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Branch office registration in Bangladesh | Step by step process of setting up a branch company

Branch office registration in Bangladesh | Step by step process of setting up a branch company in Bangladesh

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Tahmidur Rahman, Director and Senior Associate

11 Nov 2019

This post in will explain in details about Branch office registration in Bangladesh – This article will explain the step by step process for setting up a branch office in Bangladesh.  In addition, people want to know the required cost and documents for a branch office registration in Bangladesh. This article will explain everything you need to know about branch office with directions and infographics.

Table of Contents

Find the subsections below, If you want to jump through specific sections instead of reading the whole article.

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How to open a branch office in Bangladesh?

A branch serves as an extension of its parent company, meaning, there will be no separate legal entity established. Its parent company is liable for the branch office’s debts or any other obligations and activities.

No operation in Bangladesh that is not expressly authorized by BIDA can be conducted by a Branch Office. A Branch Office is also expected to register with the Joint Stock Companies and Company Registrar and to comply with other legal formalities prescribed by the Companies Act 1994.

A Branch Office offers the advantages of ease of service and uncomplicated closing. Nevertheless, as the operations are strictly controlled by the guidelines for exchange control, a Branch May may not provide the best framework for its expansion / diversification plans to a foreign firm.A foreign company’s branch office can engage in commercial activities with prior BIDA approval. A branch office may have a local source of revenue from the approved business sector in Bangladesh and with the prior approval of the Inter-Ministerial Committee and sufficient justification and supporting documentation.

 

Allowed activities of a Branch office in Bangladesh

One of the major differences between a branch and a liaison / representative office is that a branch may engage in commercial activities with a prior approval from the Bangladesh Investment Development Authority (BIDA). The branch office, for example, can:

 

  • collect payments on behalf of the parent company
  • have local sources of income
  • make outward payments from Bangladesh with a prior approval from the BIDA

 

Documents to submit in BIDA for a Branch office in Bangladesh

A Branch or Liaison Office is a proper legal body in Bangladesh once it is registered with the BIDA. It is called a multinational company extension, and not a separate legal entity. Unlike a Bangladeshi subsidiary, a Branch or Liaison Office parent company is indirectly responsible for all branch or liaison office debts and liabilities.

As per the guideline of BIDA, following papers/documents are required for application for opening of branch office. (4 copies of all documents).

1. Application in prescribed form signed by the authorized person for establishment of Branch office registration in Bangladesh.

2. Memorandum and Articles of Association and Certificate of Incorporation of the principal/ parent company. (Attested by the concern Bangladesh Embassy)

3. Name and nationality of the directors/promoters of the principal company. (Attested by the concern Bangladesh Embassy)

4. Audited Accounts of last financial year of the principal company. (Attested by the concern Bangladesh Embassy)

 5. Company’s board of director’s resolution regarding opening of office in Bangladesh. (Attested by the concern Bangladesh Embassy)

6. Proposed organogram of the office showing the posts to be occupied by both expatriates and local personnel.

7. Furthermore, Details of activities to be performed through the proposed branch/liaison/representative office in Bangladesh.

8. Finally, Any other documents BIDA, may ask for after primary reviewing

In addition, you must translate any documents that are not stated in English before submission. (Branch office registration in Bangladesh)

Inspection of the Documents by the BIDA

When the documents are issued, they will be thoroughly reviewed by the BIDA Inter-Ministerial Committee. When the committee is content with the verification then they may give the approval or can obtain additional documentation. Hence it is important to carefully prepare the papers.

 

Time and governments cost for approval

The average time needed for submission and getting the approval is one month. However, BIDA may seek physical representation of the documents as such this may make the process lengthier. (Branch office registration in Bangladesh.)

