The Bangladesh government has ordered that all garment and textile buying houses in Bangladesh must register with the textile department in order to conduct business. The textiles and jute ministry stated in a gazette notification on May 28, 2023 that registration is required within 60 days. If a buying house requests an extension for valid reasons, it may be granted an additional 60 days. The government will take legal action if registration is not completed on time.
On April 1, 2023 the ministry published a gazette notice outlining the registration process. Many buying houses operate unregulated in the country, and the government has no idea how many companies are involved, according to Bangladesh Garment Buying House Association president Kazi Iftequer Hossain, who spoke to a Dhaka-based English-language daily. According to the association, there are over 1,200 buying houses in the country, with approximately 400 of them being members. Ten buying houses have been registered since April 1st of this year.
In summary, there are three major steps that must be taken in order to establish a Buying House in Bangladesh, which are as follows:
- Establishing a Business in Bangladesh (i.e. Limited Company, Partnership or Proprietorship, Branch office or liaison office)
- Register with the Textile Department (DoT)
- Obtain the necessary licenses and memberships.
Step-by-step instructions for establishing a Buying House
What are the procedures for establishing a buying house in Bangladesh?
Step one: Applying for the Name clearance
To begin, a unique selected name must be approved by Joint Stock Companies and Firms before forming a private limited company (RJSC).
The certificate is usually delivered within 1 to 2 days.
The government fee for Buying house name clearance is currently 230 BDT (3 USD including VAT).
Step 2: Create an MOU and an AOA.
A limited company’s Memorandum of Association (MOA) essentially includes the company’s objectives. You can include as many objectives as you want. The Articles of Association (AOA), on the other hand, are the company’s constitution. An AOA contains all of the rules for how a limited company will operate as well as the company’s Managing Director, Chairman, and so on.
Time for drafting:
We can draft the MOA and AOA within the same day, if we have all the necessary information. Fast and efficient client service is always the priority of Tahmidur Rahman Remura.
Step 3: Open a bank account (for foreign nationals or entities)
When it comes to opening a bank account, there will be a distinction between foreign nationals/entities and Bangladeshi nationals.
- Bank Account Documents Required:
- a photocopy of the certificate of name clearance
- AOA and MOA drafts
- Passport photocopy (application for foreign nationals)
- Following receipt of the aforementioned documents, the bank will open a provisional account in the company’s name.
In Bangladesh, opening a bank account takes one working day.
Following the opening of the provisional bank account, a share money deposit will be sent from the foreign shareholder’s country to the provisional account. Following that, the bank will issue an encashment certificate.
Step 5: Registration in RJSC
Following receipt of the encashment certificate, a few documents, including the AOA, MOA, and encashment certificate, as well as all other necessary information, must be submitted to the RJSC. RJSC will generate an invoice to be paid to the recognized bank after receiving all necessary documents and information.
a). Documents needed:
- MOA and AOA
- Certificate of Encashment
- Name, parents’ names, passport number, email ID, and mobile number of directors
- Managing Director’s Name Chairman’s Name
- NID (if Bangladeshi national) (if Bangladeshi national)
- TIN (if Bangladeshi national) (if Bangladeshi national)
- Paid-up capital limit
- authorized capital limit
- All shareholders’ photos (1 copy)
- Signatories to the bank account’s address
b) Document filing fees to RJSC: The registration filing fee is BDT 1200 (one thousand and two hundred taka).
c) The government registration fee is determined by the company’s authorized capital. If the authorized capital is 50 lakh, the government fee is BDT 13570 (thirteen thousand five hundred and seventy takas) or USD 160 (one hundred and sixty takas) plus 15% VAT.
d) Incorporation certificate: After receiving all of the aforementioned documents, RJSC will verify all of the information contained in the AOA and MOA, as well as the encashment certificate, with the bank. After reviewing all of the information, the RJSC will issue an incorporation certificate in the company’s name. The formation of a limited company is complete at this point. However, in order to do business in Bangladesh, a few other requirements must be met.
Step 6: Obtain a Tax Identification Number (TIN) for Buying house in Bangladesh.
Following receipt of the incorporation certificate, you must apply to the National Board of Revenue (NRB) for a tax identification number. Following receipt of the application, a tax certificate in the name of the company will be issued.
Step 7: Obtain a business license for Buying house in Bangladesh.
To obtain a trade license, an application must be submitted to the relevant city corporation. This is necessary in order to conduct business in Bangladesh.
Along with the application, the following documents must be submitted:
AOA and MOA photocopies
TIN Rental agreement Photo of the company’s managing director or chairman
The nature of the business
A trade license usually takes 3–4 working days to obtain.
