Bangladesh has become one of the most attractive emerging markets for foreign investors due to its favorable Foreign Direct Investment (FDI) regulations, a large and skilled workforce, competitive labor costs, and sustained economic growth. Foreign companies looking to expand into Bangladesh can establish a branch office or a liaison/representative office by applying to the Bangladesh Investment Development Authority (BIDA).
Branch Office
A branch office is an extension of the parent company and is not a separate legal entity. The parent company remains responsible for all liabilities of the branch. Although a branch office can engage in commercial activities, it must obtain a waiver from BIDA to do so.
Liaison/Representative Office
Similar to a branch office, a liaison/representative office is also an extension of the parent company and not a separately incorporated entity. The parent company retains responsibility for all liabilities of the office. However, unlike branch offices, liaison/representative offices cannot generate any local revenue and must cover all operational costs through remittances from abroad.
Key Factors to Consider:
- Permission is granted for a three-year period, subject to renewal.
- After opening a bank account, the company must inform the Bangladesh Bank.
- The office is allowed to maintain a foreign currency account.
- An initial cash injection of at least USD 50,000 is required.
- Foreign Exchange Regulations guide the remittance of funds; however, it can be difficult to remit funds overseas for branch offices unless the branch is dissolved.
- For every expatriate employee hired, five local employees must be employed.
Process of Establishing a Branch or Liaison Office
The entire process can be divided into two key phases: Pre-approval and Post-approval.
1. Pre-Approval Process
Before applying to BIDA, the necessary documents for the branch or liaison office must be prepared according to the nature of the office’s activities. The following documents from the parent company must be attested by the Bangladesh High Commission in the parent company’s country:
- Audited financial accounts from the last financial year
- Board resolution approving the opening of an office in Bangladesh
- Proposed organogram of the branch office
- Detailed description of the activities of the parent company and the proposed office
- Names and nationalities of the promoters of the parent company
- Memorandum and Articles of Association of the parent company
- Certificate of incorporation of the parent company
- A valid commercial address must be provided as the registered address for the branch or liaison office.
An online application, along with the original documents, must be submitted to BIDA for approval. The application is then reviewed and approved by an inter-ministerial committee at BIDA.
2. Post-Approval Process
Once BIDA approval is obtained, the following steps must be taken:
- Bank Account: Open a bank account in Bangladesh and bring in a remittance of at least USD 50,000 from the parent company within two months as initial establishment and operational costs.
- Regulatory Registrations: Obtain mandatory regulatory registrations, including Tax Identification Number (TIN), Trade License, and VAT Registration, to legally operate the branch or liaison office in Bangladesh.
How Helpink Can Assist
Helpink Business Consulting Agency is committed to helping businesses navigate the complex regulatory landscape of Bangladesh. We provide end-to-end assistance for establishing a branch or liaison/representative office, from document preparation and submission to BIDA to obtaining regulatory registrations. With Helpink, you can set up your office quickly and efficiently, ensuring compliance with all legal and operational requirements.