Doing business in Bangladesh

In association with:

2016

Introduction ................................................................................................................................................................................ 3

– Country proﬁle ................................................................................................................................................................... 4

Legal overview ........................................................................................................................................................................... 6

Conducting business in Bangladesh ........................................................................................................................................ 10

Tax system ............................................................................................................................................................................... 13

Labour ...................................................................................................................................................................................... 17

Audit ......................................................................................................................................................................................... 20

Trade ......................................................................................................................................................................................... 22

Finance ..................................................................................................................................................................................... 23

Infrastructure ............................................................................................................................................................................ 25

Contents

This Guide has been prepared jointly by The Hongkong and Shanghai Banking Corporation Limited in Bangladesh and Grant Thornton for the purposes of providing a high-level general

overview of the business environment in Bangladesh for the information of businesses who may be interested in transacting or investing in Bangladesh. Any transaction or investment in

Bangladesh, however, should only be undertaken based on professional advice speciﬁc to such transaction or investment.

This guide to doing business in Bangladesh will provide foreign investors with an insight into the key aspects of

undertaking business and investing in Bangladesh. The country offers a competitive market, business-friendly

environment and a growing population.

Bangladesh has a well-educated,

highly adaptive and industrious

workforce with the lowest wages

and salaries in the region. Over 50

per cent of the population is under

25, providing foreign investors with a

youthful group for recruitment.

Furthermore, Bangladesh’s

location next to India, China and

the ASEAN markets provides

foreign investors with a strategic

location to access these markets.

Bangladesh has proved to be an

attractive investment location

with its population of 168.9 million

and consistent economic growth

substantiated by strong and

growing domestic demand.

Bangladesh offers the most liberal

FDI regime in South Asia, allowing

100 per cent foreign ownership

with an unrestricted exit policy,

easy remittance of royalties and

repatriation of proﬁts and incomes.

Bangladesh also offers a number

of export-oriented industrial

enclaves with infrastructural

facilities and logistical support for

foreign investors.

In the past decade, Bangladesh’s

economy has grown at nearly six

per cent per year. Testament to

the country’s continued growth,

the OECD upgraded its rating for

Bangladesh from a 6 to a 5 in July

2015. This means the OECD now

categorises Bangladesh as a new

frontier market, rather than a nation

highly dependent on development

aid. Bangladesh has set a target

to be in the middle income group

status by 2021. This is expected to

be achieved through simultaneous

improvement of the political,

economic, social, technological,

legal and environmental

infrastructure. Bangladesh was

recently promoted as a lower middle

income country (LMIC) from a low

income country (LIC) classiﬁcation

by the World Bank.

Bangladesh also has made

substantial strides in improving the

Human Assets Index (a measure of

the level of human capital consisting

of four indicators: two on health

and nutrition and two on education)

over the past few years and is only

about 2.0 percentage points short of

meeting the graduation criterion. If

current trends can be maintained, it

will be likely to meet this criterion in

the 2018-2021 review.

While the economy is likely to

retain its competitive advantage

in producing clothing and apparel,

rising incomes, better regulation

and improved infrastructure

will encourage a shift towards

investment in higher value-added

sectors. In the long term, rising

Foreign Direct Investment (FDI)

inﬂows will have a key role

in supporting investment in

Bangladesh. Growing household

incomes will also open up a

substantial market for consumer

goods, including high-tech products.

While this guide makes reference to

some of the most common issues

investors might face, it must be

noted that certain industries, such

as the ﬁnancial services sector,

are subject to special regulation

and therefore companies wishing

to invest in this area should seek

legal advice.

The information in this publication is

current at January 2016.

Introduction

Country proﬁle

Capital City

Dhaka

Area

148,460 sq.km

Population

168,957,745

Language

Ofﬁcial language is Bangla (Bengali). English though not having ofﬁcial status,

is prevalent across government, law, business, media and education, and can

be regarded as the de facto co-ofﬁcial language of Bangladesh.

