Anti-Money Laundering (AML) & Counter-Terrorist/Proliferation Financing (CFT/CPF): A Practical, 2025 Playbook for Banks, Fintechs, DNFBPs & Corporate Treasuries
By TRW Law Firm — Financial Crime Compliance, Investigations & Cross-Border Practice
Why this guide (and why now)
Financial crime risk has exploded in complexity: instant payments, platform business models, trade corridors, digital advertising, remote onboarding, and third-party sales channels. Regulators expect evidence of control—not just policies. Your survival kit is a risk-based, auditable operating system that: (1) identifies and rates risks, (2) onboards the right way, (3) monitors activity with context (not just thresholds), (4) files clean reports on time, and (5) keeps a provable trail.
This TRW guide is a field manual you can deploy immediately—built for banks & NBFIs, PSP/PSO/MFS providers, money changers, capital markets firms, insurers, importers/exporters, and DNFBPs (law/accountancy, real estate, dealers in precious metals & stones, company service providers).
No references or links are included, per your request. Treat any time-sensitive thresholds as examples—confirm current local rules before filing.
What AML/CFT/CPF actually covers (scope at a glance)
Part B — Governance & Accountability (who owns what)
Board: approves the AML/CFT/CPF policy, risk appetite, EWRA, and annual program. Receives quarterly MI (metrics, SAR stats, sanctions hits, training, audit).
Senior management: allocates resources, removes blockers, signs off on high-risk relationships, and ensures remediation deadlines are met.
MLRO/AMLCO (independent of business): owns the framework, STR/SAR filings, regulator liaison, and training.
Three lines of defence:
1st line (Business/Ops): executes KYC, screening, and monitoring SOPs.
2nd line (Compliance/Risk): designs controls, conducts QA, challenges 1st line, manages alerts and reporting.
3rd line (Internal Audit): tests independently; reports to Audit Committee.
Policies & charters: AML/CFT/CPF policy; Sanctions/TFS policy; KYC/CDD standard; EDD/PEP standard; Name Screening standard; Transaction Monitoring (TM) standard; TBML guideline; PF control; Investigation & Escalation SOP; Record Retention policy; Training policy; Model Governance standard.
Part C — KYC/CDD: what “good” looks like
1) Identification & verification (ID\&V)
Individuals: full legal name(s), DOB, current address, nationality, government ID, photograph; verify via reliable, independent sources. Legal persons: legal name, registration number/date, registered & principal address, tax number, nature of business, directors/officers, UBOs down to the natural person(s) with ownership or control, plus control-via-other-means. Legal arrangements (trusts/NPOs): settlor, trustee(s), protector (if any), beneficiaries/classes; controlling individuals; purpose and fund flows.
Remote/e-KYC: use certified document capture, liveness checks, and database cross-checks; maintain device/IP metadata and geo-risk overlays.
2) Purpose & nature of relationship
Document sources of funds (SoF) and, for wealthier or PEP-linked profiles, source of wealth (SoW). Capture expected activity profile (products, channels, countries, typical values/volumes)—this powers smart monitoring.
Set fuzzy-matching thresholds and escalation rules; store match rationales.
5) Risk-based KYC refresh
High risk/PEP: frequent refresh (short cycles), periodic SoF/SoW updates, enhanced monitoring and senior sign-off.
Medium/Low: standard cycles; triggers for interim refresh (address change, unusual activity, hits).
6) EDD (Enhanced Due Diligence)
Apply EDD when PEP, high-risk geography/sector, complex ownership, NPOs with cross-border flows, private banking, correspondent banking, MSBs, money changers, or when early monitoring flags concerns. EDD may include:
Senior management approval and reduced velocity limits until comfort is established
Part D — Sanctions/TFS & PF controls (how to stay off the rocks)
Scope: apply to customers, counterparties, beneficial owners, directors, payments, vessels/aircraft, ports, banks, and goods/services linked to sanctions or PF regimes.
Ownership & control: blocked persons owning/controlling non-listed entities can taint the transaction—apply aggregation rules.
Routing risk: even clean trades can be contaminated by trans-shipment via restricted ports, AIS-dark vessels, STS transfers, or intermediary banks with exposure.
PF (proliferation financing): flag dual-use goods, specialty metals/chemicals, electronics, optical/precision instruments, aerospace/aviation parts; require end-use/end-user statements; escalate unusual routing, high-risk counterparties, or front companies.
When a hit is true-positive: freeze/hold, block or reject per policy, escalate to MLRO, and report as required. Document the decision trail.
Part E — Transaction Monitoring (TM): from rules to intelligence
Channel abuse: new device/browser each time, multiple IPs, proxy/VPN, emulator use, rapid device switch.
Network analytics: shared addresses/phones/devices across unrelated customers; daisy-chain transfers.
2) Risk-based thresholds & tuning
Start with conservative thresholds; track alert precision/recall, false positives, and “no SAR” rates. Tune quarterly. Apply peer groups and customer baseline deltas (e.g., ±3σ vs. cohort medians). Calibrate to your EWRA.
Use consistent case narratives: the “what, why, so what” test.
Time-bound SLAs for each stage; quality checks by 2nd line.
No tipping-off: customer communications must avoid signaling a report is being filed.
4) Model governance
Document scenario logic, data sources, assumptions, back-testing results, overrides, changes, and approvals. Internal Audit should test models yearly.
Part F — STR/SAR, CTR & asset freezing (reporting done right)
STR/SAR (suspicious transaction/activity report): file promptly once knowledge, suspicion or reasonable grounds exist. Include KYC summary, timeline, counterparties, values, rationale, and documents.
CTR/threshold cash reports (where mandated): automate from core systems; reconcile totals to GL and cash registers.
Asset freeze/hold: if a TFS match is confirmed, freeze immediately, notify internally and file the required report; maintain logs of balances and interest accrued.
Recordkeeping: keep KYC, transactions, and STR files for at least the statutory minimum (often 5+ years from relationship end or report date).
Confidentiality: protect reporter identity; never disclose an STR to the customer or non-essential staff.
Part G — Trade-Based Money Laundering (TBML): controls that actually deter abuse
Red flags
Counterparties with no visible commercial rationale for goods traded; unusual routing; newly formed offshore entities; repeated changes to consignee/Notify Party.
Price/quantity/quality anomalies vs. market data; mismatched HS codes; inconsistent Incoterms; large amendments to LCs close to shipment.
Ghost shipments: no verifiable cargo movement; suspicious chartering.
Third-party payments with no contract linkage; split invoicing; rebates outside contract.
Controls
Trade file with contract, invoice, packing list, B/L or AWB, inspection, insurance, certificate of origin, freight/port costs, payment method, and sanctions routing sheet.
Price checks vs. public indices/quotes for sensitive goods.
Vessel screening (ownership, flags, AIS).
End-use/end-user statements for dual-use/sensitive items.
Bank narrative scripts for payments to pre-empt de-risking.
For banks: strengthen documentary collections/LC checks, dual control on amendments, and integrate sanctions/TM flags into trade desks.
Part H — Sector specifics (what changes by industry)
Banks & NBFIs
Correspondent banking: EDD on respondent FIs, understanding of their AML regime, nested relationships, payable-through risks, and usage monitoring.
Private banking/wealth: SoW depth, PEP governance, and tighter alerting.
Cash logs, camera coverage, currency source checks, structured cash patterns, and frequent cross-border small-value sends.
Agent audits and mystery shopping.
Capital Markets & Insurers
BO account KYC, omnibus accounts oversight, pump-and-dump/synchronized trading detection; life insurance SoF/SoW and beneficiary checks; early surrender patterns.
DNFBPs
Law/accountancy: client due diligence on company formation, escrow handling, and complex structures; report suspicious trust/company service requests.
Screening: batch + real-time; robust fuzzy logic with explainability; delta screening on updates; API hooks at payment and beneficiary creation; vessel/port screening where relevant.
TM: risk-based scenarios, customer baselining, peer groups, graph analytics, and case management with audit trails.
Legal name, registration, tax number, registered/principal address, directors/officers, UBO chart with % and control; SoF/SoW where relevant; business model; expected activity; sanction/PEP/adverse media.
EDD add-ons
Independent SoF/SoW proofs (bank statements, pay slips, audited accounts, title docs); site visit report; senior approval.
Sanctions/TFS decision log
Hit details → matching score → source lists → ownership/control analysis → business rationale → decision (block/reject/allow) → notifications filed.
TM case narrative (the 7 sentences)
Who is the customer (risk, business)?
What happened (timeline, amounts, counterparties, channels, locations)?
Why is it suspicious (indicators vs. baseline/peer)?
What could be legitimate explanations (tested)?
What we checked (docs/data) and results?
Decision and rationale (close/escalate); risk controls applied.
Next steps (STR filed, monitoring changes, EDD refresh).
Board dashboard (quarterly)
Alerts opened/closed & SLA, false-positive rate, STRs filed, sanctions hits (TP/FN), high-risk customer counts and refresh status, training completion, audit/QA findings, open remediation actions.
Part O — Common failure modes (and how to avoid them)
Great policy, poor evidence: regulators ask “show me.” Fix: embed checklists & case tools; save artifacts by default.
