How to open a new company in Bangladesh?
Prior to the start of the engagement, it is essential for you to understand how to open a company in Bangladesh. Tetra Consultants advises you to read through this guide to fully understand the steps required to successfully set up a Bangladesh company.
Simply put, we can break down each engagement into four different phases:
- Planning & strategy
- Bank account opening
- Staying compliant
By systematically following the above four phases, you can expect your Bangladesh business to be set up and operationally ready within 6 weeks. If you would like to find out more about how to open a company in Bangladesh, kindly contact us . Our team of experts will revert within the next 24 hours.
Step 1: Planning and Strategy
- The first step is to ensure that you are crystal clear on how to open a company in Bangladesh. After understanding your business goals and activities, Tetra Consultants will advise you on the optimum type of business structure for your business.
- Prior to setting up the Bangladesh company, our team will also advise you on the optimum paid-up share capital, corporate structure, legislations and whether there is a need to apply for any licenses to operate.
- Before Tetra Consultants can set up company in Bangladesh, you will be requested to provide a list of required KYC documents. Some of these documents include passport copies, proof of address and CV of the directors and shareholders.
- Once received, Tetra Consultants will submit your company’s name clearance application and reserve your preferred company name with the Registrar of Joint Stock Companies and Firms. According to the business activity and corporate structure, Tetra Consultants will also draft articles of incorporation, business plan and other incorporation documents for the online business registration.
Step 2:Bangladesh Company Incorporation
- Once the above documents are signed, Tetra Consultants will proceed to file for registration with the Registrar of Joint Stock Companies and Firms and submit the completed Form XII. On average, the company will be set up within 2 weeks.
- After receiving approval, Tetra Consultants will courier the Certificate of Incorporation, Memorandum of Association and Articles of Association and other corporate documents to your preferred address.
- If you are looking to set up a branch office or a representative office, Tetra Consultants will assist you to secure approval from the Bangladesh Investment Development Authority (BIDA).
- In the event your business requires a local trade license, Tetra Consultants will also secure the required license from the local authorities.
- In addition, Tetra Consultants will aid you in applying for other required licenses. Licensing examples in Bangladesh include import registration certificate (IRC), export registration certificate (ERC), fire license and construction certificate. The licenses required will differ based on the type of business you choose to set up and the factory license category your business falls under.
Step 3: Bank Account Opening
- Once the Bangladesh company is set up, Tetra Consultants will assist you in opening a corporate bank account. Our team has established partnerships with multiple reputable banks in Bangladesh. We will present your business to each relationship manager and compliance team.
- Some of the international reputable banks we work with include HSBC, Dutch-Bangla Bank, Sonali Bank and Standard Chartered. By engaging our services, you can leverage on our full portfolio of banking partners.
- Typically, a corporate bank account opening will take roughly 4 weeks. In most cases, the directors and shareholders are not required to travel. However, if travel is required, we will have a representative accompany you to the bank meeting. Alternatively, our team will negotiate with the banks to conduct a conference call instead or to request for a waiver.
- Once your account has been successfully opened, Tetra Consultants will courier the internet banking token and access codes to your preferred address.
Step 4: Staying Compliant
- Following the setup of your new Bangladeshi corporate home, Tetra Consultants will continue to provide you with the necessary accounting and tax services to ensure that you can continue to legally conduct business while staying compliant with regulatory obligations.
- Our team of dedicated consultants will timely prepare your firm’s financial statements, corporate tax returns and manage bookkeeping on your behalf.
- In general, you can expect to make capital gains, corporate income tax payments.
- Companies are required to file an annual report and renew their yearly business license.
- Our team of dedicated consultants will continue to clarify any doubts you may have with regards to your company’s obligations.
Can foreigners start a business in Bangladesh?
- Yes, Bangladesh allows foreigners to incorporate their company with 100% foreigner ownership for most of its sectors.
- However, there are some industries such as the banking and insurance industry where you will need to receive further approval from the government.
How to open a company in Bangladesh?
- The first step is to decide on your company’s name and search for the availability of your company’s name through the Registrar of Joint Stock Companies and Firms (RJSC). This is to ensure that the name of your company is unique and does not coincide with the list of franchises in Bangladesh. You will then have to create an account in the RJSC for your company name registration.
- After you have received approval from the RJSC for your company’s name and opened a Bangladesh bank account for the company, you can proceed to prepare and draft the relevant documents such as the AOA and the Form XII required for the registration of your company. After you have paid the registration fee and submitted all the relevant documents to the RJSC, you will receive a certificate of incorporation, and the approved MOA and AOA.
- Upon successful incorporation, all companies are required to apply for a tax identification number (TIN number) and VAT registration number from the National Board of Revenue (NBR). You will also be required to apply for a business licence, based on the type of business your company conducts.