 The government cost for getting the approval from BIDA is USD 300 (three hundred dollar)

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Step two- Opening Bank Account to set up branch office

Following approval from BIDA, the next move is to open a Bangladesh Bank Account. It is because while no minimum paid-up capital is needed for the establishment of a branch office, a remittance of US$ 50,000 must be deposited within 2 ( two) months from the date of issuance of the BIDA letter of authorisation. (Branch office Registration in Bangladesh

a) Documents

The documents required for opening bank account are:

  1. BIDA permission letter
  2. Draft Article and Memorandum of Association
  3. in addition, Passport of the bank account signatory (if foreign nationals) and
  4. lastly, NID (if Bangladeshi national)

Step 3- Bangladesh Bank approval

Also in regards to Branch office registration in Bangladesh, Parliament of Bangladesh revised the 1947 Foreign Exchange Regulatory Act. Now, however, Bangladesh Bank’s criteria for 18B approval has been withdrawn. In addition, according to the amendment, the branch office will report to the Bangladesh Central Bank after receiving approval from BIDA. Such a report with 30 ( thirty) days to approve should be made.

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Step 4- Registration with RJSC for Branch office

 

After obtaining approval from both Bangladesh Bank and BIDA, registration with the RJSC is required. The following documents will be required for this purpose (for Branch office registration in Bangladesh):

 

 a) Documents:

 

  • BIDA and Bangladesh Bank approval letter
  • Certified copies of the Memorandum of Association and Articles of Association
  • Full address of the registered or principal office of the company
  • List of the directors and secretary (if any) of the company
  • in addition, the name and address of a Bangladeshi who may represent the company in processing and accepting documents and
  • The full address of the office of the company in Bangladesh

 

Step five: Obtaining Trade License from the Local City Corporation

In order to get trade license an application need to be made to the concerned city corporation. Along with the application, the following information and documents need to be submitted:

a) Documents

  • Photocopy of AOA and MOA
  • Photo of Managing Director or Chairman
  • TIN of the branch office
  • in addition, Rental agreement of the office and
  • lastly, Nature of business

b) Time

It usually takes 3 to 4 working days to get a trade license. In order to know more about how to get trade license in Bangladesh.

c) Cost

The government for trade license is USD 100 (hundred dollar).

Step six: Income Tax Registration & VAT Registration for the branch office in Bangladesh

After setting up the branch office, it is important that the branch office has a unique Business Identification Number (BIN) to carry out normal business operations in Bangladesh. Therefore a VAT registration certificate must be obtained from the Department of the National Revenue Board (NBR) to obtain a business identification number. It’s free to register for the VAT registration.

a) Documents 

  • TIN Certificate
  • Trade License
  • Import / export Registration certificate
  • Furthermore, Passport sized photos
  • Deed of Agreement
  • Bank solvency certificate
  • in addition, BOI registration and
  • lastly, Memorandum and Articles of Association

 

In order to carry out normal business operations in Bangladesh after setting up the branch office, it is essential that the branch office has a unique Business Identification Number (BIN). Therefore, to get a Business Identification Number, a VAT registration certificate need to be obtained from the Department of the National Board of Revenue (NBR).

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Can a foreign employee be employed in Branch office?

 

Sponsors may apply for Private Investors Visa. Foreign employees can appointment. Appointment can be made by foreign employees.  International workers need to get a work permit to be able to operate in Bangladesh.  This is a multiple entry visa and it is only valid for 3 months but can be extended later.

A branch manager may be a foreigner but he / she should be a Bangladesh citizen.  Remember also that a cap of 5 percent (five percent)  of foreign employees in a branch is restricted by Bangladeshi law. In addition, it should be noted that as per the Bangladesh Investment Development Authority Handbook 2011, the
current maximum ratio of foreign to local employees is 1:5 for commercial offices and 1:20 for industrial enterprises. (Branch office Registration in Bangladesh)

 

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Validity Period of Approval of Branch office registration in Bangladesh

The approval is usually provided to establish a branch for a period of three years and it has to be extended/ renewed. You have to apply for renewal or extension at least 2 (two) months  before the expiry of the current term.