No UBO clarity: hidden ownership behind layers. Fix: require attestations + docs, escalate when structures are needlessly complex.
Untuned screening: either floods or misses. Fix: adjust fuzzy thresholds; whitelist with governance; test regularly.
TM spaghetti: too many rules, low precision. Fix: start with high-value scenarios; add baseline/peer analytics; prune quarterly.
Agent/partner blind spots: great bank controls, weak agent nodes. Fix: agent KYC, training, audits, and risk-based limits.
Tipping-off: staff try to be “helpful.” Fix: scripts and training; strict comms control.
Stale KYC: PEP became minister two years ago and no one noticed. Fix: periodic delta screening and refresh calendars.
No PF lens: sanctions OK, but dual-use export financed unknowingly. Fix: PF checks in trade flows; end-use statements.
Model changes with no paper trail: audits fail. Fix: model governance with approvals and back-tests.
Part P — FAQ (fast, practical answers)
Do I need EDD on every PEP? Yes—by definition they’re higher risk. Calibrate depth to role, proximity to power, country risk, and product exposure.
When should I file an STR? As soon as suspicion or reasonable grounds exist—don’t wait for proof. Document your reasoning and file within required timelines.
What if a sanctions hit is on a shareholder at 40%? Assess ownership/control. If rules aggregate to or above the blocking threshold or show control through other means, treat as restricted.
Can I rely on third-party KYC (e.g., marketplace, agent)? Only under a controlled reliance framework: written agreement, audit rights, sample checks, and clear liability.
How long to keep AML records? At least the statutory minimum after relationship end or transaction date; longer for investigations and litigation holds.
Is crypto relevant if we don’t offer it? Yes—customers may try to move funds to/from platforms or P2P intermediaries; treat as a red-flag use case and monitor card/wallet rails accordingly.
Part Q — The TRW package (how we help end-to-end)
EWRA & risk appetite tailored to your products, channels, and geographies.
Policy suite & SOPs: AML/CFT/CPF, KYC/EDD, screening, TM, TBML/PF, investigations, model governance.
An AML/CFT/CPF program wins when it’s operational: risk-rated onboarding, tuned screening, intelligent monitoring, clean reporting, and strong evidence. Install the rhythm in 90 days, then keep tuning. If you’d like, we’ll convert this guide into a bespoke SOP + control library (forms, dashboards, scenarios, and training pack) tailored to your sector so your team can execute on autopilot.
NBR Tax & VAT Compliance (2025): The Complete, Practical Playbook for CFOs, Founders, and Compliance Teams
By TRW Law Firm — Tax, VAT & Cross-Border Practice
Why this guide
In Bangladesh, the National Board of Revenue (NBR) sits at the center of every commercial transaction: income taxes, VAT and Supplementary Duty (SD), advance/withholding at source, import-stage levies, and the paperwork behind cross-border payments. Getting compliant isn’t about memorizing rates; it’s about installing a repeatable operating system: registrations that match your business model, ledgers that flow into returns without gymnastics, airtight withholding and VAT credit trails, and a proven response plan for audits and notices.
This playbook is a field-tested, step-by-step manual. Use it to set up from scratch, reset a messy file, or upgrade your controls to “due-diligence ready.
What “NBR compliance” actually covers
Direct taxes (Income Tax)
Corporate tax for companies (resident and non-resident with Bangladesh source income)
Withholding at source (TDS) on payments to suppliers, contractors, landlords, professionals, banks, and on many cross-border remittances
Advance/estimated tax, minimum tax, loss carry-forward, depreciation, incentives, transfer pricing, and return filings
Indirect taxes (VAT & SD)
Registration (BIN), classification of supplies, place of supply, time of supply
Input VAT credit (eligibility, apportionment), output VAT, VAT Deducted at Source (VDS), Supplementary Duty (SD) on specified goods/services
Import stage VAT/SD/advance VAT; turnover tax for qualifying small businesses
Monthly returns, e-invoicing/evidence, and refund/adjustment mechanisms
Trade-linked taxes
Import stage: customs duties + VAT/SD + advance income tax (AIT) or advance tax at import (AT) and how to book/claim them
Export stage: zero-rating and documentation
Cross-border intersections
Withholding and documentation for interest, royalties, technical/management services, digital and cloud services, freight, advertising, and dividend repatriation
Treaty relief (where available) and certificate trails
Part A — Registration & setup: get the “plumbing” right
1) Entity identity
e-TIN (Taxpayer Identification Number): One per legal entity; keep the registration address and fiscal year aligned to statutory books.
BIN (Business Identification Number for VAT): One per business place or as the VAT law/portal requires; map your supply locations and decide whether to operate with a single BIN or multiple units.
IRC/ERC (import/export) and relevant sectoral licenses: coordinate with tax/VAT setup so descriptions and addresses match; banks and customs check consistency.
2) Chart of accounts (CoA) with tax anatomy built in
Build accounts that mirror tax/VAT returns so you aren’t hand-reconciling every month:
Separate taxable vs. exempt revenue streams.
Specific GLs for VDS withheld by customers, AIT/AT at import, input VAT (creditable vs. blocked), SD, withholding tax payable (multiple sub-ledgers by section/head).
Dedicated cross-border expense GLs (royalty, technical service, marketing, cloud/SaaS, freight, interest) paired with withholding rate tags and treaty flag fields.
3) Master data discipline
Vendor master: TIN, BIN (if registered for VAT), address, nature of supply, default WHT section/rate, default VAT treatment (standard/exempt/SD).
Customer master: TIN/BIN, VDS status (are they a VAT withholding entity?), certificate email for VDS credits.
Import: Bill of Entry, customs assessment, tax deposit challans, bank debits, goods receipt.
Cross-border: Contracts, invoices, work completion or usage evidence, withholding challans, gross-up mechanics where agreed.
Part B — Corporate income tax: from monthly routines to the annual return
1) Monthly & quarterly routines (so the annual return is easy)
Withholding at source (TDS): Identify payments subject to withholding (contractors, suppliers, rent, professional fees, interest, advertising, transport, C\&F, commission, royalties/technical services, digital ad/IT services where applicable, etc.). Deduct at the time of payment or credit, deposit within the statutory time, and issue withholding certificates to vendors.
Advance/estimated tax: Forecast your year’s income early. Where advance/estimated tax applies, calendar the deposit dates.
Disallowable expense checks: Flag vendor payments without TIN (where rules require TIN), undocumented expenses, cash expenses beyond thresholds, and unpaid WHT/VAT that may become non-deductible.
2) Year-end close: the “clean return” checklist
Trial balance tie-out to statutory financials; permanent vs. timing differences reconciled.
Tax depreciation vs. accounting depreciation schedules reconciled.
Related party summary: schedule of related parties, transactions, balances; cross-check with transfer pricing documentation thresholds.
Loss carry-forward register updated (with expiry years).
Minimum tax and tax rebate/incentive computations documented with supporting letters or certificates.
3) Transfer pricing (TP): when you must document
If you transact with related non-residents (or resident permanent establishments of non-residents) above NBR thresholds, maintain a Local File: functional analysis, comparables, pricing policy, and intercompany agreements. Keep a summary ready for the tax return.
Practical policy: pre-agree allocation keys (for shared services) and yearly true-up so the TP position aligns to actuals.
4) Annual return filing
Form & attachments: audited financials, schedules, withholding/advance tax summaries, tax credits, loss carry-forward, and TP disclosure (where applicable).
Governance: board approval minute for the financials; CEO/CFO sign-offs as required.
Cure strategy: if you discover an error post-filing, use the available amendment/correction path promptly.
Part C — Withholding at source (TDS): build and use a “source-tax matrix”
Create a living withholding matrix (sheet or system table) with rows for payment types and columns for: applicability, base (gross/net), rate band, timing (payment/credit), deposit due date, certificate form, and disallowance risk if missed. Typical rows include:
Goods purchases (by specific categories), work/contract payments, rent (land, building, plant & equipment), professional/technical services, commission, advertising & media, transport, C\&F, interest (banks/NBFIs vs. others), dividends, prize money, insurance commission, contract manufacturing, event/activation, IT & digital services (domestic and cross-border), royalties, training, conference fees, maintenance, security services, manpower supply.
Controls that work
Pre-payment check in AP: the system blocks payment until a WHT section and rate are selected; exceptions routed to tax for approval.
Automatic certificate generation when challan is posted; monthly vendor emails with certificate PDFs.
Aging report of WHT not yet deposited; red flags to CFO weekly.
Disallowance watchlist for payments where WHT was missed or late.
Part D — Payroll & individual taxes (employer obligations)
Hire packet includes TIN, proof of residency, and declaration for employer tax card.
Monthly payroll: compute tax on projected annual income using current slabs and rebates; deduct monthly; deposit within the statutory deadline.
Year-end: issue salary certificates; reconcile payroll GL to withholding challans; capture perquisite valuation and benefits in kind; manage expat tax equalization where applicable.
Fringe & reimbursements: convert policy into tax rules (e.g., mobile/fuel caps, travel, WFH allowances) so payroll doesn’t guess month to month.
Part E — VAT & SD: how to design the “VAT engine” that never jams
1) VAT registration & scoping
Decide whether your business must register (thresholds) or should register (to claim input VAT, trade with VAT-registered buyers, or avoid turnover tax).
