant approval.
It is important to note that registering for an online news portal in Bangladesh can be a complicated and time-consuming procedure. Consult a lawyer or professional service provider who can guide you through the process and assist you in submitting your application accurately and on time.
Compliance for Bangladesh Online News Portal Registration
Following the registration of an online news portal in Bangladesh, you must adhere to the following post-registration requirements:
Displaying the registration certificate:
Your online news portal should prominently display the registration certificate issued by the Ministry of Information of Bangladesh so that it is readily visible to your audience.
Compliance with laws and regulations:
You must ensure that your online news portal complies with all Bangladeshi laws and regulations pertaining to online news publishing. This includes defamation, obscenity, hate speech, and national security laws.
You must submit periodic reports to the Ministry of Information of Bangladesh regarding the status of your online news portal, including information on circulation, readership, and revenue.
You must ensure that you pay all taxes applicable to your online news portal, including income tax, value-added tax (VAT), and customs duties.
You should take appropriate measures to safeguard the personal information of your users, including complying with Bangladesh’s data protection laws.
You should ensure that your online news portal adheres to journalistic ethical standards, such as accuracy, impartiality, and objectivity.
Renewal of registration:
As required by law, you must periodically renew your registration with the Ministry of Information of Bangladesh.
Consult an attorney or professional service provider who can guide you through the post-registration compliances and ensure that you continue to comply with all applicable laws and regulations.
Required documentation for Bangladesh Online News Portal registration
To register an online news portal in Bangladesh, the following documents are required:
National identification certificate or passport of the holder: This is required to prove the identity of the online news portal’s owner(s).
A bank statement must be provided to demonstrate the financial credibility of the online news portal’s owner(s).
This could be a utility receipt, a lease agreement, or any other document that demonstrates the address of the online news portal’s owner(s).
If the online news portal’s owner(s) are registered as a corporation, a certificate of incorporation is required.
If the proprietors of the online news portal have registered their brand name as a trademark, a trademark certificate is required.
If the online news portal has already registered a domain name, ownership verification is required.
No objection certificate (NOC):
If the owners of the online news portal are leasing the office space where the portal will be administered, the landlord must provide a no objection certificate (NOC).
It is essential that all documents submitted during the registration procedure are accurate and current. The application for registration may be denied if it contains any incorrect or deceptive information.
Bangladesh Online News Portal registration fee:
The government determines the registration fee for an online news portal in Bangladesh, which is subject to change. A news website’s registration fee was BDT 10,000 (Bangladesh Taka) as of September 2021, the last month for which I have information.
Before beginning the registration procedure, it is advisable to confirm the current registration fees with the Ministry of Information of Bangladesh or a professional service provider, as fees and charges are subject to change.
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BIDA Registration for Foreign Investment Project in 2023
According to the BIDA Act of 2016, all industrial investors (those outside the jurisdiction of BEZA, BEPZA, BHTPA, and BSCIC) are required to register their investments with BIDA. Registration with BIDA is not required for commercial and trading activities, purchasing houses, and service institutions.
A foreign company’s branch, liaison, and representative offices must register with the Commercial Department of BIDA. Every industrial enterprise in Bangladesh is required to register with the Bangladesh Investment Development Authority (BIDA) under the industrial department.
Registration with BIDA is required for investors to be eligible.
Regarding government-declared privileges and facilities.
To apply for licenses and permits related to investments, such as work permits for expatriates, foreign borrowings, and import permits/registration certificates for industrial use.
To gain access to any other BIDA facilitation services.
For incentives including exemptions from income tax, import duty, and other taxes.
To obtain sanction for outgoing payments such as royalties, franchise fees, technical license/know-how/assistance fees, and short-term loans.
Registration procedure with BIDA
The investor must submit an online application through the BIDA One Stop Service (OSS) Portal. Also, please attach the pertinent documents. The required documents are detailed below.
For investments abroad and collaborative ventures
transmitting letter to be submitted by Chairman/Managing Director of the company/organization on official stationery.
Application on BIDA’s prescribed form, duly filled out and duplicated
Certificate of Incorporation with Memorandum and Articles of Association for a public/private Limited Company
joint venture agreement duly signed by both parties, if the undertaking is a joint venture;
List of Shareholders/Directors to be submitted in the company’s official pad (SL No., Name, Address, Position, and Nationality).
