Holding and Subsidiary Companies in Bangladesh in 2023 – Everything you need to know

This article will explain in details about Holding and Subsidiary Companies in Bangladesh and how can you start your business in Bangladesh.

Types of Companies in Bangladesh

There are six ways of doing business in Bangladesh:

• Public Limited Company
• Private Limited company
• Branch office
• Liaison Office
• Proprietorship
• Partnership Business in Bangladesh

In general, these are the six types of business entities can be found in Bangladesh. 

In simplest way: How you can incorporate Holding and Subsidiary Companies in Bangladesh

Holding and Subsidiary Companies in Bangladesh

When a company has control over another company and it holds the majority of the shares of another company, it is known as a holding company. And the company which is controlled by the first mentioned the company is known as a subsidiary company. Under the provision of Companies Act, 1994,

“a company shall be deemed to be the holding company of another if and only if that other is its subsidiary.”

So, the following characteristics of a holding company may be found-

• It has the controlling power over another company;
• It holds more than 50% shares of that other company;
• It has more than 50% voting power;
• The holding company is directly of indirectly empowered to
• appoint directors of that other company.

Subsidiary company:

On satisfying any or more of the following conditions, a company shall be deemed to be a subsidiary company:

(1) Controlling the composition of board of directors:

If the composition of board of directors of a company is controlled byanother company, then the company whose board of directors is controlledshall be deemed to be a subsidiary company. [sec. 2 (2) (a)]

The composition of board of directors is said to be controlled when any director of the subsidiary company is removed or appointed by the parent company without the consent of any other person of the said subsidiary Company.

(2) Controlling voting securities:

A company shall be a subsidiary of another company if more than 50% of the voting securities are directly or in directly controlled, held or owned or managed in any other ways by another (holding) company.

(3) Subsidiary of another subsidiary company:

A company shall also be deemed to be a subsidiary of another company if it is a subsidiary of any company which is that other company’s subsidiary.

For Example: Company B is a subsidiary of company A, and company C is a subsidiary of company B. So, company C is a subsidiary of company ‘A’ also. If company ‘D’ is a subsidiary, then ‘D’ will be regarded as subsidiary of company ‘B’ also, and consequently of company ‘A’ also.

Other Companies alongside Holding and Subsidiary Companies in Bangladesh in Bangladesh:

(a) Existing Company:

Existing company indicates the company formed and registered at or before the commencement of the Companies Act, 1994. Before passing this Act, the companies were regulated under the Companies Act, 1913 .

However, under the provision of present Companies Act, 1994 “Existing Company” means a company formed and registered under any law relating to companies in force at any time before the commencement of this Act, and is in operation after commencement of this Act. 

(b) Foreign Company:

Generally, a foreign company is a company which is incorporated outside Bangladesh. But under section 378, a foreign company may include company incorporated outside Bangladesh, but has an established place of business in Bangladesh.

Setting up a Subsidiary Company in Bangladesh

In the event that you go it alone and establish a Bangladesh subsidiary, you’ll need to think carefully about the best organizational structure and geographical location for your business. Private Limited Company is the most common business structure because it shields the parent company from legal responsibility for the actions of its subsidiaries.

Once a building type has been selected, a site must be selected. Countries, states, or even counties can have their own sets of rules and norms by which they conduct business. Consider these criteria as you make your final decision on a suitable location for your company.

The following are the stages of establishing a Holding and Subsidiary Companies in Bangladesh:

• The Registrar of Joint Stock Companies and Firms website allows you to check your name and print a clearance certificate.
• Getting Your Company’s Articles of Incorporation and Memorandum of Incorporation
• To obtain encashment certificates and finalize your registration, you must first open a bank account in Bangladesh.
• Since the banking system in Bangladesh wasn’t built to handle international business transactions, companies there often face difficulties when trying to do business there. Acquiring encashment certificates is a necessary step in the registration process because they serve as evidence that foreign currency was converted to Bangladeshi Taka. In a stroke of good fortune for expanding businesses, Bangladesh is currently modernizing its banking systems.

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.

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

Company formation and registration at Tahmidur Rahman Remura: TRW: The Law Firm in Bangladesh:

The legal team of Tahmidur Rahman, The Law Firm in Bangladesh Remura: TRW, The Law Firm in Bangladesh 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: info@trfirm.com
Phone: +8801847220062 or +8801779127165

Address: House 410, Road 29, Mohakhali DOHS