Registration of a Private Limited Company in Bangladesh in 2022 | 5 Simple Steps

Registration of a Private Limited Company in Bangladesh in 2022 | 5 Simple Steps

Registration of a Private Limited Company in Bangladesh in 2022

Meheruba Mahbub

Meheruba Mahbub
 Senior Associate, Counsels Law Partners

24 Jan 2022

This article will explain in details about formation and registration of a Private Limited Company in Bangladesh.

It will focus on five easy steps: business name clearance, drafting required documents, opening a bank account, company registration with the RJSC, and post registration formalities.

Moreover, it will outline essential points for foreign investors and alternative ways to set up a company in Bangladesh.

, Private Limited Company in Bangladesh

There are five ways of doing business in Bangladesh:

Registration of a Private Limited Company is the most common way of doing business as PLC is a typical legal entity for Bangladeshi businesses. As per the Companies Act 1994 a Private Limited Company has the following characteristics:

  • It restricts the ability to transfer shares [section 2(q)]
  • The minimum number of members is 2 (two) [s. 5]; the maximum number of members is 50 (fifty), excluding employees of the Company [s. 2(q)].
  • It must have at least two directors [s. 90 (2)]
  • It prohibits any public invitation to subscribe for the Company’s shares or debentures [s. 2(q)].

After completion of Registration of a Private Limited Company in Bangladesh, it can begin operations as soon as it is registered with  The Registrar of Joint Stock Companies (RJSC), subject to obtaining the other licenses listed below in the post-registration section of this Report.

    Procedure for Registration of a Private Limited Company in Bangladesh

    The 5 steps listed below correctly outlines the procedure for the registration of a Private Limited Company in Bangladesh.

    Step 1: Business Name Clearance 

    The first step in forming a private limited company in Bangladesh is to fix a desired name for the company.  Following the selection of a name, the applicant must apply for name clearance in order to obtain the name approval certificate RJSC.

    The certificate is usually delivered within 1 to 2 days. Investors are required to pay RJSC the necessary fees for name clearance and verification.The government fee for name clearance is currently 230 BDT or  around 3 USD.

    Step 2: Drafting Required Documents

    In order to form a Private Limited company in Bangladesh, a Memorandum of Association (MoA) and Articles of association (AoA) must be prepared by the company.

    Drafting Memorandum of Association (MoA):

    A limited company’s Memorandum of Association (MOA) states the company’s objectives, company’s authorized capital, and list of the shareholders along with their respective shareholdings.

    However, it should be noted that in order to begin a banking, finance, school, or hospital business, prior approval from the relevant authority is required.

    Drafting Articles of Association (AoA):

    The AoA outlines all of the regulations that govern how a limited company operates. The AoA should include the number and list of directors, the board’s power, the Managing Director’s power, the meeting process, quorum, notice procedure, and the appointment of auditors.

    It also specifies how the company’s bank account will be managed.

     

     

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    Step 3: Opening a Bank Account

    To start a private limited company in Bangladesh, you will need to open a temporary bank account in the proposed company name with any scheduled bank in Bangladesh.  

    This stage is solely applicable if the proposed company has foreign shareholding. The following documents need to be filed to the respective banks in order to open the bank account:

    • Name Clearance
    • Draft copy of your MoA and AoA
    • Board Resolutions of the foreign company
    • Passports copies of the representative shareholders
    • bank account opening forms.

    Foreign investors wanting to form a private limited company in Bangladesh must deposit the requisite paid-up capital into the company’s bank account.

    The remitted funds will be held by the bank. The bank will produce an Encashment Certificate, which will be required by RJSC in order for the company to be incorporated.

    This certificate states that the appropriate capital contribution has been duly deposited in the proposed company’s temporary bank account.

     

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    Step 4: Company Registration with the RJSC

    In order to register the private limited company in Bangladesh, all the required information and documents must be submitted to the RJSC. They are as follows:

    • Details of Directors (name, parents name, passport number, email ID, mobile number)
    • National Identification Number (if Bangladeshi national)
    • Tax Identification Number (if Bangladeshi national)
    • Limit of paid up capital and authorized capital
    • Photo of all shareholders (1 copy)
    • Address of the company
    • Signatories of the bank account

    The registration fee and stamp duty must be paid in the RJSC’s designated bank.
    The government fee will be calculated depending on the proposed company’s approved share capital.
    A certificate of incorporation must be obtained from the RJSC after all processes have been completed successfully in order to register a private limited company in Bangladesh.

    Step 5: Post-registration Formalities

    After successful company formation, the last step in order to form a private limited company in Bangladesh is to acquire the following certificates/licenses:

    (a) Trade License 

    The companies must obtain a trade license from the local authorities. The proposed Company must submit an application to the local City Corporation, together with all essential paperwork and payments.

    The cost of getting a trade license is around USD 200, and it can be renewed annually. Three to four working days are typically required to receive it.

    b) TIN (Tax Identification Number)

    A private limited company in Bangladesh must obtain an E-TIN from the National Board of Revenue‘s (NBR) website, which can be done free of cost.

    c) VAT Registration Certificate

    The newly formed company must also obtain a VAT registration Certificate from the National Board of Revenue. This should take about 5-7 working days.

    d) Fire Certificate

    Bangladesh Fire Service and Civil Defense Authority will need to issue a fire certificate to the private limited company.

    e) Environmental Clearance Certificate

    A private limited company in Bangladesh must collect an environment clearance certificate from the Department of Environment if it intends to be involved in industrial activity.

    Furthermore, each year, the company must submit to the RJSC the following documents:

    • Schedule X which is a list of shareholders and an annual summary of share capital.
    • Balance Sheet within 30 days of Annual General Meeting (AGM).
    • Profit and Loss Account within 30 days of AGM.
      Form 23B which is a letter of approval from the auditor that must be provided within 30 days of the appointment date.
    How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Dhaka

    If you want to open a liaison office in Bangladesh or about branch formation click here!

    • Step by Step Process of forming a liaison office in Bangladesh

    Essential Information for Foreign Investors

    Foreign investors need to keep the following things in mind when they plan to form a private limited company in Bangladesh:

    • The costs of registering a company are primarily determined by the company’s authorized capital. The average cost is between USD 1800.
    • Shelf companies are not permitted and must have a physical place of business in Bangladesh.
    • Bangladesh Forex Regulations allow for the full repatriation of profits and investments.
    • Foreign nationals may be employed at a 20:1 (local: expat) ratio, subject to obtaining the necessary work permit.
    • Except in a few restricted areas, 100 percent FDI investment is permitted.
    • Directors can be either foreign or domestic nationals.
    • The typical corporate income tax rate ranges from 25% to 45 percent, depending on the sector and nature of the company.

      However, tax exemptions are available for selected sectors and areas for 5-7 years.

    • There are also additional tax exemptions  for investing in Special Economic Zones.

     

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    What are some alternative ways to set up a company in Bangladesh?

    Branch Office:

    A branch  is not a separate incorporated entity, but rather an extension of its parent company. In other words, the parent company is liable for the liabilities of its branches. 

    With Bangladesh Investment Development Authority’s (BIDA) approval, a branch can engage in commercial activities. The Exchange Control Guidelines, on the other hand, strictly monitor its operation.
    In Bangladesh, the average time to open a branch officis 45- 60 days.

    Liason Office:

    A liaison, also known as a representative office, is subject to BIDA approval  similarly as a branch.

    It must have an overseas parent company, and its activities are limited because it only serves as a communication or coordination instrument for Bangladesh’s business resources.

    Also, keep in mind that a liaison office in Bangladesh cannot earn any local income. Through remittance, the parent company bears all of its expenses and operational cost. It also adheres to the general business registration procedure in Bangladesh.

     

    How To Register A Private Limited Company In Bangladesh Infographics Remura Mahbub

    “To start a private limited company in Bangladesh, you will need to open a temporary bank account in the proposed company name with any scheduled bank in Bangladesh.

     This stage is solely applicable if the proposed company has foreign shareholding.”

     -Meheruba Mahbub

    Are you planning to register a private limited company in Bangladesh?

    Company formation and registration at Tahmidur Rahman Remura:

    The legal team of Tahmidur Rahman, Counsels Law Partners Remura are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company in Bangladesh . For queries or legal assistance, please reach us at:

    E-mail: [email protected]
    Phone: +8801727983838

    Address: Jamilla Villa (4th Floor Flat No-C2 House 4/A/1 Road no: 2 Dhaka 1212

     

    FAQ

    How much money is required for company registration in Bangladesh?

    The governmental fees for registering a company are determined by the amount of authorized capital. Government fees for the issuance of an Incorporation Certificate shall be BDT 1000.

    How long does it take to register a company in Bangladesh?

    Once the aforementioned formalities have been completed, RJSC will usually issue the certificate of incorporation (Company registration certificate) within 6-8 working days.

    It usually takes 2-3 weeks from the date of submission of all documents to RJSC to register a company.

    What is BIDA?

    Bangladesh Investment Development Authority (BIDA) is in charge of facilitating foreign investments in the country.

    BIDA's responsibilities include issuing work permits for foreign employees, visas for foreign investors, processing loans from foreign sources, approving remittance of royalties and technical fees, assisting in the acquisition of industrial plots, facilitating utility connections, approving foreign loans, suppliers credit, and providing assistance and advice on a variety of investment-related issues.

    Foreign investors with industrial projects are strongly advised to register with BIDA after forming their limited company. However, there is no requirement for a commercial or trading company to register with BIDA. The average time frame for obtaining registration is 7-10 working days.

    What documents are needed to set up a private limited company in Bangladesh?

    1. Memorandum of Association
    2. Article of Association
    3. Certificate of Incorporation
    4. Trade License
    5. TIN
    6. VAT Registration Certificate
    7. Name Clearance
    8. Environmental Clearance Certificate
    9. Fire Certificate

    What is the minimum capital required for a private limited company in Bangladesh?

    In Bangladesh, there is no minimum or maximum authorised capital for a local company.

    However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50,000/- must be invested in the Company.

    Can a single person start a company in Bangladesh?

     Bangladesh does not allow a single person to open a private limited company or One Person Company (OPC).

    A private limited company must have at least two shareholders. In the case of a public limited company, however, the total number of shareholders required is seven.

    Can a private limited company have one director in Bangladesh?

    A private limited company must have at least two directors. Local or foreign nationals may serve as directors.

    Directors must be at least 18 years old and have never been bankrupt or convicted of a crime. A director is required by law to own the qualification shares specified in the Articles of Association.

    What is the difference between authorised capital and paid-up capital?

    - Authorised capital: The amount of authorised capital must be specified in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that a company may allocate to shareholders.  

    In Bangladesh, there is no minimum or maximum authorised capital for a local company. However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50000/- must be invested in the Company.

    -Paid-Up Capital : The minimum paid-up capital for registering a Bangladeshi company is Taka 1 (for local companies) and USD 50000 (for foreign companies).

