How To Open A Branch Office In Bangladesh

The advantages and scope of profit through opening a branch office in Bangladesh attract many foreign investors to the country. A branch office can easily conduct its everyday operations with the approval of the brand office registration body, BIDA. However, it is not a separate organization. Now you are wondering how to open a branch office in Bangladesh. Don’t worry! We have outlined the whole process in this blog. 

Essentials of Opening a Branch Office in Bangladesh 

With the flexible laws for foreign investment, easy entry and exit in the market, and the prospect of earning revenues, many foreign investors want to open a branch office in Bangladesh. However, the branch office has to comply with the legal requirements of the Companies Act of 1994 and register with the Joint Stock Companies and Company Register. All the complex legal jargon may feel too much. This is why this blog explores the specifics of how to open a branch office in Bangladesh. 

What is a Branch Office?

The branch office acts as an extension of the foreign parent company. It can function as a recognized business in Bangladesh more independently and flexibly. Only the operations listed in the Branch office application are authorized by BIDA (Regulating body for branch office registration) for the Branch Office’s commercial activities in Bangladesh. The branch office is not permitted to engage in any other additional activities. It is permitted to do business in the same way as the parent foreign company. A branch office can engage in limited manufacturing activities. It is able to subcontract them to a business in Bangladesh. Moreover, the specifics of the branch office’s operations will be cleared in the BIDA approval letter. 

Characteristics of a Branch Office

• The branch office is the foreign parent company’s expanded version. 
• The parent foreign company’s memorandum and article of association apply to its infrastructure and management. 
• The parent foreign company is responsible for bearing the responsibilities associated with its business-oriented debt and losses. 
• The operations of the branch must stay within the parameters set by the Bangladesh Investment Development Authority (BIDA)
• The company must have documents that prove continuous profit-making for the last three financial years and net assets of at least one lakh US dollars. Otherwise, the company needs to have a previous record of a profit despite the loss and have minimum net assets of at least one lakh US dollars. 
• The branch office name has to get the approval of the Register Company of RJSC. 

Permitted Activities of Branch Office 

Even though the branch office has a lot of flexibility, their activities in Bangladesh are limited. Their permitted activities are as follows- 

• A branch office can undertake commercial operations (mentioned in the BIDA application letter) in Bangladesh on behalf of the parent company. 
• Any kind of financial and technical help can be extended between the new Bangladeshi company and the parent foreign company or any foreign company regarding cooperation. 
• A branch office can be engaged in research on behalf of the foreign parent company. 
• A branch office can be the representative for foreign airlines and shipping companies in Bangladesh. 
• A branch office acts as the sales representative in Bangladesh on behalf of the parent company. 
• A branch office can offer consulting services, or play the role of a contractor or subcontractor given the parent company’s job description. 
• A branch office can provide sales and after-sales to make sure there is appropriate marketing and distribution.
• A branch office can conduct import and export after getting the necessary approval. 
• A branch office can also undertake other commercial operations after the authority’s or Inter-Ministerial Committee’s authorization.
• A branch office involved in the production of goods and services needs to establish an industry in Bangladesh within ten years from the date it gets permission. The renewal of branch office certification will not be viable after ten years. 

Eligibility Criteria for a Branch Office set-up in Bangladesh

• Age of the Foreign Parent Company: The foreign parent company must be no less than 2 years old as a formally registered company outside of Bangladesh. 

• Name & Approval of the Branch Office: A branch office must have the same name as the parent company and approval from BIDA (Bangladesh Investment Development Authority).

• Operational Expenses: A branch office needs to cover all the expenses using remittances from the head office or the profit earned from BIDA-approved operations in Bangladesh. 

• Minimal Investment Requirement: The foreign parent company has to invest at least $50,000 or 6 months of operational expenses including the initial office set-up expenditure.

• Taxation in Bangladesh: The branch office can generate revenue. That’s why all regular taxes are applicable to the branch office. 

