How to register a branch office in Bangladesh is a frequently asked question from Bangladesh’s foreign investors. This article by the sole Bangladesh-based international law firm, Tahmidur Rahman Remura Wahid, TRW will outline the steps involved in establishing a branch office in Bangladesh. In addition, individuals want to know the cost and documentation requirements for establishing a branch office in Bangladesh. However, this article provides a comprehensive guide for registering a branch office in Bangladesh.
Profit and Capital Repatriation for Foreigners
Foreign capital invested in Bangladesh for industrial ventures with government approval is permitted to be repatriated from Bangladesh, along with any capital appreciation, provided Bangladesh Bank approval is first obtained. Remittance of dividends and profits is now permitted with fewer restrictions. Before profits from foreign subsidiaries can be transferred back to the parent company, Bangladesh Bank approval is required. First, taxes must be paid. Profit remittance requests must be submitted to the Bangladesh Bank via the applicant’s bank. It is essential
Repatriation of investments made in Bangladesh with the approval of the government of Bangladesh / Bangladesh Bank is permissible, assuming the disinvestment was also made with the approval. Actual remittances will be permitted subject to the satisfaction of such conditions as to repatriation amount and installments, etc., as may be applicable from time to time.
With prior permission from Bangladesh Bank, foreign nationals temporarily residing in Bangladesh may transfer to their home countries current assets such as salary, dividend, etc. savings.
There are currently no restrictions on the receipt of remittances through appropriate banking channels from any foreign nation in Bangladesh. Additionally, there are no restrictions on the importation of foreign currency checks. Drafts in any foreign currency may be freely converted by authorized dealers. Traveler’s checks and foreign currency notes / coins may be exchanged for taka at money-changers authorized by the Bangladesh Bank to conduct such transactions.
Agreements for the remittance of fees for the purposes of royalties, technical know-how, and technical assistance do not require the prior approval of the BIDA if the total fees and other expenses associated with technology transfer (service fee, marketing commission, etc.) fall within the following limits. Such fees and other expenses should not exceed six percent of the commercial value of imported machinery for new projects.
Recurring annual fees for royalties and other expenses, such as fees for technical know-how, technical assistance, operational services, marketing of products, etc., should not exceed a limit of 6 percent of the previous year’s sales reported on the tax return of the company.
Once the above-mentioned technical transfer agreements have been signed, they must be submitted to the BIDA for registration.
Proposals that fall within the prescribed limits will require the BIDA’s prior approval, for which an application must be submitted along with the required documentation and a copy of the relevant draft agreement.
How to Register a Branch Office in Bangladesh
Several steps and legal procedures are required for a reputable law firm in Bangladesh to register a branch office in Bangladesh. Here is an outline of the procedure:
Step one: BIDA Document Submission
BIDA approval is the first stage in establishing a branch office in Bangladesh. To obtain BIDA approval, the following documents must be submitted to BIDA.
- Documents that required:
The following papers/documents are required to apply for the establishment of a branch office in accordance with BIDA regulations. Four copies of all documents are required.
- Application for the establishment of a branch office on the prescribed form, signed by the authorized representative
- The principal/parent company’s Memorandum and Articles of Association and Certificate of Incorporation. (Attested by the Bangladesh Embassy concerned)
- The names and nationalities of the principal company’s directors and promoters. (Attested by the Bangladesh Embassy concerned)
Last year’s audited financial statements for the parent company. (Attested by the Bangladesh Embassy concerned)
The resolution of the company’s board of directors regarding the establishment of an office in Bangladesh. (Attested by the Bangladesh Embassy concerned)
The proposed office organogram displays the positions to be filled by both expatriates and locals.
- Specifics of the activities that will be carried out by the proposed branch/liaison/representative office in Bangladesh.
Finally, 8. Other documents BIDA may request after initial review
In addition, you must translate any non-English documents before submitting them.
- b) Examination
After obtaining the documents, the Inter-Ministerial Committee of BIDA will conduct a thorough review. Afterwards, if the committee is satisfied, they will grant approval or request additional documentation. Therefore, it is essential to meticulously prepare the documents.
- c) Time
One month is the average time required for submission and approval. However, BIDA may require the physical representation of the documents, which could lengthen the process.
- d) Cost to the Government for Approval
The government fee for obtaining BIDA approval is $300 (three hundred dollars)
Phase two: Establishing a Bank Account to Establish a Branch Office
After receiving approval from BIDA, the next stage is to open a bank account in Bangladesh. This is because, although there is no minimum paid-up capital requirement for establishing a branch office, a remittance of US$ 50,000 must be made within two months of the BIDA permission letter being issued. You have to make sure you do it with a lawyer who is well versed in the Banking and Finance industry of Bangladesh. For example, Barrister Tahmidur Rahman is highly regarded as the best banking lawyer in Bangladesh.