    Infographics
    How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Bangladesh
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    Author’s Bio
    About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

    Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

    Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
    Work highlights

    Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

    ⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

    ⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

    ⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

    ⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

    ⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

    Email: [email protected]

    Address: 2 Turner Street, Canning Town, E16 1FH, United Kingdom

    Gender: Female

    Job Title: Barrister and Senior Associate

    Have a Different Question?

    Email us anytime : [email protected]

    Or call — +8801727983838

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    Tahmidur Rahman

    Senior Associate, Counsels Law Partners

    2 Feb 2020

    This post in details will explain in details about the process of opening a liaison office in Bangladesh, the process of getting permission from BIDA, time period of the validity of the license, Bank Account opening, Bangladesh bank approval and everything in regards to registering a Liaison office in Bangladesh with infographics and diagrams.

     

     Liaison Office registration in Bangladesh

    Businesses wishing to develop a presence in Bangladesh without carrying out operations within the country immediately are called liaison offices or representative offices.

    A liaison office must take approval from the Bangladesh Investment Development Authority (BIDA) for the establishment of the Bangladesh Liaison Office.

    Liaison office and Branch office are almost similar. But a liaison office in Bangladesh can not perform any business or income-earning activities.

    But a Branch Office can do so with proper authorization. If you would like to know how to set up a branch please click here. On the other hand, in Bangladesh, a limited company or a subsidiary can do full-fledged business through proper incorporation.

     

    Liaison Office In Bangladesh

    If you want to know everything about Branch office registration in Bangladesh!

    Basic requirement of registering a Liaison office in Bangladesh?

    Companies wishing to set up a Liaison Office must fulfill the following basic requirements:

    • It’s a foreign company registered outside Bangladesh that wants to set up Liaison Office.
    •  The name of the Liaison Office shall correspond to the name of the international company.
    • Shareholders, the structure of the corporation and its operations shall be regulated by the Memorandum and Articles of Association of the international company. For the Liaison Office, there is no separate Agreement and Articles of Association.
    • The Liaison Office must have an email address in Bangladesh.
    •  The Liaison Office would not have a local source of income in Bangladesh.
    • Establishment and maintenance expenses shall be met by the parent company abroad.
    • The bank account
    • USD 50,000 or equivalent as projected initial establishment costs and 6(six) months operating costs of the Liaison Office shall be charged as inward remittances to Bangladesh within 02(two) months from the date of issuance of the BIDA permission letter.
    •  Other business licenses such as industrial license, tax registration (ETIN) and so on.
    • The registration fee for BDT 25.000.
    •  Registration with the Board of Joint Stocks in Bangladesh.
    •  Job visas for foreign workers.
    • Branch which carries out commercial activities shall pay corporate income tax and comply with sales VAT.
    • Other tax and VAT (GST) laws, such as withholding like tax & VAT, return submission etc., must be complied with, irrespective of the activities of the Branch.
    Best Company Formation In Bangladesh_Liaison Office In Bangladesh

    How to register a Liaison Office in Bangladesh – Step by Step process

    On the basis of funding, we can further extend the scope of NGOs, such as locally sponsored, government-funded, foreign The information provided below offers a comprehensive step-by – step method for setting up a branch or liaison office in Bangladesh.

    In the meantime, it is important to notice that the approval of the Bangladesh Investment Development Authority (BIDA) is the primary prerequisite for the establishment of a branch or liaison office in Bangladesh.

    Step one: Obtaining Permission from BIDA for setting up a Liaison office in Bangladesh

    Permission from the Bangladesh Investment Development Authority (BIDA) is required to set up a Liaison Office. Now, what needs to be done to get permission from BIDA?

    The foreign investor will be expected to submit an application in the specified form along with the documents mentioned below. It should be noted that the documents must be accredited by the Bangladesh Embassy / High Commission of the country of origin or the Top Chamber of Commerce of the country of origin.

    Required Documents for the permission from BIDA

    1. Application in prescribed form signed by the authorized person for establishment of branch/liaison/ representative office – 4 copies. 
    2. Memorandum of Association and Articles of Association of the principal Company;
    3. Incorporation Certificate of the principal Company;
    4. Nationalities and name of the directors/promoters of the principal Company;
    5. A board resolution for opening a Liaison office in Bangladesh;
    6. Last financial year’s audited accounts of the principal company;
    7. Projected organogram of the office viewing the posts to be occupied by local personnel as well as expatriates;
    8. List of activities on the Company letterhead of the proposed Liaison office in Bangladesh.

    Government Cost for Permission

    A fee of BDT 25,000 (Twenty-five thousand) is expected to be paid by bank payment order and the original copy of the payment order must be sent to BIDA to get the permission for opening the Liaison office in Bangladesh.

    Registration procedure and approval timeline for the Liaison office

    All records should be sent to BIDA on a physical basis. You can also apply online via the BIDA website. After careful examination of all records, the BIDA officials shall send the application and records to the Inter-Ministerial Committee.

    The Committee may review the documentation and can request further documentation or a physical presentation. If the committee is pleased, the approval will be given for the Liaison office in Bangladesh. The Inter-Ministerial Committee normally sits twice a month. Usually the duration is one month or less.

    Usually, permission is given to the opening of a branch or liaison office initially for a term of 3 ( three) years, which can be extended later.

    Liaison Office In Bangladesh_Best Law Firm In Bangladesh_Tahmidur Rahman

    Step two: Opening a Bank account for the liaison office in Bangladesh

    In regards to opening a Liaison office in Bangladesh, A bank account must be opened at any bank in Bangladesh after obtaining the approval from BIDA.

    The bank account is required at this stage because a sum of foreign exchange equal to US$ 50,000 (fifty thousand dollars or more) must be transferred to Bangladesh as an inward remittance. This must be achieved within 2 ( two) months from the date of the issuing of the BIDA authorization.

    Step three: Obtaining the approval from the Bangladesh Bank (Central Bank)

    The Foreign Exchange Regulations Act 1947 has recently been (2015) amended by the Bangladesh parliament. Bangladesh Bank’s criteria for 18B Approval was withdrawn.

    Under the amendment, within 30(thirty) days of receiving permission from the Bangladesh Investment Development Authority, the Branch Office or Liaison Office or Representative Office will have to report to the Bangladesh Bank. We will update this section once any notification to that effect is released by Bangladesh Bank in regards to Liaison office in Bangladesh.

    In addition to that since the amendment, the government or the Bangladesh Bank will be able to request that any individual residing in Bangladesh return their holdings of foreign exchange, foreign securities, any immovable property or industrial or commercial undertaking or company held, operated, founded or managed by that individual outside Bangladesh.

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

    • Step by Step Process of Registering a Company in Bangladesh

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    Step Four: Registering the Liaision office with the RJSC 

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

    1. BIDA Letter of Approval.
    2. Bank of Bangladesh letter of approval.
    3. Certified copy of the company memorandum and articles of associations, or other statutory records.
    4. Complete address of the company’s registered office or principal office.
    5. A list of the company’s directors, and secretary, if any.
    6. The name and address or the names and addresses of one or more persons residing in Bangladesh, allowed to accept company service of process on behalf of the company and any notices or other documents necessary to be served on the company.
    7. The full address of the company’s office, which is to be considered as the main place of its business in Bangladesh.

    What is the scope of a Liaison office in Bangladesh

    A Liaison Office in Bangladesh would only be allowed a very small operation to be carried out, as the Liaison Office it will have the right to carry out feasibility studies, market analysis to determine the quality of the targeted product , customer service and to supervise the activities of local agents. They may also provide customer service and supervise the activities of local officers.

    In most situations, the Liaison Office serves as a liaison between the main office and any other company located in Bangladesh that it plans to negotiate with when the time comes.

    Liaison Office In Bangladesh_Top Law Firm In South Asia

    Limitations of a Liaison office in Bangladesh

    Since a Liaison Office in Bangladesh is not legally a corporate organization, it is not authorized to carry out any profit-making operations. Examples of such activities include entering into a strictly binding contract, leasing space for other businesses , providing technical services, issuing receipts, and even ship / store goods without a local agent in Bangladesh.

    No outward remittances of any kind from Bangladesh sources shall be permitted except for the unexpended amount brought from the parent company abroad.

    “In most situations, the Liaison Office serves as a liaison between the main office and any other company located in Bangladesh that it plans to negotiate with when the time comes.” 

    Tahmidur Rahman_ Liaison Office In Bangladesh_Best Law Firm In Bangladesh

    Frequently Asked Questions about Liaison office in bangladesh

    In regards to Liaison in bangladesh people also ask these questions frequently, hence this FAQ content block is dedicated to answering your questions.

    NGO and INGO registration at Tahmidur Rahman Remura:

    The legal team of Tahmidur Rahman, Counsels Law Partners Remura are highly experienced at dealing with company matters along Liaison office set up process, and branch office registration in Bangladesh . For queries or legal assistance, please reach us at:

    E-mail: [email protected]
    Phone: +8801727983838

    Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka

     

    FAQ

    What is a liaison office in Bangladesh?

    The liaison office of a foreign company is permitted to function in Bangladesh only on a limited basis, provided that none of the operations is profit-making. In other words, a liaison office will perform market analysis and representation activities only. Click to see the List of Approved Activities for the Bangladesh Branch Office.

    What are the permitted activities for a Liaison office in Bangladesh of a foreign entity?

    The liaison office of a foreign company is permitted to function in Bangladesh only on a limited basis, provided that none of the operations is profit-making. 


    In other words, a liaison office will perform market analysis and representation activities only. Click to see the List of Approved Activities for the Bangladesh Branch Office.


    What is Income Tax rate for a Liaison office of a Foreign Company?

    The Liaison Office of a foreign parent company shall not be regarded as a separate and independent body in Bangladesh and, for all tax purposes, the Government of Bangladesh shall tax the income of such entities at higher rates.

    What are the conditions of opening a Liaison office in Bangladesh?

    Liaison or representative office of a foreign company can be opened if the applicant foreign corporation has had a record of profit generation for the past 3 years and is financially sound. 


    When we say that a foreign company is financially sound in the sense of a representative or liaison office in Bangladesh, we mean a net worth of USD 50,000 or its equivalent. The financial statement properly certified by the statutory auditor of the parent company is required.

    What are the additional incorporation requirements for opening a Liaison office in Bangladesh?

    • A certified copy of the charter,
    • laws or memorandum and articles of the corporation or other instrument constituting or specifying the company's constitution and,
    • if the instrument is not in the English language, a certified translation thereof into the English language;
    • the full address of the company's registered office or head office;
    • the list of directors and secretary of the company's contents;
    • The full address of the company's office in Bangladesh, which is considered to be its principal place of business in Bangladesh;
    • Specifics of opening and closing a business premises in India on earlier occasions or occasions;
    • a declaration that none of the company's directors or the approved representative in Bangladesh has ever been convicted or removed from the creation of companies and management
    • and any other information as may be prescribed.

    Can a liaison office or a branch office be considered a legal entity?

