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Procedure of Foreign Direct Investment in Bangladesh: FDI Legal Process in Bangladesh

Ready to start a business in Bangladesh? With a fast-growing economy and a GDP of $451 billion, Bangladesh offers great opportunities. It has 210 trade partners and a trade growth rate of 2.98%. While the registration process may seem complex, don’t worry—Bay of Legal will simplify it for you. Just follow this article for all the information you need to get started with FDI Legal Process in Bangladesh.

FDI can be happened in Bangladesh through following five forms of establishment:

Establishing Liaison Office or Representative office;
Opening Branch Office;
Forming a new company;
Establishment of wholly subsidiary company;
Forming a joint venture company with any competent local company;

Establishing Liaison Office or Representative office

Foreign companies may establish Liaison Offices in Bangladesh, subject to specific approval from the Bangladesh Investment Development Authority (BIDA). Liaison Offices also require registration with the Registrar of Joint Stock Companies and Firms.

Activities of Liaison Office-

Maintain communication channels between foreign companies and Bangladeshi customers, the principal and local agents, distributors/exporters’ institutions through correspondences, personal contacts, and other electronic media;
Promote business interests by spreading awareness of their services/products;
Collect, compile, analyze, and disseminate business information related to its field of activities as mentioned in the BIDA approval letter;
Explore opportunities for establishing a permanent presence.
Look into and find business opportunities in the country;
Encourages import and export in Bangladesh as well as does market study, financial, technical engagement, and so on;
Establishes financial and technological cooperation between Bangladeshi businesses and foreign enterprises;

Liaison Offices are prohibited

from undertaking any business activities;
from generating income in Bangladesh under the terms of BIDA approval;
from outward remittances from Bangladesh except for the unspent amount brought in from abroad;
from engagement in any profitable activities since it is not formally recognized as a corporate entity.

Liaison Office set-up at a glance:

Liaison office:
Eligibility Criteria	BIDA Approval	BB Approval	RJSC Registration	Other requirements
a. Parent company need to be minimum 2 years old;	Following documents are required:	Following documents are required:	Following documents are required:	Tax Registration.
				Trade License.
	a. Foreign Company Incorporation Certificate	a. BIDA approval letter,	a. BIDA approval letter,	VAT Registration.
				Bank Account.
b. Name should be according to parent company;	1. Memorandum and Article of Association (AOA)	b. Proof of bank account opening,	b. BB approval letter	Reporting: comply regular reporting requirements to BIDA.
	2. Audited Financial Statements of the Foreign Parent Company (Previous Two Years)
	3. Board Resolution the for Liaison Office set-up in Bangladesh	1. Declaration That Details the Nature of the Activity of the Parent Company	c. Foreign Company Incorporation Certificate
	4. Perfect Information of Directors	2. Declaration That Details the Nature of the Activity of the Proposed Liaison Office
c. Parent company should have capacity to remit USD 50,000 or 6 months of operational expenditures with the cost of initial office set-up (within two months from the date of the BIDA approval);	5. Complete Details of the Shareholders of the Applicant Company	3. The Employee List of the Proposed Liaison Office.	d. Trade License.
	6. Declaration That Details the Nature of the Activity of the Parent Company	4. Authorization Letter of the Consultant who will Process the Application on Behalf of the Applicant
	7. Declaration That Details the Nature of the Activity of the Proposed Liaison Office		1. The full address of the office of the company in Bangladesh
	8. The Employee List of the Proposed Liaison Office.		2. Memorandum and Article of Association (AOA)
	9. Authorization Letter of the Consultant who will Process the Application on Behalf of the Applicant		3. Audited Financial Statements of the Foreign Parent Company (Previous Two Years)
			4. Board Resolution the for Liaison Office set-up in Bangladesh
	The first four documents need to be translated into English and attested by the concerned Bangladesh High Commission of the respective country.		5. Perfect Information of Directors
			6. Complete Details of the Shareholders of the Applicant Company
			7. The Employee List of the Proposed Liaison Office.
			8. Information of Representative in Bangladesh
			9. Authorization Letter of the Consultant who will Process the Application on Behalf of the Applicant
	Process:	Process:	Process:

	Application: Submit a formal application to BIDA through their online portal, including necessary documents.	Reporting: After obtaining BIDA approval, the liaison office must report to the Bangladesh Bank.	· Name clearance,
	Inter-Ministerial Committee: An inter-ministerial committee within BIDA will review the application and grant approval.	Financial Regulations: The BB will oversee the financial activities of the liaison office.
	BIDA Permission Letter: Upon approval, BIDA will issue a permission letter, which is a crucial document for establishing the liaison office.	Inward Remittance: Within two months of receiving the BIDA permit, the liaison office must remit a minimum of USD 50,000 (or equivalent) into Bangladesh to cover initial establishment and operational costs.	· Submission of application with necessary documents,
	Timeframe: The approval process typically takes around 4-5 weeks.
	Cost: There is a fee for registration with BIDA.		· Approval of registerer,

			· The approval process typically takes around 3-4 weeks.