Prerequisite Documents for Branch Office set-up 

Required Documents for BIDA (Bangladesh Investment Development Authority) Permission:

• Foreign Company’s Incorporation Certificate 
• Memorandum and Article of Association 
• Audited Financial Statements of Parent Company (Last Two Years)
• Board Resolution for the set-up of the Branch Office in Bangladesh
• Complete Details of the Directors
• Perfect Information of the Shareholders of the Applicant Company
• A Declaration that details the nature of the activity of the Parent Company
• A Declaration that details the nature of the activity of the Proposed Branch Office 
• Total Employee List of the Proposed Branch Office 
• Authorization Letter to the Consultant who will process the application on behalf of the Applicant 

The prerequisite documents (from point 1 to point 4) need to be translated into English and attested by the concerned Bangladesh High Commission of the respective country.   

Process of Setting Up a Branch Office in Bangladesh

Step-1: BIDA Permission

Firstly, you need to form a user ID after submitting a government fee for the account creation. Then you must fill out the application and submit the application to BIDA online. After checking and verifying the documents, BIDA will approve the application. The average time needed to get approval is one month. An e-letter for BIDA permission is sent which is the fundamental legal document needed to be approved as a branch office. 

Step-2: RJSC Certificate

You need to register the Branch Office with the RJSC (Register of Joint Stock Company).

Step-3: Trade License

You also need to apply for a trade license to the local government so that you can conduct commercial activities at the branch office. For the trade license, the branch office must have a commercial office address and rental agreement 

Step-4: Tax Identification Number

Then you will receive an exclusive 12-digit TIN (Tax Identification Number) from Bangladesh’s Income Tax Department. After obtaining the E-TIN, the branch office can move on to opening a bank account.

Step-5: Bank Account

You need to open a bank account in any bank in Bangladesh.

Step-6: Initial Investment

You must remit an initial investment of $50,00 within two months from the date of the BIDA approval. An additional 5 percent of the total remittance is required to be brought to Bangladesh as a form of penalty in the circumstance of non-compliance within the two-month tenure. 

Step-7: VAT Registration 

A 13-digit online VAT Registration/BIN (Business Identification Number) will be given to the branch office after receiving the initial investment. 

Once you have completed all the steps, your branch office is ready to start its daily operation. If you need a more in-depth view of how to set up a branch office in Bangladesh, find more here!

Pros and Cons of Opening a Branch Office in Bangladesh

The pros and cons of opening a branch office make it clear whether you should open a branch office in Bangladesh. If you are ready to get into the process of opening a branch office in Bangladesh, Khan Akber & Co. is the capable hand you should rely on. We will simplify the process and help you set up the branch office in Bangladesh. 

Summary

Bangladesh has a strong track record for economic growth. This is why foreign companies are eager to establish their business here. Opening up a branch office is perfect for you if you wish to generate revenue and have more flexibility while doing business here. To help you understand how to open a branch office, this blog has detailed what a branch is, its characteristics, and permitted activities in Bangladesh. It also examines the eligibility criteria, prerequisite documents, and the process of setting up a branch office here. Finally, it finishes off with the pros and cons of opening a branch office in Bangladesh to weigh them yourselves and decide whether it’s the best option for you. Now if you need help with the process, Khan Akber & Co. is a leading industry expert you can reach out to.

Frequently Asked Questions (FAQs)

What is BIDA?

BIDA, also known as Bangladesh Investment Development Authority, is the governing body that regulates branch office establishments in Bangladesh. 

How long does it take to receive BIDA approval?

It requires 30-45 days for BIDA to approve the submission of the mentioned paperwork in order to approve the establishment of the branch office.

What is the Company Act, 1994?

The Company Act 1994 amends and consolidates the legal requirements associated with companies and other organizations. Learn more from here. 

What amount of fees must be paid to set up a branch office?

A BDT 25,000 government fee is required and the parent company must send USD 50,000 for initial investment to the branch office’s bank account.