Opening a branch office in Bangladesh is an attractive opportunity for foreign investors due to the advantages and profit potential. The branch office can conduct its daily operations with approval from the Bangladesh Investment Development Authority (BIDA). However, it is important to note that a branch office is not a separate legal entity. This detailed guide outlines the process of opening a branch office in Bangladesh.

Essentials of Opening a Branch Office in Bangladesh

Bangladesh offers flexible laws for foreign investment, easy market entry and exit, and the potential for significant revenue. Many foreign investors seek to open branch offices in Bangladesh. However, branch offices must comply with the Companies Act of 1994 and register with the Joint Stock Companies and Company Register. The complex legal requirements can be daunting, so this guide will provide clarity on opening a branch office in Bangladesh.

What is a Branch Office?

A branch office serves as an extension of a foreign parent company, allowing it to operate more independently in Bangladesh. BIDA, the regulatory body for branch office registration, authorizes only the activities listed in the branch office application. The branch office is not allowed to engage in additional activities beyond those approved. It can perform business operations similar to the parent company and may engage in limited manufacturing activities, subcontracting to local businesses if necessary. The specifics of the branch office’s operations are detailed in the BIDA approval letter.

Characteristics of a Branch Office

• Extension of Parent Company: The branch office functions as an expanded version of the foreign parent company.
• Governance: The parent company’s memorandum and articles of association govern the branch office’s structure and management.
• Liability: The parent company is responsible for any debts and losses incurred by the branch office.
• Operational Limits: The branch office must operate within the parameters set by BIDA.
• Financial Requirements: The parent company must show continuous profitability for the last three years and net assets of at least USD 100,000. If not, it must have a history of profitability and minimum net assets of USD 100,000.
• Approval of Name: The branch office name must be approved by the Registrar of Joint Stock Companies and Firms (RJSC).

Permitted Activities of Branch Office

While branch offices have some flexibility, their activities in Bangladesh are limited to those authorized by BIDA. Permitted activities include:

• Conducting commercial operations as specified in the BIDA application letter.
• Extending financial and technical assistance between the Bangladeshi branch and the parent company or other foreign companies.
• Engaging in research on behalf of the parent company.
• Representing foreign airlines and shipping companies in Bangladesh.
• Acting as a sales representative for the parent company.
• Providing consulting services, and acting as contractors or subcontractors based on the parent company’s job description.
• Offering sales and after-sales services for proper marketing and distribution.
• Conducting import and export activities with necessary approvals.
• Undertaking other commercial operations with authorization from relevant authorities or the Inter-Ministerial Committee.
• If involved in production, establishing an industry in Bangladesh within ten years of obtaining permission. Certification renewal is not viable after ten years.

Eligibility Criteria for Setting Up a Branch Office in Bangladesh

• Age of Parent Company: The foreign parent company must be at least two years old.
• Name & Approval: The branch office must have the same name as the parent company and obtain approval from BIDA.
• Operational Expenses: All expenses must be covered by remittances from the head office or profits from BIDA-approved operations.
• Minimum Investment: The parent company must invest at least USD 50,000 or cover six months of operational expenses, including initial setup costs.
• Taxation: The branch office is subject to all regular taxes applicable in Bangladesh.

Prerequisite Documents for Setting Up a Branch Office

Required Documents for BIDA Permission:

• Foreign Company’s Incorporation Certificate.
• Memorandum and Articles of Association.
• Audited Financial Statements of the Parent Company (last two years).
• Board Resolution for setting up the Branch Office in Bangladesh.
• Complete details of the directors.
• Information on the shareholders of the applicant company.
• Declaration detailing the nature of the parent company’s activities.
• Declaration detailing the nature of the proposed branch office’s activities.
• Total employee list of the proposed branch office.
• Authorization letter to the consultant processing the application.

The prerequisite documents must be translated into English and attested by the relevant Bangladesh High Commission.

Process of Setting Up a Branch Office in Bangladesh

Step 1: BIDA Permission

• Create a user ID after paying the government fee for account creation.
• Fill out and submit the application to BIDA online.
• BIDA will review and approve the application, typically within one month.
• An e-letter from BIDA will serve as the primary legal document for branch office approval.

