How To Register A Subsidiary Company In Bangladesh

A corporate foreign investor is eligible to register a subsidiary company in Bangladesh. 100% foreign investment is allowed, it shall also be treated as private limited company. It is one of the preferred market entry business arrangements for corporate investors who want to establish a local company in Bangladesh.

Characteristics of a subsidiary Company in Bangladesh

  • A subsidiary company is an LLC that is independent of its parent foreign corporate.
  • Foreigners can hold 100% of its shares.
  • A subsidiary company gets the consideration of a local company.
  • It enjoys all the tax incentives, waivers and allowances given by the local authority.
  • The holding company is only liable for the capital it has invested in the shares.
  • It is accountable for its own debts and losses arising out of its business operations.
  • It can have minimum 2 and maximum 50 shareholders (owners).
  • It must have minimum 2 directors.
  • An initial paid-up capital of at least BDT 1. Additional capital can be injected any time after incorporation.
  • Registered office address must be a physical address.
  • It can own property in its name.
  • It can sue or be sued in its own right. Thus, shareholders are not involved in the legal proceedings.
  • The name of the company should end with Ltd., Private Limited or Limited.
  • It must appoint an auditor within 30 days from the date of its incorporation.

Steps and Procedure Registering a Subsidiary Company in Bangladesh

  • Select a proposed company name;
  • Apply for Name Clearance;
  • Drafting MOA & AOA and other FORMs;
  • Open a temporary / in-operative Bank Account in Bangladesh to bring the initial share capital;
  • Transfer the initial share capital to temporary Bank Account in Bangladesh;
  • Collect the Encashment Certificate from Bank;
  • Online application to RJSC portal for company registration;
  • Verification of Encashment Certificate by RJSC with respective Bank;
  • Receive the certified copies of Incorporation Certificate, MOA & AOA and Form XII;
  • Apply for others registration and license, like trade license, tax registration, VAT/GST registration, import and export registration etc.

Documents Required Registering a Subsidiary Company in Bangladesh

  • Copy of the passport for all director & shareholders.
  • Photographs of all Shareholders.
  • Copy of the Incorporation Certificate, MOA & AOA of parent company.
  • A board resolution authorizing a specific individual to sign necessary subsidiary documents on behalf of the parent company or shareholders.
  • A board resolution to select the bank in Bangladesh to open a temporary/in-operative bank account to bring the initial equity investment and the bank signatories.
  • Draft MOA (Memorandum of Association) & AOA (Article of Association).
  • Signed subscriber form, directors’ consent and declaration of register address form.

Pros and Cons of a Subsidiary Company in Bangladesh

ProsCons
  • No restriction in business activity, allowed engaging in any business activities which is unrelated to its parent.
  • Though subsidiary is an independent and separate legal entity than its parent, eligible to use the benefits of parent’s brand in the market.
  • Shareholders are not liable for the company's debts beyond the amount of capital they have put into the company.
  • It is easy to transfer ownership through the selling of shares or issuing of new shares to new investors.
  • It has perpetual succession, which means there is no need to wind up the company in the event of changes in shareholders or directors.
  • There are tighter rules and regulations compared to Liaison office or Liaison office.
  • Equity investment is not allowed to remit back to source until dissolution of the company.
  • Dissolution process is long procedural, bit costly and time consuming.

Leave a comment