Step by Step Activities for Opening Liaison office in Bangladesh:

Step-1: Get BIDA Permission
Step-2: Receive the Tax Identification Number
Step-3: Open a Bank Account
Step-4: Get BB Permission
Step-5: Inward Remittance of Initial Investment
Step-6: VAT Registration
Step-7: Get Trade License
Step-8: Get RJSC & F registration

NOTE:

All setup and operational costs, including salaries for expatriates and local employees, must be borne by the parent company abroad through inward remittance of foreign exchange.
An amount of $50,000 as an initial investment needs to be remitted within two months from the date of the BIDA approval. In the cases of non-compliancewith the mentioned two-month tenure, an additional 5 percent of the total remittance is needed to be brought to Bangladesh as a penalty.
Liaison office can sign a legally binding contract, renting space to other companies, offering technical assistance, generating invoices, and even shipping or storing products in Bangladesh without the need for a local representative from the country.
All kinds of taxes except for profit taxes are applicable to the Liaison office in Bangladesh. This is because the liaison office is not permitted to engage in any revenue-generating operation.

Branch Office

A Branch Office serves as an extension of a foreign corporation in Bangladesh. Foreign corporations may open branch offices to engage in business activities within Bangladesh, provided they obtain prior approval from BIDA. A branch office is an ideal option for foreign companies looking to set up a temporary presence in Bangladesh without long-term commitments. Registering a branch office allows the company to operate as an authorized entity in Bangladesh, offering more flexibility and freedom than a liaison office. The Bangladesh Investment Development Authority (BIDA) oversees branch office registrations. BIDA grants the branch office permission to conduct business in Bangladesh, but only for the activities outlined in its application. Any activities beyond those specified are not allowed. The branch office can engage in business similar to its parent company, although its manufacturing capabilities are limited. These activities can be subcontracted to a local Bangladeshi company. Additionally, the branch office’s operations will be restricted to the duration specified in the approval letter from BIDA.

Activities of Branch office (might be allowed by BIDA):

A branch office can play the role of a sales representative in Bangladesh acting on behalf of the parent company.
A branch office can conduct commercial activities in Bangladesh acting on behalf of the parent company.
Any form of financial and technical assistance is allowed between the new Bangladeshi company and the parent company or any foreign company to grant assistance regarding cooperation.
A branch office can provide expert and consulting services, or act as a contractor or subcontractor inside the detailed parameters of the parent company’s given job description.
A branch office can undertake research activities acting on behalf of the parent company.
A branch office can offer sales and after-sales to ensure appropriate distribution and marketing.
A branch office can act as a representative for foreign airlines and shipping companies in Bangladesh
A branch office is allowed to carry out import and export business after receiving the necessary approval.
A branch office can conduct other commercial activities upon the authority’s or Inter-Ministerial Committee’s authorization.

Branch Office set-up at a glance:

Branch office:
Eligibility Criteria	BIDA Approval	BB Approval	RJSC Registration	Other requirements
a. Parent company need to be minimum 2 years old;	Following documents are required:	Following documents are required:	Following documents are required:	Tax Registration.
				Trade License.
	k. Foreign Company Incorporation Certificate	g. BIDA approval letter,	n. BIDA approval letter,	VAT Registration.
				Bank Account.
b. Name should be as same as parent company;	1. Memorandum and Article of Association (AOA)	h. Proof of bank account opening,	o. BB approval letter	Reporting: comply regular reporting requirements to BIDA.
	2. Audited Financial Statements of the Foreign Parent Company (Previous Three Years)			Submission of tax return according to law
	3. Board Resolution the for branch Office set-up in Bangladesh	1. Declaration That Details the Nature of the Activity of the Parent Company	p. Foreign Company Incorporation Certificate
	4. Perfect Information of Directors	2. Declaration That Details the Nature of the Activity of the Proposed Branch Office
c. Parent company should have capacity to remit USD 50,000 or 6 months of operational expenditures with the cost of initial office set-up (within two months from the date of the BIDA approval);	5. Complete Details of the Shareholders of the Applicant Company	3. The Employee List of the Proposed Branch Office.	q. Trade License.
	6. Declaration That Details the Nature of the Activity of the Parent Company	4. Authorization Letter of the Consultant who will Process the Application on Behalf of the Applicant
	7. Declaration That Details the Nature of the Activity of the Proposed Branch Office		1. The full address of the office of the company in Bangladesh
	8. The Employee List of the Proposed Liaison Office.		2. Memorandum and Article of Association (AOA)
d. Parent company must make profit continuously for the last three financial years and net assets of at least one lakh US dollars.	9. Authorization Letter of the Consultant who will Process the Application on Behalf of the Applicant		3. Audited Financial Statements of the Foreign Parent Company (Previous Three Years)
	10. Any other documents BIDA may ask for after primary reviewing.		4. Board Resolution the for Branch Office set-up in Bangladesh
			5. Perfect Information of Directors
	The first four documents need to be translated into English and attested by the concerned Bangladesh High Commission of the respective country.		6. Complete Details of the Shareholders of the Applicant Company
e. The subsidiary company of the said company may provide a minimum of 10 million USD or its equivalent financial assets on behalf of the applicant company if the applicant company is not financially sound alone. In such cases, the company may also offer an undertaking letter detailing the financial assistance given.			7. The Employee List of the Proposed Branch Office.
			8. Information of Representative in Bangladesh
			9. Authorization Letter of the Consultant who will Process the Application on Behalf of the Applicant