If you have multiple locations/lines, map which will be VATable, exempt, or mixed, and whether to use separate BINs.
Register on the VAT online system, ensure users/DSCs are configured, and test return submission before your first real due date.
2) Classify your supplies
Standard-rated supplies at the prevailing rate.
Exempt supplies (no output VAT; input VAT is blocked or must be apportioned).
Zero-rated supplies (exports, certain international services); keep the export proof trail.
MRP-based or specific rate supplies (where applicable).
Imported services: subject to reverse charge—account for VAT even when the supplier is abroad.
3) Input VAT credits (what you can actually claim)
Creditable: VAT on purchases directly linked to taxable supplies; import VAT; local VAT on inputs; VDS withheld by your customers is creditable once you receive the certificate.
Blocked: expenses specifically disallowed (e.g., certain motor vehicles, entertainment) or linked only to exempt sales.
Apportionment: for mixed supplies, compute the credit ratio each month/period and carry forward the working.
4) VDS (VAT Deducted at Source)
When selling to entities obligated to withhold VAT, they will deduct a portion and issue a VDS certificate.
Credit this VDS in your return once the certificate and payment confirmation are in hand; match to invoices to avoid double-claim or omission.
5) Import stage VAT, SD & AT
Imports trigger customs duty, VAT, SD (if applicable), and often advance VAT/advance tax.
Post every import with the Bill of Entry number; credit input VAT/SD eligible under the law and record advance components for later adjustment.
Prepare: return draft from ERP; investigate variances (big credits, negative net payable, unusual SD).
Deposit & file: pay net VAT/SD, submit the return, archive acknowledgment and working papers.
Operational guardrails
If you can’t claim input VAT (exempt business or blocked category), book it to expense or capital as rules allow—don’t park it in an “input VAT suspense” forever.
For zero-rated exports, maintain export proof (shipping docs, bank realization where relevant).
Maintain a VDS certificate tracker—follow up with customers that delay issuing certificates; it is your money.
Part F — Turnover tax vs VAT: know which regime you are in
Qualifying small businesses may opt or fall under turnover tax instead of standard VAT, paying a percentage of gross turnover without input credit. Decide early which regime you belong to—and don’t mix regimes across invoices, or you’ll face assessments and denied credits.
Part G — Cross-border payments: tax & VAT choreography
1) Services from abroad (royalty, technical/management, cloud/SaaS, digital ads, training, freight)
Withholding tax at prescribed rates (often on gross); deposit and issue certificates.
VAT on imported services (reverse charge): compute and pay in your VAT return unless a specific mechanism says otherwise.
Contracts must define gross-up if you bear foreign partner’s taxes; confirm pricing is arm’s length if related.
Keep performance/use evidence (deliverables, timesheets, usage reports). Banks, auditors, and NBR all ask for it.
2) Dividend repatriation to non-residents
Withhold per domestic/treaty rules; ensure the share register and encashment evidence match the payee.
VAT is not applicable on dividends, but any related service charges are.
3) Interest & loan fees to non-residents
Withhold tax on interest/fees; if a treaty applies, keep the residency certificate and beneficial owner declarations.
Ensure the facility is properly registered/cleared with the relevant authorities and that security filings are in order; otherwise banks will hesitate and NBR may challenge deductibility.
Part H — Customs & trade taxes join the dots
Import costing: build a landed cost worksheet showing assessable value, customs duties, VAT/SD, AIT/AT at import, port charges, and freight/insurance allocations. If input VAT is creditable, reverse it out of inventory cost.
Export zero-rating: match shipping bills, EXP numbers, and bank realization (where applicable) to your zero-rated sales for the VAT file.
Drawbacks/incentives (if you claim any): keep a separate audit file per claim cycle with bills of materials, consumption norms, and export proof.
Part I — Incentives, exemptions & industry-specific points (handle with care)
Bangladesh offers incentives for priority sectors, export-oriented units, economic/hi-tech parks, power & infrastructure, RMG and backward linkage, IT/ITES and others—via tax holidays, reduced rates, accelerated depreciation, VAT exemptions, and customs concessions. These change from time to time. Your job is to:
Identify the incentive at deal/design stage (not after the year closes).
Obtain the necessary eligibility/approval certificates.
Ring-fence qualifying income/costs in the ledger from day one.
File the right returns and renew approvals on time.
Never claim incentives retroactively without a paper trail—you will lose on audit.
Part J — Internal controls that make or break your file
Single source of truth: ERP/ledger is the origin; spreadsheets are only working papers.
Maker–checker at every tax point: vendor creation, invoice posting (VAT/WHT fields), challan booking, return filing, and bank payment.
Close calendar: monthly mini-close for VAT/WHT; quarterly tax provision close; year-end full close with a signed checklist.
Adopt a retention policy (commonly 6–7 years minimum), with off-site/secure backups.
Part P — Seven high-impact fixes (if you do nothing else)
Turn your withholding matrix into system rules in AP.
Create a VDS tracker; no certificate, no closure of the month.
Split GLs for creditable vs. non-creditable input VAT.
Install a monthly VAT close and quarterly tax provision routine.
Build a cross-border payment pack template; reuse it.
Start a TP policy if you have group transactions—even a one-pager.
Put all challans and certificates into a searchable DMS tied to invoice numbers.
Part Q — FAQ (fast answers you’ll actually use)
Do all service payments to non-residents require VAT? Imported services generally require reverse charge VAT unless specifically exempt. Handle WHT and VAT together so the bank and auditors are satisfied.
Can I claim input VAT on expenses related only to exempt sales? No—input VAT attributable solely to exempt supplies is typically blocked. Use apportionment for mixed businesses.
We missed WHT on a supplier last month—now what? Deduct now if unpaid; if already paid, deposit the tax from your own account with interest/penalty as applicable and issue the certificate. Book a disallowance risk note in case of scrutiny.
How do I recover VDS withheld by my customers? Obtain the VDS certificate; record it and credit in your VAT return. Keep a tracker to chase missing certificates.
Is import-stage AIT or AT a sunk cost? Often it’s creditable against your income tax or VAT liability, subject to rules. Don’t expense it blindly—map it and adjust properly.
What triggers a transfer pricing file requirement? Related-party cross-border transactions above NBR’s monetary thresholds. Even below, keep intercompany agreements and a simple pricing memo.
Part R — The TRW method (how we execute end-to-end)
Diagnostics: BIN/TIN/ledger mapping, VAT classification, WHT matrix gap analysis.
NBR compliance is not a once-a-year event. It’s a monthly rhythm—withholding, VAT close, import postings, and evidence trails—that culminates in a clean, low-risk annual return. Install the rhythm now and you’ll spend the rest of the year growing the business, not firefighting notices. If you want, we can turn this guide into a bespoke SOP pack for your company (dashboards, checklists, templates, and system rules) so your team can execute on autopilot.
BSEC Compliance (2025): Bangladesh Securities and Exchange Commission (BSEC)- A Complete, Practical Guide for Issuers, Intermediaries, and Boards in Bangladesh
By TRW Law Firm — Capital Markets, Corporate Governance & Regulatory Practice
Why this guide
If you’re listed, planning to list, issuing debt or sukuk, running a brokerage, a merchant bank, a mutual fund/AIF manager, or serving as a trustee/custodian in Bangladesh, you live under the Bangladesh Securities and Exchange Commission (BSEC) rulebook. Getting “BSEC-ready” is less about memorising regulations and more about building a repeatable operating system: disclosures that are timely and consistent, governance that actually works, documented internal controls, and an evidence trail strong enough for audits, inspections, ratings, and deals.
This guide is a detailed, field-tested playbook covering:
Who BSEC regulates and what permissions/registrations they need
Listing and public offering pathways (equity, debt, sukuk)
Research Analyst (where specific registration applies)
Registrar to Issue/Transfer Agent (RTI/RTA)
3) Market institutions
Stock exchanges (DSE/CSE)
Central Depository
Clearing & Settlement entities (where applicable)
Part B — Permissions, licences, and fit-and-proper
Every intermediate role above is permission-based. Core elements repeat across applications:
Fit-and-proper: promoter and key personnel integrity, competence, and financial soundness; absence of disqualifications; conflict-of-interest mapping.
Capital & net worth: prescribed minimum paid-up/net capital; capital adequacy ratios (brokers/ dealers) and risk management framework.
Infrastructure: trading/back-office systems, cyber-security, BCP/DR, secured data retention, and audit trails.
Policies: KYC/AML/CFT, RPT handling, insider trading prevention, research independence (if applicable), complaint redressal, whistleblowing, code of conduct, and risk appetite statement.
Reporting: periodic returns to BSEC/stock exchanges/depository, auditor certifications, and event-driven notifications (management changes, control changes, breaches).
Fees: initial and annual renewal fees; inspection facilitation.
Build a Licence Dossier template per licence type: governance charts, resumes, SOPs, SLAs, internal audit plan, system architecture, policy library, specimen disclosures, and sample client agreements.
Part C — Equity capital markets: IPO/QIO/Rights/Bonus
1) Pre-IPO readiness checklist (12–18 months out)
Track record & financial hygiene: three years’ audited financials (or as prescribed); no qualified/adverse opinions; clean revenue recognition and related-party balances; tax filings current.
