PROCESS OF REGISTRATION AND LICENSING
There are numerous investment opportunities in the restaurant sector, including sole proprietorship, partnership, and private limited liability company. Foreign investors are not eligible for the first two alternatives. In this post we will explain the procedure of Restaurant Business registration in Bangladesh.
SOLE PROPRIETARY RIGHTS
In Bangladesh, a Sole Proprietorship is not a separate legal entity, hence it is not distinct from its owner/proprietor. In the event that any liability occurs during the course of business, the owner will be held personally liable. Any Bangladeshi citizen at least 18 years old may establish a sole proprietorship.
Method of Restaurant Business registration in Bangladesh:
In order to establish a single proprietorship in Bangladesh, the following actions must be taken:
Step 1: Business name proposal.
Step 2: Obtaining a Business License
Trade License – This is the fundamental need for business ownership. This can be obtained by submitting an application to the appropriate City Corporation or local government together with the office lease or rental agreement. Entities that will operate in the commercial sector must apply for a commercial trade license, while those that will operate in the industrial sector must apply for an industrial trade license.
TIN Certificate — The application must be submitted through the National Board of Revenue’s online portal (NBR).
VAT certificate —- The application must be submitted using the National Board of Revenue’s online portal (NBR).
Partnership Method for Restaurant Business registration in Bangladesh:
The Registrar of Joint Stock Companies and Firms of Bangladesh (“RJSC”) must register a partnership business.
STEP 1- CHOOSING THE PARTNERSHIP NAME
The Registrar of Joint Stock Companies And Firms must grant a Name Clearance for the proposed name of the Partnership Business (RJSC).
STEP 2 – PREPARE A PARTNERSHIP DEED
In compliance with the Stamp Act, the Partnership Deed must be prepared on stamp paper, and all partners must sign it before having it notarized.
STEP 3- REGISTER PARTNERSHIP DEED WITH RJSC
The partnership agreement and a completed Form I must be submitted to RJSC. The RJSC officials will analyze the submitted documents and issue a Certificate of Registration.
Timeline – It takes approximately two weeks to get the Certificate of Registration from RJSC after submitting the required papers in accordance with STEP 3.
TIN Certificate ———- The application must be submitted using the National Board of Revenue’s online portal (NBR).
Trade License for Restaurant Business registration in Bangladesh –
The application, along with the applicable government fees, must be submitted to the relevant municipal corporation office/local government office, along with the business paperwork and the lease/rent deed of the Business’s office space. Entities that will operate in the commercial sector must apply for a commercial trade license, while those that will operate in the industrial sector must apply for an industrial trade license.
VAT certificate —— The application must be submitted using the National Board of Revenue’s online portal (NBR).
PRIVATE LIMITED COMPANY for Restaurant Business registration in Bangladesh:
Method for company formation:
The steps involved in establishing a company are as follows:
First, a Name Clearance must be obtained from RJSC for the proposed name of the company.
The second step is to draft and sign the following:
• Memorandum and Articles of Association of the company
STEP 3 :
Opening a bank account for the Bangladeshi company and transferring the foreign owners’ share capital (not required for local shareholders)
The bank must give an encashment certificate for the international transfer (not required for local shareholders)
The documents specified in step 2 must be signed and submitted to the RJSC along with the encashment certificate and the incorporation fees.
The RJSC will conduct a document verification and give the certified incorporation paperwork.
Timeline for Restaurant Business registration in Bangladesh –
It typically takes three to four weeks for RJSC to issue the certifications following the submission of the required documents in Step 5.
TIN certificate ——— After the company has been properly created, an online application must be submitted to get the certificate. In addition, the application requires a local phone number and a registered office address.
Trade License —- The application, along with the applicable government fees, must be sent to the relevant city corporation office, along with the company’s documentation and the lease/rent deed for its office space. Entities that will operate in the commercial sector must apply for a commercial trade license, while those that will operate in the industrial sector must apply for an industrial trade license.
VAT certificate after Restaurant Business registration in Bangladesh :
The application must be submitted via an online portal alongside Company documentation.
Certain licenses and/or approvals for Restaurant Business registration in Bangladesh:
The restaurants create commercial food goods and beverages that are offered to a large number of people; as a result, they must adhere to particular health standards and need special authorization and license from the Bangladeshi government in order to conduct business there.