    The Branch or Liaison Office is a legal body that has been registered with the BIDA in Bangladesh. It is called a multinational business extension, and not a separate legal entity.

    Unlike a subsidiary of Bangladesh, the parent company of the Branch or Liaison Office is indirectly responsible for all debts and liabilities of the Branch or Liaison Office.


    Can foreigners set up a Liaison or branch office in Bangladesh?

    There are no restrictions on foreign nationals being a Bangladeshi company director, shareholder, or a secretary. 

    You even do not have to live in the Bangladesh for the formation.


    Who bears the operating expense of a Liaison office in Bangladesh?

    All expenses for setting up a Liaison Office and operating it are basically borne by the parent company which is established abroad.

    Does the Liaison office needs an office address in Bangladesh?

    The general requirement is that, a Branch or a Liaison Office must have an office address located in Bangladesh.

    What are the five steps of a Liaison Office Registration in Bangladesh?

    1. Apply to BIDA for authorization to open the Liaison Office.
    2. Receive the permission.
    3. Open a corporate bank account.
    4. Bring   USD 50,000 for starting-up the liaison office and running costs for at least six ( 6 )months.
    5. Apply to the RJSC to register.

    What is the timeline of a Liaison office approval in Bangladesh?

    • 30-45 days need from application date
    • As one meeting hold once in month, sometimes 2 meeting holds when more applications are submitted
    • Additional time or second meeting might need if application is rejected for lack of papers

    Infographics
    How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Bangladesh
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    Author’s Bio
    Tahmidur Rahman | Law Firm in Dhaka, Bangladesh

    Tahmidur Rahman is a trained Engineer and one of Bangladesh's most innovative young Barristers. He is regarded as one of the country's sharpest young legal experts.

    He is academically qualified Legal Professional (BA LLB) and CS Engineer (BSc CSE- concurrently pursued four different majors at two different universities) with experience structuring and negotiating complex business transactions such as company formations, registrations, mergers, acquisitions, leveraged buyouts, syndicated loans, and acquisition financings.

    For the past several years, I've been counseling corporations, investors, and banks on a wide range of capital markets products and financial restructurings, particularly in cross-border settings in rising South Asian markets. I like assisting clients in resolving complicated financial structure difficulties, dealing with difficult market conditions, and navigating Bangladeshi legislation, regulation, and disclosure requirements.

    As one of the the leading law firms in Bangladesh, Counsels law Partners chamber aligns its way to consistently exceed the legal expectations from its revered local and International clients. Voted as the best Banking law firm in Bangladesh by ACQ, best Commercial law firm in Bangladesh by FT and best Company law firm in Bangladesh, in 2020 by several world class publications and databases, Remura law firm in Bangladesh is also considered as one of the best multi-disciplinary full service law firm in Dhaka, Bangladesh.

    The law chamber functions as a group of many leading practicing lawyers who work together to represent Remura's clients and have so far achieved an outstanding overall success rate in both litigation and commercial matters. The Lawyers and Barristers are working as partners, associates and paralegals of Tahmidur Rahman|Remura- Law Firm in Dhaka, Bangladesh.

    They are highly trained and exceptionally qualified with both local and international credentials and skills. The current Managing Partner, Barrister Hafiz Khan has the experience of practicing in the Supreme court of Bangladesh for more than 15 years and was educated in England and was also called to the Bar of England & Wales as Barrister of the Honourable Lincoln's Inn Society. Partners and partners have extensive experience and skills in their respective fields of practice, ranging from Admiralty, Writ Matters, Business, Criminal and Private Law, Finance Law, Information Technology Law, Investment Law, Intellectual Property law, Divorce & Family Practice.

    The head office of the law firm is situated in the Gulshan 1 circle of Dhaka, which is considered to be the financial center of Bangladesh. The firm is strategically situated close to Gulshan 2 & Banani Commercial Areas and is easily accessible from Uttara, Dhanmondi, Bashundhara Residential Area and Badda. The firm works in compliance with strict ethical principles and maintains international standards in the handling of its business.

    Tahmidur also gained broad experiences in antitrust, consumer protection, and general litigation matters, with particular experience in FTC investigations, private antitrust litigation and class actions. Within short span of formation, Tahmidur also served several national and multinational corporations which includes Team Group Plc, Seecen International Ltd., Diplomate Resorts Plc, Cloudcone Technology PTE Ltd., Benaul the Piper etc.

    Remura as a firm also defends corporations in a wide variety of industries, including pharmaceutical and technology companies. Despite this exponential growth and proliferation of clients, the managing partner still constantly maintaining the firm’s grounded approach and making sure the members of ‘Counsels Law Partners’ maintain a contiguous and helping hand towards its clients of all norms.

    Email: [email protected]

    Address: Jamilla Villa (4th Floor Flat No-C2 House 4/A/1 Road no: 2, Gulshan 1, Dhaka, 1212, Gulshan, Dhaka, 1212, Bangladesh

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    Procedure of Foreign Investment in Bangladesh | Law, Policy, Direct, Angel, Rules, Policy- Everything you need to know in 21st century

    Procedure of Foreign Investment in Bangladesh | Law, Policy, Direct, Angel, Rules, Policy- Everything you need to know in 21st century

    Procedure of Foreign Investment in Bangladesh 2020| Law, Policy, Direct, Angel, Rules, Policy- Everything you need to know about Foreign Investment in 21st century Bangladesh

    Tahmidgoldenpicturebackground E1569742859700

    Tahmidur Rahman
     Director and Senior Associate, Counsels Law Partners

    17 Jan 2020

    Procedure of foreign investment in Bangladesh: Leading up to initiating a major investment , investors needs to navigate the basic legal policies on investment law in Bangladesh. Bangladesh is one of the easiest countries in the world to do business with straightforward regulation, a well-respected legal system and low entry barriers. Entrepreneurship is also massively respected and encouraged in the country.

    Despite this welcoming atmosphere and a lack of red tape, difficult choices and decisions need to be taken at an early stage, and this article describes everything you need to know about the Procedure of foreign investment in Bangladesh.

    Foreign Investment Policy in Bangladesh & Procedure of foreign investment in Bangladesh

     

    The Government of Bangladesh has put in place a wide range of policies aimed at bringing substantial socio-economic changes to the citizens of Bangladesh and, eventually, self-reliance to the country, which would in turn pave the way for seamless procedure of foreign investment in Bangladesh.

    In recognition of the capacity of the private sector to contribute to the achievement of these objectives, the government has recently initiated a number of major policy reforms, which are planned to create a more transparent and competitive environment for foreign investment in Bangladesh.

    In order to achieve the goal of accelerating industrial growth and increasing the share of industry in the Gross Domestic Product ( GDP) and to make industrial policy sensitive to changes in the global economy, the current government announced an Industrial Policy in 1999. 

     The core characteristics of the 1999 industrial strategy are as follows: 

    • To draw foreign direct investment in Bangladesh,  both export and domestic market-oriented industries to compensate for the lack of domestic investment opportunities and to acquire emerging technology and to gain access to export markets, so that the Procedure of foreign investment in Bangladesh bangladesh gets even easier.
    • To ensure the sustainable growth of industrial jobs by promoting investment in labour-intensive manufacturing sectors, including investment in productive small and cottage sectors.
    • Diversifying and increasingly increasing the production of manufacturing.
    • Coordinate economic and fiscal policies to inspire a growth in foreign investment in Bangladesh.
    • Promote the competitive strength of import substituting industries for catering to a rising domestic market.
    • To increase the production base of the economy by increasing the pace of industrial investment to ease the procedure of foreign investment in Bangladesh .
    • Promote the private sector to drive the development of industrial production and investment and making the Procedure of foreign investment in Bangladesh way easier.
    • Emphasis on the role of the government as a facilitator in creating an enabling environment for the expansion of private investment and the procedure of foreign investment in Bangladesh.

    Investment Structures in Bangladesh and Procedure of foreign investment in Bangladesh

    Bangladesh offers generous opportunities for investment under its relaxed Industrial Policy and export-oriented, private sector-led growth strategy. Except for the previously stated reserved sectors, foreign investors are free to make investments in Bangladesh in industrial enterprises.

    In regards to Procedure of foreign investment in Bangladesh, Foreign companies wishing to do business or establish a presence in Bangladesh have a number of options.

    1.  Foreign Direct Investment in Bangladesh

    FDI (foreign direct investment in Bangladesh) in industrial or construction projects must be registered with the Bangladesh Investment Development Authority (BIDA).

    BIDA, formerly known as the Investment Board, was formed by the Bangladesh Investment Development Authority Act 2016 to deal with issues related to FDI and to promote investment in Bangladesh.

    The foreign direct investment (FDI) inflow at the end of June 2018 amounted to USD 2.58 billion (foreign investment in Bangladesh stats, Bangladesh bank).

    The Bangladesh Investment Development Authority (BIDA) announced an impressive 13.34% rise in FDI in the third quarter of 2018, receiving proposals worth USD 3.23 billion over the same period, suggesting strong interest on the part of foreign investors.

    The key objective of BIDA is to encourage domestic and foreign investment as well as improve Bangladesh’s international competitiveness. BIDA also provides the necessary facilities and assistance for the establishment of industries.

    In regards to the Procedure of foreign investment in Bangladesh, determining the route of investment usually depends on the specific sector and the policy of the FDI adopted by the Government in regards to foreign investment in Bangladesh. 

    2. Wholly owned subsidiaries in Bangladesh

    Foreign companies are allowed to create wholly-owned subsidiaries in Bangladesh. Such companies may be known as private limited or public limited companies. Foreign equity ownership can be up to 100% in most sectors, including construction, information technology and production.

    Foreign entities can acquire an existing Bangladeshi company or incorporate a new company that complies with the requirements of the Registrar of Joint Stock Companies and Firms (RJSC). Subsidiaries are entitled to remit dividends reported on income after tax.

    3. Joint Ventures in Bangladesh (Foreign Investment in Bangladesh)

    As with wholly-owned subsidiaries, international companies can have joint venture companies with Bangladeshi partners. The equity ownership of a foreign corporation would depend on the sector in which it is invested.

    Foreign Investment In Bangladesh_How Foreign Investment Works In Bangladesh

    If you want to know everything about Branch office registration in Bangladesh!

    4. Setting up a Branch or Liasion offices in Bangladesh for foreign investors

    International companies can also create a presence in Bangladesh through a representative office, liaison office or branch office for the purpose of foreign investment in Bangladesh.

    Typically foreign companies that do not have local earnings in Bangladesh may choose to set up representative offices, liaison offices or branches.

    The operations of these organizations are limited to those set out in their BIDA approvals and are subject to strict compliance with the foreign exchange regulations.

    Generally, no outward remittance of any kind from Bangladesh is allowed unless expressly approved by the Foreign Exchange Regulations or the Bangladesh Bank.

    fSuch offices are expected to pay inward remittances of at least USD 50,000 within two months from the date of establishment as a cost of establishment.