Copy of Trade License issued by the concerned authority of the factory’s location and specifying the sector
Copy of Company’s TIN Certificate
List of Local and Imported Machineries to be submitted in the company’s official pad (SL No., Name of Machine, Quantity and value (in million Tk./US$))
Copy of agreement/deed (for rented/leased land) or ownership document (for owned land) in the name of the company
Trade License
Redeemable certificate
Project profile if the budget exceeds $100 million
NOC from BSCIC if the project site is within the BSCIC area.
According to the industrial policy, approval from the relevant Ministry/Directorate/Department must be submitted for the controlled sector.
In the instance of a power plant, the power Purchase Agreement (PPA) is applicable.
Other required documentation
Fees
After the application has been approved, a fixed amount based on the invested capital must be paid via online payment gateway (Credit Card: Visa/Master Card), Mobile Banking (Bkash), or Sonali Bank counter payment.
For (1-100 million) BDT – 5,000 BDT
For (100,000,000,000,000-250,000,000,000,000) BDT – 10,000 BDT
For 250,000,000 BDT to 500,000,000 BDT – 25,000 BDT
50,000 BDT for (500,001,001-1,000,000,000,000) BDT
For (1,000,000,001-1 billion trillion) BDT – 100,000 BDT
In conclusion, it can be stated that BIDA registration is an essential step for Bangladeshi industrial enterprises. Registration with the Bangladesh Investment Development Authority (BIDA) is required for all Bangladeshi industrial enterprises. Without it, investors and business owners will be unable to obtain vital licenses and permits, such as the Import Registration Certificate, Export Registration Certificate, and Bond License.
In addition, registration with BIDA is required for the purchase of an industrial property in the special economic zone. It enables them to obtain essential licenses and permits, as well as access to special economic zones, which can help them thrive in the dynamic business environment of the country.
Bida Registration Fees:
Expenses of Registration (for Each Type of Investment)
Amount of Proposed Investment
Registration Fee
VAT (15%)
Local Investment
Up to BDT 100 million
BDT 5,000
BDT 750
Foreign Investment
Up to BDT 100 million
BDT 5,000
BDT 750
Joint Venture Investment
Up to BDT 100 million
BDT 5,000
BDT 750
Local Investment
BDT 100 million – 250 million
BDT 10,000
BDT 1,500
Foreign Investment
BDT 100 million – 250 million
BDT 10,000
BDT 1,500
Joint Venture Investment
BDT 100 million – 250 million
BDT 10,000
BDT 1,500
Local Investment
BDT 250 million – 500 million
BDT 25,000
BDT 3,750
Foreign Investment
BDT 250 million – 500 million
BDT 25,000
BDT 3,750
Joint Venture Investment
BDT 250 million – 500 million
BDT 25,000
BDT 3,750
Local Investment
BDT 500 million – 1,000 million
BDT 50,000
BDT 7,500
Foreign Investment
BDT 500 million – 1,000 million
BDT 50,000
BDT 7,500
Joint Venture Investment
BDT 500 million – 1,000 million
BDT 50,000
BDT 7,500
Local Investment
Over BDT 1,000 million
BDT 100,000
BDT 15,000
Foreign Investment
Over BDT 1,000 million
BDT 100,000
BDT 15,000
Joint Venture Investment
Over BDT 1,000 million
BDT 100,000
BDT 15,000
FAQ on BIDA Registration for Foreign Investment Project in Bangladesh
FAQ
Answer
What is the registration procedure at BIDA?
The registration process is the same for local, foreign, and joint venture investors. All applications for investment registration are to be made online through BIDA’s One-Stop Service (OSS) portal at https://bidaquickserv.org/.
Can BIDA’s headquarters register investments anywhere?
Yes, BIDA can register investment projects located anywhere in Bangladesh, except those located in the zones or areas managed by BEZA, BEPZA, BHTPA, Hi-Tech Park, and BSCIC.
Is it possible to register through BIDA’s divisional office?
Yes, it is possible. BIDA’s Divisional Offices are authorized to receive applications and grant registration, regardless of the project’s status. However, the registration of branch, liaison, or representative offices is only processed from BIDA’s headquarters in Dhaka.
What are the categories of investment registration?
The following industries need to be registered with BIDA outside the jurisdiction of BIDA/BEZA/Hi-Tech Park/BEPZA: 1) Local investment, 2) 100% foreign investment, and 3) Joint-venture investment.
Why should investors register their businesses with BIDA?
All investors for industrial undertakings located outside the jurisdiction of BEZA, BEPZA, BHTPA, and BSCIC are required to register their investments with BIDA according to the BIDA Act, 2016. Registration offers various incentives, privileges, and facilities declared by the government.