Share capital & lock-in: sponsor holdings locked per rules; no unpaid calls; ESOP/trust structure (if any) aligned to regulations.
Corporate governance: board size and structure aligned to the Code; committees constituted; Company Secretary, CFO, and Head of Internal Audit & Compliance (HIAC) in post; charters adopted.
Internal controls: documented processes for sales cut-off, inventory, bank reconciliations, treasury, procurement, FX, credit control; internal audit and management letters with actioned findings.
Legal & title: clear asset/title chains, IP ownership, subsidiary control docs, and absence of unresolved litigations likely to be material.
Use of proceeds: realistic capex/opex plan; project agreements and feasibility; environmental/land permissions (if relevant).
Fixed-price IPO or book-building (rules differ on eligibility, valuation, and investor allocation); QIO for qualified investors in smaller deals; Rights issues for existing shareholders; Bonus/scrip dividends under corporate action rules.
Issue Manager (merchant bank): due diligence, valuation/price band, prospectus preparation, coordination with exchanges and depository, and marketing.
Underwriters (if required): underwriting agreement and capacity proof.
Credit rating (where required): initial rating and surveillance cycle.
Auditors & legal: comfort letters, legal due diligence, and opinions.
Trustee (only for debt/sukuk/mutual fund issues): investor protection throughout life of the instrument/fund.
3) Prospectus/offer document essentials
Company, risk factors, use of proceeds, MD\&A, corporate governance, capital structure, related-party transactions, litigations, industry & competition, financials and notes, auditors’ report, material contracts, and responsibilities of each actor.
4) Post-issue, pre-listing
Subscription and allotment reconciliation; refund and allotment communications; BO credit of shares for successful applicants; final listing approval; commencement of trading.
Part D — Corporate Governance Code (CGC): building it into the machine
The CGC sets minimum governance standards for listed issuers. Key elements:
1) Board composition & independence
A board of an appropriate size, with independent directors meeting criteria on experience, independence, and non-association. The Code prescribes a minimum proportion of independents and their qualifications; confirm current ratios when appointing.
Clear rotation/re-appointment cycles; disclosure of attendance; prohibitions on executives holding concurrent compliance roles.
2) Board committees
Audit Committee (AC): chaired by an independent director; oversees financial reporting, internal control, risk, compliance, and external audit relationships; approves internal audit plan; reviews RPTs; monitors whistleblower matters.
Nomination & Remuneration Committee (NRC): also chaired by an independent; oversees board skill matrix, succession planning, KPIs, and remuneration frameworks for directors and senior management.
3) Key officers and certifications
CEO/MD and CFO certify the financial statements’ truth and fairness to the board/exchanges.
Company Secretary (CS) ensures compliance with the Code, meeting formalities, and filing discipline.
Head of Internal Audit & Compliance (HIAC) reports functionally to the AC, not to management.
Compliance certificate: annual external certification (by a practising professional) confirming Code compliance and disclosure of departures with explanations.
4) Policies you must adopt (publish on website and implement)
Risk Management Policy (with risk register and KRIs)
Whistleblower & Investigation Policy
Board Diversity & Director Selection Policy
Communication/Disclosure Policy (IR playbook)
Cyber-Security & Data Protection Policy
Treat the CGC as a living control system. Minutes, working papers, checklists, and action trackers are as important as the high-level policy text.
Part E — Continuous disclosure & corporate actions
1) Price-sensitive information (PSI)
Define PSI categories relevant to your business (earnings, dividend decisions, M\&A, major contracts, default/closure, legal orders, production disruptions).
Immediate disclosure to exchanges and BSEC upon board/authorised decision; ensure trading window closure before board meetings considering PSI.
Maintain a UPSI list and “Chinese walls” for persons with access; log recipients and dates.
2) Periodic financial reporting
Quarterly/half-yearly unaudited financials within prescribed timelines; annual audited financial statements within the stipulated period after year-end.
MD\&A with material variances and segment data; reconciliation explanations.
Board decision with record date; exchange notifications; credit of cash/bonus via depository and bank within timelines; rights issue timetable and abridged prospectus (if applicable).
Maintain a Corporate Actions SOP: step-by-step approvals, disclosures, banking, BO credit, reconciliations, and investor communications.
5) Website & investor relations
A compliance-ready website: financials, Code compliance status/certificate, board/committee charters, policies, shareholding pattern, contact points, and grievance redressal process.
Appoint one authorised spokesperson for public statements; script Q\&As for earnings calls.
Part F — Insider trading & market abuse
1) Definitions & prohibited conduct
Insider trading: dealing while in possession of UPSI; tipping others; procuring deals through intermediaries.
Surveillance: periodic review of trades vs. disclosures; exception reports to AC.
Disciplinary protocol: from show-cause to board-approved sanctions; report material breaches to BSEC/exchanges.
Part G — Related-party transactions (RPT)
Define related parties aligned to accounting standards and regulation (directors/KMPs, relatives, significant shareholders, group entities).
Materiality thresholds and approval matrix: management → AC review → board approval; shareholder approval for certain classes where required.
Documentation: contemporaneous benchmarking or third-party pricing; contract summaries; conflict disclosures; abstentions recorded in minutes.
Disclosure: in financials and immediate announcements if material; ongoing monitoring through an RPT Register reviewed by AC.
Part H — Debt & sukuk: before and after issuance
1) Before issuance
Trustee appointed early; security package structured (charge over assets/receivables/shares; mortgage; escrow; DSRA).
Credit rating obtained; covenants and events of default clearly drafted; intercreditor and subordination documented; for sukuk, Shariah governance, asset selection (asset-based vs asset-backed), and Shariah certification.
Offer document/IM includes use of proceeds, risk, covenants, financials, project details, trustee reporting, and monitoring.
AMLCFT programme for distributors and KYC for unit-holders.
Part J — Alternative Investment Funds (AIF): VC/PE/Impact
AIF Manager licence: fit-and-proper, team track record, investment and risk policies, compliance & valuation frameworks, and PPM (private placement memorandum) standards.
Fund registration: trust or company form as permitted; minimum corpus; eligible investors (high-net-worth/institutional); commitment & drawdown mechanics.
Governance: investment committee charter, conflict management, co-investment and related party rules, side letters, key-person events, and suspension/termination provisions.
Marketing: private placement only to eligible investors; communications discipline and recordkeeping.
Part K — Intermediaries’ obligations: the operational core
1) Broker/Dealer (and DP if combined)
Capital adequacy & margins: maintain prescribed net capital; risk-based haircuts; daily computations.
Client asset segregation: separate client funds and securities; reconciliations with exchange/depository.
KYC/AML: robust onboarding, PEP/negative news screening, source of funds, periodic reviews, STR/SAR reporting, and travel rule (where applicable).
Order handling: fair allocation, time stamping, error trade SOPs, algo/auto-trading controls.
Records & reporting: trade confirmations, contract notes, ledger statements; regulatory returns on time.
Tech & cyber: two-factor authentication for clients, secure APIs, DRC/BCP and incident logging.
Due diligence: true and fair prospectuses; site visits; third-party validations; legal and tax checks; financial comfort procedures; valuation justification.
Portfolio management (if permitted): discretionary/non-discretionary mandates; IPS (investment policy statement); suitability; best execution; fee disclosures and performance presentation.
3) Trustee & Custodian
Monitoring: compliance with deed, offer document, covenants; NAV/asset checks; voting on corporate actions; default handling.
Reporting: exception reporting to BSEC/investors; immediate alerts on breaches.
Independence: manage conflicts, Chinese walls with affiliates.
4) Credit Rating Agency (CRA)
Methodology disclosure; rating committee independence; surveillance schedule; conflict management; analyst trading prohibitions; records and model validation.
Part L — Takeovers, substantial acquisitions, delisting, buy-backs
Substantial acquisition triggers: crossing defined shareholding thresholds or control parameters typically requires a public tender offer; filings include offer price justification, funding proof, and timeline commitments.
Creeping acquisitions: annual limits may apply for increases without a full tender.
Delisting: board and shareholder approvals plus investor protection mechanisms; conditions and exit price discovery standards apply.
Buy-backs (where permitted): sources of funds, limits, tender/screen-based procedures, insider window closures, and post-buyback disclosures.
For M\&A or control deals, construct a Takeover Dossier: SPA/MoU, financing evidence, valuation, shareholder letters, standalone public announcement and detailed public statement drafts, and escrow arrangements.
Part M — Inspections, enforcement & remediation
1) What to expect
Thematic inspections (e.g., RPTs, insider controls, cyber) or full-scope exams.
Requests for working papers, board/committee minutes, registers, logs, system reports, and emails/IM where relevant.
2) Common findings
Late disclosures, inadequate UPSI logs, missing pre-clearance records, unsupported valuations, weak AML KYC files, NAV/pricing errors, back-dated minutes, charge filings missing (for debt issuers), and ratings not kept current.
3) Penalties & measures
Monetary penalties, disgorgement, suspension of trading or licences, debarment of directors/KMPs, directives to rectify and restate, and investor communications.
4) How to remediate
Root-cause analysis; corrective action plan with owners & deadlines; back-filings; investor notices (where needed); external assurance on completion.