Step 8: Certificate of Value Added Tax (VAT)
To conduct normal business operations in Bangladesh following the formation of a private limited company, the company must have a unique Business Identification Number (BIN). Companies must therefore have a VAT registration certificate in order to obtain a Business Identification Number. The National Board of Revenue’s Customs, VAT, and Excise Department regulates VAT (NBR). It is free to apply for VAT registration.
- TIN Import/Export License Certificate Certificate of Registration
- Photos in passport size
- Agreement Deed Bank Solvency Certificate
- Memorandum and Articles of Association for BOI Registration
Every private limited company is required to pay VAT on the 15th (fifteenth) of each month.
To learn how to open a branch office in Bangladesh, click here, and to learn how to open a liaison office, click here.
Register with the Textile Department (DoT).
All buyers’ houses in the country must be registered with the Textile Department. As a result, once a company is formed, it must register with the DoT. The following documents must be submitted to the DoT for registration:
a) Documents and information:
Registration letter to the Director General of the Department of Transportation:
- duly completed the registration form.
- a business license (copy attested)
- Certificate of Income Tax (attested copy)
- Certificate of Incorporation, Memorandum of Association, and AoA
- Annual revenue projections
- Membership certificate from a relevant commercial association (for example, BGBA or BGME) (attested copy)
- The registration fee is payable by bank draft.
- bank’s certificate of solvency
b) Registration fee:
The registration fee is BDT 20,000 (twenty thousand takas only) and must be deposited with the appropriate bank.
c) Form of application:
For your convenience, the application form for registration with the DoT is attached below.
d) Registration Process:
Temporary Registration Certificate: Once the primary and main documents are submitted to the DoT, the authority can issue a temporary registration certificate. However, the temporary certificate’s validity period will be 60 (sixty) days from the date of issue, after which it will expire automatically. As a result, all of the above-mentioned documents must be submitted within 60 (sixty) days. It should be noted that a temporary registration certificate will only be issued once to a purchasing house.
Once all of the above-mentioned documents are submitted to the authority within 60 days of the temporary registration certificate’s issuance, the documents will be inspected. Following that, the authority will issue the registration certificate within 60 (sixty) days of receiving all of the documents.
e). Certificate validity:
The registration certificate is good for three years.
f) Registration certificate renewal:
It should be noted that you must apply for registration certificate renewal at least 60 (sixty) days before its expiration date. To apply for renewal, submit an application in the appropriate form along with the required documents to the Director General of the DoT.
The following documents must be submitted for renewal:
- a business license (copy attested)
- Certificate of Income Tax (attested copy)
- Certificate of membership in a relevant commercial association (e.g., BGBA or BGME) (attested copy)
- Export data from the previous year
- For the renewal fee, a bank draft pay order is required.
- Following inspection of the aforementioned documents, the authority will issue a new registration certificate within 30 (thirty) days of receipt. This will be valid for another three years.
g) Renewal Fee
The government fee for renewing a registration certificate is BDT 5,000 (five thousand takas only), which must be deposited at the appropriate bank.
The following licenses are required :
- Certificate of Export Registration (ERC)
- Certificate of Registration for Import (IRC)
- Chamber of Commerce membership
- BGMEA membership
Process of Running a buying house in Bangladesh:
|01||Contact with the buyer||At first, the clothing merchandiser contacts the buyer and collect the order from them.|
|02||Placement of order in the factory||Here, should search for a qualified factory according to the buyer’s demand for placing that order.|
|03||Consumption||Garments Merchandiser makes all the consumption according to the buyer’s specification.|
|04||Costing||Prepare actual costing sheet and approved by the buyer.|
|05||Making & approval of product develop sample||Make product development sample (Proto, Fit, SMS, etc) and approved by the buyer.|
|06||Received master L/C from the buyer||Here, the garments merchandiser must collect a master L/C copy from the buyer as an order approval and pass it to the buying house commercial team.|
|07||Provide Back to back L/C to the suppliers||The commercial team forwards the Back to back L/C copy to the suppliers for in-housing necessary raw materials.|
|08||Follow up the production||Here, the garments merchandiser collects the regular production update from the factory.|
|09||Online inspection by buyers Q.C||In the meantime, an online inspection has to be completed by the buyer nominated Q.C.|
|10||Final inspection||Final inspection has done here by third-party Q.C or as order contract specification.|
|11||Complete all the documents for shipping||Here, the Buying house commercial team makes ready all the necessary documents or papers for shipping the goods.|
|12||Shipping the goods||Finally, all the goods are shipped here containing necessary documents.|
|13||Contact with bank||The commercial team contacts the bank for order payment here.|
|14||Payment received||Finally, the payment received from the bank.|
Are you planning to register a private limited company in Bangladesh?
The legal team of Tahmidur Rahman, TRW Law Firm in Bangladesh: 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: [email protected]
Phone: +8801847220062 or +8801779127165
Address: House 410, Road 29, Mohakhali DOHS