    One of the requisite approvals for the establishment is that security clearance must be obtained from the Ministry of Home Affairs of the Government of Bangladesh. (foreign investment in Bangladesh)

    5. Option of Participating in an existing Bangladeshi company by purchasing shares (procedure of foreign investment in Bangladesh.)

    In regards to foreign investment in Bangladesh, Foreign investors are free to invest in local companies in Bangladesh unless expressly prohibited (as stated above).

    Shares can also be given to foreign investors against capital machinery brought by them to Bangladesh (subject to confirmation by the Customs and Excise Office of the import documents, Procedure of foreign investment in Bangladesh).

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

    • Step by Step Process of Registering a Company in Bangladesh
    Foreign Investment In Bangladesh_How To Invest In Bangladesh

    Right to Issue and Transfer Shares in Bangladesh – Procedure of foreign investment in Bangladesh.

     

    There is no need for permission from the Bank of Bangladesh to set up such ventures if the entrepreneurs use their own funds. Prior approval of the Central Bank is not necessary for the issuance of shares in favor of non-residents against foreign investment in BD.

     

    Shares may be issues relating to freely convertible foreign exchange brought in from abroad via the banking channel or to the importation of capital machinery or the combination of both.

     

    Foreign exchange thus entered must be paid out in taka before the issuance of shares, except in the case of Type A (full foreign owned) and Type B (joint venture) units of EPZ and EZ, where FC ‘s foreign bright equity of be held in the FC accounts of the units concerned.

     

    Transferring shares and securities in Bangladesh from one shareholder to another shareholder regardless of their nationality / residence does not require approval from Bangladesh Bank.

     

    In the event of a transfer of private / public (non-listed) shares between resident-non-residents or vice versa, a general intimation to Bangladesh Bank is required by the Approved Bank within 14 days of such a transaction.

     

    As there is no established marketplace for such investment in Bangladesh, Bangladesh Bank will accept fair value of the shares as on the date of sale based on a reasonable combination of three valuation approaches (NAV; FMV and DCF), depending on the nature of the company in regards to the Procedure of foreign investment in Bangladesh.

     

    If you want to know everything about Share Transfer process in Bangladesh!

    Procedure Of Foreign Investment In Bangladesh_Best Investment Law Firm In Bangladesh_Tahmidur Rahman

    Full Repatriation of Dividend, Investment and Income for foreign investors in Bangladesh.

    It will enable complete repatriation of the capital invested from free sources in regards to the Procedure of foreign investment in Bangladesh. Profits and dividends accruing to foreign investment can likewise be transferred in full (Procedure of foreign investment in Bangladesh).

    Those would be considered as new investment if foreign investors reinvest their reparable dividends and/or retained earnings. Foreigners living in Bangladesh have the right to remit up to 50 percent of their income and can enjoy facilities for complete repatriation of their savings and pension benefits. (Procedure of foreign investment in Bangladesh.) 

     

    Laws for the Protection of Foreign Investment in Bangladesh

     

    For a seamless procedure of foreign investment in Bangladesh, the government guarantees immunity from nationalisation and expropriation through the 1980 Foreign Private Investment Act that involves repatriation of capital and dividend for foreign investors.

    In addition, to facilitate the Procedure of foreign investment in Bangladesh, Bangladesh has made ample legal provisions to secure intellectual property rights. In addition to the 1980 Foreign Private Investment Act , the government has developed an FDI Policy (Foreign Direct Investment Policy for the Procedure of foreign investment in Bangladesh), which supports easy but efficient investment mechanisms in Bangladesh.

     

    The policy encourages the establishment of enterprises by simplifying the leasing and purchasing process of private property, forming an agency, enabling corporate tax holidays for 7 years (15 years in the power sector) and in some respects introducing an exemption of foreign employees’ income tax for up to 3 years.

     

     

     

    Foreign Investment In Bangladesh_Trends In Foreign Investment In Bangladesh

    Disputes Settlement in regards to the procedure of Foreign Investment in Bangladesh

    In dispute cases alternative conflict settlement is possible under the 2001 Arbitration Act. The Bangladesh International Convention on the Recognition and Compliance of Foreign Arbitral Awards was signed. Bangladesh is also a member of International Centre for Investment Dispute Settlement (ICSID).

    The new law also provides for the implementation without much hindrance of international arbitral awards. Although venturing in a company may be overwhelming, Bangladesh offers investors a safe and resourceful environment suitable for establishing or expanding any company, and it can be said that Bangladesh is in fact a “dream investment destination,” after much consideration.

     

    Visa, Work Permit, Citizenship in Bangladesh (Procedure of foreign investment in Bangladesh)

    For periods ranging from one month to five years prospective foreign investors may apply for visas. Foreign workers must get BIDA / BEZA / BEPZA work permit.

    In an industrial organization the number of expatriate workers can not exceed the ratio of 1:20 (foreign: local) for industrial settings and 1:5 (foreign: local) for commercial establishments.

    Citizenship in a scheduled bank may be subject to investment of USD 1 million or a fixed deposit of USD 2 million. Investors can also get ‘NO Visa Requirement’ exemption for investment of more than USD 10 million.

     

    If you want to know more in details about Visa obtaining process in Bangladesh

    “Counsels Law Parnters is Considered as one of the leading Investment Law Firms in Dhaka, Bangladesh”

    Carpe Noctem Bangladesh

    Incentives offered to Foreign Investors in Bangladesh

    Bangladesh is keen to boost the economy in a short time and turn the poverty-stricken economy into a developed one. Government investment strategy provides competitive stimulus packages to attract foreign investment. These incentives are updated annually and new incentives are announced, too.

    These installations are subject to certain conditions and are issued by the BIDA. Moreover, Bangladesh gives international investors citizenship, permanent residency and multiple entry visas for their ease of business and ease of the Procedure of foreign investment in Bangladesh.

     

    Investing in the Stock market in Bangladesh

    International investors are eligible to engage in Initial Public Offerings ( IPOs) without regulatory restrictions. In addition , capital gains from listed securities are tax-exempt for private investors and lower tax rates apply to corporations and other organizations.

     

    Import Duty exemption in Bangladesh (Procedure of foreign investment in Bangladesh)

    No import duties are applicable for export-oriented sectors. There are duty exemptions also for some preferred sectors. General exemption of import duties is also available in respect of import of specific Plant & Machinery and spares.

     

    If you want to know everything about Immigration and Citizenship in Bangladesh read this articl

    Foreign Investment In Bangladesh_Entering The Bangladshi Market

    Allowance of Capital repatriation in Bangladesh

    Full repatriation of invested capital, profits and dividends is allowed, subject to applicable taxes to make the process seamless in regards to the Procedure of foreign investment in Bangladesh.

     

    Tax holiday facility in Bangladesh (THF) for seamless procedure of foreign investment in Bangladesh

    Tax holidays are granted to industries subject to the relevant rules and procedures laid down by the National Revenue Board of Bangladesh (NBR). This may vary from 3 to 7 years depending on the location of the establishment. For example, industries located in the Dhaka and Chittagong Divisions (excluding three Hill Tract districts of the Chittagong Division) are exempted for a period of five years.

    This tax holiday scheme, which was scheduled to end in 2015, was extended until June 2019 to create an investor-friendly atmosphere in Bangladesh. Tax holiday facilities are also available to manufacturing units and economic zone developers for a period of 10 years and 12 years respectively, and once again it makes it more seamless, the procedure of foreign investment in Bangladesh.

     

    Special Tax Exemption for the foreign investors in Bangladesh

    Tax exemptions are commonly permitted in the following cases:

    • There will be scope of tax exemption on royalties, technical know-how fees earned by any international partner, business, company and expert;
    • Reasonable income tax-upto-threeyearsforeign technicians working in industries as defined in the respective schedule of income tax regulations;
    • Relevant revenue of a private corporation conducting public infrastructure projects;
    • In regards to capital gains from the sale of shares of limited public company listed on the stock exchange;
    • NGO reported with the NGO Affairs Bureau;
    • Reasonable profits of companies and other sectors defined in the income tax Ordinance

    Depreciation allowance in regards to Tax (Procedure of foreign investment in Bangladesh)

    Depreciation allowance shall be allowed in respect of any house, equipment, factory, furniture, bridge, road or overhead used in any company or industrial undertaking in the measurement of income or gains.

    The third schedule of the Income Tax Ordinance 1984 sets out a list of various types of properties and their corresponding depreciation allowance rates, which usually range from 10 % to 30% of costs.

    The plan also sets out the overview of the usual rate of depreciation allowance, the original rate of depreciation allowance and the accelerated rate of depreciation allowance for various asset groups.

     

    If you want to know more in details about tax submission in Bangladesh click here!

     

    Avoidance of Double Taxation for Foreign Investors

     

    Double taxation for international investors can be avoided on the basis of the Bilateral Double Taxation Avoidance Treaties (DTTs). NBR is responsible for negotiating Double Taxation Agreements (DTAs) with foreign countries to facilitate FDI in Bangladesh.

    The DTA is an arrangement between two countries that aims to prevent double taxation by specifying the taxing rights of each country with respect to cross-border income flows and providing for tax credits or exemptions to remove double taxation for the ease of the Procedure of foreign investment in Bangladesh.

    It also allows for the exchange of information between treaty partners on tax evasion. For instance, Bangladesh has double taxation treaties with  Denmark, France, Germany, Belgium, Canada, China, India, Italy, Japan, Poland, Romania, Singapore, South Korea, Sri Lanka, Sweden, Thailand, The Netherlands, The United Kingdom and other countries.

     

    Foreign Investment In Bangladesh_Top Law Firm In Bangladesh

    Remittance of profits for foreign investors in Bangladesh

    Remittance of income of subsidiaries of foreign companies / companies, dividends / capital gains, wages and savings of expatriates, royalties and technical fees, training and consulting fees, receivables obtained by shipping companies and airlines for freight and transit can be made by approved dealers without the prior approval of the Bangladesh Bank.

    In addition to that the Procedure of foreign investment in Bangladesh are placed in such a way that global entrepreneurs are also entitled to the same facilities as domestic entrepreneurs with regard to tax holidays, dividends, technological know-how fees, etc.

    Business profits and tax exemption for foreign investors in Bangladesh

    The income of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.

    If the enterprise carries on business as mentioned above, the benefit of the enterprise may be taxed in the other Contracting State, but only in so many cases as is due to that permanent establishment. (Article 7 of the Double Taxation Agreement).

    Dividends and tax exemption for foreign investors in Bangladesh

    Dividends paid by a company resident in a Contracting State to a resident in the other Contracting State may be taxed in the other State.

    However, such dividends may also be taxed in the Contracting State in which the corporation paying the dividends is resident and in compliance with the laws of that State, but where the beneficiary is the beneficial owner of the dividend, the tax paid shall not exceed 10% of the gross sum of such dividends (Article 10 of the Double Taxation Agreement).