How to open a limited company in Bangladesh?
- The public limited company registration process is generally the same as the registration procedure for all other types of companies. You can refer to the section “How to open a company in Bangladesh?” for greater details about the process.
- However, the requirements and documents required for a public limited company in Bangladesh will be slightly different. A public limited company must have at least 7 members and there is no limit on the number of shareholders in the company. At least 3 of the 7 members must be directors and they can be of any nationality. Although there is no minimum authorized capital requirement if you are only hiring local employees, you will need to have a minimum of US$50,000 authorized capital if you wish to hire foreign employees. The minimum paid up capital requirement for a foreign owned company is also US$50,000.
- You can choose to set up a public limited company if you wish to raise share capital from the Dhaka Stock Exchange.
How to open a private limited company in Bangladesh?
- The steps to open a private limited company in Bangladesh is generally the same for all companies. You can refer to the section “How to open a company in Bangladesh?” for greater details on the process.
- However, the requirements and documents required for a private limited company in Bangladesh will be slightly different.
- These requirements include a minimum of 2 directors of any nationality and a maximum of 50 shareholders. The Memorandum of Association and Articles of Association must state the amount of authorized capital. Similarly, there is a minimum requirement of US$50,000 authorized capital only if you are hiring foreign employees. The minimum paid up capital requirement for a foreign owned company is also US$50,000.
How much does it cost to register a company in Bangladesh?
- The RJSC registration fees for a company in Bangladesh is typically around Rs 5,000 but will be higher depending on the amount of share capital your company has. Additional recording fees will also be incurred when you submit the relevant documents to the Registrar of Joint Stock Companies and Firms.
Which business is best for Bangladesh?
- Some of the different types of business you can consider includes the e-commerce business, business in the Information and Communications Technology (ICT) industry and the food delivery business.
- The e-commerce industry is one of the fastest-growing industry in Bangladesh, especially in the recent years. Moreover, banks in Bangladesh have introduced new payment systems to make it easier for customers from abroad to purchase goods from Bangladesh. This allows local e-commerce entrepreneurs to extent their customer outreach to overseas consumers.
- The ICT industry is also an industry that has great potential. Although, the ICT industry does not generate a significant portion of the country’s national income, the Bangladesh government has identified the IT industry as a potential growth industry and implemented measures to encourage both local and foreign entrepreneurs to set up an IT company or a software company. This includes income tax exemption for up to 10 years and full equity control of company even if the company is owned by foreigners.
- Another industry to consider is the food delivery market. With the rise in dual-income families, many parents do not have sufficient time to cook for their children. This has led to the popularity of food delivery services in the country.
- Alternatively, you may wish to consider industries from the top 100 group of companies in Bangladesh which include pharmaceuticals companies, finance companies, and consumer service companies and a construction company.
Which is better, LLP or Pvt Ltd company?
- Both the Limited Liability Partnership (LLP) and the Private Limited (Pvt Ltd) are forms of business ownership under the Companies Act 1994 that offer limited liability to their shareholders or partners. This means that shareholders or partners are considered a separate legal entity from the company, thus they are only held liable for the debt and liability incurred pertaining to the amount of shares they hold for Pvt Ltd companies or the amount of investments they have in the company for a partnership business.
- Typically, a small business in Bangladesh will prefer to set up an LLP because an LLP enjoys most of the same advantages as a Pvt Ltd company but at a lower cost. For instance, the registration fee for an LLP is much lower than a Pvt Ltd company and an LLP is not required to audit its accounts if its annual turnover does not exceed US$54,500.
- However, larger businesses which have an annual turnover of more than US$54,500 will be required to submit audited financial accounts. These accounts may contain information about the income of the partners because an LLP is taxed based on the personal income of the partners. Hence, larger businesses may prefer to set up a Ptd Ltd company for confidentiality reasons.
- In addition, it is usually more advantageous to be taxed based on corporate tax instead of personal income tax if your company has a high amount of profits. Hence, it is more advisable for large businesses to set up a Ptd Ltd company instead of a LLP.
What are the requirements of Pvt Ltd?
- A Pvt Ltd company requires at least 2 directors, and they must be at least 18 years old and can be of any nationality. Only a maximum of 50 shareholders is allowed for a Pvt Ltd company in Bangladesh. In addition, there is a minimum share capital requirement of US$50,000 for a foreign-owned company.
Is Bangladesh good for business?
- Yes, Bangladesh is a good place for businesses because of its low labour cost and less stringent requirements for the set up of a foreign company. The average monthly salary of a Bangladesh worker is US$310, hence it can be cheap for foreign companies who are planning to hire local workers. Bangladesh also allows for 100% foreign ownership of companies and has no nationality requirements for officeholders.