Part N — The BSEC Compliance Calendar (model; tune to your facts)
Replace placeholders with your actual fiscal year ends, board cadence, and instrument-specific covenants.
ESG/Climate reporting: even where not mandated, expect investor scrutiny on governance, emissions baselines, and social metrics. Start with a materiality map and board-level ESG oversight.
Part S — For boards & CEOs: the two-page oversight routine
Page 1: Quarterly Board Dashboard
Compliance heat-map (green/amber/red by topic)
Top 10 risks & KRIs (with trend arrows)
Financial close status (quarter and YTD)
Disclosures made & pending (with owners/dates)
RPT summary (new/renewed; values; approvals)
Insider trading control metrics (window breaches, pre-clearances)
Litigation/investigation updates
Debt/sukuk covenant status & rating outlook
Fund/AIF KPIs (if relevant)
Page 2: Action Register
Open items by owner & due date
Items escalated to AC/NRC/board
Regulatory interactions (inspections, notices) and response status
Part T — “Day-1 to Year-1” roadmap (issuers and intermediaries)
BSEC compliance is not a binder on a shelf; it’s a rhythm. When your board cadence, disclosure muscle, internal controls, and evidence trail move in sync, you reduce regulatory friction, lower the cost of capital, and increase strategic degrees of freedom. Use this guide to install that rhythm—then keep tuning it as your business and the rules evolve.
Bangladesh Bank Approvals (2025): The Complete, Practical Guide for Companies, Investors & CFOs
By TRW Law Firm — Foreign Exchange, Corporate & Cross-Border Practice
Executive Summary
“Bangladesh Bank approvals” touch far more than just banks. As the central bank and foreign-exchange regulator, Bangladesh Bank (BB) sets the rules for how foreign currency enters, moves through, and exits the country—across equity, loans, services, royalties, dividends, freight, shipping, software, advertising, and more. BB also licenses and supervises payment systems, money changers, mobile financial services (MFS), PSPs/PSOs, agent banking, OBUs, and Authorized Dealers (AD banks). On top of that, specific industries (airlines, shipping, telecom, power, EPC contractors, NGOs/INGOs) interact with BB frequently for routine outward remittances and profit repatriation.
This guide gives you a single, end-to-end playbook: what approvals you may need, when your AD bank can remit without prior BB approval under “general permission,” how to structure dividend and royalty remittances correctly, how foreign loans and guarantees are cleared, how share transfers with non-residents are priced and paid, and how to keep documentation and tax compliance airtight so your payments clear quickly.
Regulations and circulars evolve. Treat this as a comprehensive operating manual; always align final numbers and thresholds with current circulars and your AD bank’s latest checklist.
Part A — Where Bangladesh Bank Sits in the System
Bangladesh Bank acts in three roles that matter to you:
Foreign Exchange Regulator Implements and administers foreign exchange rules—what can be sent or received, by whom, for what purpose, under what documentation, and whether prior approval is needed or the transaction falls under general permission (i.e., the AD bank can remit directly when the file is complete).
Prudential & Payment Systems Regulator Licenses and supervises banks, non-bank financial institutions in specified activities, Authorized Dealers (AD) in foreign exchange, Money Changers, Offshore Banking Units (OBUs), Agent Banking, Payment Service Providers (PSP), Payment System Operators (PSO), Mobile Financial Services (MFS), card schemes/acquirers, white-label ATM operators, and certain cross-border payment rails.
Supervisor & Data Collector Requires banks to submit transaction-level data (import/export forms, TM forms, returns). Your AD bank is the gatekeeper—if your documents are weak, the bank won’t forward or execute, even when prior BB approval is not required.
Part B — Who Needs BB Approval (or AD Bank Clearance) and When
Below is a practical catalog of entities, transactions, and licenses that touch BB, with notes on whether prior approval is typical or whether general permission with AD bank processing usually applies.
1) Corporate Forms & Market Entry with FX Touchpoints
Bangladeshi private/public companies with foreign shareholders:
Inward share subscription: Generally remittable to a local company’s bank under general permission, subject to proper encashment certificate and share issuance at compliant pricing.
Dividend repatriation to non-resident shareholders: Typically under general permission via AD bank when tax has been withheld/paid and documents are in order.
Share transfers between residents and non-residents: Require valuation per accepted methodology and AD bank sign-off; some cases may require prior BB approval (e.g., complex structures, unusual pricing, legacy cases).
Branch office (foreign company):
Profit remittance: Permitted once audited accounts and tax clearance are in place; AD banks remit under general permission with a full pack.
Closure remittance: Final remittance of unspent balances on closure normally requires a dedicated file with the AD bank; BB may be involved depending on facts.
Liaison/representative office:
Operational funding via inward remittance: General.
No local revenue; thus no profits to remit.
Closure remittance of unspent balances proceeds on a documented file.
2) Banks, NBFIs, and FX Intermediaries (Licenses Issued by BB)
Scheduled bank license (bank formation/merger/branching) — BB license and ongoing prudential approvals.
Authorized Dealer (AD) license in foreign exchange — BB approval; AD branches are specially permitted outlets.
Offshore Banking Unit (OBU) permission — BB authorization; subject to separate FX and prudential norms.
Agent Banking permission.
Money Changer license.
Payment ecosystem:
Mobile Financial Services (MFS) license.
Payment Service Provider (PSP) and Payment System Operator (PSO) approvals.
Card issuance/acquiring and certain white-label ATM/network approvals.
If you operate in any of the above, the application is a licensing dossier to BB, followed by periodic reporting, inspections and compliance conditions.
3) Foreign Currency Accounts & Retentions
Exporters’ Retention Quota (ERQ) accounts for a percentage of export proceeds; use governed by circulars.
Resident Foreign Currency Deposit (RFCD) accounts for resident individuals with eligible foreign currency income; corporates have specified FC account types for export earnings, projects and special cases.
Non-Resident Taka Accounts (NRTA/NITA) for non-resident investors for capital market and other eligible investments.
Most of these operate under general permission if you keep the file clean and within allowable uses.
4) Inbound & Outbound Services, Royalties, IP, and Intercompany Charges
Royalty, franchise, trademark, and technical know-how fees:
Often remittable by AD banks under general permission within percentage caps or subject to contract vetting and tax/VAT compliance.
Over-cap or unusual structures may need prior BB approval.
Management fees, shared services, IT support, cloud/SaaS, software licenses:
Many categories can be remitted by AD banks against service agreements, invoices, tax documents, and technology transfer proof where relevant.
For sensitive items or large values, banks may escalate to BB.
Professional services (audit, legal, consulting), testing/lab, training, marketing/advertising with overseas media:
Typically via AD banks with standard document sets; banks watch withholding tax, VAT on digital services, and proof of service.
Routine in these industries; AD banks clear with standard packs (sales reports, netting statements, tax/VAT evidence, agency agreements).
5) Trade Finance & Imports/Exports
Imports via LC, usance, or collection: AD banks manage within FX rules; BB prior approval generally not needed unless an item is restricted or the structure is unusual.
Back-to-back LCs for exporters: managed by AD banks under FX/trade circulars.
Exports: Proceeds realization, retention, and use of EXP and shipping documents flow through AD banks; certain deviations escalate.
Require registration/clearance with BB (and, where applicable, alignment with the investment authority and sector regulators).
Banks and BB will scrutinize pricing, maturity, security, and use of proceeds.
Security creation over local assets in favor of non-resident lenders and upstream or cross-border guarantees typically require BB’s consent.
7) Capital Market & Investment Flows
Non-resident portfolio investment through NITA or equivalent channels: executed via custodians/ADs under general permission.
Repatriation of capital gains and dividends from listed securities: under general permission with broker/custodian packs and tax compliance.
Unlisted shares (private transfers between resident and non-resident): valuation and documentation must satisfy the AD; BB approval may be sought for complex exits.
8) Outbound Investment & Special Cases
Outbound equity investment by residents: generally requires specific prior approval (policy is conservative and fact-dependent).
Remittance for ESOP/stock option exercises for resident employees in a foreign parent: often needs specific clearance (structure-dependent).
Donations, grants, endowments, prize money abroad: usually require strong justification; AD banks may escalate for BB guidance.
Part C — The Dividend Repatriation Playbook (Company & Branch)
Dividend remittance is frequent—and avoidable errors cause most delays. Use this two-track approach:
Track 1 — Bangladeshi Company Paying Dividends to Non-Resident Shareholders
Pre-conditions
Audited financial statements for the period, approved by the board and adopted by AGM.
Dividend declaration: board recommendation + shareholder approval per Articles/Companies Act.
Tax compliance: appropriate withholding tax deducted and paid; any corporate tax arrears addressed.
Documentation Set for the AD Bank
Board minutes recommending dividend; AGM minutes declaring it.
Shareholding evidence: latest Form XII/Schedule X or register excerpt matching the declaration date.
Proof of foreign investment (for non-resident holders): original encashment certificate(s) or other bank confirmation of the inward share subscription, plus share certificates/allotment return.
Withholding tax challans or bank confirmation of payment to the exchequer.
Bank remittance form(s) and beneficiary bank coordinates.
KYC update if shareholder banking details changed.
Processing Notes
In typical cases, general permission applies—your AD bank remits without sending a prior approval case to BB, as long as the file is complete and compliant.