    Interest arising from contract state for investors

    Interest occurring in a Contracting State and charged to a citizen of the other Contracting State may be taxed in another State.

    However, such interest may also be taxed in the Contracting State in which it exists and in compliance with the laws of that State, however if the beneficiary is the beneficial owner of the interest, the tax so paid shall not exceed 10% of the gross sum of the interest.(Article 11 of the Double Taxation Agreement).

    Capital gain derived by a foregin resident in Bangladesh

    Gains obtained by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other Contracting State. (Article 13 to prevent a double taxation agreement, Procedure of foreign investment in Bangladesh)

    Foreign Investment In Bangladesh-Formal Sectors In Bangladesh

    Repatriation of investment in Bangladesh – Foreign Investment Law in Bangladesh

    Full restitution of the capital accumulated from foreign sources is permitted. Likewise, the gains and dividends accrued on foreign investment can be transferred in full.

    If foreign investors reinvest their repatriable dividends and/or retained profits, they will be considered as new assets. Foreigners living in Bangladesh are required to pay up to 75% of their wages and will benefit from complete repatriation of their savings and retirement benefits.

    In order to allow full repatriation of the capital invested, benefit and dividend, foreign investors will have to apply for repatriation approval from the Bangladesh Bank through an approved bank. 

    Foreign Private Investment (Promotion and Protection) Act, 1980, section 8 also states:

    (1)  In respect of foreign private investment, the transfer of capital and the returns from it and, in the event of liquidation of industrial undertaking having such investment, of the proceeds from such liquidation is guaranteed.

    (2)  The guarantee under sub-section (1) shall be subject to the right which, in circumstances of exceptional financial and economic difficulties, the Government may exercise in accordance with the applicable laws and regulations in such circumstances.

    Foreign Investment In Bangladesh_Best Law Firm For Fdi And Visa_Tahmidur Rahman

     

    List of online portals for potential investors in Bangladesh (Procedure of foreign investment in Bangladesh)

    Foreign direct investment (FDI)

     

    www.bida.gov.bd

    BIDA
    Investing in economic zoneswww.beza.gov.bd BEZA
    Trade-related Informationhttps://www.bangladeshtradeportal.gov.bd/Bangladesh Government
    Company name Clearance

    http://app.roc.gov.bd:7781/psp/nc_ search?p_user_id=

     

    Office of the Registrar of Joint Stock Companies and Farm (RJSC)

     

    Registration of Companyhttp://www.roc.gov.bd/

    Office of the Registrar of Joint Stock Companies and Farm (RJSC)

     

    VAT Registrationhttp://www.nbr.gov.bd/

    National Board of Revenue

     

    Issuance of Certificate for using standard mark

    http://www.bsti.gov.bd/Form_Online.html

    Bangladesh Standards and Testing Institution (BSTI)

     

    Foreign Investment In Bangladesh_All The Priority Sectors For Foreign Investment In Bangladesh

    Elimination of Taxation treaty in Bangladesh

     

    In double taxation the following shall be eliminated:

     

    (a) If a resident of China receives income from Bangladesh, the amount of tax on that income payable in Bangladesh in compliance with the terms of this Agreement may be credited against the Chinese tax levied on that resident.

     

    However, the amount of the credit shall not exceed the amount of Chinese tax on that income determined in accordance with China’s tax laws and regulations.

     

    (b) where the revenue received from Bangladesh is a dividend paid by a company resident in Bangladesh to a company resident in China and holding not less than 10 per cent of the shares of the company paying the dividend, the credit shall take into account the tax paid to Bangladesh by the company paying the dividend for its revenue.

     

    Bilateral Investment treaties in Bangladesh

    Bangladesh has with many nations, including China, signed Bilateral Investment Treaties (BIT) and Trade Agreements (TA). Typical provisions contained in BITs are clauses on foreign investment protection and treatment standards which usually address issues such as fair and equal treatment, full protection and security.

    Provisions on reimbursement for damages suffered by foreign investors as a result of expropriation or as a result of war and dispute are typically a central part of such agreements as well. Most IIAs also control the moving of funds across borders in connection with the Procedure of foreign investment in Bangladesh.

    The BITs also contain a clause on dispute resolution between investor and state. Usually this allows investors the right to bring a lawsuit to an international arbitral tribunal if a dispute occurs with the host country (Procedure of foreign investment in Bangladesh).

    The International Center for Settlement of Investment Disputes (ICSID), the United Nations Commission on International Trade Law ( UNCITRAL) and the International Chamber of Commerce (ICC) are common places in which arbitration is sought.

    Foreign Investment In Bangladesh_Best Law Firm For Investment Tahmidur Rahman

    Funding options for foreign investors in Bangladesh

    Foreign entities can conveniently access funding for short- and long-term investments from local financial institutions, including working capital loans, syndication, and trade finance. In addition, some of the Foreign Institutions (FIs) at home and abroad have access to on-shore and off-shore funding.

    There are currently 58 planned commercial banks in the financial sector, as well as a host of Non-Bank Financial Institutions (NBFIs) and specialized financial institutions.
    In addition to raising debt-based funding, investors may also consider securing equity-based capital-market financing from the country.

    Raising Capital from the Equity market in regards to the Procedure of foreign investment in Bangladesh

    International companies can start raising capital from the stock market, subject to fulfillment of certain terms and conditions. The government is keen to increase the number of companies listed on the local stock exchange, and offers regulatory incentives to attract profitable businesses and facilitate the Procedure of foreign investment in Bangladesh.

    Listed firms pay 25 per cent corporate taxes on non-listed entities, excluding those markets, compared with 35 per cent tax limit.
    Formal approval from the Bangladesh Securities and Exchange Commission (BSEC) is required for the fundraising process. Companies may use either the fixed price, or the option of constructing books.

    The appointed merchant bank and auditor help prepare a prospectus under the fixed-price process, valuing the business based on current assets and prospects for future growth. The indicative stock price is determined and has to be certified by the regulator.

    The method of book building involves a designated merchant bank to prepare an indicatively priced prospectus. The contending business then holds a series of road shows in which institutional investors are invited to bid on their stocks. IPO share price is dependent on input from other institutional investors and their interests. 

    The DSEX listing process has the mandatory requirement that an Issue Manager be employed or named (approved by the DSEX). The way IPOs are determined needs support from the approved Issue Manager.

    The draft prospectus shall be prepared in compliance with the Regulations of an Issue Manager and the Securities and Exchange Commission (Public Issue for the Procedure of foreign investment in Bangladesh ), 2015. IPOs can be issued by either book building or fixed-price system.

    Debt capital from local commercial Banks in Bangladesh

    International investors have access to financing for the local debt. Trade finance, term loans, and working capital are readily accessible to large foreign investors, in particular.

    Interest rates are low for such loans and between 9-16 per cent. Bangladesh has a very large number of  State and commercial banks (as stated in the preceding section), and bank loans can be obtained against collateral secured in regards to the Procedure of foreign investment in Bangladesh.

    Private Foreign Commercial borrowing in Bangladesh

    To secure long-term foreign currency loans, a request must be sent to BIDA, which will then be forwarded to the Central Bank for further review.
    To secure the loans, a business case supporting the loan condition must be included in the application. The proposal, along with the business case, is submitted for evaluation and decision by a committee chaired by the Bangladesh Bank Governor including members from BIDA, PMO Ministry of Finance.

    Foreign Investment In Bangladesh_Tahmidur Rahman _Best Law Firm In Dhaka

    Regulatory institutions facilitating investment in Bangladesh

    The investment route depends on the business sector and on the FDI policy introduced by the Government of Bangladesh. The following government and trade agencies would oversee and encourage investment in most sectors;

    The Bangladesh Investment Development Authority (BIDA), Formerly known as the Investment Board (BOI), has been set up to deal with local and foreign investment issues. All incoming investments must be pre-approved by BIDA.

    The regulatory body aims to encourage domestic and foreign investment by simplifying the bureaucratic complexities of entering the Bangladesh market in regards to the Procedure of foreign investment in Bangladesh. 

    Bangladesh Bank ( BB) is the central bank of the country. The central bank must be officially informed of any foreign transactions, including equity investments made on the stock market. All incoming investments shall be reported to BB via commercial banks.

    Relevant trade bodies and chambers in Bangladesh

    The Dhaka Chamber of Commerce and Industry (DCCI) is a non-profit, service-oriented chamber serving as the first point of contact for small and medium-sized enterprises. DCCI offers market-oriented inputs to imports , exports and investments throughout the government’s policy formulation period for the Procedure of foreign investment in Bangladesh.

    The Chamber periodically publishes guidebooks to promote trade and investment. DCCI also has its own training facility to facilitate the growth of capability of professionals associated with member organizations.

    The International Investment Chamber of Commerce and Industries (FICCI), founded in 1963, is made up of 188 members across the mining, service and manufacturing sectors. Classified as Class ‘A’ Chamber of Commerce, FCCI is affiliated with the FBCCI, the International Trade Center (Geneva) and the World Trade Organization (Paris).

    The Metropolitan Chamber of Commerce and Industry (MCCI) is a leading chamber body made up of representatives of major local and multinational corporations. The MCCI maintains frequent ties with major international trade organizations and global private sector organizations. (procedure of foreign investment in Bangladesh)

    Exit policy for foreign investors in Bangladesh

    An investor can terminate an investment either by a decision of an annual or an extraordinary general meeting. Once a foreign investor has completed the formalities to leave the country, he or she can repatriate the net proceeds after obtaining proper authorisation from the central bank (Bangladesh Bank, Procedure of foreign investment in Bangladesh).

    Foreign Investment In Bangladesh_Tahmidur Rahman_Top Law Firm In Bangladesh

    Frequently Asked Questions about Foreign Investment in Bangladesh

    In regards to Foreign Investment in bangladesh people also ask these questions frequently, hence this FAQ content block is dedicated to answering your questions.

    General Questions about Foreign Investment in bangladesh

    Which Countries invest the most in Bangladesh?

    The country’s major investors are China, South Korea , India, Egypt, the United Kingdom , the United Arab Emirates and Malaysia. According to the most recent data available from Bangladesh Bank, FDI flows increased by 5.36% to USD 1.65 billion in July-October 2019 per year. -Procedure of foreign investment in Bangladesh

    How is the Investment Scenario in Bangladesh in 2020?

    Bangladesh is already recognized as a thriving investment hub, reflected in influxes of foreign direct investment ( FDI) from the region. Bangladesh ‘s FDI amounted to USD 2.58 billion at the end of June 2018.

    According to the Bangladesh Investment Development Authority (BIDA), there was a 13.34% rise in FDI in the third quarter of 2018, with proposals worth USD 3.23 billion in the basket. Mega-projects by the government is seen as the primary explanation for significant FDI investments in  Transportation, transportation , and communications. Exports from the country are also growing amid domestic consumption.

    What is an example of Foreign Direct Investment in Bangladesh?