Can investors obtain trade license and company incorporation certificate from BIDA?
Trade licenses are issued manually/digitally by the relevant local government offices such as City Corporation, Municipality, or Union Parishad. The trade license from Dhaka South City Corporation can be serviced through BIDA’s OSS Portal at https://bidaquickserv.org/.
Companies need to be registered with the Registrar of Joint Stock Companies & Firms (RJSC&F) according to the Companies Act 1994. An arrangement has been introduced to obtain the incorporation certificate from BIDA’s OSS Platform in addition to RJSC&F.
How can foreign investors incorporate a company in Bangladesh?
Foreign investors can incorporate fully owned, subsidiary, or jointly owned companies in Bangladesh. The most common types of incorporation include public or private limited companies.
The process involves steps such as getting name clearance from RJSC&F, opening a temporary bank account for capital deposit, and preparing Articles and Memorandum of Association for submission of the incorporation application with RJSC&F. It usually takes around five weeks to complete the incorporation process.
How can a foreign investor open a bank account in Bangladesh?
Foreign investors can open a temporary bank account (Non-resident Taka Account: NRTA) without prior permission from Bangladesh Bank to receive capital remittance from abroad.
This temporary account allows for the encashment certificate. Investors can open temporary accounts through an online arrangement for Foreign Direct Investment (FDI) in Bangladesh, as per Circular No. 11 of the Foreign Exchange Policy Department of Bangladesh Bank issued on May 17, 2021.
Once the investor’s company is registered with RJSC&F, a new bank account can be opened to transfer the capital from the temporary account.
Is BIDA registration required for commercial and trading activities?
BIDA registration is not necessarily required for commercial and trading activities, buying houses, and service-oriented institutions. It is primarily required for industrial undertakings located outside the jurisdiction of BEZA, BEPZA, BHTPA, and BSC
Registering a commercial office with BIDA
FAQ
Answer
Description
How are the services offered by BIDA different from the others?
BIDA’s services are available for both domestic and foreign investments at any location outside the jurisdiction of other investment authorities (BEZA, BEPZA, PPPA, BHTPA, BSCIC). BIDA also provides policy advocacy for national investment development.
BIDA distinguishes itself by providing comprehensive investment services for both domestic and foreign investors, covering locations beyond the jurisdiction of other investment authorities.
Additionally, BIDA actively promotes national investment development through policy advocacy.
What are the other investment promotion agencies in Bangladesh?
The other investment promotion agencies in Bangladesh are Bangladesh Economic Zones Authority (BEZA), Bangladesh Export Processing Zones Authority (BEPZA), Public Private Partnership Authority (PPPA), Bangladesh High-Tech Park Authority (BHTPA), and Bangladesh Small & Cottage Industries Corporation (BSCIC).
Bangladesh has a network of investment promotion agencies, each catering to specific sectors and types of investment. These agencies include BEZA, BEPZA, PPPA, BHTPA, and BSCIC.
Are there any explicit restrictions for foreign investment in Bangladesh?
Bangladesh, in general, is open to foreign investment, following the non-discrimination principle, where 100% foreign ownership is permitted in the majority of sectors.
However, local ownership is required for limited cases including freight/cargo forwarding agent, airline/railway/general or pre-shipment service cargo agent, shipping agent, courier services agent, buying house and indenting agent, advertising agent, and for-profit/commercial education institutions.
While Bangladesh welcomes foreign investment and allows 100% foreign ownership in most sectors, there are specific cases where local ownership is required.
These include certain service sectors and for-profit/commercial education institutions.
What are the restricted sectors to which investments are not allowed?
The National Industry Policy (NIP) (2016) defines controlled and reserved industries. Controlled industries require a proposed investor to obtain a ‘No Objection Certificate (NOC)’ from the concerned ministry/division prior to registration with BIDA/BEZA/Hi-Tech Park/BEPZA. Private industries are not allowed to invest in reserved/restricted industries.
Examples of controlled industries include deep-sea fishing, banking/finance, insurance, power generation/supply/distribution, and exploration/extraction/supply of natural resources. Reserved industries include arms/ammunitions, nuclear power, security printing/minting, and mechanized extraction within reserved forests.
The NIP (2016) outlines controlled and reserved industries that require special approval for investment.
Controlled industries necessitate obtaining an NOC from the relevant ministry/division before registering with BIDA/BEZA/Hi-Tech Park/BEPZA. Reserved industries, on the other hand, are off-limits to private investment.