Restaurant License for Restaurant Business registration in Bangladesh:
To operate a restaurant, an application with the required fee and procedure must be submitted to the appropriate registrar.
Upon receipt of the application, the registrar will examine the given information. If the registrar is satisfied, he will provide a certificate of registration to the applicant, specifying the time, procedure, and criteria on the application form.
Initiate the restaurant business and receive a license within one year of the date the registration certificate was issued.
The business owner must next submit an application to the respective controller with the necessary fee and paperwork to receive a license.
If the inspector is satisfied, the controller will issue the license.
After three years, the license will expire and be renewed.
Import Registration Certificate (IRC) for Restaurant Business registration in Bangladesh-
Entities who wish to import food or restaurant equipment are required to get the IRC.
The IRC application must be submitted to the Office of the Chief Controller of Imports along with the entity’s incorporation paperwork, TIN certificate, trade license, bank solvency certificate, chamber of commerce membership certificate, and applicable government fees. The certificate must be renewed each year.
Fire License for Restaurant Business registration in Bangladesh:
Buildings and commercial organizations are required to obtain a fire license in consideration of the surrounding environment and to protect the safety of the firm and its personnel. It is issued by the Fire Service and Civil Defense (FSCD) body functioning under Bangladesh’s Ministry of Interior.
The following documents must be provided in order to receive a fire license: –
1. prescribed application form;
2. trade license;
3. annual value certificates;
4. agreement deed;
5. establishment layout;
6. Certificate of Organization;
7. Memorandum and Articles of Association; 8. Certificate of no objection from the local authority; 9. Certificate of clearance from the FSCD office; 10. Deposit slip/treasury challan.
Certification Mark from Bangladesh Standards and Testing Institution (BSTI) –
There are 71 Agricultural and Food Products under the mandatory Certification Marks (CM) scheme of BSTI, which means that the marketing of any of these items requires a Bangladesh Standard conformity certificate from the BSTI. There are 23 imported Food Products that require certification prior to customs clearance. If a restaurant uses a product from these two categories, it must ensure that the product bears the appropriate Certification Marks.
Legal Issues in regards Restaurant Business registration in Bangladesh
Annual General Compliances of Business Entities – Entities are required to comply with annual filing requirements, such as updating trade license at the respective city corporation, renewing chamber membership, renewing IRC, filing taxes, updating annual filings at the RJSC for limited liability companies, and renewing branch office permission at BIDA when it expires.
Implications of Contract Law in Restaurant Business registration in Bangladesh –
The entities’ interaction with dealers/vendors who provide products or services to the business is an integral component. When selling items to dealers or receiving goods and/or services from vendors, there should be a dealership/vendor agreement in place.
Vendor Agreements can include a wide range of services, including software, professional services, office supplies, technical services, event organizing, marketing, and consultants.
In the event of a dispute, the agreement, in addition to the applicable laws, plays a crucial part in resolving the dispute; therefore, it is crucial to protect one’s interests when drafting agreements.
The franchise agreement is also an essential component of this industry, since numerous businesses bring the products of international bands to market as franchisees.
It is essential that this agreement be drafted with all legal aspects clarified, particularly in accordance with Bangladesh Bank’s foreign exchange requirements. This will be useful when remitting royalties to the franchisor via banking channels. Foreign owners may also remit the dividend after deducting the applicable taxes, in addition to the royalty payment.
Requirements Labour regulations for Restaurant Business registration in Bangladesh-
Entities must guarantee that their relationships with employees comply with Bangladesh’s labour laws. Employees must have a letter of appointment that specifies their job title, job description, remuneration, benefits and welfare, applicable working hours and leaves, etc. It should be highlighted that an employer cannot, via contract or appointment letter, supply less than what the labor laws require. It is also the responsibility of the employer to ensure a safe and healthy work environment.
Foreign Exchange regulations– Entities with foreign investors must ensure that the initial investment is made via proper banking channels, e.g. at the time of company incorporation or purchasing shares of an existing company, the foreign investors should be remitting the share capital amount from their foreign bank account Company’s bank account with a note reading “investment in the share capital of (Name of Company)”. This will demonstrate that the investment was made through the proper channels, and when remitting the profit, these initial investment paperwork and information will facilitate a smooth transfer in accordance with Bangladesh Bank regulations.
