Incorporating a foreign company in Bangladesh
Setting up a business in Bangladesh offers several advantages, making it an attractive destination for entrepreneurs and investors. Here are some key benefits:
1. Growing Economy
Bangladesh has experienced impressive economic growth in recent years, with a steadily expanding GDP. The country has become one of the fastest-growing economies in Asia, driven by sectors like textiles, agriculture, and manufacturing.
The country’s growth potential is seen as an opportunity for long-term investments.
2. Strategic Location
Bangladesh is strategically located in South Asia, with easy access to major markets like India, China, and Southeast Asia. It also provides proximity to global shipping routes, which is beneficial for trade and export businesses.
3. Large Consumer Market
With a population of over 160 million people, Bangladesh offers a large domestic market for products and services. This is particularly attractive for businesses targeting consumer goods, retail, and services.
4. Competitive Labor Force
Bangladesh has a young, cost-effective, and growing workforce. The country is known for its affordable labor costs, which makes it an appealing destination for manufacturing and service-oriented businesses.
Many workers are skilled in industries like textiles and garment production, which is a major export sector.
5. Incentives for Foreign Investment
The government offers various incentives for foreign investors, such as tax holidays, duty exemptions, and special economic zones (SEZs) that provide attractive terms for setting up businesses.
The Bangladesh Investment Development Authority (BIDA) also provides support to foreign investors with regulatory and procedural matters.
6. Trade Agreements and Access to Global Markets
Bangladesh is a member of several international trade organizations, including the World Trade Organization (WTO), the South Asian Free Trade Area (SAFTA), and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).
The country also enjoys preferential trade access to European Union markets under the “Everything But Arms” (EBA) initiative, which allows duty-free exports of many products.
7. Growing Infrastructure
Significant investments are being made in improving infrastructure in Bangladesh. Roads, ports, airports, and power generation are being modernized to improve business efficiency and connectivity.
The government is focusing on improving the ease of doing business, and initiatives are being taken to create a more investor-friendly environment.
8. Competitive Tax Rates
Bangladesh has relatively low corporate tax rates compared to many other countries, making it an attractive location for business setup.
Additionally, there are tax exemptions in certain sectors, such as export-oriented industries.
9. Government Support and Reforms
The government has undertaken multiple reforms to improve the business environment, including simplifying business registration processes, reducing red tape, and offering support for entrepreneurship.
There are also efforts to ease regulations related to land ownership, labor laws, and export/import processes.
10. Focus on Sustainable Development
Bangladesh is becoming increasingly focused on sustainable development and green business practices, providing opportunities for businesses in renewable energy, waste management, and eco-friendly technology.
11. Untapped Potential in Various Sectors
Several sectors in Bangladesh are underdeveloped and offer growth potential, including infrastructure, ICT, pharmaceuticals, education, and healthcare.
This creates opportunities for businesses to tap into emerging markets and become industry leaders in their respective sectors.
12. Export-Oriented Economy
Bangladesh is one of the largest exporters of ready-made garments (RMG), textiles, and agricultural products. For businesses in these sectors, Bangladesh offers a ready platform for exports and access to global supply chains.
13. Investment in Technology and Innovation
The rise of the digital economy is helping to foster innovation and new business opportunities in fields such as fintech, e-commerce, and digital marketing.
The growing penetration of the internet and mobile phones is creating new opportunities for tech-driven businesses.
Starting a business in Bangladesh can be highly rewarding due to its growing economy, cost-effective labor force, strategic location, and investment incentives. Entrepreneurs and foreign investors can take advantage of a large consumer base, government support, and an improving infrastructure. While challenges exist, the business environment is evolving, making it an increasingly favorable place to set up and expand operations.
Incorporating a company in Bangladesh involves a well-defined, step-by-step process regulated by the Registrar of Joint Stock Companies and Firms (RJSC). Below is a detailed guide on how to incorporate a company in Bangladesh:
Step 1: Choose the Type of Company
Before starting the process, decide on the type of company you want to form. In Bangladesh, the most common types are:
Private Limited Company: Most common for small and medium businesses.
Public Limited Company: Suitable for businesses that plan to raise capital from the public.
Foreign Company: If a foreign entity wants to set up a branch or representative office.
Non-Profit Organization: If the purpose of the company is to operate for charitable purposes.
Step 2: Choose a Company Name
Unique Name: The name of the company must be unique and should not resemble any existing company name.
Check Name Availability: Conduct a name search on the RJSC website or at the Registrar’s office to ensure that your desired name is available. The name should also adhere to the regulations regarding prohibited words.