- a) Documents:
The documents required to establish a bank account are: i. a letter of authorization from BIDA
- Article of Incorporation and Memorandum of Association
In addition, the signatory’s passport (if they are a foreign national) and NID (if they are a Bangladeshi national) are required.
Step three: approval by the Bangladesh Bank
Recent amendments have been made to the Foreign Exchange Regulations Act 1947 by the Bangladeshi parliament. The requirement for 18B approval from the Bangladesh Bank has been eliminated. In addition, pursuant to the amendment, the branch office must report to the Central Bank of Bangladesh after receiving approval from BIDA. This report must be submitted within thirty (30) days of approval.
Step four: RJSC Branch Office Registration
After obtaining both Bangladesh Bank and BIDA’s approval, the final stage is to register the branch office with the RJSC.
- Documents:
- BIDA and Bangladesh Bank approval letter
- Certified copies of the Memorandum of Association and Articles of Association
- Full address of the registered or principal office of the company
- List of the directors and secretary (if any) of the company
- in addition, the name and address of a Bangladeshi who may represent the company in processing and accepting documents and • the name and address of a Bangladeshi who may represent the company in processing and accepting documents and
- The complete address of the company’s office in Bangladesh
Step Five: Commercial License from the Local Municipality
A business license application must be submitted to the appropriate city corporation. The following information and documents must be submitted with the application:
- a) Documents
- Photocopy of the Articles of Association and Memorandum of Association • Photograph of the Managing Director or Chairman • TIN of the branch office • Additionally, the Rental agreement for the office and
- lastly, the Business Nature
- b) Time
It typically takes three to four business days to obtain a business license. To learn more about how to obtain a business license in Bangladesh.
- c) Cost
The government fee for a business license is one hundred dollars (USD).
Income Tax and VAT Registration is the sixth step.
To conduct normal business operations in Bangladesh after establishing a branch office, the branch office must have a unique Business Identification Number (BIN). Therefore, a VAT registration certificate must be acquired from the Department of the National Board of Revenue (NBR) in order to obtain an Employer Identification Number.
The process of registering for VAT is free.
Documents that will be required:
- TIN Certificate
- Trade License
- Import/Export Registration certificate • In addition, passport-sized photographs • Deed of Agreement • Bank solvency certificate • in addition, BOI registration and • finally, the Memorandum and Articles of Association
Can an international worker be employed at the Branch office?
Sponsors may submit Private Investor Visa applications. Foreign employees can appointments. Foreign employees who wish to work in Bangladesh are required to obtain a work permit. It is a multiple-entry visa with an initial validity period of three months that can be extended.
A branch superintendent may be a foreigner, but he or she must be a Bangladeshi resident. Also, observe that Bangladeshi law limits the number of foreign employees in a branch to no more than 5%. In addition, the Board of Investment (currently known as the Bangladesh Investment Development Authority) Handbook 2011 states that the current maximum ratio of foreign to local employees is 1:5 for commercial offices and 1:20 for industrial enterprises.
Validity Period of Acceptance:
The sanction to establish a branch is typically granted for three years and must be extended/renewal. You must submit a request for renewal or extension at least 2 months prior to the expiration of the current term.
Expenditure necessary for an auxiliary office.
In Bangladesh, there is no minimum capital requirement for branch offices. For registration of branch offices in Bangladesh, a minimum inward remittance of US$ 50,000 is required, as this amount should cover the cost of initial establishment and six months of operating expenses.
Period for establishing an auxiliary office
It takes anywhere from sixty to ninety days to establish a branch office in Bangladesh.
The operations of a Branch office in Bangladesh:
The branch office does not exist as a distinct legal entity. Because it functions as an extension of its parent organization. Therefore, the parent company is entirely responsible for the branch office’s activities, debts, and obligations.
A branch office, unlike a liaison office, can engage in commercial activities. However, prior sanction from the Bangladesh Investment Development Authority (BIDA) is necessary for this.
Examples of Branch office activities include:
- Payment collection for the parent organization
- Local sources of revenue for the branch office c. Additionally, make an outward payment from Bangladesh (with BIDA’s approval).
Company Law practice in TR Barristers in Bangladesh
The Barristers, Advocates, and lawyers at Tahmidur Rahman TRW Law chamber in Mohakhali DOHS, Dhaka, Bangladesh are highly experienced at assisting clients in dealing with and registering branch offices in Bangladesh. For queries or legal assistance to set up a branch office in Bangladesh, please reach us at:
E-mail: [email protected]
Phone: +8801847220062 or +8801779127165
House 410, Road 29, Mohakhali DOHS