Step 2: RJSC Certificate

• Register the branch office with the RJSC.

Step 3: Trade License

• Apply for a trade license from the local government to conduct commercial activities.
• The branch office must have a commercial office address and a rental agreement.

Step 4: Tax Identification Number

• Obtain a 12-digit TIN (Tax Identification Number) from Bangladesh’s Income Tax Department.
• After obtaining the E-TIN, proceed to open a bank account.

Step 5: Bank Account

• Open a bank account in any bank in Bangladesh.

Step 6: Initial Investment

• Remit an initial investment of USD 50,000 within two months of BIDA approval.
• An additional 5% of the total remittance is required as a penalty for non-compliance within two months.

Step 7: VAT Registration

• Obtain a 13-digit online VAT Registration/BIN (Business Identification Number) after receiving the initial investment.

Upon completing these steps, your branch office is ready to start operations.

Pros and Cons of Opening a Branch Office in Bangladesh

Pros

• Temporary and Express Entry: Branch offices can obtain temporary and express entry for a set period, with the possibility of extension.
• Market Exit: Exiting the Bangladesh market is straightforward.
• Foreign Worker Employment: You can hire foreign workers with a work permit.
• Brand Identity: Maintaining the brand identity is advantageous if the parent company is well-known.
• No Equity or Share Capital Requirement: Setting up a branch office does not require equity or share capital.

Cons

• Restricted Activities: The branch office can only engage in limited, approved activities.
• Initial Investment Requirement: A minimum of USD 50,000 must be brought to Bangladesh within two months of registration.
• Corporate Tax: The branch office must pay corporate tax on locally generated revenue.

These pros and cons should help you determine whether opening a branch office in Bangladesh is the right choice for your business.

Application for PI and E Visa

Visa Application Support:

• Eligibility Check: Guiding both employees and investors through the visa application process.
• Documentation Assistance: Preparing and verifying necessary documents, including:
  • Academic certificates and professional experience papers.
  • Appointment letter from the branch office.
  • Passport copies and photographs.
  • Newspaper advertisement copies.
  • Branch office permission copy and employee list.
  • Salary details of foreign staff and other relevant documents.

Work Permit and Security Clearance

Streamlined Process:

• Work Permit Application: Submitting the work permit application to BIDA within 15 days of the expatriate’s arrival, including all required documents.
• Security Clearance: Coordinating with the Ministry of Home Affairs for security clearance, ensuring timely processing without delays.

Post-Registration Compliance and Renewal

Continuous Support:

• Bank Account Setup: Assisting in opening a bank account in a scheduled bank and ensuring compliance with the initial remittance requirement.
• Renewal Assistance: Guiding you through the renewal process, ensuring all necessary paperwork is submitted three months before the permit’s expiration.
• Trade License: Guiding you through the renewal process, ensuring all necessary paperwork is submitted three months before the permit’s expiration.

Timeline and Fees

Estimated Timeline:

• Approval Duration: Typically 30-45 days from the application date, subject to the number of meetings held by BIDA.
• Additional Time: Possible delays if the application is incomplete or requires further documentation.

Fee Structure:

• Government Fee: BDT 35,000 via Solani Bank.
• Professional Fees: Ranging from USD 2,000 to 4,000, depending on the complexity of your requirements.
• Additional Charges: Ensuring no additional fees are overlooked during the process.

Additional Information

• Remittance Use: Ensuring the remittance is used only for operational purposes in Bangladesh.
• Form 18B Collection: Assisting in obtaining Form 18B from Bangladesh Bank for remittance withdrawals.
• Compliance with Regulations: Ensuring adherence to all 18 terms and conditions stipulated for branch and liaison offices.

Contact Us

For more information or to begin the process of setting up a branch office in Bangladesh, contact LegalSeba.com today. Our team is ready to provide you with tailored assistance to ensure a seamless setup.

• Phone/Whatsapp: +8801753718223
• Email: [email protected]

Choose LegalSeba.com for expert guidance and support in establishing your branch office in Bangladesh. Our comprehensive services will ensure that you meet all legal requirements efficiently and effectively. Contact us today to get started on your journey to establishing a successful presence in Bangladesh.