	Process:	Process:	Process:

	Application: Submit a formal application to BIDA through their online portal, including necessary documents.	Reporting: After obtaining BIDA approval, the liaison office must report to the Bangladesh Bank.	· Name clearance,
	Inter-Ministerial Committee: An inter-ministerial committee within BIDA will review the application and grant approval.	Financial Regulations: The BB will oversee the financial activities of the Branch office.
	BIDA Permission Letter: Upon approval, BIDA will issue a permission letter, which is a crucial document for establishing the liaison office.	Inward Remittance: Within two months of receiving the BIDA permit, the liaison office must remit a minimum of USD 50,000 (or equivalent) into Bangladesh to cover initial establishment and operational costs.	· Submission of application with necessary documents,
	Timeframe: The approval process typically takes around 8-12 weeks.	Timeframe: The approval process typically takes around 4 weeks
	Cost: There is a fee for registration with BIDA.		· Approval of registerer,

			· The approval process typically takes around 3-4 weeks.

Step by Step Activities for opening Branch office in Bangladesh:

Step by Step Activities for opening Branch office in Bangladesh

Step-1: Get BIDA Permission
Step-2: Open a Bank Account
Step-3: Get BB Permission
Step-4: Get RJSC & F registration
Step-5: Get Trade License
Step-6: Income Tax & VAT Registration
Step-7: Inward Remittance of Initial Investment

NOTE:

An amount of minimum $50,000 as an initial investment needs to be remitted within two months from the date of the BIDA approval. In the cases of non-compliance with the mentioned two-month tenure, an additional 5 percent of the total remittance is needed to be brought to Bangladesh as a penalty.
Foreign employees can be appointed in Branch Office. To be able to work in Bangladesh, foreign employees need to secure a work permit from BIDA. The Bangladeshi law limits a maximum of 5% (five per cent) of foreign employees in a branch.
A branch manager can be a foreigner but he/she should be a resident of Bangladesh.
The BIDA approval is usually provided to establish a branch for three years and it has to be extended/ renewed.
A branch office engaged in the production of goods and services is required to establish an industry in Bangladesh within ten years from the date it receives permission from the office. The renewal of branch office certification will be disregarded after ten years.

Establishment of New Company in Bangladesh:

Types of companies are follows-

Companies Limited by Shares

Private Limited Companies: Limit the number of shareholders.
Public Limited Companies: Have no limit on the number of shareholders.

Companies Limited by Guarantee

Companies limited by guarantee are typically used for non-profit organizations.

Companies with Unlimited Liabilities

The company has debts or obligations, members must personally pay them off without any limits.

In Bangladesh formation of private limited company is mostly popular. Therefore information relating to registration of a Private Limited Company in Bangladesh have been given below:

To set up a private limited company in Bangladesh, follow these specific procedures.

Step 1: Obtain Name Clearance Certificate following below process:

Complete the online application form.
Create an E-account on the RJSC website.
Perform a name search on the RJSC website to check availability.
Make the necessary payment to designated bank (BRAC Bank, or One Bank or Mutual Bank).
Submit the payment receipt to finalize the process and obtain your name clearance certificate.

