How to open a Liaison office in Bangladesh –Registration and Incorporation Procedure of Liaison office in Bangladesh

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.

 

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1) How to open a Liaison office in Bangladesh –Registration and Incorporation Procedure of Liaison office in Bangladesh

 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

“Tahmidur Rahman – Counsels Law Parnters is Considered as one of the leading firms in NGO and Non-profit Law in Dhaka, Bangladesh”

Carpe Noctem Bangladesh

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.

General Questions about Liaison office in bangladesh

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.

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

NGO and INGO registration at Tahmidur Rahman CLP:

The legal team of Tahmidur Rahman, Counsels Law Partners CLP 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: tahmidur@counselslaw.com
Phone: +8801727983838

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

 

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