Bangladesh is rapidly emerging as a promising destination for foreign investors, thanks to its strategic location, growing economy, favorable government policies, and a young, dynamic workforce. If you are a foreign investor considering entering the Bangladeshi market, understanding the types of business entities available and the registration process is essential to ensure a smooth and compliant setup. This comprehensive guide explains the different types of companies foreigners can open in Bangladesh, the legal and procedural requirements, and how Habib Sarwar Bhuiyan & Co. Chartered Accountants can assist you in every step of the process.
Types of Business Entities Foreigners Can Establish in Bangladesh
Foreign investors have several options to establish their business presence in Bangladesh. Each type has distinct legal characteristics, operational scopes, and compliance requirements. The main types of foreign business entities in Bangladesh include:
1. Private Limited Company (Subsidiary Company)
The Private Limited Company is the most popular and flexible option for foreign investors. It is a locally incorporated company with limited liability, meaning shareholders’ liability is limited to their share capital. A foreign company can own 100% of a private limited company in Bangladesh, making it a wholly foreign-owned enterprise (WFOE).
Key Features:
- Separate legal entity distinct from the parent company.
- Can engage in any legally permissible commercial activity.
- Requires at least two directors and two shareholders (maximum 50).
- Minimum share capital requirement is low, often BDT 1 per shareholder.
- Must have a registered address in Bangladesh.
- Subject to annual compliance including audits, tax filings, and annual general meetings.
This structure offers operational autonomy, brand leverage, and limited liability protection. It is ideal for businesses aiming to establish a long-term, independent presence in Bangladesh.
2. Public Limited Company
A Public Limited Company is suitable for larger-scale operations, especially those intending to raise capital from the public by issuing shares. It requires stricter regulatory compliance and governance standards than private companies.
Foreign investors can participate in public limited companies either wholly or through joint ventures. This structure is less commonly used by foreign investors initially but may be relevant for expansion or large projects.
3. Branch Office
A Branch Office is an extension of the foreign parent company and not a separate legal entity. It can conduct business activities such as marketing, sales, and service provision but is not allowed to engage in manufacturing or production.
Key Points:
- Requires approval from Bangladesh Investment Development Authority (BIDA).
- Subject to local tax and regulatory compliance.
- Liable for the parent company’s activities in Bangladesh.
- Useful for companies testing the market or providing services without full incorporation.
4. Representative (Liaison) Office
A Representative Office serves as a liaison or marketing arm of the foreign company. It is limited to non-commercial activities such as market research, promotion, and coordination with local partners.
Important Notes:
- Cannot generate revenue or enter into commercial contracts.
- Requires BIDA approval.
- Ideal for companies exploring market opportunities before committing to full operations.
Step-by-Step Process to Register a Foreign Company in Bangladesh
Registering a foreign company involves several key steps and documentation. Here is an overview of the typical process:
Step 1: Decide the Type of Entity
Choose the most appropriate business structure based on your operational goals, investment scale, and legal considerations.
Step 2: Name Clearance
Apply to the Registrar of Joint Stock Companies and Firms (RJSC) for name clearance to ensure your proposed company name is unique and complies with naming rules.
Step 3: Prepare Documentation
Key documents include:
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Name clearance certificate
- Passport copies and photographs of foreign directors and shareholders
- Address proof of the registered office in Bangladesh
- Other forms such as Form IX and X as required by RJSC
Step 4: Incorporation with RJSC
Submit the incorporation application along with the required documents to the RJSC. The registration process typically takes 30 to 45 days.
Step 5: Register with BIDA
Post incorporation, foreign companies must register with the Bangladesh Investment Development Authority (BIDA) to obtain necessary permits, licenses, and investment incentives.
Step 6: Open Bank Account and Deposit Capital
Open a temporary bank account in Bangladesh for capital deposit. Foreign investors can open accounts online following Bangladesh Bank’s Foreign Exchange Policy guidelines.
Step 7: Obtain Tax Identification and Other Licenses
Register with the National Board of Revenue (NBR) for tax purposes and obtain any sector-specific licenses or approvals.
Ongoing Compliance Requirements
Once registered, foreign companies must comply with:
- Annual filing of audited financial statements.
- Submission of annual returns to RJSC.
- Regular tax filings including income tax and VAT returns.
- Compliance with labor laws and social security.
- Maintaining proper corporate governance and record-keeping.
How Habib Sarwar Bhuiyan & Co. Chartered Accountants Can Help Foreign Investors
Navigating the legal and regulatory landscape in a foreign country can be challenging and time-consuming. This is where Habib Sarwar Bhuiyan & Co. Chartered Accountants stands out as a trusted partner for foreign investors in Bangladesh.
Expert Guidance on Company Formation
With decades of experience, the firm provides expert advice on choosing the right type of business entity tailored to your investment goals and industry sector. They assist in preparing and reviewing all necessary documentation, ensuring full compliance with the Companies Act 1994 and other relevant laws.
Efficient Handling of Registration Procedures
Habib Sarwar Bhuiyan & Co. manages the entire registration process with the RJSC and BIDA, including name clearance, document submission, and liaison with authorities. Their familiarity with local procedures helps avoid delays and errors.
Tax Planning and Compliance
The firm offers strategic tax advisory services to optimize your tax liabilities while ensuring compliance with Bangladesh’s tax laws. They handle tax registrations, filings, and audits, minimizing your risk of penalties.
Accounting and Audit Services
Maintaining accurate financial records and conducting statutory audits are critical for compliance and business credibility. Habib Sarwar Bhuiyan & Co. provides comprehensive accounting, bookkeeping, and audit services tailored to foreign companies’ needs.
Ongoing Corporate and Regulatory Support
Beyond incorporation, the firm supports clients with ongoing corporate secretarial services, regulatory updates, and compliance management, allowing you to focus on growing your business.
Cross-Border Expertise
As a member of AFFILICA International, Habib Sarwar Bhuiyan & Co. leverages a global network of professionals to assist clients with cross-border transactions, international tax planning, and multi-jurisdictional compliance.
Why Choose Habib Sarwar Bhuiyan & Co.?
- Proven Track Record: Over 30 years of experience serving multinational corporations, foreign investors, NGOs, banks, and government bodies.
- Client-Centric Approach: Customized solutions that align with your business objectives.
- Regulatory Expertise: Deep knowledge of Bangladesh’s corporate, tax, and investment laws.
- Global Network: Access to international expertise through AFFILICA International.
- Integrity and Confidentiality: Commitment to the highest ethical standards.
Conclusion
Bangladesh offers tremendous opportunities for foreign investors, but successfully entering this market requires a clear understanding of the types of companies you can establish and the regulatory environment. Whether you want to set up a private limited subsidiary, a branch office, or a representative office, the process can be complex but manageable with the right guidance.
Habib Sarwar Bhuiyan & Co. Chartered Accountants is your ideal partner to navigate these complexities. From choosing the right business structure to handling registration, tax compliance, and ongoing advisory services, they provide end-to-end support to ensure your investment journey in Bangladesh is smooth and successful.
