Bangladesh is becoming one of the world’s most promising emerging markets for numerous reasons. Its openness to foreign investment, competitive labor costs, and rapid economic growth are among the leading factors.
Prior to investing, it is crucial to understand the legal entities available to foreign investors. This article provides a straightforward guide to company registration in Bangladesh.
If you wish to hire a foreign employee, however, you must make an inward remittance of US$ 50,000 in advance.
Requirements for Bangladesh company registration
Table of Contents
Foreign ownership in Bangladeshi Companies
Bangladesh is extremely receptive to foreign ownership, permitting up to 100 percent foreign ownership in the majority of sectors. In certain sectors, however, government approval is required, and a few sectors restrict both domestic and foreign investment.
Other advantages include the right to purchase land and property in the company’s name, tax incentives, etc.
Minimum capital requirement
In Bangladesh, there is no official minimum capital requirement. Because of this, $1 is considered the minimum required capital contribution. To employ foreign workers, however, investors must transfer at least $50,000.
Types of available legal entities in Bangladesh
Numerous businesses in Bangladesh are registered as Private Limited Companies. The liability of Bangladeshi limited liability companies is limited to the shareholders’ capital contributions, and they can be wholly foreign-owned.
Any individual over the age of 18 may register a company. In addition, the law stipulates a minimum of two shareholders and a maximum of fifty, as well as two directors. In addition, keep in mind that you can form a joint venture with a local entity to share the benefits and reduce the risks.
#2 Public Limited Company in Bangladesh
In contrast, a public limited company can issue shares to the general public and is typically listed on a stock exchange.
A public limited company must have at least seven members, three directors, and there is no limit on the number of shareholders. Its shareholders may be any legal entity or individual over the age of 18 who is qualified under Bangladeshi law.
It can solicit donations from the public. In addition to the Companies Act of 1994, it must also adhere to the Securities and Exchange Commission Act of 1993.
The steps involved in registering a company in Bangladesh
The estimated duration of full registration in Bangladesh is between 45 and 60 days on average.
Step 1: Clearing the name:
First, The Registrar of Joint Stock Companies and Firms must approve your company’s name (RJSC).
Step 2: Creating mandatory documents:
The second step is to draft the Article of Association (AoA) and the Memorandum of Association (MoA). As part of the RSJC’s compliance requirements, you must include this form in the drafting process.
Step 3: Bank account opening:
If you plan to hire foreign employees, you must open a bank account in the proposed name of the company and make an inward remittance of at least US$ 50,000. Tahmidur Rahman Remura can help you establish the bank account.
Step 4: Submission of documents to the RSJC is the fourth step:
This step entails submitting all required documents to the RJSC and paying the registration fees. During the standard processing time, you can also access RSJC for the incorporation certificate.
Step 5: Compliance after registration:
You now have the certificate of incorporation, Articles of Association (AoA), and Memorandum of Association (MoA), and your Bangladeshi company is newly registered.
You must also obtain the following licenses and registrations:
- Number of tax identification for business license (TIN)
- VAT Registration Certificate Fire Certificate Environmental Clearance Certificate (if necessary)
- Alternatives to establishing a business in Bangladesh
A branch is an extension of its parent corporation and not a separate legal entity. In other words, the parent company is liable for the liabilities of its branch.
BIDA’s approval is required for a branch to engage in commercial activities. However, the Exchange Control Guidelines strictly supervise its operations.
The average time required to establish a branch in Bangladesh is 45 to 60 days.
Office of Representation/ Liaison office in Bangladesh:
A liaison, also known as a representative office, is subject to BIDA’s approval as its primary requirement, just like a branch. It must have a foreign parent company, and its activities are constrained because it serves only as a communication or coordination tool for business resources in Bangladesh.
Also note that a liaison office in Bangladesh cannot earn any local income. Through remittance, the parent company covers all expenses and operational costs.
Aside from the amount brought in from abroad, no outward remittances of any kind from Bangladesh resources are permitted. Similarly, it follows the standard business registration procedure in Bangladesh.
Operation of a franchise with local promoters:
Foreign-owned businesses are also permitted to establish franchises in Bangladesh. Through a franchise, you can authorize local promoters to use your brand, offer them technical support, and charge them fees or commission for their activity.
The operation of a franchise conforms to both the purchase and license agreements.