Step 3: Reserve the Company Name
Once you have a unique name, you must reserve it. You can reserve the name online through the RJSC website by submitting a name reservation application. This step is mandatory before proceeding with the incorporation process.
Step 4: Draft the Memorandum and Articles of Association
Memorandum of Association (MOA): This document outlines the main objectives of the company, its scope of operations, and other fundamental details.
Articles of Association (AOA): This document governs the internal management of the company, including the rights and responsibilities of shareholders, directors, and other key personnel.
These documents must be drafted in accordance with Bangladeshâs Company Law and should be signed by the founding members.
Step 5: Appointment of Directors and Shareholders
Directors: A private limited company in Bangladesh must have at least two directors, while a public limited company requires a minimum of three.
Shareholders: A private limited company must have at least two shareholders. For a public company, a minimum of seven shareholders is required. The directors and shareholders can be individuals or corporate entities.
Step 6: Submit Documents for Registration
The following documents must be submitted to the RJSC for the registration of the company:
Incorporation Application (Form IX)
Memorandum of Association (MOA) and Articles of Association (AOA)
Certified copy of the National Identity Card or Passport of directors and shareholders
Proof of registered office address (such as a lease agreement, utility bill, or property tax receipt)
Bank Certificate: A certificate from a bank showing the deposit of the minimum capital (if applicable).
TIN Number (Taxpayer Identification Number) of the directors and shareholders.
Step 7: Pay the Registration Fee
The registration fee is based on the authorized capital of the company. You can check the fee schedule on the RJSC website. The payment can be made online or at the RJSC office.
Step 8: Review and Approval by RJSC
Once the application and documents are submitted, the RJSC will review them for compliance. This process usually takes a few days. If everything is in order, the Registrar of Joint Stock Companies will approve the application.
You will be issued a Certificate of Incorporation, which officially establishes your company.
Step 9: Obtain the Digital Signature
After incorporation, you need to obtain a Digital Signature Certificate from the authorized agency for e-filing purposes, such as Bangladesh Computer Council (BCC).
This is essential for filing tax returns, submitting documents electronically, and for business-related government correspondence.
Step 10: Register for Taxes
Tax Identification Number (TIN): Your company must apply for a TIN with the National Board of Revenue (NBR). The TIN is required for tax purposes and for obtaining VAT (if applicable).
VAT Registration: If your companyâs turnover is above the VAT threshold, you will need to register for VAT with the NBR.
Step 11: Register with Other Relevant Authorities
Depending on your business type, you may need additional licenses or registrations, such as:
Import/Export Registration with the Customs Department if you intend to engage in international trade.
Trade License from the local City Corporation or Municipal Corporation to legally operate within your locality.
Employee Provident Fund (EPF) registration if you plan to hire employees.
Step 12: Open a Corporate Bank Account
Once the company is incorporated, you will need to open a business bank account in the companyâs name. Youâll need the Certificate of Incorporation, TIN, and MOA/AOA to open the account.
Step 13: Compliance with Ongoing Regulations
After incorporation, ensure compliance with ongoing legal and regulatory requirements, including:
Annual General Meeting (AGM): Conduct an AGM to review financial statements and elect directors if applicable.
Annual Filing with RJSC: Submit annual returns and financial statements to RJSC to maintain your company’s legal status.
Tax Filings: Regularly file tax returns with the NBR to comply with tax obligations.
The process of incorporating a company in Bangladesh is straightforward but involves several key steps, including reserving a company name, drafting legal documents, and registering with the relevant authorities. Itâs important to ensure all documents and filings are accurate and comply with local regulations to ensure smooth registration and business operations. It may also be beneficial to consult with legal or business professionals to guide you through the process.
Incorporating a foreign company in Bangladesh follows a detailed process that is governed by the Registrar of Joint Stock Companies and Firms (RJSC), as well as other regulatory bodies. Foreign companies can set up their operations in Bangladesh in several forms, including as a branch office, representative office, or subsidiary of an overseas company. Hereâs a step-by-step guide to incorporating a foreign company in Bangladesh:
Step 1: Decide on the Type of Foreign Entity
The first step is to decide on the type of foreign business entity that suits your goals. The main options are:
Branch Office: A branch office is an extension of the parent company and can carry out business activities such as sales, marketing, and operational activities in Bangladesh.
Representative Office: A representative office is limited to non-commercial activities like market research, promotional activities, and liaison between the parent company and local parties.
Wholly Owned Subsidiary: A subsidiary is a separate legal entity that is fully owned by the foreign parent company and operates like a Bangladeshi company, subject to local regulations.