 

Capital requirement for branch office registration in Bangladesh

There is not minimum capital requirement in Bangladesh for branch office. However, there is a requirement for a minimum of US$ 50,000 inward remittance for registration of branches offices in Bangladesh as this inward remittance should cover the cost of initial establishment and six months’ expenses for operation.

 

Time period to set up or a  branch office registration in Bangladesh

To set up a branch office in Bangladesh, conventionally it takes from 60 days (sixty) to 90 days (ninety) in total.  Other formalities are consequential and will take about 2 weeks.

“Sponsors may apply for Private Investors Visa. Foreign employees can appointment. Appointment can be made by foreign employees.  International workers need to get a work permit to be able to operate in Bangladesh.  This is a multiple entry visa and it is only valid for 3 months but can be extended later.”

 

If you want to know how to open a company in Bangladesh or about company formation click here!

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Business activities of a Branch office in Bangladesh

Branch office does not have its own independent legal body. This is because it functions as an extension of its parent company. Hence the parent company is entirely responsible for its branch office ‘s operations, debts and responsibilities.

Unlike liaison office, a branch office can engage in commercial activities. However, in order to do so, prior approval from the Bangladesh Investment Development Authority (BIDA) is required.

Activities that a Branch office can engage in are:

  1. Payment collection on behalf of the parent company
  2. Local sources of income for the branch office
  3. in addition, Make outward payment from Bangladesh (with approval from BIDA)

 

Compliances to maintain as a branch office in Bangladesh

 

In the approval letter issued by BIDA, the activities of a Branch office shall remain confined to the areas and for the time specified and authorized. Unless the organization wishes to extend its Office past the approval period, they will have to apply for the required renewal / extension in the specified form with correct documentation at least 2 ( two) months prior to the expiry of the current term. In addition to that the Branch office should also maintain the following compliances:

  • Quarterly return of incomes and expenditures out of remittances received from abroad shall have to be submitted to the BIDA, concerned Bank, National Board of Revenue and Bangladesh Bank with documentary evidences under circular No 01/2009 amended circular No 03/2009 of 30th July, 2009.

     

  • Any change(s) of present address shall be intimated to the BIDA for necessary action and approval before the proposed change is carried out.

  • The permitted Office shall have to obtain clearances/ licenses from the concerned government agencies, as and where required, under the existing rules of the country.

     

  • The permitted Office shall have to pay duty/income tax/VAT/revenues and other taxes payable to the government under the existing laws of Bangladesh.

 

How to take the profit/dividend out from Bangladesh to the parent company?

 

At the end of the fiscal year, you can declare the company’s dividend and transfer the money to the account of the parent company.

Foreign capital invested in Bangladesh for industrial projects with government approval is permitted to be repatriated from Bangladesh, along with any capital appreciation, provided Bangladesh Bank approval is first obtained.

Remittance of dividends and profits is now permitted with fewer restrictions. Before profits from foreign subsidiaries can be transferred back to the parent company, Bangladesh Bank approval is required. First, taxes must be paid. Profit remittance requests must be submitted to the Bangladesh Bank via the applicant’s bank.

Repatriation of investments made in Bangladesh with the approval of the government of Bangladesh / Bangladesh Bank is permitted (except in cases where the investment was permitted on the specific condition that it would not be eligible for repatriation), provided the disinvestment was also made with approval.

Actual remittances will be permitted subject to the satisfaction of such conditions as to repatriation amount and installments, etc., as may be applicable from time to time.

With prior permission from Bangladesh Bank, foreign nationals temporarily residing in Bangladesh may transfer to their home countries current assets such as salary, dividend, etc. savings.

There are currently no restrictions on the receipt of remittances through proper banking channels from any foreign nation in Bangladesh. Additionally, there are no restrictions on the importation of foreign currency checks. Drafts in any foreign currency may be freely converted by authorized dealers.

