This article provides an overview of the different ways of doing business in Bangladesh. The primary ways of doing business in Bangladesh are:
- Private Limited Company
- Public Limited Company
- Branch office
- Liaison office
Private Limited Company
Section 2(1)(q) of the Companies Act 1994 states that “private company” means a company which by its articles-
(i) restricts the right to transfer its shares, if any;
(ii) prohibits any invitation to the public to subscribe for its shares or debenture, if any;
(iii) limits the number of its members to fifty not including persons who are in its employment.
To get an idea on how to form a company in Bangladesh, please have a look at our article on “How to set up a company in Bangladesh”
Public Limited Company
Section 2(1)(q) of the Companies Act 1994 (r) “public company” means a company incorporated under this Act or under any law at any time in force before the commencement of this Act and which is not a private company.
In contrast with private limited company, a public limited company invites people from the public to buy shares in the company, and is often listed in a stock exchange.
A proprietorship in Bangladesh does is not considered to be a separate legal entity. This means that it does not have a separate corporate personality and is thus not distinct from the owner/ proprietor. Therefore, the business owner/proprietor is personally responsible for all liabilities of the business. A commercial address must be provided as the business address for the sole proprietorship. Profits of the proprietorship is considered to be the income of the proprietor, thus it is subjected to the same tax rate as that of personal income. Further it should be noted that although trade license is a mandatory requirement for proprietorship.
Liaison or Branch office
A Branch office of a foreign company can commence all kinds of commercial activities with approval from the Bangladesh Investment Development Authority (BIDA).
Upon approval from the BIDA, a Liaison Office of a foreign company, however, can undertake limited activities, including:
1. Maintaining relationship between principal and local agents, distributors/exporters’ institutions, personal contracts and other electronic media.
2. Collecting, compiling and analyzing business information related to its field of activities.
Further points about branch/liaison office
The activities of a Branch and Liaison office must be limited to the areas and for the period of time mentioned in the approval letter provided by BIDA.
If the approved company wants to hire foreign nationals(s), work permits must be obtained from the BIDA.
Quarterly return of incomes and expenditures shall have to be submitted to the BIDA, concerned Bank, National Board of Revenue and Bangladesh Bank.
Approval of Branch, Liaison, and work permit for foreign nationals will be made on the condition of security clearance from the Ministry of Home Affairs. The Ministry of Home Affairs usually provides security clearance within 45 days of issuance of permission letter.
The following documents are required for approval from the BIDA:
1. Application in prescribed form signed by the authorized person for establishment of branch/liaison/ representative office.
2. Memorandum and Articles of Association of the principal company.
3. Name and nationality of the directors of the principal company.
4. Audited Accounts of the last financial year of the principal company.
5. Board of director’s resolution regarding opening of office in Bangladesh.
6. Proposed organogram of the office showing.
7. Details of activities to be performed through the proposed branch or liaison office in Bangladesh.
8. Forwarding Letter
Liaison/Brach Office formation at CLP
The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly experienced at assisting clients in dealing with the formation of Liaison and Branch office formation. For queries or legal assistance, please reach us at:
Phone: +8801700920980 | +8801947470606
Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.