Certification Marks from BSTI There are food and agricultural goods from number (Number 1-71 in the product list of BSTI). BSTI also released a list of 55 Imported Products subject to required certification prior to customs clearance, 23 of which are food products (Number 1-23 in the list of imported products)
The Food (Special Courts) Act of 1956 and Restaurant Business registration in Bangladesh:.
The Food (Special Courts) Act of 1956 provides for the establishment of special courts for the rapid trial of food-related offenses. A Special Magistrate may accept jurisdiction over any crime punishable by this Act. If a person commits an offense punishable under this Act, he shall be punished with imprisonment for a term that may not exceed three years or with a fine, or with any one or both of these, and the Court of Special Magistrate trying such an offense may order that any foodstuffs in respect of which it is satisfied that a notified order has been violated shall be forfeited to the government.
1983 Fish and Fish Products (Inspection and Quality Control) Ordinance Application
The Fish and Fish Products (Inspection and Quality Control) Ordinance, 1983 governs fish and fish product inspection and quality control. Fish items that are decomposed, unfit for human consumption, or infected with pathogenic organisms should not be exported, marketed for export, or possessed for export. A person with leprosy, tuberculosis, or any other contagious disease that the government may specify by notification in the official Gazette may not catch, handle, transport, or process fish or fish products, or cause others to do so, nor may they work in fish processing and fish packing plants and establishments. The penalty for violating these laws is imprisonment for up to six months or a fine of up to five thousand Taka, or both.
Implementation of the 2013 Food Safety Act
The Food Safety Act of 2013 addresses a broad range of issues to guarantee the right to access safe food for the protection of human health and life. There are certain restrictions associated with Food Safety Management System.
• Use of hazardous materials, substances, or ingredients, pesticides, or intoxicated food coloring or flavoring, or any other intoxicated additions or processing aids that may be harmful to human health;
• Excessive use of radioactive materials, heavy metals, etc., beyond allowable limits.
• Production of a contaminated food item or food additive, etc.
• Applications of food additives and processing aids
• The storage of spent industrial oil, industrial waste, adulterants, and other contaminants in food establishments.
• Expired food items or food ingredients
• The use of growth boosters, insecticides, herbicides, drug residues, microorganisms, etc.
• The sale of diseased or putrefied fish, meat, milk, eggs, etc., as well as any food products manufactured from such substances.
• Maintaining and displaying the name, address, and receipt or challan of the relevant parties.
If a person violates a law and is found guilty and fined by a Food Court, the complainant is entitled to receive 25% of the fine as an incentive: If the complainant is an officer or employee of the Authority, he is ineligible to receive such an incentive.
Application of the 2014 Hotel and Restaurant Ordinance of Bangladesh:
“Restaurant” refers to a business establishment where customers can purchase regular cuisine for a fee that meets the minimum set specifications and has seating for at least thirty people. This law prohibits the operation of a restaurant without a registration certificate and license. The restaurant’s owner may transfer ownership by notifying the controller.
The previous owner must return the registration certificate and license to the controller, and the new owner of the restaurant must complete the procedure and pay the costs to obtain a new license. If a person or owner violates any provision of this act, they shall face six months of simple imprisonment or a maximum fine of two lakhs of Bangladeshi taka, or both. If a firm violates the legislation under this act, the individual directly involved in the violation shall be held accountable.
Implementation of the Consumer Protection Act for Restaurant Business registration in Bangladesh:
The Consumers’ Right Protection Act, 2009 (Act No. 26 of 2009) [6 th April, 2009] regulates the provisions for the protection of the rights of consumers, the prevention of anti-consumer right practices, and things related thereto. If anyone violates any provision of this legislation, he will be punished.
• The penalty for failing to label goods with their weight, quantity, ingredients, instructions for use, maximum retail price, date of manufacturing, date of packaging, and date of expiration must be imprisonment for a term not exceeding one year or a fine not exceeding fifty thousand taka, or both.
• The penalty for failing to display a price list is imprisonment for a term not to exceed one year or a fine not to exceed fifty thousand taka, or both.
• The penalty for failing to maintain and show pricing lists for services is imprisonment for a term not exceeding one year or a fine not exceeding fifty thousand Taka, or both.
