This article will discuss the step-by-step process of setting up a Buying house in Bangladesh. Therefore, this article will help you understand the cost, time, licenses, and documents required for setting up a Garments Buying House in Bangladesh.
Buying house set up process in Bangladesh
In brief, there are three major steps that must be taken in order to set up a Buying House in Bangladesh which are:
- Setting up a business in Bangladesh (i.e. Limited Company, Partnership or Proprietorship, Branch office or liaison office)
- Register with the Department of Textile (DoT)
- Get the required license and membership
Step-by-step process of setting up a Buying House
What are the processes of business setup?
Step One: Name clearance
At first, to form a private limited company, a unique selected name is required to be approved by Joint Stock Companies and Firms (RJSC).
Time
It usually takes 1 to 2 days to get the certificate.
Cost
Currently, the government fee for name clearance is 230 BDT or 3 USD including VAT.
Step Two: Drafting MOA and AOA
A Memorandum of Association (MOA) of a limited company basically includes the objectives of a company. One can add as many objectives as one wants. On the other hand, the Article of Association (AOA) is the constitution of the company. An AOA contains all the rules of how a limited company will run and the Managing director, Chairman, etc. of the company.
a). Time
It takes two days to draft the MOA and AOA.
Step Three: Bank account opening (for foreign nationals or entities)
At what stage one can open a bank account, will defer between foreign nationals/entities and Bangladeshi nationals?
Documents Required for Bank Account:
- Photocopy of name clearance certificate
- Draft AOA and MOA
- Photocopy of passport (application for foreign nationals)
After receiving the above-mentioned documents, the bank will open a provisional account in the name of the company.
Time
It takes one day to open a bank account in Bangladesh.
Step Four: Depositing share money (for foreign nationals or entities)
After opening the provisional bank account, a share money deposit will be sent from the country of the foreign shareholder to the provisional account. Thereafter, Bank will issue an encashment certificate.
Step Five: Registration to RJSC
After receiving the encashment certificate, a few documents need to be submitted to the RJSC namely AOA, MOA, and encashment certificate along with all other necessary information. After receiving all the necessary documents and information, RJSC will generate an invoice to be paid to the recognized bank.
a). Documents required:
- AOA and MOA
- Encashment certificate
- Particulars of Directors i.e. name, parents’ name, passport number, email ID, mobile number
- Name of Managing Director
- Name of Chairman
- NID (if Bangladeshi national)
- TIN (if Bangladeshi national)
- Limit of paid-up capital
- Limit of authorized capital
- Photo of all shareholders (1 copy)
- Address of company
- Signatories of the bank account
b). Cost of filing documents to RJSC:
The registration filing fee is BDT 1200 (one thousand and two hundred taka).
c). Government cost for registration:
It depends upon the authorized capital of the company. For instance, if the authorized capital is 50lakh, the government fee will be BDT 13570 (thirteen thousand five hundred and seventy takas) or USD 160 (one hundred and sixty takas) along with 15% VAT.
d). Incorporation certificate:
After receiving all the above-mentioned documents, RJSC will verify all the information given in the AOA and MOA and will also verify the encashment certificate with the bank. After being satisfied with all the information, the RJSC will issue an incorporation certificate in the name of the company. At this stage, the formation of a limited company is completed. However, in order to do business in Bangladesh, a few other compliances need to be complied with.
Step Six: Tax Identification Number (TIN)
After receiving the incorporation certificate, you have to make an application to be made to the National Board of Revenue (NRB) for tax identification number. Upon receiving the application, a tax certificate will be issued under the name of the company.
Step Seven: Trade license
In order to get a trade license an application needs to be made to the concerned city corporation. This is required in order to do business in Bangladesh.
a). Documents:
Along with the application, the following information needs to be submitted:
- Photocopy of AOA and MOA
- Photo of Managing Director or Chairman
- TIN of the company
- Rental agreement
- Nature of business
b). Time
It usually takes 3 to 4 working days to get a trade license.
Step Eight: Value Added Tax (VAT) Certificate
In order to carry out normal business operations in Bangladesh after the formation of a private limited company, it is essential that the company has a unique Business Identification Number (BIN). Therefore, to get a Business Identification Number, companies are required to have a VAT registration certificate. VAT is regulated by the Customs, VAT, and Excise 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
Every private limited company needs to pay the VAT on the 15th (fifteen) of every consecutive month.
In order to know how to set up a Branch office in Bangladesh click here and to know the process of setting up a liaison office click here.
Register with the Department of Textile (DoT)
All buying houses operating in the country must get registered with the Department of Textile. Therefore, after a business has been formed, registration with DoT must be done. The documents that need to be submitted to DoT for registration are as follows.
a). Documents and information:
- Registration letter to Director General of DoT
- Duly Filled in the registration form
- Trade license (attested copy)
- Income tax certificate (attested copy)
- Certificate of incorporation, MoA, and AoA
- Estimated yearly turnover
- Membership certificate of relevant commercial association(i.e.BGBA or BGME) (attested copy)
- Bank draft pay order for the registration fee
- Solvency certificate from bank
b). Registration fee:
The registration fee is BDT 20,000 (twenty thousand takas only) which needs to be deposited to the relevant bank.
c). Application form:
The application form for registration with DoT is attached below for better understanding.
d). Registration Process:
- Temporary Registration Certificate: once the primary and main documents are submitted to DoT, a temporary registration certificate can be issued by the authority. However, the validity of such a temporary certificate will be of 60 (sixty) days from the date of issue after which it will expire automatically. Therefore, all the necessary documents mentioned above must be submitted within the 60 (sixty) days time period. It is to be noted that a temporary registration certificate will be issued only once for a buying house.
- Registration certificate: once all the required documents mentioned above are submitted to the authority within 60 days of issuance of the temporary registration certificate, the authority will inspect the documents. Thereafter, the authority will issue the Registration Certificate within 60 (Sixty) days from the date of receiving all the documents.
e). Validity of certificate
The registration certificate will be valid for 3 (three) years.
f). Renewal of registration certificate
It is to be noted that, you have to apply for renewal of your registration certificate at least 60 (sixty) days before its expiry date. In order to apply for renewal, an application in the relevant form along with the requisite documents must be submitted to the Director General of DoT.
The Documents that must be submitted for renewal are:
- Trade license (attested copy)
- Income tax certificate (attested copy)
- Membership certificate of relevant commercial association (i.e.BGBA or BGME) (attested copy)
- Details of export done in the last year.
- Bank draft pay order for the renewal fee
Thereafter, upon inspection of the above-mentioned documents, the authority will issue a new registration certificate within 30 (thirty) days of receiving the documents. Such will again be valid for a time period of 3 (three) years.
g). Renewal Fee
The government fee for renewal of the registration certificate is BDT 5,000 (five thousand takas only) which has to be deposited to the relevant bank.
Required Licenses
The additional licenses required for buying a house are listed below:
- Export Registration Certificate (ERC).
- Import Registration Certificate (IRC)
- Membership of Chamber of Commerce.
- Membership of BGMEA
Legal Advice regarding setting up a Buying House in Bangladesh by CLP:
The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly experienced at assisting clients through the entire process and legal provisions relating to setting up a private limited company and Buying House in Bangladesh.
For any 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.
