The establishment of a subsidiary in Bangladesh is a crucial and primary measure for the expansion of a business. In light of the seemingly uncomplicated transaction at hand, it is imperative to acknowledge that the undertaking necessitates a comprehensive understanding of diverse procedures and legal instruments. Prior to delving into the intricate details of establishing a subsidiary, it is imperative to acquire a comprehensive understanding of the procedural aspects, requisite documentation, and the governing laws pertaining to the establishment of said subsidiary.
Please find enclosed a comprehensive manual elucidating the intricacies of the subsidiary framework in the jurisdiction of Bangladesh, along with a compelling rationale for the establishment of a subsidiary entity within said jurisdiction.
What are the Types of Subsidiaries in Bangladesh?
1. Private Limited Company
In this Bangladeshi subsidiary business, the company’s liability is limited to member capital. Foreign investors possess 100% of a private limited corporation.The minimal investment is $1.
Starting this kind of organization requires two stockholders. Employers may utilize this organization for all commercial activity due to its restricted liability.
2. Public Limited Company
Stock exchanges list public limited business shares. Trade these shares openly. This entity needs seven shareholders, unlike the private limited corporation. Public limited companies in Bangladesh must have USD 1 in share capital.
3. Subsidiary Company
The parent firm normally controls this legal entity. Starting a subsidiary corporation requires two shareholders.The capital requirement is USD 1. Foreign investors may invest 51% to 100% in a subsidiary.
4. Branch Office (Foreign Owned)
A branch office is appropriate for a foreign firm starting business in Bangladesh. No minimum money is needed for this company. No minimum business membership is required.Since the foreign parent firm owns the business, 100% direct foreign investment is permissible.
5. Representative Office (Foreign Owned)
Bangladeshi liaison offices handle the central office’s marketing and R&D. Bangladesh has no minimum capital for representative offices. No minimum number of members is needed to start the firm.
How to Set Up Subsidiary in Bangladesh?
Setting up a Bangladeshi subsidiary requires the following steps.
The initial course of action entails submitting an application for name clearance. Pursuant to the applicable regulations, it is incumbent upon employers to duly submit a bank slip, and it is further incumbent upon employers to remit the sum of 600 Taka in order to obtain a name for the company. Upon completion of the payment, it is anticipated that an official clearance shall be duly issued by the website of the Registrar of Joint Stock Companies (RJSC).
Corporate bank account
The aforementioned action is a crucial prerequisite for the establishment of a foreign subsidiary within the jurisdiction of Bangladesh. The shareholding of the company is of utmost importance in order to facilitate the establishment of a corporate bank account. Upon completion of said step, it is anticipated that the bank shall proceed to duly issue an encashment certificate. The aforementioned certificate is mandated by the Registrar of Joint Stock Companies And Firms (RJSC) for the purpose of incorporation. In the event that the company intends to engage the services of a foreign employee at a later date, it is imperative to note that an inward remittance fee of USD 50,000 shall be levied.
This correspondence serves as the conclusive measure in the process of incorporating a foreign subsidiary within the jurisdiction of Bangladesh. It is imperative that employers duly furnish and submit all requisite information on the official website of the Registrar of Joint Stock Companies (RJSC). Furthermore, it is imperative that employers duly furnish a bank slip as evidence of payment, accompanied by the requisite stamp duty. Upon fulfillment of all necessary requirements and procedures, the Registrar of Joint Stock Companies (RJSC) duly and lawfully issues the certificate of incorporation.
Benefits of Bangladesh Subsidiary
Some of the benefits of a subsidiary company in Bangladesh are:
- It has a growth-oriented economy
- Foreign-invested allowed is allowed in the country
- Profits can be transferred to the home country
- No minimum capital is required to set up a subsidiary
- Tax exemptions for entrepreneurs are offered
Documents for Opening a Bangladeshi Subsidiary
A subsidiary firm in Bangladesh requires the following documents:
- Name Clearance Certificate from RJSC
- Association articles and memorandum
- Object clause schedules must be completed.
- Form IX data
- Company-related clause in 450 words as required by RJSC
- Information about directors and subscribers
- Business registered address
- The Tax Identification Number
- If the shareholder is abroad, they must present their passport.
Bangladeshi subsidiaries may have what business forms?
The three most popular business subsidiaries in Bangladesh are:
- Private Limited Companies
- Office branch
- Office of liaison
These PLCs may be 100% foreign-owned. The aforementioned subsidiaries need no minimum capital.
Bangladesh Subordinate Laws
Below are the laws associated with setting up a subsidiary business in Bangladesh:
- At least two shareholders and directors are required. Individuals or legal entities.
- Bangladesh requires just USD 1 in paid-up share capital.
- PLCs must submit audited yearly accounts to the Bangladesh Income Tax Authority.
- In Bangladesh, PLC formation takes five weeks on average. Bank account opening takes four weeks.
Compliance after incorporation
Here are some post incorporation compliances for the foreign subsidiary in Bangladesh:
- After receiving the RJSC certificate of formation, the firm must apply for trade licenses, VAT registration, and other registrations.
- An Import or Export Registration Certificate is needed to establish an import or export firm.
- Directors and shareholders must arrange the annual meeting 18 months after establishment. After this meeting, 15 months must pass before the next.
- Besides the foregoing, the corporation must submit regular tax returns.
Bangladeshi subsidiary taxes
In Bangladesh, the taxation on a foreign subsidiary in Bangladesh are as follows:
- Resident entities pay taxes on global business income.
- Non-residents tax Bangladeshi income.
- Taxes on overseas firm branches average 35%.
- Tax Incentives for Businesses Setting Up a Subsidiary in Bangladesh
Foreign enterprises investing in special economic zones and hi-tech park zones get tax perks.
Other Important Factors
It is imperative to underscore the indispensability of meticulous planning in the establishment of a subsidiary within the jurisdiction of Bangladesh. It is imperative to note that the transportation duration required for your travel to and from your designated country is of considerable magnitude. It is imperative that you familiarize yourself with the legal framework of the jurisdiction in which your business entity operates and engage in the process of recruiting and employing individuals within the prescribed legal parameters at this juncture.
Can Multiplier’s Employer of Record Help You Hire and Expand in Bangladesh?
In order to facilitate the seamless establishment of a subsidiary in Bangladesh, it is advisable to engage the services of a third-party service provider.
Multiplier, a reputable global employment partner, possesses the expertise and knowledge necessary to serve as your esteemed guide throughout this transformative journey. Through the utilization of our esteemed Employer of Record services, businesses are afforded the exceptional opportunity to engage the services of skilled individuals in a foreign jurisdiction, all while circumventing the necessity of establishing a local legal entity.
With our Software-as-a-Service (SaaS) solution, which is consolidated on top of our Employer of Record (EOR) infrastructure, Multiplier guarantees the proper onboarding of employees while strictly complying with the employment laws of the respective country. With our cutting-edge, streamlined payroll solution, employers have the unparalleled ability to remunerate employees across the globe with utmost precision and punctuality.