Expect requests for clarifications if accounts show accumulated losses, intra-group balances, or if there’s a sudden jump in payout ratio.
Timing
Well-prepared files often clear in 5–10 working days; add time for large shareholder bases or complex tax positions.
Track 2 — Branch of a Foreign Company Remitting Profits
Pre-conditions
Audited branch accounts for the period.
Tax clearance noting profit remittance and confirming taxes due have been paid.
Activity compliance: profits must arise from activities within the BIDA-approved scope.
Documentation Set
Audited branch accounts and management representation (if requested).
Tax clearance (profit remittance specific).
BIDA approval letter(s) and any renewal(s).
Bank forms and beneficiary instructions.
Lease/office confirmation and TIN/VAT alignment if banks request recon.
Processing
Generally permitted via AD banks once the tax clearance exists; unusual issues (scope questions, large inter-company charges) can prompt escalation.
Part D — Royalty, Franchise & Technical Know-How Fees
Many businesses rely on overseas IP and know-how. BB’s framework generally allows AD bank remittance under general permissionwithin defined parameters, subject to:
The Core Tests
Genuine contract: executed agreement (principal terms, scope, fee basis—percentage of net sales, per-unit fee, lump sum, milestone, or hybrid).
Pricing & caps: ensure your fee basis matches the permitted cap or market norms; if above, seek prior approval or restructure.
Tax & VAT: withholding tax (rates vary) and VAT on digital/technical services (where applicable) paid.
Evidence of use: sales base certified by CFO/auditor, proof of deliverables for technical assistance, and proof of IP use.
Transfer pricing: if parties are related, maintain contemporaneous TP documentation.
Remittance Pack
Signed agreement + any amendment.
Invoice with calculation base.
Sales/usage certificate (auditor or finance head).
Tax payment evidence (withholding/VAT).
Board resolution (sometimes requested).
Bank forms and beneficiary details.
Staying within permitted fee ratios and filing a clean, consistent pack is the fastest route. When fees exceed typical caps, prepare an approval memo explaining value, benchmarks, and strategic necessity.
Part E — Intercompany Services & Shared Costs (IT, Finance, HR, Marketing)
Multinationals charge Bangladeshi subsidiaries for shared services. AD banks can remit under general permission when:
There is a clear service agreement (scope, pricing, cost allocation keys).
Invoices are consistent with the agreement.
Withholding tax is deducted and paid (or exemption evidenced).
Transfer pricing file supports the allocation and markup.
Where relevant (software/IT/cloud), VAT on digital services is accounted for.
Pro tip: Pre-agree a yearly service calendar (deliverables, KPIs, fee envelope) so payments don’t look ad-hoc.
Part F — Foreign Loans, Buyer’s Credit & Security
Foreign borrowing must be properly cleared before drawdown and remittance of interest/principal. Expect these elements:
Lender & facility: identify whether it’s an offshore bank, shareholder, OBU, ECAs, or funds; ensure lender eligibility.
Tenor & pricing: comply with the applicable ceilings/benchmarks and minimum average maturities for term borrowings.
Use of proceeds: capex, working capital, refinancing—state precisely.
Security & guarantees: mortgages/charges over local assets and cross-border guarantees typically require consent; align with RJSC charge filings.
Registration/clearance: lodge the loan with the appropriate authorities, complete any BB registration/reference processes, and obtain drawdown clearance.
Covenants & reporting: keep post-disbursement reporting (interest, principal, covenant tests) immaculate—banks and BB may monitor.
Outflows You’ll Later Remit
Interest and principal per the repayment schedule.
Fees: arrangement, commitment, agency, ECA premiums—ensure they’re disclosed and consistent.
Early Warning Signs
Mismatched drawdown purposes versus actual use, unreported amendments, or security not registered can hold up outflows.
Part G — Imports, Exports & Trade-Related Remittances
Imports
AD banks are your primary interface: opening LCs, endorsing import forms, handling import payments at sight/usance.
No prior BB approval is needed for most goods unless restricted/sensitive or structured in an unusual way (barter/offsets, complex third-country triangulation).
Document set: LC, invoice, packing list, shipping docs, certificate of origin, insurance, and inspection where required.
Exports
EXP form registration and shipment reporting via the AD bank.
Realization: Export proceeds must be realized within stipulated time; short/over shipments and quality claims go through the AD.
Retention (ERQ): A portion of proceeds can be kept in FC for approved uses (imports of inputs, overseas marketing, travel, commissions). Keep a clear audit trail.
Freight, Shipping & Airlines
Airlines remit net sales after taxes/charges; shipping lines remit freight and demurrage/charges.
Files typically include sales reconciliation reports, tax evidence, and agency agreements; AD banks remit under general permission.
Part H — Capital Market Flows & Share Dealings with Non-Residents
Listed Securities
Non-resident investors use designated accounts through custodians/ADs; dividends and capital gains are repatriable under general permission with broker/custodian packs and tax evidence.
Unlisted Shares (Private Companies)
Share issuance to non-residents: inward remittance, compliant pricing, allotment return, and share certificate issuance.
Share transfer between resident and non-resident: valuation per accepted methods (e.g., NAV, earnings, DCF). AD banks review pricing fairness; in atypical cases, banks may seek BB guidance.
Exit & repatriation: sale proceeds (net of taxes) remittable through the AD upon proof of shareholding, sale agreement, valuation basis, and tax payment.
Boardroom rule: Keep your cap table, RJSC returns, and share certificates in perfect order; sloppy records are the #1 cause of delays.
Part I — Outbound Investment & Special Remittances
Outbound equity investment by Bangladeshi companies is policy-sensitive and generally requires specific prior approval with robust justifications (strategic fit, forex impact, governance). Expect a high evidentiary bar and longer timelines.
ESOP/stock options: outward remittance of exercise price or taxes associated with foreign parent stock plans typically needs case-by-case treatment with the AD bank and often BB input.
Donations/prizes/endowments abroad: rare and tightly controlled; most companies route such items through local charitable activities unless a strong corporate/contractual basis exists.
Part J — Payment Systems, PSP/PSO & MFS Licensing
If you run or plan to run payments infrastructure:
MFS: Wallet issuance, P2P, P2B, merchant acquiring, cash-in/out—all under BB license with capital, governance, agent network, interoperability, and settlement rules.
PSP/PSO: Gateways, aggregators, switches, card networks, QR rails, merchant acquiring—licensing with technology, security (PCI/EMV), settlement, and dispute management obligations.
Agent banking: Bank-led, BB-authorized channels using agents for deposits, withdrawals, and basic services in underserved areas.
Money Changers: License for buying/selling foreign currency banknotes and traveler’s cheques; strict AML/KYC rules.
These are full licensing matters with detailed application forms, fit-and-proper tests, capital/technology criteria, and ongoing reporting and inspections.
Part K — The “No-Surprises” Documentation Model
Whether you’re paying a dividend, a royalty, or an intercompany fee—or drawing down a foreign loan—the fastest path to clearance is a bank-ready file. Here’s the universal checklist:
Board approvals: Resolutions that clearly authorize the payment, beneficiary, amount, and purpose.
Contracts: Executed copies with all schedules; amendments consolidated; latest versions only.
Invoices & workings: Fee basis shown step-by-step; where sales-linked, include certified sales numbers.
FX evidence: For capital flows, the encashment certificate proving the original investment.
Statutory filings: RJSC returns (e.g., Form XII/Schedule X for shareholding), charge filings, or auditor letters where relevant.
Beneficiary coordinates: Bank, SWIFT, IBAN, currency; KYC on any changes.
Cover letter: One-page narrative tying it all together, with a numbered index.
Submission path: You submit to your AD bank. If within general permission, the bank executes. If outside, the bank submits to BB with its note; strong files move faster.
Part L — Taxes & Transfer Pricing: What Banks Quietly Check
Withholding tax: Correct rate, correct base (gross vs. net), timely deposit.
VAT on imported services: Where applicable (e.g., digital ad spend, SaaS), ensure VAT is paid and documented.
Transfer pricing: Intercompany charges must pass arm’s-length tests; keep your Local File/Master File ready.
Treaty positions: If you rely on a DTA rate, provide residency certificates and beneficial ownership statements.
If tax is wrong, FX will be slow. Banks won’t risk their license on a defective tax file.
Part M — Step-by-Step: The Dividend Remittance SOP (Copy & Use)
Stage 1 — Corporate Actions
Board approves audited accounts and proposes dividend.
AGM declares dividend.
Finance prepares shareholder-wise payout with residency flag and tax rates.
Stage 2 — Compliance Pack 4) Compile audited financials and signed minutes. 5) Prepare dividend schedule (gross, tax, net, currency). 6) Attach encashment certificates for non-resident holdings and the cap table evidence. 7) Pay withholding tax; print challans. 8) Draft a cover letter to the AD bank with a numbered index.
Stage 3 — Bank Execution 9) Submit the pack + bank forms; respond promptly to any clarifications. 10) On execution, collect the SWIFT copy and keep a remittance file for six years (or more per policy).
Stage 4 — Investor Relations 11) Email shareholders a remittance advice with amount, currency, date, and bank reference. 12) Update statutory registers and the audit file for next year.
