This article will explain the step-by-step process for setting up a branch office of a foreign company in Bangladesh. Expanding a business by setting up a branch office that allows limited monitoring, supervisory, and marketing activities, is quite popular at the moment. Therefore, everything that you need to know regarding the branch office setup process has been listed below including business activities of the branch office, capital requirements, set up process, time for setting up, rules related to import and export, cost, etc.
Branch Office Set-Up Process in Bangladesh
Setting up a branch office in Bangladesh involves several steps: submitting documents to BIDA, opening a bank account, obtaining Bangladesh Bank approval, registering with RJSC, acquiring a trade license from the local city corporation, and completing income tax and VAT registration.
Business activities of the Branch office
The branch office does not have a separate legal entity of its own. This is because it functions as an extension of its parent company. Therefore, the parent company is fully responsible for the activities, debts, and obligations of its branch office.
Unlike a liaison office, a branch office can engage in commercial activities. However, to do so, prior approval from the Bangladesh Investment Development Authority (BIDA) is required.
Activities that a Branch office can engage in are:
- Payment collection on behalf of the parent company
- Local sources of income for the branch office
- Make an outward payment from Bangladesh (with approval from BIDA)
Capital requirement
There is no minimum capital requirement in Bangladesh for branch offices. However, there is a requirement for a minimum of US$ 50,000 inward remittance for the registration of branch offices in Bangladesh. This inward remittance should cover the cost of the initial establishment and six months’ expenses for operation.
The period for setting up
To set up a branch office in Bangladesh it takes from 60 days (sixty) to 90 days (ninety) in total.
Branch Office Set-Up Process in Bangladesh
Step one: Submit Documents to BIDA
The first step for establishing a branch office in Bangladesh is to get approval from BIDA. Now for getting the approval, the required documents need to be submitted to BIDA.
Documents
As per the guidelines of BIDA, the following papers/documents are required for application for the opening of the branch office. (4 copies of all documents).
- Application in the prescribed form signed by the authorized person for establishment of branch office
- Memorandum and Articles of Association and Certificate of Incorporation of the principal/ parent company. (Attested by the concerned Bangladesh Embassy)
- Name and nationality of the directors/promoters of the principal company. (Attested by the concerned Bangladesh Embassy)
- Audited Accounts of the last financial year of the principal company. (Attested by the concerned Bangladesh Embassy)
- Company’s board of directors’ resolution regarding the opening of an office in Bangladesh. (Attested by the concerned Bangladesh Embassy)
- Proposed organogram of the office showing the posts to be occupied by both expatriates and local personnel.
- Details of activities to be performed through the proposed branch/liaison/representative office in Bangladesh.
- Any other documents BIDA may ask for after primary reviewing
In addition, you must translate any documents that are not stated in English before submission.
Inspection
Upon receiving the documents, they will be thoroughly inspected by the Inter-Ministerial Committee of BIDA. Thereafter, if the committee is satisfied they will give the approval or may seek further documents. Therefore, it is essential to prepare the documents meticulously.
time
The average time needed for submission and getting approval is one month. It is to be noted that, BIDA may seek the physical representation of the documents as such this may make the process lengthier.
Government Cost for approval
The government cost for getting the approval from BIDA is USD 300 (three hundred dollars)
Step two: Opening Bank Account
The next step after receiving approval from BIDA, is to open a Bank account in Bangladesh. This is because although no minimum paid-up capital is required for setting up a branch office, a remittance of US$ 50,000 needs to be injected within 2 (two) months from the date of issuance of the BIDA permission letter.
a). Documents
The documents required for opening a bank account are:
- BIDA permission letter
- Draft Article and Memorandum of Association
- Passport of the bank account signatory (if foreign national)
- NID (if Bangladeshi national)
Step three: Bangladesh Bank Approval
After receiving approval from BIDA, the branch office needs to report to the Central Bank of Bangladesh. Such a report should be made with 30 (thirty) days of the approval.
Step four: RJSC Registration
Lastly, after obtaining approval from both Bangladesh Bank and BIDA, the last step is to register the branch office with the RJSC.
a). 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
- The name and address of a Bangladeshi who may represent the company in processing and accepting documents
- The full address of the office of the company in Bangladesh
Step five: Trade License from the Local City Corporation
To get a trade license an application needs to be made to the concerned city corporation. Along with the application, the following information and documents need to be submitted:
a). Documents
- Photocopy of AOA and MOA
- Photo of Managing Director or Chairman
- TIN of the branch office
- Rental agreement of the office
- Nature of business
b). Time
It usually takes 3 to 4 working days to get a trade license. In order to know more about how to get a trade license in Bangladesh please click here.
c). Cost
The government for a trade license is USD 100 (hundred dollars).
Step six: Income Tax Registration & VAT Registration
To carry out normal business operations in Bangladesh after setting up the branch office, the branch office must have a unique Business Identification Number (BIN). Therefore, to get a Business Identification Number, a VAT registration certificate needs to be obtained from the Department of the National Board of Revenue (NBR). Applying for VAT registration is free.
a). Documents
- TIN Certificate
- Trade License
- Import/export Registration certificate
- Passport sized photos
- Deed of Agreement
- Bank solvency certificate
- BOI registration
- Memorandum and Articles of Association
Can foreign employees be employed?
Sponsors may apply for a Private Investors Visa. Foreign employees can be appointed. To be able to work in Bangladesh, foreign employees need to secure a work permit. It is a multiple-entry visa and initially, it is valid for 3 months but can be extended afterwards.
A branch manager can be a foreigner but he/she should be a resident of Bangladesh. Also, note that the Bangladeshi law limits a maximum of 5% (five per cent) of foreign employees in a branch.
Validity of Approval
The approval is usually provided to establish a branch for three years and it has to be extended/ renewed.
LEGAL ADVICE ON COMPANY MATTERS AT CLP
The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly experienced in dealing with company matters. In addition to handling various issues related to domestic clients regularly, it also has experience in consulting and assisting numerous international clients with utmost care and attention throughout their legal troubles. For queries or legal assistance, please reach us at:
E-mail:info@counselslaw.com
Phone:+8801700920980. +8801947470606. Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.