Step 2: Obtain Permission from the Bangladesh Investment Development Authority (BIDA)
Foreign companies need to obtain permission from the Bangladesh Investment Development Authority (BIDA), which is the central authority overseeing foreign investment in Bangladesh. This applies to all types of foreign companies, whether itâs a branch office, representative office, or subsidiary.
Submit an Application to BIDA: Provide details of the parent company, its business activities, and the proposed business plan in Bangladesh.
Documents Required: The documents that must be submitted include:
Parent Companyâs Certificate of Incorporation (certified copy)
Memorandum and Articles of Association (certified copies)
Financial Statements for the last three years
Letter of Intent describing the nature of the business in Bangladesh
A copy of the passport of the foreign companyâs representative in Bangladesh
Company Profile and other relevant documents as per the nature of the business
Step 3: Submit Application to RJSC (Registrar of Joint Stock Companies and Firms)
Once BIDA grants approval, the foreign company must register with the Registrar of Joint Stock Companies and Firms (RJSC) to get the formal legal status of the foreign company in Bangladesh.
Required Documents:
BIDA approval (if applicable)
Memorandum and Articles of Association (translated into Bangla if necessary)
Certificate of Incorporation from the parent company
Board Resolution of the parent company authorizing the opening of the office in Bangladesh
Details of the local representative in Bangladesh (for Branch and Representative Offices)
Local address proof for the registered office in Bangladesh
Legal representative details (for Branch and Subsidiary)
Step 4: Register for Taxes with the National Board of Revenue (NBR)
After registering with RJSC, the foreign company must register for taxes with the National Board of Revenue (NBR) in Bangladesh. This is a mandatory step for all foreign companies.
Obtain a Taxpayer Identification Number (TIN): A foreign company needs to apply for a TIN to legally conduct business in Bangladesh.
VAT Registration: If the companyâs turnover exceeds the VAT threshold, it must also register for VAT with the NBR.
Customs Registration: If the company plans to import/export goods, it will need to register with Customs as well.
Step 5: Open a Bank Account in Bangladesh
After obtaining the necessary approvals, the foreign company needs to open a local corporate bank account in Bangladesh. This will be used for operational and transactional purposes. For this process, you will need:
Certificate of Incorporation from RJSC
TIN from NBR
BIDA approval (if applicable)
Letter from the parent company detailing the companyâs legal status
Step 6: Obtain Other Necessary Licenses
Depending on the nature of the foreign company’s business, additional licenses or permits may be required. This can include:
Import/Export License: If the business involves importing or exporting goods, it will need to be registered with the Customs Department and obtain an import/export license.
Trade License: Issued by the local City Corporation or Municipal Corporation, it is required to operate legally within the specified jurisdiction.
Sector-Specific Licenses: Certain industries (e.g., banking, insurance, telecom) may require specific licenses from regulatory bodies such as the Bangladesh Bank or Bangladesh Telecommunication Regulatory Commission (BTRC).
Step 7: Comply with Foreign Exchange Regulations
Foreign companies must also comply with foreign exchange control regulations set by the Bangladesh Bank. These regulations govern the repatriation of profits, dividends, and capital from Bangladesh to the parent company abroad.
Capital Remittance: Foreign companies must repatriate capital or profits through a designated bank authorized by the Bangladesh Bank.
Dividend Distribution: Foreign companies can remit dividends to the parent company, subject to applicable taxes.
Step 8: Employment and Social Security
If the foreign company plans to hire local employees, it must comply with Bangladesh labor laws and register with the Employeesâ Provident Fund (EPF) and Gratuity Fund if applicable. Employers must also:
Pay the relevant contributions to EPF
Comply with minimum wage laws and other employment regulations
Step 9: Ongoing Compliance
Foreign companies are required to maintain ongoing compliance with local regulations, including:
Annual Returns: Submit annual returns and financial statements to the RJSC.
Tax Filing: Regularly file tax returns with the NBR.
Audit: The financial statements of the company must be audited by a licensed auditor in Bangladesh.
Annual General Meeting (AGM): For subsidiaries and branches, conducting AGMs as per the laws and regulations is required.
Conclusion
The process of incorporating a foreign company in Bangladesh is fairly straightforward, but it involves various legal and regulatory steps. These include obtaining approvals from BIDA, registering with the RJSC, acquiring the necessary tax identification, and ensuring compliance with local labor, tax, and customs regulations. Consulting with legal and financial professionals who are well-versed in local laws and regulations is advisable to ensure a smooth incorporation process.