Step 2: Prepare Memorandum and Articles of Association (MoA)

Required Documents
The name clearance certificate
Physical location of the company’s main office in Bangladesh
Authorized and paid-up capital amounts.
Distribution of shares among shareholders.
Full names, addresses, and copy of NID or passports of all shareholders and directors.
Process
Gather all the necessary documents
Review the final draft of MoA and AoA
Submit the stamped MoA and AoA to the RJSC.

Step 3: Obtain Certificate of incorporation from RJSC

Required Documents
Name clearance certificate
Memorandum and Articles of Association
Completed Form I
Completed Form VI
Completed Form IX
Completed Form X
Completed Form XII
TIN certificate for all directors
Process
Go to the RJSC website to apply for company registration.
Enter the name clearance submission number and letter number.
Fill out the required forms.
Attach the Memorandum of Association and Articles of Association.
Submit your registration application.
Pay the required fee at a designated bank and get the payment slip.
Upload the documents online.
Print the uploaded documents and submit them along with the payment slip to the RJSC office.
Receive your Certificate of Incorporation from the RJSC office.

Step 4: Create a Bank Account

Required Documents
Certified copy of the company’s Memorandum and Articles of Association.
Certified copy of the company’s Certificate of Incorporation.
The most recent list of directors, including their addresses and phone numbers, along with Form XII.
Copy of the TIN certificate.
A resolution passed by the board of directors authorizing the opening of the account.
Process
Select a bank.
Collect all necessary documents.
Visit the nearest branch of your chosen bank with these documents.
Complete the account opening form provided by the bank.
Deposit the minimum initial amount specified by the bank.
Wait for your account to be activated.

Step 5: Get a Trade License

Required Documents
Application form
Copies of national ID card of the shareholders and directors
Recent passport-sized photo of the shareholders and directors
Declaration on a non-judicial stamp agreeing to follow the rules of the City Corporation and Municipal Corporation
Certified copy of the memorandum and articles of association
Copy of the certificate of incorporation
TIN certificate
Copy of the lease agreement for the registered office
Bank solvency statement
Process
Obtain the required application form from the City Corporation, Municipal Corporation, or Union Parishad office.
Submit the completed application form along with the necessary documents to the appropriate section.
The licensing supervisor will conduct an inspection.
Pay the required fees at the relevant office.
Receive the trade license.

Step 6: Obtain a Tax Identification Number (TIN) Certificate

Required Document
Application form
Copies of national ID card of the shareholders and directors
Recent passport-sized photo of the shareholders and directors
Certified copy of the memorandum and articles of association
Copy of the certificate of incorporation
Copy of the lease agreement for the registered office

Step 7: Register for VAT

Required Document
Copies of national ID card of the shareholders and directors
Recent passport-sized photo of the shareholders and directors
Certified copy of the memorandum and articles of association
Copy of the certificate of incorporation
Copy of the TIN certificate
Copy of the trade license
Process
Get the application form from the NBR Zonal Office or download it from the NBR website.
Fill out the application form and submit it along with the required documents to the Zonal Office.
NBR officials will review and verify your documents.
A physical inspection of your business location will take place.
Then, you will receive the VAT Registration Certificate within 6-7 days.

Step 8: Obtain a Fire License (Optional)

Required Documents
Trade License
Tax Identification Number Certificate
Company Memorandum of Association and Articles of Association
Layout plan of the facility
National ID or passport of the shareholders and directors

Step 9: Obtain Import/Export Registration Certificates (Optional)

Required Documents
Trade License
Tax Identification Number
Company Memorandum of Association and Articles of Association
Certificate of Incorporation
BIDA Registration Certificate (if needed)

How to Register a Foreign Company in Bangladesh?

Step by Step Activities for opening Branch office in Bangladesh

To register a foreign company in Bangladesh :

Step 1: Create a Temporary Bank Account

Required Documents
Name Clearance Certificate
Draft Memorandum of Association
Draft Articles of Association
Board Resolution
Passports of foreign shareholders or investors
Additional documents as requested by the bank
Process
Choose a commercial bank in Bangladesh.
Submit all required documents to the bank.
Open the temporary bank account.
If needed, complete the account opening process from abroad.

Step 2: Trans fer the Required Capital

Shareholders need to transfer the minimum required share capital from overseas. The bank will provide an Encashment Certificate as evidence of the deposit. It must be submitted to the RJSC for verification

Step 3: Register with the BIDA

Required Document
A completed application form.
A Trade License.
A Certificate of Incorporation
Memorandum of Association
Articles of Association
A background summary of the owners on official letterhead.
A TIN Certificate.
Process
Get a local investment registration form.
Pay the registration fee at any scheduled bank and get a pay order or bank order.
Submit the completed application form with the necessary documents to the right department.
The authorities will check your application and documents.
If approved, you will get the Registration Certificate.