    Examples of foreign direct investment in Bangladesh include, but are not limited to, mergers, acquisitions, retail, utilities, logistics, and development. Foreign direct investment and the laws that regulate it can be critical to the growth strategy of a business.

    What are the types of foreign Investment?

    Examples of foreign direct investment in Bangladesh include, but are not limited to, mergers, acquisitions, retail, utilities, logistics, and development. Foreign direct investment and the laws that regulate it can be critical to the growth strategy of a business.

    What is the current trend of foreign investment in Bangladesh?

    35.4 per cent of the FDI came from the manufacturing industry in 2016-17. The country witnessed phenomenal Y-o – Y growth of 11 per cent 2017 In this area. Experts in industry are optimistic this development will be maintained in the years to come. The sectors of transport , storage and communications ranked second with FDI inflows of 25 per cent.

    This may be due to the mega projects being initiated and executed by the government at the present time. Over the time, electricity, accompanied by gas and petroleum, attracted FDI of 19 per cent. Over the years, the power sector has steadily drawn foreign investments due to the Government ‘s attractive tax incentives. (Procedure of foreign investment in Bangladesh)

    How Foreign investors can enter into Bangladeshi Market?

    Foreign investors may either form a wholly / partially owned subsidiary, or set up a branch or liaison office for Bangladesh operations. The type of organization that was created will rely on the medium- and long-term strategy of the investor for market penetration. Hence the three conventional ways of entering the Market in Bangladesh:

    • Wholly owned subsidiaries
    • Limited liability by purchasing shares in an existing Bangladeshi company
    • Joint ventures
    How to get work permit and visa as a foreign investor in Bangladesh?

    For investors planning to become resident in Bangladesh by taking a full-time position or for the company’s expatriate employee, branch office, liaison office, work permit is required.

    Upon arrival in Bangladesh for a short period of time under two types of visa, the person is required to apply for a work permit with BIDA and an extension from the Passport and Visa Department, subject to effective completion of the security clearance.

    If not treated skillfully, the process can be very hectic, and time consuming. We help our customer make it easy and hassle-free. We also help our client locate commercial addresses needed for trade license and clearance of protection.

    How to open a Liaison or Branch office in Bangladesh?

    Opening Liaison office requires some critical preparatory work and documentation work which requires experience. We have significant experience of getting BIDA  registration for both liaison and branch office for several foreign principals.

    Legal documentation involves authentication of parent company’s Memorandum and Articles of Association, list of directors etc. Often the authentication process is cumbersome.

    We try our best to make the process smooth and hustle free. In recent time we have opened several branch and liaison offices for construction and engineering companies whose principal is located in Italy, UK, China, Singapore and other neighboring countries.

    What is SEZ or Special Economic Zone in Bangladesh?

    In Bangladesh, economic zone is a relatively new term. The government intended to establish 100 economic zones in various geographical locations.

    However, as the land is still under development process, only a handful of economic zones are currently allocating property, or will do so in the near future. Mirsarai Economic Zone for example.

    Our customer can take our service from the Bangladesh Economic Zones Authority (BEZA) to conduct due diligence on land in the economic zone. We also provide legal due diligence services for lands adjacent to the Mirsarai Economic Zone which is ready for immediate investment

    How to get permits and consents as a foreign investor in Bangladesh?

    Often the client carries out due diligence on the number of permits and approval necessary and the time period. The type of permits and consent required depends largely on the type of industry, the business venture, its location and the planned Bangladesh activity.

    The Chambers offers all basic licensing services such as business registration, liaison office approval, branch office approval, trade authorization, export and import permit, chamber and trade membership, work permit, bank account opening, IRC, ERC, ad hoc IRC, BIDA registration, BIDA recommendation, etc.

    We can help with other licenses or permits. We either do it ourselves or outsource it from our established service providers and vendors

    What is EPZ or Export Processing Zone in Bangladesh?

    Export Processing Zone is ideal for wholly owned export-oriented companies, if it is a Joint Venture, etc. 08 (eight) EPZs are geographically diversified in various locations within Bangladesh.

    Depending on the nature of the company, availability of utilities, rental rates, transportation, availability of qualified man power, etc. Customer may choose acceptable EPZ to invest.

    Interested customers can take advantage of our services to locate, lease, or move existing land leases from Bangladesh Export Processing Zone Authority (BEPZA).

    How to do share acquisitions as a foreign investor in Bangladesh?

    Share acquisition requires many paperwork works in an unlisted private and public corporation, e.g. signing Form 117, affidavits etc. In addition, in conjunction with the Memorandum and Articles of Association, several resolutions are required along with the drafting of the Share Purchase Agreements.

    For the whole process, we counsel clients so that the transition is done smoothly. We also recommended buyer as well as seller to take over some businesses. We have also advised individual shareholder in the purchasing and sale of shares. Our service involves not only supporting documentation work, but also helping to actually record and receive a certified copy from RJSC

    Foreign Direct Investment in Bangladesh at Remura:

    The Barristers, Advocates, and lawyers at Remura in Gulshan, Dhaka, Bangladesh are highly experienced at dealing with foregin direct investment, where we assist clients in setting up of the complete business irrespective of whether it is within a specialized zone or any other part of Bangladesh. In Counsels Law Partners, our experience helps us to efficiently execute local and cross-border global transactions while helping you at all stages of the process and offering you cost-effective, realistic business solutions. In addition to handling various issues related to domestic clients on a regular basis, it also has experience in consulting and assisting numerous international clients with utmost care and attention throughout their legal exploration in Bangladesh. For queries or legal assistance in regards to the Procedure of foreign investment in Bangladesh, please reach us at:

     E-mail:[email protected]
    Phone:+8801727983838

    Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.

     

    Have a Different Question?

    Email us anytime : [email protected]

    Or call — +8801727983838

    Tahmidur Rahman | Law Firm in Dhaka

    Affiliated with Counsels Law Partners, A full service multi-directional law firm in Dhaka.

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    Liquidation or Winding up a company in Bangladesh | Everything you need to know

    Liquidation or Winding up a company in Bangladesh | Everything you need to know

    Liquidation or Winding up a company in Bangladesh | Solvency declarance, Board meeting, declaration filings| Everything you need to know.

    Tahmidgoldenpicturebackground E1569742859700

    Tahmidur Rahman, Director and Senior Associate

    12 Nov 2019

    This post in will explain in details about the process of Liquidation or winding up a company in Bangladesh – This article will explain the step by step process of winding up a company office in Bangladesh, Declaration of solvency , accounts and audit, extraordinary general meeting, declaration of solvency and everything you need to know and to be aware of.

     

    What is Liquidation or Winding up a Company? And how a Liquidation or winding up works?

    Winding up is the process of dissolving a company. A business organisation stops doing business as normal when it winds up. Its conventional aims are to sell off stock, pay off creditors and transfer to partners or shareholders any remaining assets. The term is used mainly in UK where liquidation is synonymous with the process of turning assets into cash. In other terms, this mechanism generates a monetary fund in which a business pays its debts, outstanding bills, and splits the remainder and distributes to shareholders, members of the corporation, investors, or any other investor. A receiver may be designated to control such asset distribution (known as “Liquidator”) process.

    Winding up a business is a legal process regulated by company laws of Bangladesh as well as a company’s AoA (Articles of association) or partnership agreement. Winding up can be compulsory or voluntary and can apply to publicly and privately held companies. (Liquidation or Winding up a company in Bangladesh)

    Process of Liquidation or Winding up a company in Bangladesh

    Before we deep dive into the process of winding up a company in Bangladesh, it is pertinent to note the term used here is Company but not businesses, as sole proprietorships or partnership business in Bangladesh do not follow the equivalent pathway or practice such as liquidation or winding-up. Therefore, to continue with the liquidation process one must have or have an operating company, properly incorporated / registered under Bangladesh law.

    Under the company law 1994, there are three modes of winding up a company in Bangladesh. The winding up of a company may be either:

     

    • by the court or
    • voluntarily or
    • Subject to the supervision of the court.

     

    Who can file the petition of winding up in Bangladesh?

    A winding-up petition can be filed jointly or separately by a creditor, the business or the company (i.e. shareholders) or lender under section 245 of the Companies Act 1994. In the event of a company winding up, section 235 of the Companies Act notes that each of the company’s current and former owners will be liable to contribute to a amount adequate to cover the company’s debts, liabilities, costs and liquidation expenses. Section 237 describes the term contributory; it means that in case of wound up each individual is liable to contribute to the assets of a corporation. (For Liquidation or Winding up a company in Bangladesh)

    Hence to summarise,

    A petition for winding up can be filed by:

    1. Creditor or,
    2. the Company (i.e. shareholders) or
    3. Contributory (who contributes to a companies’ assets in paying the debts and costs of the company), together or separately.

     

    Liquidation Or Winding Up A Company In Bangladesh_Tahmidur Rahman_Best Law Firm In Bangladesh

    Winding up a company by the court in Bangladesh

    Winding Up of a company by court may be done in certain circumstances which are:

     

    • if the company through the special resolution decided that it must be winded up by the court; or
    • if default is made in filling the statutory report or in holding the statutory meeting; or
    • if the number of members reduced below the required number as per the Company Law; or
    • the company is incapable of paying its debts; or
    • if the court is of opinion that it is just and equitable to wind up the company.

    Liquidation or winding up a Company by Court- Process in Bangladesh

    Company winding up or Liquidation process in Bangladesh by court has been discussed very briefly in order to give an idea of the process.

    Step one: Filing Petition to Court

    In order to wind up a company by the court, a petition has to be filled the company court of High Court Division of Supreme Court .  It is to be noted that winding up of a company by the court shall be deemed to commence from the time of presentation of petition for winding up. Upon hearing the application the court will pass an order for winding up of the company.

    Step two: Notification to registrar

    In issuing a winding-up order, the petitioner and the corporation are obliged to file a copy of the order with the Registrar within 30 ( thirty) days from the date of the request. The Registrar shall register a summary in his company related books upon filing a copy of a winding-up order. The registrar then notifies the official Gazette that such an order has been made. Such an order shall be considered to be a discharge notice to the company’s employees, except when the company’s business is continued.

    Step three: Appointment of Liquidator

    The court will then appoint an official liquidator and the liquidator will perform its duties as per the Companies Act 1994. In case of winding up by the court, all the property and effects of the company shall be deemed to be in the custody of the Court as from the date of the order for the winding up of the company.

    Step four: Information recorded with RJSC

    Once a company’s affairs have been completely wound up, the Court shall make an order to dissolve the company from the date of the order, and the company shall be dissolved accordingly. Official liquidator shall report the order to the registrar within 15 (fifteen) days of the order. The registrar shall record a minute of the company’s dissolution in his books.