Part N — Step-by-Step: Royalty/Know-How Fee Remittance (Under Caps)
Confirm your fee basis fits within permitted ratios/thresholds.
Obtain/review the executed agreement; add an annex showing fee formula.
Prepare the invoice; compute the fee on certified sales (attach certificate).
Deduct and deposit withholding tax (and VAT where applicable).
Compile the bank pack: agreement, invoice, sales certificate, tax evidence, board minute (if needed), bank forms.
Submit to AD bank. If everything is within parameters, expect straight-through processing. If not, be ready with a justification memo for prior approval.
Part O — Step-by-Step: Foreign Loan Clearance & Repayments
Before Drawdown
Finalize term sheet (amount, tenor, pricing, amortization, covenants).
Align use of proceeds with policy; prepare cashflow model.
Prepare security/guarantee matrix; obtain in-principle lender and BB/AD comfort on cross-border security.
Lodge the registration/clearance file with AD bank for BB’s concurrence or registration step.
On approval, draw down into the permitted account.
During Life 6) Track interest and principal schedules; diarize remittance dates. 7) File periodic covenant compliance and interest reporting with your bank.
On Repayments 8) Submit repayment request with loan statement, calculation of interest, and tax evidence if any withholding applies. 9) Bank executes; you keep the SWIFT and update the loan ledger.
On Amendments 10) Any material changes (tenor, pricing, security) require fresh clearance; don’t amend informally.
Part P — Industry Mini-Guides
Airlines (International)
Monthly/quarterly remittance of net ticket sales and ancillary income after taxes/charges; pack includes BSP/ARC or equivalent reports, tax evidence, and agency agreements.
Shipping Lines & Agents
Freight and demurrage remittances with manifest and billing summaries; outward commissions per agency contracts.
Telecom & Tech
Interconnect/roaming settlements; license/software/SaaS remittances; ensure data/IT security and tax alignment.
Cloud & ads: high-frequency payments—set standing documentation and tax workflows.
Power and Infrastructure
Foreign loan servicing, ECA premiums, spare-parts imports, and technical service fees; long-dated covenants and multiple lenders require precise calendars.
EPC/Contractors
Mobilization advances, progress certificates, retention money, and contractor profit remittances for foreign branches; tax and warranty obligations must be closed before final remittance.
NGOs/INGOs & Development Projects
Foreign grant inflows to FC accounts; use per project budgets; staff benefit remittances and consultant payments via AD bank rules.
Part Q — Compliance Pitfalls (and How to Avoid Them)
Unclear purpose narratives: Banks need a one-line purpose in plain language that matches documents.
Mismatched names across contracts, invoices, and bank records.
Missing encashment certificates for historic investments; solve by reconstructing with bank letters and corporate records.
Over-cap royalties without justification: restructure, stage fees, or file a cogent approval case.
Tax gaps: Withholding paid late or at the wrong rate—banks will hold.
Foreign loan amendments done informally—later remittances get stuck.
Transfer pricing silence: For intercompany services, keep a lean TP pack ready.
Expired BIDA/industry approvals for branches—banks stop profit remittance until renewed.
Charge filings not done at RJSC—BB won’t bless security/repayments cleanly.
Last-minute submissions: Build buffers for quarter-end and year-end queues.
Retention: minimum six years (longer for projects or lender requirements). Use a numbered index; your bank will love you for it.
Part S — Fast FAQs (No Jargon)
Do all outward remittances need prior BB approval? No. Many are permitted under general permission and are executed by AD banks if the file is clean and within parameters.
When do I definitely need prior approval? Over-cap royalties/technical fees, unusual or large intercompany payments, foreign loans and security/guarantee matters, outbound investments, and certain exceptional cases.
Can I repatriate dividends freely? Yes—if profits are real, taxes are paid, and you can prove the original foreign investment. Your AD bank can remit under general permission.
How long does a dividend remittance take? Well-prepared files often execute in about a week through the AD bank. Complex cap tables, tax queries, or missing encashment evidence add time.
Are software, cloud, and digital ads payable abroad? Yes, commonly via AD banks—but ensure VAT/withholding compliance and keep agreements/invoices tidy.
Who handles my case at BB? You rarely go directly—your AD bank prepares and sends cases when prior approval is needed. Keep your relationship team in the loop early.
Part T — SEO-Ready Outline (If You Publish This on Your Site)
H1: Bangladesh Bank Approvals: Complete Corporate & FX Guide
Bangladesh Bank’s framework is navigable and business-friendly when you plan. The playbook is simple: decide the correct route (general permission vs prior approval), build immaculate documentation, align taxes, and submit through a proactive AD bank. Do that, and dividends, royalties, loan repayments, and exits become predictable and repeatable—exactly what your board, auditors, and investors want.
RJSC Filings & Compliance in Bangladesh (2025): The Complete, Practical Guide for Local & Foreign Companies
By TRW Law Firm — Corporate, Cross-Border & Compliance Practice
Executive Summary
This guide explains, step by step, how to incorporate and keep a company compliant with the Registrar of Joint Stock Companies & Firms (RJSC) in Bangladesh. It covers local private limited companies, One-Person Companies (OPCs), and foreign establishments (branch and liaison/representative offices). You’ll get exact sequences, form names, filing timelines, drafting tips, stamp duty and fee planning, annual calendars, and event-driven checklists—everything you need to set up correctly and stay bankable.
Use this if you want to:
Incorporate a new company (local or foreign-owned)
Register a branch or liaison office
Run annual returns and accounts on time
Record share allotments, transfers, capital increases, director/office changes, and charges
Avoid filing defects that delay banking, visas, trade licensing, customs codes, or tenders
Laws, fees, and forms can change. Treat amounts and internal processes as planning guidance; use current official schedules at the time you file.
1) RJSC in One Page: What It Does and Who Must File
RJSC is Bangladesh’s statutory registrar for:
Companies (private/public/OPC): incorporation and ongoing returns
Foreign companies with a presence in Bangladesh: branch and liaison offices
Partnership firms, societies, and trade organizations (not the focus of this article)
You must deal with RJSC when you:
Reserve a company name
Incorporate (MoA/AoA + statutory forms + fees/stamp duty)
Create, modify, or satisfy a charge over company assets
Register and maintain the Bangladesh presence of a foreign company
2) Choose Your Route: Local Company vs. Foreign Establishment
A) Bangladeshi Company (Most Common)
Who chooses this? Exporters, importers, service providers, manufacturers, tech/SaaS, and any foreign sponsor seeking a scalable local footprint and the ability to raise capital or employ at scale.
Ownership: In most sectors, 100% foreign ownership is permitted (sectoral rules still apply).
Pros: Clean local KYC, direct invoicing in Bangladesh, seamless hiring and banking, easier M\&A.
Cons: Full local compliance (annual returns, audits where applicable, payroll, tax/VAT).
B) Foreign Company Establishment (Branch or Liaison/Representative Office)
Liaison/Representative Office: Non-commercial presence; no local sales. Expenses funded by inward remittances. Good for market development, coordination, and after-sales support.
Branch Office: Can carry out revenue-generating activities strictly within the approved scope.
Gateway: Prior approval from the investment authority (commonly BIDA), then RJSC registration as a foreign company.
Decision rule of thumb: If you will sell locally, build teams, sign local contracts, or raise local capital, form a Bangladeshi company. If you will coordinate or support offshore sales only, and keep books as a cost center, consider liaison; for tightly scoped commercial activity, consider a branch.
3) Incorporating a Private Limited Company: End-to-End Steps
Step 1 — Name Clearance
Create an e-services account and apply for Name Clearance.
Validity: Time-bound (commonly around a month). Don’t let it lapse—finish drafting and signing within the window or renew.
Pro tips
Keep names distinctive and sector-appropriate.
For OPCs, include “(OPC)” in the name.
Screenshot or download your certificate; you’ll upload it later.
Step 2 — Draft the Constitution and Statutory Forms
Prepare the Memorandum of Association (MoA) and Articles of Association (AoA):
MoA: State your main objects broadly enough to avoid frequent amendments. Include ancillary powers (borrowing, security, guarantees, IP, tech licensing).
AoA: Share classes (if any), transfer restrictions, pre-emption rights, quorum, board/MD powers, dividend rules, meeting procedures, seal, and minutes.
Core incorporation forms (private company):
Form I – Application & declaration for registration
Form VI – Situation of registered office (and future changes)
Form IX – Director’s consent to act (one per director)
Form X – List of persons consenting to be directors
Form XII – Particulars of directors and manager (also used for later changes)
Drafting hygiene
Use full legal names matching passports/NIDs.
Capture residential addresses (not P.O. boxes).
Decide the financial year and first AGM month now (back-solve your audit timetable).
Step 3 — Stamp Duty on MoA & AoA
Pay stamp duty per the prevailing Stamp Act/Finance Act schedules.
Typical practice: one duty head for MoA (with AoA attached) and a separate duty for AoA, sometimes capital-linked.
Keep original paid vouchers and stamped sets; scan for portal upload.
Planning note: Stamp amounts can change annually. Confirm current schedules for your filing year.
Step 4 — (Foreign Shareholders) Capital Inflow & Encashment
Open a provisional bank account in the proposed company name.