Examples of controlled industries cover various sectors such as finance, power, telecommunications, and natural resource extraction, while reserved industries include military equipment, nuclear power, and forestation within reserved forests.
What are the priority or thrust sectors for investments in Bangladesh?
The National Industry Policy (NIP) (2016) designates high-priority sectors, such as agriculture, food processing, ready-made garments, ICT/software, pharmaceuticals, leather products, and light engineering. Additionally, there are priority sectors like plastics, shipbuilding, renewable energy, tourism, and more.
The NIP (2016) identifies priority sectors in Bangladesh, focusing on industries that play a significant role in the country’s economic growth and development.
These sectors encompass agriculture, manufacturing (such as garments and leather products), information technology, pharmaceuticals, and various other industries that have been designated as high-priority or priority sectors.
What formalities need to be performed to open a commercial office after getting registration from BIDA?
After receiving registration from BIDA, the following formalities need to be completed:
1. Notify Bangladesh Bank about the registration. 2. Register with the National Board of Revenue (NBR). 3. Register with the Registrar of Joint Stock Companies and Firms (RJSC&F). 4. Apply for a trade license.
Opening a commercial office requires additional steps after obtaining registration from BIDA.
These steps include notifying Bangladesh Bank, registering with the NBR, registering with the RJSC&F, and applying for a trade license.
Compliance with these formalities ensures proper establishment and legal operations of the commercial office.
What is the registration process of commercial offices (branch, liaison, and representative office)?
The registration process for branch, liaison, and representative offices is conducted through the Online Single Submission (OSS) portal. An inter-ministerial committee examines the applications and grants approval to open offices in Bangladesh.
The committee convenes twice a month to review and approve office openings.
Guidelines for establishing/opening branch, liaison, and representative offices and issuing work permits are available for detailed information. There is a registration fee and 15% VAT imposed by the Government of Bangladesh for registering commercial offices.
The registration of branch, liaison, and representative offices is facilitated through the user-friendly OSS portal, streamlining the application process. An inter-ministerial committee assesses the applications and grants approval for office openings.
The committee meets bi-monthly to review and approve office establishments. Detailed information and guidelines regarding the registration process, including work permit issuance, can be found in the provided guidelines. A registration fee, along with 15% VAT, is applicable for commercial office registration.
What documents and steps are required for registering a commercial office with BIDA?
To register a commercial office (branch, representative, or liaison office) with BIDA, the following documents and steps are required:
1. Article and Memorandum of Association of the parent company. 2. Names and nationalities of directors/investors of the parent company. 3. Resolution of the board of directors mentioning the decision to establish the office and the appointed person’s name to manage the office. 4. Parent company’s audited accounting statements from the previous financial year. 5. Details of activities conducted by the parent company and activities to be performed by the proposed office. 6. Organizational structure of the proposed office, indicating the required local and foreign manpower.
Registering a commercial office involves submitting necessary documents, including the parent company’s Article and Memorandum of Association, director/investor information, board resolution, audited accounting statements, and details of activities.
Additionally, the proposed office’s organizational structure, along with the required local and foreign manpower, must be provided. These steps ensure a comprehensive registration process for commercial offices.
What is the process of amending a registered investment if there are changes in registered data?
Investors can amend information in their registration letter, such as machinery, board of directors/shareholders, office/factory address, company name, or amalgamation.
Currently, the process involves submitting a manual application signed by the company’s chairperson/managing director, along with supporting documents, to BIDA. An amendment fee of BDT 1000.00 is charged per amendment, with 15% VAT applicable.
In case of changes to registered data, investors can apply for amendments by submitting a manual application, signed by the company’s chairperson/managing director, along with supporting documents to BIDA.
Each amendment incurs a fee of BDT 1000.00, along with 15% VAT. This process allows investors to update their registration information effectively.
Reference
-BIDA 2016 Act
-BIDA OSS
Why choosing the right lawyers are important for FDI in Bangladesh:
In FDIs, a counsel with extensive experience is a necessity. This is because a competent attorney will be required to advise foreign investors on Bangladesh’s investment procedures.
Contract formation: in order to invest, numerous contracts must be drafted, and only a lawyer can assist with this.
advising on the available facilities for FDI, investment protection laws, and policies.
Company formation: In the case of foreign investment in Bangladesh through company formation, a counsel is once again required.
Due diligence report: if you intend to invest in a company in Bangladesh, you will require a due diligence report on the company in question, which will be prepared by a barrister.
