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How To Start A Business?

Legal Solution BD > How To Start A Business?

Business structure of Bangladesh

Mainly three types of business structure are continuing in Bangladesh. These are
(1) Limited Company
(2) Partnership Firm and
(3) Sole Proprietorship

Limited Companies are two types;
(a) Privet Limited Company (Privet Limited Company can be forming as (a). 100% Locally Operate, (b) Join Venture by local and foreign investor, (c) Subsidiary of Foreign Company
(b) Public Limited Company.

RJSC also register Foreign Company and Branch Office, Liaison Office, Representative Office of Multinational Company. Joint Venture Companies are also registered at RJSC.

To form Privet Limited Company minimum two and maximum fifty directors required. On the other hand, for Public Limited Company minimum member should be seven and the maximum is unlimited.

For forming a Joint Venture Company by foreign investors, the minimum member should be two and maximum fifty. Out of all members minimum, one should be Bangladeshi and minimum one should be Foreigner. In Bangladesh no scope to start a Limited Company by one man.

Potential Investment Sectors in Bangladesh

Bangladesh, traditionally known for jute and tea exports, has recently attracted attention for readymade garments i.e. woven and knit however fisheries and leather goods are the next largest export sector from Bangladesh. Shipbuilding is also a potential sector for investment.
  • Textile, Leather Goods, Frozen food, Jute goods
  • Oil and Gas, Coal, Power
  • Telecommunication, Air Transportation
  • Electronics, Light engineering industries
  • Tourism, Agriculture, Agro-based industries
  • Computer software development
  • Data entry & data processing

Minimum capital requirement

There is no official minimum capital requirement in Bangladesh. For this reason, $1 is considered the minimum capital contribution. However, investors should keep in mind that they need to make an inward remittance of no less than $50,000 if they intend to hire foreign employees.

Option-01 : Locally Registered Company (Private Limited Company)

There are many reasons why Bangladesh is becoming one of the most promising emerging markets in the world. Some of the top reasons include its openness to foreign investment, competitive labour costs, and rapid economic growth.
A large number of companies in Bangladesh are registered as private limited companies (LLC). The liability is limited to shareholders’ shared capital and LLCs in Bangladesh can be fully foreign-owned.

Any person including a foreigner who is above 18 is eligible to register a company. Furthermore, the law prescribes a minimum of 2 and a maximum of 50 shareholders, and 2 directors.

Incorporating or acquiring a locally registered company offers the most flexible option for the investor. Foreign investors are allowed to invest or own shares or incorporate companies in most sectors. Prior approval is required for some sectors. Foreign investors may also establish a joint venture company with either a local or another foreign investor. The company may take the form of either a private or public limited company. For the purposes of taxes, a locally registered company will be considered as a domestic company.

Learn more…How to incorporate a Company in Bangladesh?

Private investment is restricted in the following sectors:

Arms and ammunition and other military equipment and machinery;
> Nuclear power;
> Security printing and minting; and
> Forestation and mechanized extraction within the boundary of reserved forest.

Prior Approval from relevant ministries/authorities is required for establishing a business in the following sectors:

> Fishing in the deep sea
> Bank/financial institution
> Insurance company
> Generation, supply and distribution of power
> Exploration, extraction and supply of natural gas/oil
> Exploration, extraction and supply of coal
> Exploration, extraction and supply of other mineral resources
> Large-scale infrastructure project (e.g. flyover, elevated expressway, monorail, economic zone, inland container depot/container freight station)
> Crude oil refinery (recycling/refining of lube oil used as fuel)
> Medium and large industry using natural gas/condescend and other minerals as raw material
> Telecommunication service (mobile/cellular and land phone)
> Satellite channel
> Cargo/passenger aviation
> Sea-bound Ship Transport
> Sea-port/Deep sea-port
> VOIP/IP Telephone
> Industries using heavy minerals accumulated from sea beach

Option-02 : Branch Office

An investor may conduct business in Bangladesh by establishing a branch office of its foreign company. A branch office operates similar to a company except that it is only permitted to conduct business in areas permitted by the Bangladesh Investment and Development Authority (“BIDA”). The permission to operate as a branch office is also subject to renewal after 3 years. However, the winding down process of a branch office is far less complicated than a company. A branch office is an extension of the foreign company, whereas a locally registered company is a separate entity from the foreign company,The average establishment time of a branch in Bangladesh is 45- 60 days.

Learn more…How to open a Branch or Liaison Office in Bangladesh?

Option-03 : Representative/ Liaison office

Just like a branch, a liaison, also called a representative office, is subject to BIDA’s approval as its primary requirement. It must have a parent company abroad, and its activities are limited since it only serves as a communication or coordination instrument of the business resources in Bangladesh.
Also, take note that a liaison office cannot earn any local income in Bangladesh. The parent company shoulders all of its expenses and operational costs through remittance.There also cannot be any outward remittances of any kind from Bangladesh resources, except the amount brought in from abroad. Similarly, it also follows the general process of business registration in Bangladesh.According to the BIDA, the only activities a liaison office is permitted to undertake are the following:

> Maintain liaison/coordination between principal and local agents, distributors/exporters’ institutions through correspondences, personal contacts and other electronic media.

> Collect, compile analyze and disseminate business information related to its field of activities as mentioned in the approval letter.

All costs associated with the liaison office must be paid by the foreign investor through inward remittance. No outward remittance from Bangladesh sources will be permitted.

Option-04 : Franchise operation with Local Promoters

Foreign-owned companies can also enter into franchises in Bangladesh. Through a franchise, you can permit local promoters to use your brand, provide them with technical support and charge fees or commission on their activity.A franchise operation complies with both the purchase and license agreement.