Bangladesh is becoming one of the most attractive emerging markets for foreign investors in recent years. The country’s easy FDI regulations, large working population, competitive labour costs and economic growth are all reasons for global firms to invest. Investors can also establish a branch or liaison/representative office in Bangladesh by application to Bangladesh Investment Development Authority (BIDA).
Branch Office
Branch offices are extensions of the parent company and not a separately incorporated entity. The parent will remain responsible for all liabilities of the branch. A branch office can engage in commercial activities provided it obtains a waiver from BIDA.
Liaison/Representative Office
Similar to branch offices, liaison/representative offices are extensions of the parent company and not a separately incorporated entity. The parent will remain responsible for all liabilities of the liaison/representative office. However, liaison/representative offices cannot earn any local revenue and the parent must bear all operational costs through remittance from abroad.
Some common factors to note:
- Permission given for 3 years and subject to renewal.
- Needs to inform Bangladesh Bank after opening a bank account.
- Allowed to maintain a foreign currency account.
- Initial cash injection is required, normally at least USD 50,000.
- In Bangladesh, Foreign Exchange Regulations guide the overall remittance issues. In practice it is often almost impossible to remit funds overseas for branch offices except when branch is dissolved.
- For every expatriate employee, 5 locals must be employed.
The entire process of establishing a branch or liaison office can be divided into two steps:
- Pre-approval process &
- Post-approval process
1. Pre-approval process:
- Documents required by BIDA need to be prepared according to the activities of the branch office.
- The following documents of the parent company need to be attested by the Bangladesh High Commission of the parent company’s country:
- Audited accounts of last financial year
- A board resolution regarding opening of office in Bangladesh
- Proposed organogram of the branch office
- Details activities of the principal and proposed branch office
- Name and nationality of the promoters of the principal company
- Memorandum and Article of Association of the principal company
- Certificate of incorporation of the principal company
- A valid “commercial address” must be provided as a registered address of the branch or liaison office.
An online application along with original copies of the documents need to be submitted and this application is subject to approval by an inter-ministerial committee of BIDA.
2. Post-approval process:
- A bank account must be opened for bringing up the inward remittance of minimum USD 50,000 from the parent entity as initial establishment cost and operational expenses within two (2) months of obtaining approval from BIDA.
- Other mandatory regulatory registration such as Tax registration, Trade license and VAT registration are also required to operate the branch or liaison office.
ACE Advisory is one of the leading professional service providers in Bangladesh. Our experts can assist you to setup a branch or liaison/representative office quickly and efficiently.
Written By – Zahid Hasan
Date – 3 September 2021