Disputes: Finally, for resolving any dispute through litigation or alternative dispute resolution, an effective attorney will be required. These are the primary FDI-related areas where an attorney plays a significant role. Therefore, a counsel will be required to advise foreign investors on their rights and responsibilities in Bangladesh before they can invest.
TAHMIDUR RAHMAN REMUA Bangladesh is a full-service law firm in Dhaka that combines international offshore expertise with local knowledge and experience in a number of practice areas, such as dispute and litigation, energy and infrastructure, banking and finance, and tax.
The team of Bangladeshi lawyers and professionals at TAHMIDUR RAHMAN REMURA WAHID has extensive expertise in project development, international trade, corporate and structured finance, mergers and acquisitions, employment, and general commercial affairs.
In this dynamic market, our dedicated and diligent Bangladeshi attorneys collaborate with an international and local partner-led team to provide clients with practical, dependable, flexible, and forward-thinking solutions.
The team advises multinational corporations on a variety of significant initiatives. It is currently advising a number of well-known global institutions and investors on numerous offshore and onshore financings, mergers and acquisitions, and other projects. The team has also advised on a variety of corporate and financial transactions, as well as significant greenfield independent power projects.
ADVICE CONCERNING FDI AT TAHMIDUR RAHMAN REMURA WAHID
The Barristers, Advocates, and attorneys at Tahmidur Rahman Remura Wahid in Mohakhali DOHS, Dhaka, Bangladesh, have extensive experience in FDI-related matters. In addition to managing a variety of domestic client issues on a regular basis, the firm has extensive experience advising and assisting numerous international clients with the utmost care and attention throughout their legal issues. For questions or legal counsel, please contact us at:
GLOBAL OFFICES: DHAKA: House 410, ROAD 29, Mohakhali DOHS DUBAI: Rolex Building, L-12 Sheikh Zayed Road LONDON: 1156, St Giles Avenue, 330 High Holborn, London, WC1V 7QH
Power of attorney guidelines for non-Bangladesh nationals
The purpose of this article is to provide a comprehensive overview of the laws pertaining to Power of Attorney in Bangladesh and to outline the key considerations when drafting a Power of Attorney.
Definition:
A power of attorney is a legal document that gives one individual the authority to act on behalf of another. The POA grants a person (the power receiver) the authority to make legal decisions on behalf of the power grantor.
Usages and types:
This document is primarily intended for individuals residing outside of Bangladesh who wish to transact with legally protected assets via an agent or attorney. A foreign power of attorney in Bangladesh functions similarly to a domestic power of attorney in most respects, but must adhere to a distinct set of procedures and protocols.
There are two categories of Power of Attorney, namely General Power of Attorney and Special Power of Attorney.
A general power of attorney grants the agent comprehensive authorizations and virtually unrestricted decision-making authority, from paying taxes to entering contracts, from managing operations to making legal decisions, from settling claims to purchasing a new property, everything.
A Special Power of Attorney is issued for the purpose of establishing special power of attorney to make decisions on a specific matter on behalf of the power giver, such as collecting rent for a specific property or allowing a business partner to use specific assets.
When the power giver relinquishes the ability to revoke it, the Power of Attorney is irrevocable. Irrevocable Power of Attorney refers to those powers of attorney pertaining to the sale, purchase, mortgage, or transfer of immovable property.
A foreigner may select any form of Power of Attorney, depending on the circumstances.
The steps involved in drafting a Power of Attorney are:
During the drafting of a Power of Attorney, it is necessary to adhere to the following terms:
The nature of power of attorney must be specified in the deed’s title.
The date of execution must be included in the power of attorney.
The deed must specify the parties’ identities, including their names, occupations, religions, nationalities, NID/passport numbers, and present and permanent addresses.
The objective should be expressed with clarity and specificity.
Powers, responsibilities, and obligations must be described in detail.
The type of POA document must specify whether general, special, or irrevocable authority is to be granted.
If the power is contingent, then the conditions must be specified. The deed must include a schedule of the subject property.
Identification and signatures of two witnesses
Name, seal, and date of a commissioned officer
The duration of the POA or its expiration date must be specified.
Photocopy of a valid Bangladeshi passport or national identification document.
Two copies of photographs of passport size.
Attestation must consist of a signature or a thumbprint.
Non-judicial stamp documents are required.
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Constraints on Power of Attorney:
The Power of Attorney Act stipulated certain restrictions on the use of Power of Attorney. These restrictions include the execution of a will, an adoption certificate, a trust instrument, a gift, a donation, and a heba deed, as well as an adoption-related power of attorney.