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

    • Step by Step Process of Registering a Company in Bangladesh
    Liquidation Or Winding Up A Company In Bangladesh_Best Full Service Law Firm In Dhaka

    “Counsels Law is Considered as one of the leading firms in Company Law in Dhaka, Bangladesh”

    Bdlawfirms & Carpe Noctem Bangladesh

    Voluntary Liquidation or a winding up a company in Bangladesh

    A company may be winded up voluntarily:

    • when the period, if any, fixed for the duration of the company by the articles expires or any event  occurs for which the articles provides that the company is to be dissolved and the company in general meeting has passed a resolution for winding up voluntarily;
    • if the company resolves by special resolution that the company be winded up voluntarily;
    • if the company resolves by extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up.

    It is to be noted that commencement of voluntary winding up shall be deemed to commence at the time of the passing of the resolution for voluntary winding up. (Liquidation or Winding up a company in Bangladesh)

    Company Winding up process subject to Court in Bangladesh

     

    When a company has by special or extraordinary resolution resolved to wind up voluntarily the court may make an order that the voluntary winding up shall continue but subject to supervision of court and such terms as the court thinks just.

     

    Section 242 of the Companies Act 1994 takes into account whether a corporation is found to be unable to pay its debts. This will be the case if a creditor to whom the company is indebted for a sum and the company fails to pay the sum for three weeks or if the execution or other proceedings issued under a decree or order of any court in favor of a company creditor are returned unsatisfied in whole or in part or if it is demonstrated to the court’s satisfaction that the company is unable to pay its debts and the court is to take account of them.

     

    Section 316-321 of the 1994 Companies Act deals with turning up being subject to court oversight. If a company has agreed to wind up voluntarily through special or exceptional means, the court may make an order that the voluntary winding up must proceed but be subject to court oversight and such conditions as the court considers appropriate. Where an order for winding up is made subject to supervision, the liquidator may exercise all the powers, subject to any limitation imposed by the court, as if the company were being wound up voluntarily entirely. (Liquidation or Winding up a company in Bangladesh)

     

     

    How to get a Trade License in Bangladesh?

    Click here and go to the post, Tahmidur Rahman speaks in details about Trade License in Bangladesh | Fees, Processing and Renewal!

    Steps by Step process of voluntary Winding Up a Company in Bangladesh

     

    This is the liquidator ‘s responsibility in any voluntary winding-up to settle the company’s debts and change the creditors’ right among themselves. Here is the comprehensive step-by – step method of voluntary wind-up of a bangladesh company.

    Step One: Drafting documents for Winding Up

    The first step on the process of winding up is to prepare documents. The documents that need to be prepared are:

    1. Declaration of Solvency, (which includes information such as the company has no debts among other things) and
    2. Profit and Loss Account and
    3. Audited Balance. 

    The above mentioned documents will have to be approved by the majority directors of the company.

    Step Two: Submission to RJSC

    The next step is to file the approved Declaration of Solvency to the RJSC within 5 (five) weeks from the approval by directors.

    Step Three: Pass Special Resolution

    The third step requires the Extraordinary General Assembly to pass a special resolution. This is to approve the company’s decision to wind down and the liquidator appointment. It should be noted that the meeting ‘s content is also to be filed with the RJSC. The special resolution will then be published in the official Gazette, and in a newspaper circulated in the district where the company’s registered office is located. It will be achieved within 10 ( ten) days of the special resolution passing it.

    Step Four: Appointing Liquidator

    Once the chosen liquidator has been approved by the extraordinary general meeting and the liquidator has accepted the appointment, such must be notified to the RJSC. In addition, the Deputy Commissioner of Taxes will also be informed of the same within 30 (thirty) days of the said appointment. 

    Step Five: Final Report by Liquidator

    At this stage the liquidator need to prepare a Final Account. The Final Account must have the details of how the winding up has been conducted and the assets distributed. Thereafter, the liquidator will call an extraordinary general meeting and the notice for that must be circulates by advertisement in the official Gazette, and in a newspaper. Such a notice must be given not less than one month before the meeting.

    The special resolution will be passed in the extraordinary general meeting with regards to the disposal of the books and papers of the company. 

    Step Six: Documents filing to RJSC

    Lastly, a final meeting must be hold and a return of the meeting must be submitted to the RJSC upon which the company will be winded up. The submission must be made within one week of the meeting.

    Step Seven: Petition filing to Court for Winding Up

    For voluntary winding up, the petition to the court is made at this stage. All the documents relevant to the winding up of the company are submitted to the court. The court being satisfied, declares that the company has been dissolved. This stage is essential to avoid any allegation of fraud later on.  

    If you want to know how to seamlessly transfer the share of a company click here!

    • Step by Step Process of Registering a Company in Bangladesh
    Liquidation Or Winding Up A Company In Bangladesh_Tahmidur Rahman_Law Firm In Bangladesh

    Government fees for Company Winding Up Process

     

    Here are the minimal required government fees for the company winding up process (Liquidation or Winding up a company in Bangladesh):

    1.         For Private and Public Company: BDT 20.00

    2.         For Trade Organization and Foreign Company: BDT 10.00

     

    Liquidation or winding up a company in Bangladesh services in Counsels Law Partners

     

    Tahmidur Rahman | Counsels Law partners, a leading Company law firm can provide following the legal services: The Law firm will assist in arranging the actual consent and interest of each company share. Furthermore, Remura will provide a complete road map for winding up processes. Team Remura may also help in the disposal of company properties and make use of the proceeds to pay creditors. In addition , the team will assist in holding creditors’ meetings, settling legal disputes and settling all the company’s pending obligations. Remura will be responsible for sending the documents to RJSC and preparing all documents in Bangladesh for the termination or liquidation of the company. On top, the company law department will provide the complete legal services in relation to Company winding up or Liquidation process in Bangladesh.

     

    For queries or legal assistance, please reach us at:

     

    E-mail: [email protected]
    Phone:+8801727983838 (WhatsApp also available)

     

    Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.

     

    Liquidation or Winding up a company in Bangladesh.

     

     

     

    Liquidation Or Winding Up A Company In Bangladesh_Best Law Firm In Dhaka
    “For voluntary winding up, the petition to the court is made at this stage. All the documents relevant to the winding up of the company are submitted to the court. The court being satisfied, declares that the company has been dissolved. This stage is essential to avoid any allegation of fraud later on.  .”

     

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

    • Step by Step Process of Registering a Company in Bangladesh
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    Registration Of A Private Limited Company In Bangladesh In 2022 | 5 Simple Steps

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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

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

    Tahmidgoldenpicturebackground E1569742859700

    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.

    Best Family Law Firm In Bangladesh

     

    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)

    Branch Office Registration In Bangladesh_Best Law Firm In Dhaka Tahmidur Rahman

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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).

    Branch Office Registration In Bangladesh_Tahmidur Rahman_ Best Company Law Firm In Dhaka

    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!

    • Step by Step Process of Registering a Company in Bangladesh
    Finallllllll 1 3

    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.

     

    Company Law practice in Counsels Law Partners 

    The Barristers, Advocates, and lawyers at Remura 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: [email protected]
    Phone: +8801727983838
    Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.

     

    Branch Office Registration In Bangladesh_Tahmidur Rahman_Corporate Branch Office Registration In Bangladesh

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    E-Commerce Company Formation in Bangladesh

    E-Commerce Company Formation in Bangladesh| Complete Overview of Starting an E-commerce Business.

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    E-commerce business formation in Bangladesh:

    E-commerce is actually one of Bangladesh’s fastest growing field and trends. There are lots of e-commerce companies that have begun operating in Bangladesh since 2015. But mostly they only operate for Dhaka city and few businesses have only started in their city. This is a positive sign and e-commerce will certainly expand in days to come. Many people come to Remura with their enquiry if they need a trade license / or a PLC for their Bangladesh e-commerce business. And the answer is of course “yes.” In Bangladesh, every business is required to have a trade license, and eventually you might opt for establishing your own PLC for your e-commerce business!

    Starting an E-Commerce business in Bangladesh

    As the study shows, Bangladesh is entering its own period of demographic dividend, meaning that the proportion of young people in the next 25 years will be the highest in the history of the country. And this is a golden opportunity for Bangladesh to tap into the promise of e-commerce by building a viable e-commerce ecosystem that will transform the country’s economic landscape. Another Asian neighbor, China, has already shown that e-commerce can easily become the key drivers of the economy, with favorable policy and government commitment.

     The term e-commerce refers to the Internet-based buying or sale of goods, products or even services. E-commerce purchases vary from the obvious things like online retailing, online media outlets, online shopping, etc. to the more important items like digital payment, online banking and even the procedures of public administration. In this article we will concentrate on the information needed to start an E-commerce company in Bangladesh.

    Major Categories and Types of E-commerce business in Bangladesh 

    In terms of E-commerce business in Bangladesh, there are three kinds of e-commerce, which are as follows-
    1. Items oriented: These online companies deal over digital media with tangible and physical goods or products.
    2. Service-oriented: These online businesses are specialized in delivering services to a customer, be it between businesses or just ordinary people or vice versa;
    3. Digital products oriented: These online companies are performing legal businesses like the two preceding ones but the goods or services they offer are entirely digital.

    The buying and selling process involves the exchange of web and electronic data using personal computers , laptops, tablets , cell phones etc. Companies are categorized as ‘brick and mortar’ (traditional trade), ‘click and mortar’ (partial e-commerce) and ‘internet businesses’ where all is digital for merchandise, distribution, and payment. The definition of e-commerce thus includes both purchases of physical goods and digitized products and services.
    In the current eBusiness world, M-Commerce (Mobile Commerce) and F-Commerce (Facebook Commerce) have become two common concepts. Within this paper both are listed within the wider e-commerce framework.

    What are the usual transactions in a e-commerce business in Bangladesh?

    These online transactions are usually done in the following six ways –

     

    1.Business to Business (B2B): The “Business to Business” transactions include two more companies conducting business with each other and barely ever involve the final customers;

    2. Business to Consumers (B2C): It is the business model where businesses directly offer goods or services to customers. Consumers are increasingly shopping for and purchasing goods online, arranging financing, arranging shipping or taking delivery of digital items such as apps, and getting after-sales services. B2C e-commerce includes online transactions often referred to as e-retail (or e-tail).
    In building B2C networks, some of the advantages businesses can achieve are decreased operational costs, increased marketing, globalization, customer satisfaction, knowledge management, etc .. Bangladesh e-commerce begins and mostly switches to B2C.

    3. Customer to Customer (C2C): The Customer to Customer” model refers to the direct transactions conducted between the consumers themselves;

    4. Customer to Business (C2B): The Customer to Business transactions refers to the providing of goods or services by a customer to legitimate businesses;

    5.Business to Administration (B2A): Business to Administration involves the transactions between businesses and governmental or administrative bodies.

    6. Customer to Administration (C2A): Customer to Administration refers to the transactions that are made between the ordinary consumers and governmental bodies.

    Open Your E-Commerce Business In Bangladesh

    Process of Starting an E-commerce business in Bangladesh

    The procedure required to start an E-commerce company in this country depends entirely on the nature of the business itself.