Step 4: Get Membership from Chamber of Commerce (MCCI/FICCI etc.)

Step 5: Apply for Employment Visas

Required Documents
Approval from the Bangladesh Investment Development Authority for your company
Job offer letter and employment contract
Copy of the foreign employee’s passport
Tax Identification Number Certificate of your company
Board resolution authorizing the hiring of foreign employees
Process
Apply for the E-Visa at the nearest Bangladeshi embassy or consulate in the employee’s home country.
Submit all the required documents along with the visa fees.
Wait for approval from the Department of Immigration and Passports in Bangladesh.
Once approved, the employee can travel to Bangladesh to start their job.

Fully owned subsidiary company:

Statutory Requirements for a Subsidiary Company:
The minimum number of directors is 2 and the highest number of directors is 50.
The minimum number of shareholders is 2 and the highest number of shareholders is 50.
BDT 1 is the minimum share capital that each shareholder must have.
The shareholders could be business entities or real people.
100% foreign directors and foreign shareholdings are permitted.
All of the company’s directors and members must be of sound mind and be older than eighteen.
The subsidiary company must have a registered address in Bangladesh.
The company must hire an auditor within 30 days of its corporation.
Annual audited account submission, an annual general meeting, submission of all financial statements and board meetings, filing of tax returns, and filing of annual returns must be done according to annual compliance conditions.
Required Documents to Set Up a Subsidiary Company
Documents for a non-operating bank account in Bangladesh:
Name Clearance certificate from RJSC (Register of Joint Stock Companies and Firms)
Draft an MOA (Memorandum of Association) and AOA (Articles of Association) of the proposed subsidiary company in Bangladesh
Promoters’ Meeting Minutes/ Board Resolution
3 copies of photographs of all shareholders and directors of the proposed company
NID/ Passport copies of all shareholders
Signed and Completed Bank Account Application Form

Additional required documents for a corporate shareholder:
The share analysis for a corporate shareholder
Passports and Photographs of all shareholders of the parent company/ corporate shareholders
Passports and Photographs of all nominee directors
Incorporation certificate, MOA (Memorandum of Association), and AOA (Articles of Association) audit report of the previous fiscal year of corporate shareholders.

All of the documents must be translated into English and notarized.

Documents for Company Registration:
Copy of the MOA (Memorandum of Association) and AOA (Articles of Association) of the proposed subsidiary company
Signed Form IX- (Consent of the Directors)
Signed Form VI- (Declaration of the Registered Address)
Signed Subscriber Page

Steps to Complete the Set Up of a Subsidiary Company
Name Approval of the Subsidiary Company
Choose an appropriate available name for the subsidiary company.
Apply through the web portal of RJSC.
Deposit the required government fees to the bank.
Get the name clearance certificate from RJSC.
Drafting the Required Documentation

The following documents need to be drafted.

MOA (Memorandum of Association)
AOA (Articles of Association)
Form IX- (Consent of the Directors to Act)
Form VI- (Notice of Situation of the Registered Address)
Promoters’ Meeting Minutes/ Board Resolution
Opening a Non-Operating Bank Account
To receive inward remittances (equity) in a non-operating bank account
To obtain Encashment Certificate
This Encashment Certificate will be verified by RJSC.
Filing to RJSC Web-portal Online
Upload the documents to the RJSC website.
MOA (Memorandum of Association)
AOA (Articles of Association)
Form IX- (Consent of the Directors to Act)
Form VI- (Notice of Situation of the Registered Address)
Encashment Certificate
After that, the registration process will be done.
Obtain Company Registration Documents
Incorporation Certificate
Certified Copies of MOA and AOA
Certified Copy of Form-XII (Particulars of Directors)
Other Registration and Licences
trade licences,
Tax Registration (E-TIN),
VAT registration(BIN),
Membership from the Chamber of Commerce,
certificates of import & export registration.

Forming a joint venture company with any competent local company

Eligibility Criterion:

Incorporated company.
Both the company together should have financial and technical capacity for the purpose.

Required Documents for formation:

Board Resolution from both the company to form JV.
Joint Venture Agreement.
Trade License in the name of JV.
BIN in the name of JV
TIN in the name of JV
Power of Attorney/Authorization to the representative of each company by their company

Steps to follow for formation:

In Bangladesh there should be a business address;
Signing of JV agreement;
Opening bank account;
Submit documents to RJSC for registration
Bringing capital from foreign partner of JV

Procedure of Foreign Direct Investment in Bangladesh

Procedure of Foreign Direct Investment in Bangladesh: FDI Legal Process in Bangladesh