Foreign Power of Attorney Execution:
The Power of Attorney Act of 2012 has also made it possible for non-Bangladeshis to execute power of attorney. In order to be legally binding, a power of attorney must be registered under section 52A of the Registration Act of 1908.
The Power of Attorney must be executed and signed in the presence of the proper officer, who, in the case of individuals residing outside Bangladesh, is the concerned officer of the Bangladesh Embassy in that country. The document must be notarized and attested by the Bangladeshi Embassy. The Ministry of Foreign Affairs must verify the documents for counter-verification.
Individuals residing outside of Bangladesh may execute POAs. This Power of Attorney must be executed and signed in the presence of the Bangladesh Consulate or Mission in the country where the individual resides.
Timeline:
Within two months of arrival in Bangladesh, the accomplished power of attorney must be submitted to the Ministry of Foreign Affairs for attestation, and then properly stamped within three months.
If the power of attorney must be registered, it must be submitted within four months of receipt to the appropriate sub-registry office.
In addition to registration at the local Sub-registrar’s office, the District Commissioner of the concerned area must also attest a power of attorney for the sale or purchase of property. If the MoFA has attested that the PoA does not involve land, then the PoA is deemed mature.
Revocation of Power of Attorney:
The power of attorney can be revoked by providing written notice to the authority recipient 30 days in advance. The principal can revoke the power of attorney, or it can be revoked by mutual agreement between the power grantor and the power recipient.
According to section 7 of the 2012 Power of Attorney Act, any act carried out by an agent is deemed to have been carried out by the principal. Any individual or organization is culpable for any work performed using a power of attorney. In actual practice, authorities and certain organizations (such as banks) will sometimes accept a power of attorney on company letterhead (for foreign companies) instead of non-judicial seal paper. A foreign power of attorney is difficult to create. Therefore, it is essential to review all documents with the opinion, counsel, or assistance of an expert.
Power of Attorney related legal advice at Tahmidur Rahman Remura Wahid TRW Law Firm
The lawyers, advocates, and barristers at Tahmidur Rahman Remura Wahid in Mohakhali DOHS, Dhaka, Bangladesh, have a great deal of experience handling Power of Attorney-related concerns. It regularly handles a variety of domestic client-related matters and has expertise consulting and supporting several overseas customers throughout their legal difficulties with the utmost care and attention.
Please contact us at the following numbers or email address for questions or legal assistance:
GLOBAL OFFICES: DHAKA: House 410, ROAD 29, Mohakhali DOHS DUBAI: Rolex Building, L-12 Sheikh Zayed Road LONDON: 1156, St Giles Avenue, 330 High Holborn, London, WC1V 7QH
The government revised the Bangladesh Labour Rules for 2015 in 2015. The government issued a revised gazette of the Labour Rules on September 1, 2022, modifying 99 rules and eliminating two. By means of this newsletter, we hope to shed light on a number of significant areas of labor regulations affected by the 2015 amendments to the Bangladesh Labour Rules.
Resolution of Conflict:
Disputes may arise in the workplace between employees and employers, employees and employees, or employers and employers. Within fifty-five (55) days of the occurrence of any dishonest labor conduct by an employer or worker in a factory or establishment, a petition must be submitted to the Director General or any officer authorized by him.
Within fifty-five (fifty-five) days of receiving such a petition, it must be decided by the Director General of Labor or a duly authorized officer.
Training on law:
The relevant law training, which mentioned in Labour Rules Amendment will be arranged by the authority in order to strengthen industrial relations and establish employees’ and employers’ legitimate demands. In this regard:
(1) The government-established or -authorized Industrial Relations Institutes are required to conduct training courses on this Act.
(2) If invited by the Industrial Relations Education Center, the proprietor of an organization or any officer designated by him, as well as employees, may participate in such a training program.
(3) Institutions of Industrial Relations may conduct any type of training course on laws and regulations for a duration of 4 (four) weeks, 1 (one) week, 2 (two) days, 1 (one) day, or for any other period determined by the Director General in consultation with the owners and workers’ representatives concerned for conducting the training courses.
Reference:
366 and 366a of the Bangladesh Labour Rules (Labour Rules Amendment)
GLOBAL OFFICES: DHAKA: House 410, ROAD 29, Mohakhali DOHS DUBAI: Rolex Building, L-12 Sheikh Zayed Road LONDON: 1156, St Giles Avenue, 330 High Holborn, London, WC1V 7QH