    • Individual businesses: If your online company is all about the Customer to Consumer ( C2C) model and you just want to trade with someone over the internet, then you don’t need a lot of formality. At the other hand, if you sell any goods or services actively through a website or page and you are the sole owner of the said company, then you will need a valid trade license and proper E-TIN set-up.

       

    • Companies or Associations: If your favored business model is Business to Customer (B2C), where you want to set up a company or association to sell your goods or services, the laws currently in force in Bangladesh regarding companies, partnerships or associations etc. will be applicable to you to set up your e-commerce business in Bangladesh.
    • Domain & intellectual properties: Another important step of setting yourself up in the E-economy is to purchase a domain name. Being prepared with a valid domain, trademarks, copyrights etc. will be instrumental in securing your intellectual properties among other things.
    • A typical Bangladesh online business: A typical Bangladesh online business starts with the development of a website or a public page in an asocial media network. The items or services to be sold are then cataloged on the Customers’ website or page on browse through. The final aspect of this initial phase is incorporating a safe form of payment, and there are quite a few good choices to choose from in your own e-commerce business in Bangladesh.
    • Payment methods: Most online stores have a cash-on – delivery system which, of course, needs no digital payment method. At the other end of the spectrum, a large chunk of all mobile banking in this country is currently being done via services such as Bkash, Rocket, Nexus Pay etc., but you do have the option of accepting other services such as the various credit or debit cards, PayPal, Money Gram or any other FIN Tech (Financial Technology) methods. The trick is to go for something that’s easily available and that has the most users. Hence:

       

      Setting up a payment gateway system in Bangladesh requires few papers/documents:

    1. Company Trade License
    2. Owner’s NID & Photograph
    3. Bank Details
    4. Company Logo
    5. Website URL
    6. Signature & Seal

    As of now, the Bangladesh Bank has allowed funds to be transferred up to BDT 5,00,000 between two customers who have accounts on the same bank via online facilities, provided that the transactions comply with the prevailing Money Laundering Prevention laws and related government circulars.
    Nevertheless, in the case of any legal issue emerging from these projects, it is often prudent to obtain professional assistance. According to the laws currently in effect in Bangladesh, e-economy participants are entitled to various legal remedies with the least amount of difficulty. The article would also address the prospective risks of operating E-commerce companies.

    Legal Framework For E-Commerce Business In Bangladesh

    Potential Legal regulations in regards to starting an e-commerce in Bangladesh

     

    •  Consumer Protection legislation is important in e-commerce business in Bangladesh to create consumer trust. In merchant’s bank account, a holding fund mechanism listed in the ‘E- Payment’ section might be established; consumers do need to use true identification for the purposes of the transaction.

       

    • Privacy of consumer’s communication, preference, visit information, personal and financial data must be maintained by the relevant merchant. There has to be a clear definition of what form of communication, intention or promise between merchant and consumer will be counted as service agreement; violation of which would face legal consequences in the justice system.

    • Community Conscious Driven Policy needs to be established in the e-commerce business in Bangladesh. The socio-economic scenario differs from country to country. Expectation from businesses and consumers need to weight in our existing standard.

       

    • Code of Conduct for the businesses and customers need to be defined. Any form of digital communication must not violate traditional social and business etiquette within the e-commerce business in Bangldaesh.

      Dispute Resolution Mechanism should be clearly stated and communicated properly to the stakeholders. A cyber court might just be established for quick resolution of such cases specifically for e-commerce businesses in Bangladesh.

       

      •  ICT Act is undergoing revision. As the cyber world evolves very rapidly, a legal committee will eventually be set up to review the law and make appropriate changes every six months. 

      •  Most e-commerce operations incorporate a variety of digital activities and conventional business processes. ICT Act will ensure compliance with current legislation and ecommerce regulations is sufficient.

      • Though e-commerce ensures easy access to entrepreneurship, some form of regulations will eventually be imposed for the new entrants for identification, authentication, taxation and monitoring purpose. Easy registration process using e-tin, address, etc will eventually be incorporated to ensure the transactions under a legal umbrella.

      • Insurance policy might also be formulated to protect businesses and consumers from larger accident and fraud incidents.

    For details of filing system, click here or in the image below-

     

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

    • Step by Step Process of Registering a Company in Bangladesh
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    How to get a Trade License in Bangladesh?

    Click here and go to the post, Tahmidur Rahman speaks in details about Trade License in Bangladesh | Fees, Processing and Renewal!

    What are the potential pitfalls of starting an e-commerce business in Bangladeh ?

      

    As a fairly recent development in Bangladesh’s economic history, there are several possible problems that may emerge from an online company. Many of these problems are discussed briefly below- 

    1. Credit and Guarantee: A large percentage of higher-end transactions are made by loans such as EMI or other types of instalment plans. For certain situations, civil proceedings can be required when the consumer defaults.  

    2. Financial fraud: all the time when it comes to e-commerce in Bangladesh, financial fraud such as credit card fraud, the use of illegal payment methods etc. Established in compliance with the 1990 Money Loan Court Act, the Artha Rin Adalat is a judicial body dealing with the recovery of money loaned to citizens through public sector financial institutions. This court can adjudicate financial fraud committed in e-transactions such as credit card frauds etc. There are some other legal remedies available under Bangladesh ‘s laws to a possible victim of fraud such as the Digital Protection Act, 2018 among others. 

    3. Return products or non-delivery of goods: E-commerce companies regularly recall items returned by consumers for different reasons, some of which are specific concerns such as the size of apparel products, while others are as ambiguous and illogical as they may be. In addition to the financial blows suffered by the sellers, factors such as product return or product non-delivery may also be harmful to the purchasers. Under existing legislation such as the Sale of Goods Act, 1930 etc., online sellers and purchasers are entitled to a plethora of protections that can be legally enforced.

    4. Quality of products: The E-economy of Bangladesh has a long history of venders providing unsatisfactory goods or services to the customer. This is mainly due to the fact that the customers do not get to check or verify what they are buying before the actual delivery takes place. This has apparently resulted in sellers delivering damaged, expired or unusable products in the end. Issues of damaged goods or goods in lesser quantity than originally agreed upon can be brought to legal action under the governing laws of the country such as the Consumer Protection Act, 2009, The Sale of Goods Act 1930, The Contract Act, 1872, The Penal Code, 1860 and the Standard of Weights & Measures Ordinance, 1982 etc.

    5. Adulterated goods: whether purchased by a customer or a business, whether it is the duty of an online retailer to deal with adulterated goods and products, it will be subject to legal consequences. The 1974 Special Powers Act provides legal provisions for adjudicating vendors trading in adulterated goods, beverages, or other items.

    6. Infringement of Intellectual Property: There is a general disregard among the Bangladeshi people for intellectual property laws, particularly when it comes to digital products, due to the state of the basic economy and the newness of information technologies.

    7. Exploitation: The very existence of the techs used to perform different transactions online leaves space for vulnerabilities that can be manipulated for illicit benefit. Frauds in the credit or debit card, frauds in the digital identity forgery, infringements of authority, unauthorized access to data and privacy etc. are some of the examples that can seriously hamper an individual’s or business’ livelihood. In addition to careful planning by the users, in the aftermath of these incidents, legal proceedings are also necessary. 

     

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    Frequently Asked Questions- FAQ about E-commerce Business in Bangladesh

    In regards to opening an E-commerce company in Bangladesh, people also ask these questions frequently, hence this FAQ content block is dedicated to answering your questions.

    General Questions about Starting an E-commerce company in Bangladesh

    What is E-commerce business in Bangladesh?

    E-commerce includes the purchasing and sale of products and services by businesses and customers via the electronic medium. E-commerce, also known as electronic commerce or internet commerce, refers to the purchasing and sale of goods or services through the Internet, and the transfer of money and data to carry out these transactions.

    How many e-commerce business are there in Bangladesh?

    The eCommerce Association of Bangladesh (e-Cab), an eCommerce trading organization in Bangladesh, reports that there are 700 eCommerce sites and about 8,000 eCommerce pages on Facebook. Facebook remains a common method of advertising and selling goods, to the point that many companies forgo the production of websites.

    What are e-commerce companies?

    Amazon, Alibab and e-bay probably the most influential e-commerce business in the world. Our neighboring country have flipkart, which is an Indian based eCommerce web portal founded by Sachin Bansal and Binny Bansal in 2007. In Bangladesh currently we have Daraz and E-valy dictating the e-commerce market.

    What are the 5 types of e-commerce?
    • Business-to-Business (B2B)
    • Business-to-Consumer (B2C) 
    • Consumer-to-Business (C2B) 
    • Business-to-Administration (B2A) 
    • Consumer-to-Administration (C2A)
    What is the best e-commerce company in Bangladesh?

    Daraz is considered to be one of the best e-commerce companies in Bangladesh. As one of the most innovative and successful online stores in Bangladesh, Daraz.com.bd offers a wide range of products, including electronics , apparel, home appliances, children’s goods , furniture, beauty and health, and much more.

    How to start an e commerce business in Bangladesh (step by step)?
    1. Select The Best Business Structure and Register Your Business legally in Bangladesh.
    2. Research Ecommerce Business Models.
    3. Start Ecommerce Niche Research.
    4. Validate Target Market and Product Ideas.
    5. Register Your Ecommerce Business & Brand Name.
    6. Finalize Your Ecommerce Business Plan.
    7. Create Your Online Store.
    8. Attract Customers To Your Ecommerce Website.
    Do I need to register my e-commerce company in Bangladesh?

    Choose a business name and register your company. There are legal protections and tax benefits for incorporating, so don’t skip it. Email us for aiding you to a seamless formation.

    What is ECAB?

    The e-Commerce Association of Bangladesh (e-CAB) was established to accelerate the growth of the e-Commerce sector in Bangladesh. The e-CAB was designed to address the current problems of e-Commerce in order to ensure its development. E-CAB aims to act as a shared forum for companies active in the e-commerce sector in Bangladesh. The e-CAB will act as their voice. In addition , e-CAB will undertake a range of activities, including research, publication, training, workshops , seminars, etc., to develop the e-commerce market.

    How to become a member of E-CAB in Bangladesh?
    • Logo of your e-commerce company
    • A short profile of the company (minimum 100 words)
    • Contact person name and contact address
    • Photocopy of the updated trade license of the organization/company
    • Photocopy of the updated Tax Identification Number (TIN) certificate
    • Photocopy of the National ID card of the proprietor/managing director/Chairman of the company
    • Passport size picture of the proprietor/managing director/Chairman of the company

    Get legal advice from the best company formation Law firm in Dhaka

    The Barristers, Advocates, and lawyers at Remura in Gulshan, Dhaka, Bangladesh are highly experienced at assisting clients through the entire process and legal provisions relating to the setting up of your E-Commerce business in Bangladesh and the safeguarding of your rights and interests in case of any conflicts.

    For any queries or legal assistance, please reach us at:

    E-mail: [email protected]

    Phone: +8801727983838

    Address: House 39, Road 126 (4th Floor) Islam Mansion, Gulshan 1, Dhaka.

     

     

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