Remit paid-up capital from abroad (each remitter should appear as a shareholder per the cap table).
Obtain a foreign exchange encashment certificate (proof of inward remittance) to support incorporation and future repatriation eligibility.
Step 5 — Online Submission & Fee Payment
Upload: stamped MoA/AoA, Name Clearance, Forms I/VI/IX/X/XII, directors’ IDs, and encashment certificate (if foreign capital).
Generate and pay registration & filing fees (authorized capital slabs + per-document fees).
Where required, lodge the hard-copy set (signed/stamped originals plus fee proof).
Error-proofing
Names and addresses must match across MoA, AoA, and forms.
Ensure directors sign in the right places, with dates.
If a director is overseas, follow notarization/authentication instructions exactly.
Step 6 — Incorporation Outputs
RJSC issues:
Certificate of Incorporation (COI)
Certified MoA & AoA
Form XII confirming directors/manager in office
File these safely; you’ll use them for trade licence, tax registrations, VAT/BIN, banking, customs codes, sector approvals, tenders, and visas.
4) One-Person Company (OPC): What’s Different
Single shareholder with “(OPC)” in the name.
Statutory caps for paid-up capital and turnover apply; if you exceed them, conversion into a private/public company may be required.
Incorporation artifacts and many returns are similar to a private company, with OPC-specific consents and nominee arrangements.
Plan early for conversion if you expect rapid scale.
5) Foreign Establishments (Branch & Liaison): Two-Stage Process
Stage 1 — Investment Approval
Apply for approval (commonly to BIDA). The approval typically sets the scope, tenure, office address, and expatriate headcount.
Stage 2 — RJSC Foreign Company Registration
File the foreign-company pack (typical items):
Certified copies of the charter/statutes/MoA/AoA of the parent
Address of registered or principal office abroad
List of directors/managers of the parent
Persons authorized to accept service in Bangladesh
Principal place of business in Bangladesh
Operating guardrails
Liaison: non-commercial; expenses funded by inward remittance; no local invoicing.
Branch: revenue permitted within scope only; keep contracts, invoicing, and bank statements aligned with the approved activities.
Banking & accounting
Local bank account(s) in the branch/liaison name.
Maintain local books; file accounts as required for foreign companies.
Track approval expiry and renew on time.
6) After Incorporation: The Post-RJSC Setup Stack
A new company usually completes these, in order:
Trade Licence (city corporation/municipality) using the RJSC pack
e-TIN (corporate tax number) and VAT/BIN (if applicable)
Bank account finalization (COI, Form XII, board resolution, KYC)
IRC/ERC for import/export, if relevant
Sectoral approvals (e.g., environment/fire/industrial where required)
Payroll onboarding; expatriate visa/work permits if applicable
Board & registers
Adopt a signing matrix and bank mandates by board resolution.
7) Annual Compliance: Meetings, Returns, and Financial Statements
A) AGM Timeline
First AGM: within 18 months of incorporation.
Thereafter, no more than 15 months between AGMs.
Approve the audited financial statements at the AGM.
B) Annual Filings (Private Company)
Schedule X (Annual Summary) — list of shareholders and directors and share capital position; file within 21 days of the AGM.
Financial statements (Balance Sheet and Profit & Loss Account) — file within 30 days of the AGM, with auditor’s report and the right officer/director signatures.
Calendar trick: On day one, set a permanent AGM month (e.g., October), work backward to fix the audit completion date (e.g., mid-September), and set internal “green zones” for draft accounts, board sign-off, and printing.
8) Event-Driven Filings: Exactly What to File and When
A) Directors & Officers
Appointment: Board/shareholder approvals per AoA → Form IX (consent) and Form XII (particulars).
Deadlines: file Form IX within 30 days of appointment; Form XII within 14 days of change.
Resignation/Removal: Process per AoA/Companies Act, then Form XII within 14 days.
Good practice
Collect passport/NID, photo, TIN, and specimen signature during onboarding.
Update bank mandates immediately after RJSC acceptance.
B) Registered Office
Form VI within 28 days of establishing or changing the registered office.
Align all external records (bank, trade licence, utilities, VAT/BIN, customs) once RJSC reflects the new address.
C) Share Capital & Shareholder Changes
Increase in Authorized Share Capital
Special resolution (file as a resolution return)
Form IV (notice of increase) — within 15 days
Update MoA capital clause (where applicable)
Return of Allotment (new shares issued)
Form XV — within 60 days of the allotment resolution and receipt of consideration
If foreign investors subscribe, keep encashment certificates for each subscriber
Share Transfer (Private Company)
Check AoA pre-emption and board veto rights
Board approve; settle consideration
Execute Form 117 (instrument of transfer) with stamp duty on face value; signing is typically done in the presence of RJSC officials
Update registers and issue endorsed share certificates
Reflect changes in the next Schedule X
Avoid these traps
Issuing shares but forgetting to file Form XV within 60 days
Transfer documents without proper stamping or without RJSC execution
D) Charges (Mortgages) Over Company Assets
Creation: File Particulars of Charge within 21 days of creation
Modification: File Modification within 21 days
Satisfaction: File Satisfaction within 21 days of full repayment
Why it matters
Banks will not finalize facilities unless your charge filings are clean.
A missed 21-day window can break priority or require corrective action that delays financing.
E) Name Change, Business Objects, or Articles Amendments
Pass a special resolution and file it with RJSC (resolution return).
A) Board Resolution — Opening Bank Account & Mandate
“RESOLVED that a current account in the name of the Company be opened with [Bank]; that any two Directors jointly, or one Director and the Managing Director jointly, be authorized signatories; that the Bank be furnished with specimen signatures; and that this resolution remain in force until revoked in writing by the Company.”
B) Board Resolution — Allotment of Shares
“RESOLVED that pursuant to the Articles, the Company hereby allots [●] ordinary shares of Tk [●] each at par/premium of Tk [●] to the persons set out in Annex-A against receipt of consideration as evidenced; and that the officers do file the statutory return of allotment within the prescribed period.”
C) Share Transfer Board Minute
“RESOLVED that the transfer of [●] shares from [Transferor] to [Transferee], as per duly stamped and executed instrument of transfer (Form 117), be and is hereby approved; that the name of the Transferee be entered in the Register of Members; and that a new share certificate be issued upon cancellation of the old certificate.”
D) Registered Office Change Minute
“RESOLVED that the registered office of the Company be shifted from [old address] to [new address] with effect from [date]; that the statutory notice be filed; and that all stakeholders, regulators, and banks be notified.”
17) FAQs (Fast Answers for Busy Teams)
Q1. Can a foreigner own 100% of a Bangladeshi private limited company? Yes in most sectors (subject to sectoral caps/approvals). Ensure subscription money is remitted and encashed properly for proof and repatriation rights.
Q2. What is the timeline to get incorporated? Where documents are in order and stamping/payment is efficient, incorporation can be quite fast. Delays usually come from name clearance lapses, incomplete forms, or director KYC gaps.
Q3. Do I need to be physically present? Most steps can be handled locally via authorized representatives. Share transfers typically require the transferor to execute Form 117 in the presence of RJSC officials—plan travel or power of attorney arrangements.
Q4. When is the first AGM due? Within 18 months of incorporation; thereafter, hold one every calendar year with no more than 15 months between two AGMs.
Q5. What happens if we miss Schedule X? You risk penalties and defects that show up in bank KYC, tenders, or diligence. Cure promptly by holding the AGM, finalizing audited accounts, and filing all overdue returns.
Q6. Can a liaison office invoice locally? No. A liaison/representative office is non-commercial and funded by inward remittances. A branch may generate revenue strictly within its approved scope.
18) On-Page SEO Tips (So This Page Ranks)
Primary keyword targets: “RJSC filings Bangladesh,” “incorporation Bangladesh,” “RJSC forms,” “Schedule X Bangladesh,” “share transfer Form 117,” “Bangladesh company compliance,” “BIDA branch liaison registration.”
H2/H3 structure: Use the headings in this article as anchors; include “RJSC forms,” “AGM annual return,” “share transfer,” “authorized capital increase,” “branch/liaison registration.”
Featured snippet candidates:
A 5–7 step list for “How to incorporate a company in Bangladesh”
A 4–step list for “How to file Schedule X”
A 7–step list for “How to transfer shares (Form 117)”
FAQ schema (if you publish on your site): Convert the FAQ section into JSON-LD.
Internal UX: Add downloadable checklists (Schedule X template, director onboarding pack, share transfer SOP).
Meta title (60 chars): “RJSC Filings & Company Compliance in Bangladesh (2025 Guide)”
Meta description (155–160 chars): “Step-by-step RJSC incorporation and annual compliance for local and foreign companies. Forms, timelines, checklists, and best practices.”
19) The TRW Way: End-to-End Without Drama
Incorporation: Name clearance, MoA/AoA drafting, stamping, forms, filing, and issuance
Banking: Board mandates, KYC packs, and relationship setup
Compliance: AGM calendar, Schedule X pack, accounts filing, charge filings
Capital & ownership: Allotments, transfers (Form 117), authorized capital increases
Foreign sponsors: Branch and liaison approvals and RJSC foreign company packs
Ongoing: Company secretarial, minutes, registers, and annual maintenance