Traveler’s checks and foreign currency notes / coins may be exchanged for taka at money-changers authorized by the Bangladesh Bank to conduct such transactions.

Agreements for the remittance of fees for the purposes of royalties, technical know-how, and technical assistance do not require the prior approval of the BIDA if the total fees and other expenses associated with technology transfer (service fee, marketing commission, etc.) fall within the following limits.

Such fees and other expenses should not exceed six percent of the commercial value of imported machinery for new projects.

Recurring annual fees for royalties and other expenses, such as fees for technical know-how, technical assistance, operational services, marketing of products, etc., should not exceed a limit of 6 percent of the previous year’s sales reported on the tax return of the company.

Once the above-mentioned technical transfer agreements have been signed, they must be submitted to the BIDA for registration.

Proposals that fall within the prescribed limits will require the BIDA’s prior approval, for which an application must be submitted along with the required documentation and a copy of the relevant draft agreement.

 

 

QuestionAnswer
What is the legal process for registering a branch or subsidiary office in Bangladesh?The legal process for registering a branch or subsidiary office in Bangladesh involves obtaining various approvals and registrations from different government bodies, including the Registrar of Joint Stock Companies and Firms, the Bangladesh Investment Development Authority, and the National Board of Revenue.
What is the difference between a branch office and a subsidiary office?A branch office is an extension of the parent company, while a subsidiary office is a separate legal entity owned by the parent company. The legal process for registering a branch office and a subsidiary office is different in Bangladesh.
What are the documents required for registering a branch or subsidiary office in Bangladesh?The documents required for registering a branch or subsidiary office in Bangladesh include a certified copy of the parent company’s memorandum and articles of association, a board resolution approving the establishment of the branch or subsidiary office, and other documents as required by the government bodies.
How long does it take to register a branch or subsidiary office in Bangladesh?The registration process for a branch or subsidiary office in Bangladesh usually takes around 2-3 months, depending on the completeness and accuracy of the application and the workload of the government bodies involved.
What are the registration fees for a branch or subsidiary office in Bangladesh?

The registration fees for a branch or subsidiary office in Bangladesh vary depending on the capital investment and other factors.

It is advisable to consult a lawyer or a business consultant to get an estimate of the fees.

Can a foreign company register a branch or subsidiary office in Bangladesh?Yes, a foreign company can register a branch or subsidiary office in Bangladesh subject to compliance with the relevant laws and regulations.
What are the tax implications of registering a branch or subsidiary office in Bangladesh?

A branch office is taxed on its worldwide income, while a subsidiary office is taxed only on its Bangladesh-sourced income.

The tax rates and regulations may vary depending on the nature and size of the business.

What are the reporting and compliance requirements for a branch or subsidiary office in Bangladesh?

A branch or subsidiary office in Bangladesh is required to file annual tax returns, audited financial statements, and other compliance reports with the government bodies.

Non-compliance may result in penalties and legal consequences.

Can a branch or subsidiary office in Bangladesh conduct business activities outside Bangladesh?A branch or subsidiary office in Bangladesh can conduct business activities outside Bangladesh subject to compliance with the relevant laws and regulations of the countries involved.
What are the legal implications of registering a branch or subsidiary office in Bangladesh?

Registering a branch or subsidiary office in Bangladesh creates legal obligations and responsibilities for the parent company, including compliance with local laws, regulations, and business practices.

It is advisable to consult a lawyer or a business consultant before proceeding with the registration process.

Company Law practice in TR Barristers in Bangladesh 

The Barristers, Advocates, and lawyers at TRW Law chamber in Gulshan, Dhaka, Bangladesh are highly experienced at assisting clients in dealing with and registering branch offices in Bangladesh.   For queries or legal assistance to set up a branch office in Bangladesh, please reach us at:

E-mail: info@trfirm.com
Phone: +8801847220062 or +8801779127165
House 410, Road 29, Mohakhali DOHS

 

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