Bangladesh has become a leading choice by foreign investors for foreign company setup because of its developing economy and huge local clientele base. The introduction of various policies targetting foreign investment, including tax exemptions, simple processes, and so many more reforms has made Bangladesh a favorable place for business. On top of that, Bangladesh permits corporations with 100% foreign value to be incorporated (BIDA). This is why foreign company registrations in Bangladesh have shot up in recent years. This blog delves into the process of registering a foreign company in Bangladesh and the legalities surrounding it in depth.
A Comprehensive Guide to Foreign Company Registration in Bangladesh
The current status of investment policies makes Bangladesh an attractive fort to conduct business. One of the primary things you need to do to expand your business here is to register your company. Now, the registration process is a little tricky. But don’t worry! This article details a step-by-step guide to foreign company registration in Bangladesh.
With Bangladesh’s rapidly expanding economy, this is the perfect time to grow your business in Bangladesh. There are many types of entities foreign companies can consider setting up in Bangladesh, likely:
- Liaison/ Representative Office
- Branch Office
- Subsidiary Company/ Private Limited Company
Liaison Office
A liaison office primarily serves as a representative of the parent company. They act as a communication bridge between the parent company and its partners in Bangladesh. Their operations are usually minimal. They coordinate, gather, and analyze business data related to the field. They mainly encourage trade and participation technically and financially.
Factors to Consider for a Liaison Office set-up in Bangladesh:
- Age of the Parent Company: The parent company must have at least be 2 years as a formally registered company outside of Bangladesh.
- Minimal Investment Requirement: The parent company must invest no less than $50,000 or 6 months of operational costs with the expense of initial office set-up cost included.
- No Income Generative Operation: The parent company is responsible for all operational expenses. The liaison office must not have any source of income in Bangladesh.
- Name & Approval of the Liaison Office: The name must hold similarity to the parent company and approval from BIDA (Bangladesh Investment Development Authority)
- Taxation in Bangladesh: All kinds of taxes are chargeable to the Liaison office in Bangladesh except for profit taxes as the office does not engage in any revenue-generating activities.
Prerequisite Documents to Set up the Liaison Office:
For BIDA Permission:
- Foreign Company Incorporation Certificate
- Memorandum and Article of Association
- Audited Financial Statements of Parent Company (Previous Two Years)
- Board Resolution for set-up of the Liaison Office in Bangladesh
- Perfect Details of Directors
- Complete Information of the Shareholders of the Applicant Company
- A declaration detailing the nature of the activity of the Parent Company
- A declaration detailing the nature of the activity of the proposed Liaison Office
- Total Employee List of the Proposed Liaison Office
- Authorization Letter to the Consultant who shall process the application on behalf of the Applicant
The prerequisite documents mentioned from point 1 to point 4 must be translated into English and attested by the concerned Bangladesh High Commission of the respective country.
For Bank Account Opening:
- Foreign Company Incorporation Certificate
- Memorandum and Article of Association
- Audited Financial Statements of Parent Company (Previous Year)
- Board Resolution for opening the bank account
- Share Tree Analysis of the Foreign Parent Company
- Complete Information of the Shareholders of the Applicant Company
- BIDA permission letter
- Tax Registration Certificate of the Bangladesh Liaison Office
- Passport Copy and Photograph of the Bank Signatories
- Passport Copy and Photograph of the Directors and Shareholders of the Parent Company
Step-by-Step Process of the Liaison Office Set-Up
Step-1: Acquire BIDA Permission
The following procedure must be done to acquire BIDA permission:
- Creating an Account with the BIDA web portal- You must create a user ID after depositing a government fee for account creation.
- Fill out the Applicant to BIDA- Fill out the application for your liaison office to BIDA online.
- Approval of the Application by EC- The executive committee of the BIDA holds two meetings a month. After verifying the documents and the decision passed by the executive committee, BIDA shall approve the application. The average time required to get an approval is one month.
- BIDA Permission Letter- BIDA issues an e-letter for BIDA permission which is the fundamental legal document needed to be recognized as an approved liaison office. The BIDA license is valid for three years. One must reapply two months before the expiry of the current term for renewal.
Step 2: Tax Identification Number
Bangladesh’s Income Tax Department provides an exclusive 12-digit number termed TIN (Tax Identification Number). Once the E-TIN is acquired, the liaison office can open its bank account.
Step-3: Bank Account Opening
Opening a bank account in any bank in Bangladesh is a requirement.
Step-4: Initial Investment
An initial investment of $50,000 must be remitted within two months from the date of the BIDA approval. In the circumstance of non-compliance with the stated two-month tenure, an additional 5 percent of the total remittance is required to be brought to Bangladesh as a penalty.
Step-5: VAT Registration
After the initial investment, a 13-digit online VAT Registration/BIN (Business Identification Number) will be provided.
After following all the steps, the liaison office will be eligible to begin its daily operations.