• Mixing forbidden substances into food that is harmful to human life or health is punishable by imprisonment for a term not to exceed three years, a fine not to exceed two lacs of Taka, or both.
• The penalty for misleading consumers by fraudulent advertising is imprisonment for a term not to exceed one year or a fine not to exceed two lacs of Taka, or both.
• The penalty for selling date-expired products is imprisonment for up to one year, a fine of up to fifty thousand taka, or both.
Application-based mobile food delivery service –
There is currently no specific legislation governing restaurants’ mobile application-based food delivery services. However, they shall be required to obtain a license from the licensing authority under the Ministry of Posts, Telecommunications and Information Technology in accordance with the Mailing Operator and Courier Service Rules, 2013 as they fall under the definition of courier services according to the aforementioned Rule and the Post Office Act, 1890.
Trademark after Restaurant Business registration in Bangladesh:
After the registration of the entity, it may apply to the Department of Patents, Designs, and Trademarks (DPDT) for registration of its trademarks and/or other Intellectual Property in order to protect trademarks and other IP-related matters. An applicant must submit a trademark registration application to the Trademark Registry Wing of the DPDT.
A trademark registration application must include the following elements:
• the Mark/Logo • the Applicant’s Name.
• The applicant’s complete address and nationality.
• The applicant’s status as merchandisers, manufacturers, or service providers
• Goods Specification and Classification.
• Date of use of the mark (whether the mark is in use or proposed to be used in Bangladesh).
• A general or particular power of attorney may be necessary.
• Fee for application
Acceptance or Denial of the Trademark:
Once the application has been filed and the documents have been examined and accepted by the Registrar, the application will be sent to the journal publication to determine whether there are any objections to the mark. In the event of an objection, the Registrar will decide the matter based on the documentation supplied by both parties.
If there is no opposition, however, DPDT will notify the applicant to pay certification fees and then issue the trademark registration certificate. It typically takes between three and five years to receive the final certificate of trademark registration. In the interim, the entity is permitted to begin using the mark. A registered trademark is valid for an initial period of seven (7) years from the date of filing, with subsequent renewals for ten (10) years.
Tahmidur Rahman Remura Wahid TRW law firm in Bangladesh AND ITS SERVICES regarding restaurant business in bangladesh:
According to the BBS survey, hotel and restaurant employment increased from 9 lakh in 2009-10 to 22.8 lakh in 2019-20.
The sector’s contribution to the gross domestic product has increased to 0.75 percent. In fiscal 2019-20, the value was Tk 87,926 billion, compared to Tk 11,986 billion in 2009-10.
As a full-service law practice, Tahmidur Rahman Remura Wahid TRW Associates provides all forms of legal and financial services through its knowledgeable and competent employees.
Tahmidur Rahman Remura Wahid TRW Associates provides services for establishing entities, such as sole proprietorships, partnerships, and/or limited liability companies, in Bangladesh and getting the necessary permits from the applicable government authorities. The services include drafting relevant documents, forms, and providing the required document list and procedure, as well as submitting the application with the relevant documents to the appropriate government office, liaising with them throughout the verification process, and obtaining the required certified documents.
Drafting and vetting agreements: As stated previously, the entities require the drafting of various types of agreements, such as vendor, employment, and franchises agreements, which are required to be drafted in accordance with the applicable laws of Bangladesh, while at the same time safeguarding their interests in order to use these agreements to their advantage in the event of future disputes.
Legal Opinion and/or Due Diligence Report:
Tahmidur Rahman Remura Wahid TRW Associates gives legal opinion to clients in regards to the implication of laws and its impact on a variety of matters, allowing them to make informed business decisions by considering the legal aspect.
In addition, Tahmidur Rahman Remura Wahid TRW Associates offers interested customers with a due diligence report for their entities that highlights all the legal criteria that must be met and any non-compliances that must be addressed.
Tahmidur Rahman Remura Wahid TRW Associates offers a formidable litigation team that assists and represents clients in defending/filing disputes before courts or tribunals for all sorts of litigation.
The entire scenario has a negative impact on the income of the majority of individuals. People already struggle to have consistent access to food. People who are still able to buy restaurant meals are concerned about their health, and they eat very little food prepared in restaurants’ kitchens.
