Opening a business in Bangladesh is a rewarding endeavor, especially for foreign investors. The country’s present economy, affordable labor force, and strategic location make Bangladesh an appealing choice for investors.
Whether you’re a seasoned entrepreneur or a new player, you have to know the legal framework and meet the legal essentials for a smooth business incorporation. From company registration to post-incorporation compliance, you have to pass through every step.
Fulfilling the legal requirements to start a company in Bangladesh is a daunting task without proper guidance.
Let’s have a clear understanding of the legal requirements and procedures to open a company in Bangladesh and kickstart your business journey with confidence.
Understanding the Legal Framework in Bangladesh
Bangladesh’s company laws are governed by the Companies Act, 1994. It defines the legal structure and compliance requirements for businesses. So, before you start the registration process, choose the appropriate business entity.
One of the most common options for foreign investors is a private limited company. A private limited company is the most preferred choice due to its limited liability protection and flexibility in operations. It requires at least two directors and shareholders, but there’s no maximum limit for foreign ownership.
Also, you have to understand the taxation and licensing requirements. Corporate taxes, VAT registration, and industry-specific licenses will vary depending on the nature of your business. You must ensure your business complies with these regulations to avoid legal complications.
Step-by-Step Procedure of Company Registration in Bangladesh
Registering your company in Bangladesh involves several legal and administrative steps. Each of these steps ensures that your business complies with local regulations and is ready to operate smoothly.
1. Choose the Business Structure
Select the right business structure as the foundation of a successful registration process. You can choose a private limited company for its flexibility and legal protection. You have other options such as public limited companies, sole proprietorships, and joint ventures, each with specific legal and operational requirements.
2. Obtain Name Clearance
A unique company name is mandatory to register a company in Bangladesh. Your proposed name must be approved by the Registrar of Joint Stock Companies and Firms (RJSC). To secure a name, submit an online application and pay the required fee. Ensure the name aligns with your branding and complies with local naming regulations.
3. Draft Articles of Association (AOA) and Memorandum of Association (MOA)
The MOA and AOA are critical documents that outline your company’s purpose, operational scope, and internal governance. Prepare them with legal assistance to ensure they comply with Bangladeshi laws.
4. Submit the Registration Forms & Documents
Once all required documents are ready, submit them with duly filled registration forms to the RJSC. Pay the required fees. Wait for the verification of documents, issuance of a Certificate of Incorporation, and allocation of a unique company identification number.
5. Post-Incorporation Compliance
After registration, apply and obtain a Tax Identification Number (TIN), VAT registration, and other necessary licenses. Also, open a corporate bank account to facilitate business transactions.
Key Considerations for Foreign Investors
Foreign investors looking to establish a company in Bangladesh must consider and fulfill the following specific regulations and approvals:
Investment Approval from BIDA
If you are a foreign investor, you must obtain approval from the Bangladesh Investment Development Authority (BIDA). This includes registering the investment, obtaining necessary permissions, and fulfilling sector-specific requirements.
Banking and Financial Requirements
If you are a foreign investor, you must deposit the minimum paid-up capital as per the company structure. Bangladeshi banks facilitate foreign currency accounts, which can be useful for international transactions.
Employment and Work Permits
If foreign employees are part of your company, secure work permits from the Ministry of Home Affairs. The application process requires proof of employment and adherence to labor laws.
Repatriation of Profits
Bangladesh allows 100% repatriation of profits for foreign investors, but the process must adhere to the regulations set by the central bank. Ensure proper documentation for seamless fund transfers.
Taxation
Pay corporate taxes and meet VAT obligations. Submit annual returns and maintain accurate financial records to avoid penalties.
Conclusion
Bangladesh offers immense opportunities for businesses, local or foreign. However, a clear understanding of the legal requirements is essential to succeed. By following the guidelines given above, you can ensure all legal compliances and confidently start a company in Bangladesh.
Whether you aim to open a new company or expand your existing business in Bangladesh, its business environment is great. Take the first step today, and embrace the possibilities of a thriving market.
Frequently Asked Questions
1. How long does it take to register a company in Bangladesh?
15-20 working days to complete the entire process (from Name Clearance to obtaining the certificate) of company registration in Bangladesh if all documents are accurate and requirements are met.
2. Can a foreigner fully own a company in Bangladesh?
Yes, foreigners can fully own a private limited company in Bangladesh. There are no restrictions on foreign ownership. They must comply with investment and regulatory requirements, and obtain approval from BIDA.
3. Is it mandatory to have a local director to open a company in Bangladesh?
No, a private limited company doesn’t need to have a local director. Both directors can be foreigners. However, they must comply with visa and work permit requirements if they reside in Bangladesh.