Branch Office
A branch office is an extension of the parent company that can also be set up in Bangladesh by a foreign company. But without the approval of BIDA, a branch office can’t operate. The branch office can carry out its business like the foreign parent company. It can export and import commodities, provide consulting, increase technical and financial partnerships, work as a representative of the parent company, offer IT services and develop software, and do research in all areas where the parent company is present. However, they can not be involved in manufacturing operations.
Factors to Consider for a Branch Office set-up in Bangladesh:
- Age of the Parent Company: The parent company must have at least be 2 years as a formally registered company outside of Bangladesh.
- Minimal Investment Requirement: The parent company must invest no less than $50,000 or 6 months of operational costs with the expense of initial office set-up cost included.
- Operation Expenses: A Branch Office is required to cover all its costs using remittances from the head office or the revenue earned from BIDA-approved operations in Bangladesh.
- Name & Approval of the Branch Office: The name must hold similarity to the parent company and approval from BIDA (Bangladesh Investment Development Authority)
- Taxation in Bangladesh: All regular taxes apply to the Branch Office as it generates revenue.
Prerequisite Documents to Set up the Branch Office:
For BIDA (Bangladesh Investment Development Authority) Permission:
- Foreign Company Incorporation Certificate
- Memorandum and Article of Association
- Audited Financial Statements of Parent Company (Previous Two Years)
- Board Resolution for the set-up of the Branch Office in Bangladesh
- Perfect Details of Directors
- Complete Information of the Shareholders of the Applicant Company
- A declaration detailing the nature of the activity of the Parent Company
- A declaration detailing the nature of the activity of the proposed Branch Office
- Total Employee List of the Proposed Branch Office
- Authorization Letter to the Consultant who shall process the application on behalf of the Applicant
The prerequisite documents mentioned from point 1 to point 4 must be translated into English and attested by the concerned Bangladesh High Commission of the respective country.
Step-by-Step Process of the Branch Office Set-Up
Step-1: Acquire BIDA Permission
The following procedure must be done to acquire BIDA permission:
- Creating an Account with the BIDA web portal- You must create a user ID after depositing a government fee for account creation.
- Fill out the Applicant to BIDA- Fill out the application to BIDA online.
- Approval of the Application by EC- The executive committee of the BIDA holds two meetings a month. After verifying the documents and the decision passed by the executive committee, BIDA shall approve the application. The average time required to get approval is one month.
- BIDA Permission Letter- BIDA issues an e-letter for BIDA permission which is the fundamental legal document needed to be recognized as an approved liaison office.
Step-2: RJSC Certificate
You must register the Branch Office with the RJSC (Register of Joint Stock Company)
Step 3: Trade License
You need to apply to the local government to have a trade license to conduct Branch Office commercial activities in Bangladesh. A commercial office address and rental agreement are required to obtain a trade license.
Step-4: Tax Identification Number
Bangladesh’s Income Tax Department provides an exclusive 12-digit number termed TIN (Tax Identification Number). Once the E-TIN is acquired, the branch office can open its bank account.
Step-5: Bank Account Opening
Opening a bank account in any bank in Bangladesh is a requirement.
Step-6: Initial Investment
An initial investment of $50,000 must be remitted within two months from the date of the BIDA approval. In the circumstance of non-compliance with the stated two-month tenure, an additional 5 percent of the total remittance is required to be brought to Bangladesh as a penalty.
Step-7: VAT Registration
After the initial investment, a 13-digit online VAT Registration/BIN (Business Identification Number) will be provided.
After following all the steps, the branch office will be ready to begin its daily operations.
Subsidiary Company
A subsidiary company is a private limited company with most shareholders being a corporate entity. It can carry out its pertinent business operations and declare its profits in Bangladesh. A foreign company can own it in its entirety.
The Statutory Requirements For a Subsidiary Company:
- The lowest number of directors is 2 and the highest number of directors is 50.
- The lowest number of shareholders is 2 and the highest number of shareholders is 50.
- The lowest amount of share capital is BDT 1 by each shareholder.
- The shareholders may be a natural person or an artificial person (corporate)
- 100% foreign shareholdings and foreign directors are allowed.
- All the directors and members of the company need to be over 18 years old and have a sound mind.
- The subsidiary office needs to have a registered address in Bangladesh.
Additionally, Annual audited account submission, filing of annual returns, and filing of tax returns must be followed as part of annual compliance conditions.