Companies should plan for the pandemic and for situations in which the outbreak has a negative impact on business in general and on the fulfilment of commercial contracts in particular. Specifically, businesses should assess whether they are permitted to use force majeure under the terms of their contracts and defer the fulfillment of their contractual duties without incurring a penalty.
A force majeure clause does permit a party’s complete inability to execute, but only for the length of the force majeure occurrence. If properly prepared, the force majeure clause may indicate that if a force majeure event continues for longer than a specified period, either party may terminate the contract without incurring any financial liability.
Since the theory of force majeure has no clear legislative basis in Bangladeshi law, its reliance is essentially based on the parties’ agreement and the respective conditions of the contract entered into between the contracting parties.
The Contract Act of 1872 (the “Act of 1872”), which is governed by Bangladeshi law, governs all contracts. The idea of frustration is codified in Section 56 of the Act of 1872, which states that a contract is null and void if its performance becomes impracticable or if, as a result of some occurrence, it becomes illegal after it has been entered into.
Therefore, if the contract becomes difficult to perform due to Corona, it shall be considered null and void under Bangladeshi law, provided that the defaulting party did not know or could not have reasonably known that the contract would become impossible to perform. A null contract has the effect that it cannot be enforced by law and the parties are released from their respective duties.
To use the doctrine of frustration, the fulfilment of the contract must become totally impossible due to the occurrence of an unanticipated catastrophe, such as a pandemic of the Corona virus.
In the absence of an appropriately worded force majeure clause in a contract, the parties in Bangladesh may be able to rely on existing provisions of Bangladeshi law, specifically Section 56 of the Act of 1872, to excuse themselves from timely performance of their respective obligations under the contract.
In addition, the government of Bangladesh has offered a package worth BDT 500,000,000,000 in an effort to stimulate the economy should a recession result from the pandemic’s effects. The business entities are optimistic that if this sector contributes its due share to the aforesaid package, it would be able to stimulate the local economy and help end the recession.
Taxation after Restaurant Business registration in Bangladesh:
The current general tax rate in Bangladesh is 32.5 percent, as stipulated by its legislation. Locally formed limited liability companies are required to submit a number of reports to the National Board of Revenue (NBR), such as a Tax Identification Number (TIN) application, a monthly tax deduction statement, a half-yearly withholding tax statement, a yearly statement related to the tax return submission of its employees, and a yearly statement related to the salary paid by the company to its employees. Quarterly Advance tax deposit, Annual tax return submission, representing the company at appeal/hearing sessions, Monthly VAT return, etc.
Tahmidur Rahman Remura Wahid TRW may provide guidance and assistance to ensure that all regulatory compliances are met, allowing the business to operate without difficulty.
The Bangladeshi restaurant business is expanding exponentially. The business environment is becoming more competitive, and everyone is developing new strategies to remain in this field. The demand from customers is still on the rise, although it has not yet peaked. This rising demand necessitates more investors to be met by the market.
|Top Factors that Make Customers Return to a Restaurant in 2023|
|Quality of food||50%|
|Attention to cleanliness and safety||43%|
|Desire to support local business||22%|
|Discounts and offers||15%|
|Presence on delivery apps||12%|
|Social media or email marketing||10%|
Business Potential Restaurant Business registration in Bangladesh:
Bangladesh’s restaurant business has a tremendous amount of untapped potential, as local demand continues to rise. The constant desire to try new cuisines is raising the demand for eateries.
Investors have the option of forming a Sole Proprietorship, Partnership Business, or Private Limited Company in order to participate in the restaurant industry. To promote a business-friendly climate, BIDA has opened a one-stop services center for investors, where services ranging from entity incorporation to post-incorporation licenses are accessible.
As a full-service law practice, Tahmidur Rahman Remura Wahid TRW Associates provides all types of legal and financial help, beginning with entity registration and ending with annual compliance and litigation services. Tahmidur Rahman Remura Wahid TRW Associates is comprised of competent Barristers and Advocates with knowledge in a variety of legal fields, allowing them to perform the required services at a high degree, and allowing customers to acquire all essential and supplementary legal services under one roof.
In spite of this, it is anticipated that as soon as the pandemic begins to decline, business will return and develop steadily.
Are you planning to do Restaurant Business registration in Bangladesh?
The legal team of Tahmidur Rahman, The Law Firm in Bangladesh: TRW, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related to forming and incorporating a Restaurant Business registration 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