The Liabilities of a Subsidiary Company:
- An annual general meeting
- An appointed statutory auditor
- Submission of all financial statements and board meeting reports
- Filing of income tax returns every financial year
Prerequisite Documents to Set up the Branch Office:
To open a non-operating bank account in Bangladesh:
- Name clearance certificate from RJSC
- Draft MOA and AOA of the proposed company in Bangladesh
- Board Resolution/ Promoters’ Meeting Minutes
- NID/ Passport copies of all shareholders (natural persons)
- 3 copies of photographs of all shareholders and directors of the proposed company
- Signed and completed Bank Account Application Form
For a corporate shareholder, additional required documents-
- Share tree analysis for a corporate shareholder
- Passports and Photographs of all nominee directors
- Passports and Photographs of all shareholders of the parent company/corporate shareholder
- Incorporation certificate, Memorandum, and AOA audit report of the previous financial year of corporate shareholders (All must be translated into English and notarized)
For Company Registration:
- Copy of the MOA and AOA of the proposed company
- Signed Form-VI (declaration of registered address)
- Signed Form-IX (consent of the directors)
- Signed Subscriber Page
Step-by-Step Process of the Subsidiary Company Set-Up
Step-1:Name Approval of the Company
- Choose an appropriate available name
- Apply through the web portal of RJSC
- Deposit the government fees to the bank
- Obtain the name clearance certificate from RJSC
Step 2: Crafting Required Documentation
- Memorandum of Association (MOA)
- Article of Association (AOA)
- Form-VI (notice of situation of registered address)
- Form-IX (consent of the directors to act)
- Board Resolution/ Promoters’ Meeting Minutes
Step 3: Opening a non-operating bank account
Before applying for company registration to RJSC, a non-operating bank account with any scheduled commercial in Bangladesh must be opened to receive inward remittance, following the Bangladesh Foreign Exchange Regulations. The recipient bank will provide an Encashment Certificate including the purpose for payment after receiving the remittance. Before the confirmation of the company registration, RJSC will verify with the issuing bank this Encashment Certificate.
Step-4: Inward Equity Remittance in Bangladesh
According to the Bangladesh Foreign Exchange Regulations, the process of inward equity remittance must be done before the submission of the company registration application to RJSC. The procedure is as follows-
- The initial paid-up capital must be deposited by the shareholders to the non-operating bank account.
- Remittances must be sent through SWIFT.
- It could take 48-72 hours to receive the payment in Bangladesh.
- An Encashment Certificate will be issued by the bank upon receipt of the equity remittance.
- The purpose of the remittance must be listed as “Equity Investment” on SWIFT.
Step-5: Online Filing to RJSC Web-portal
Upload the following documents to the RJSC web portal,
- MOA and AOA
- Signed Form-VI and Form-IX
- Signed Subscriber Page
- Encashment Certificate
Finally, the registration process will be complete.
Step-6: Company Registration Documents
The following documents will be sent by RJSC as evidence of approval of company registration after the approval of the online application by the register of RJSC:
- Incorporation Certificate
- Certified Copy of MOA and AOA
- Certified Copy of Form- XII (Particulars of Directors)
Step-7: Other Licenses and Registration
After the company registration, there are some other crucial registrations and business licenses required. They are as follows-
- Trade License
- Tax Registration (E-TIN)
- Vat Registration (BIN)
- Membership from the Chamber of Commerce (for import and export businesses)
- Import Registration Certificate (for import businesses)
- Export Registration Certificate (for export businesses)
You may also need other licenses and registrations from respective government authorities based on the field of your work.
After completing all the steps your subsidiary company will be ready to begin its operations.
If you need a reliable hand to get you through this complex process, Khan Akber & Co. is more than ready to help. We provide support to foreign companies in setting up their business in Bangladesh as well as providing standard accounting and compliance services.
Summary
Bangladesh’s steadily growing economy and its lucrative geographic location make the country a perfect business hub. This is why many foreign firms are now interested in setting up their business here. However, the legal complexities that come along with setting up a business may frighten you. Not to worry! This blog provides a detailed guide to foreign company registration in Bangladesh. Foreign firms considering setting up their business in Bangladesh have three options; liaison office, branch office, and subsidiary company. It offers step-by-step guidelines for the setups of the liaison office, branch office, and subsidiary company. If you still feel perplexed and hesitant about the process, reach out to Khan Akber & Co. We will ensure a smooth foreign company registration for you!
To Get FREE CONSULTATION, you can contact us at +88 01713 143 224 (WhatsApp & Direct) or info@khanakber.com
Frequently Asked Questions (FAQs)
Is it possible to register a foreign company in Bangladesh?
Any foreign company can establish business in Bangladesh by following the required legal guidelines in Bangladesh as mentioned in the blog.
What’s the minimum investment requirement for Liaison Office registration by foreign firms in Bangladesh?
The parent company must invest $50,000 or 6 months of operational costs with the expense of initial office set-up cost included.
Can a branch office set up by a foreign company operate without BIDA permission?
Without the approval of BIDA (Bangladesh Investment Development Authority), A branch office set up by a foreign company can’t legally operate.
What’s the minimum number of shareholders required for a subsidiary company in foreign company registration?
For a subsidiary company, the lowest number of shareholders is 2, while the highest number of shareholders is 50.