Currency

Bangladeshi Taka (BDT)

International dialling code

+ 88

National Holidays 2016

21 February – International Mother Language Day

17 March – Birthday of the Father of the Nation

26 March – Independence Day

14 April – Bengali New Year

1 May – May Day

21 May* – Buddha Purnima

23 May* – Shab e-Barat

1 July – Bank holiday

1 July – Jumatul Bidah

3 July* – Shab e Qadr

5 – 7* July – Eid ul-Fitr

15 August – National Mourning Day

25 August – Janmashtami

11 – 13* September – Eid ul-Adha

11 October – Durga Puja (Dashami)

12 October* – Ashura (Muharram)

12 December* – Eid e-Milad-un Nabi

16 December – Victory Day

25 December – Christmas 31 December – Bank Holiday

*Subject to the appearance of the moon

Business and Banking hours

Generally 09:00 to 17:00 from Sunday to Thursday

Banking Transaction Hours: 10:00 to 16:00

Stock exchanges

Dhaka Stock Exchange

Chittagong Stock Exchange

Political structure

Parliamentary representative democratic republic

Doing Business rank 2016

174 (Dropped by two points from 2015 Rank 172)

Ease of Doing Business

Topics 2016 rank 2015 rank Change in rank

Starting a business 117 111 -6

Licenses and Permits 118 118 No change

Getting Electricity 189 189 No change

Registering property 185 184 -1

Financing 133 128 -5

Protecting Investors 88 87 -1

Paying Taxes 86 85 -1

Trading Across Borders 172 172 No change

Enforcing Contracts 188 188 No change

Resolving Insolvency 155 155 No change

Source: World Bank Group (Doing Business)

Political and legal system

Bangladesh is a constitutional

republic with a multi-party

parliamentary democracy. Elections

in Bangladesh are held on the

basis of universal suffrage. The

Parliament of Bangladesh is a

unicameral legislature consisting of

300 members, directly elected from

each constituency on the basis of

a ﬁrst-past-the-post system and 50

women members elected by the

aforesaid members on the basis

of proportionate representation in

the parliament. The President is the

head of the state elected by the

members of the parliament for a

ﬁve-year term. Executive power of

the Republic is, in accordance with

the Constitution, exercised by or on

the authority of the Prime Minister.

The President is responsible for

appointing the Prime Minister.

The Cabinet shall be collectively

responsible to Parliament.

The present structure of the local

government in Bangladesh had its

origin in the British colonial period.

The ﬁrst attempt at establishing a

local government institution was

made during the latter part of the

nineteenth century. The structure,

function and ﬁnancial management

of local government institutions have

undergone many changes from the

British colonial period to the present

day. Currently, the rural/regional

local government of Bangladesh has

three tiers, namely ‘Zila Parishads’,

‘Upazila Parishads’ and ‘Union

Parishads’. Due to the rapid growth

of towns and cities, in sub-urban

areas the ‘Union Parishad’ is

frequently replaced by the Municipal

Corporations (Pourashava) and City

Corporations.

The Constitution of Bangladesh is

the supreme law of the Republic.

However, it can be amended by an

ordinary law-making procedure; this

amendment can only be passed

through a vote of no less than two

thirds of the members of Parliament.

If any other law is inconsistent

with the Constitution that other

law shall, to the extent of the

inconsistency, be void. Part III and

Article 27 to 44 of the Constitution

provide 18 fundamental rights such

as equality before law, equality of

opportunity in public employment,

right to protection of law, protection

of right to life and personal liberty,

freedom of movement, freedom of

thought, etc.

The present legal and judicial system

of Bangladesh owes its origin mainly

to the two centuries of British rule in

the Indian Sub-Continent, although

some elements are remnants of the

pre-British period tracing back to

Hindu and Muslim administration.

Most legislation in Bangladesh

originates from English law and the

legal system is based on English

common law.

The term “law” has been deﬁned

in the Constitution of Bangladesh

as any Act, ordinance, order, rule,

regulation, bylaw, notiﬁcation or

other legal instrument, and any

custom or usage, having the force of

law in Bangladesh.

Besides, Article 111 of the

Constitution of Bangladesh provides

that the law declared by the

Appellate Division shall be binding

on the High Court Division and

the law declared by either division

of the Supreme Court shall be

binding on all courts subordinate

to it. Therefore, the statutory laws,

secondary legislation and judgment

laws or precedent, along with

customs and usage, all form the

sources of law in Bangladesh.

The judiciary of Bangladesh consists

of a Supreme Court, subordinate

courts and tribunals established

under the provisions of different

statutes. The Supreme Court of

Bangladesh is the highest court of

law in Bangladesh. It consists of two

divisions, an Appellate Division and

High Court Division. The Supreme

Court is independent of the

executive branch and is able to rule

against the government.

Data protection

There is no speciﬁc privacy or

data protection law in Bangladesh,

except for the Information and

Communication Technology

Act, 2006.

Nevertheless, the right of privacy is

a fundamental right in Bangladesh.

Article 43 of The Constitution of

Bangladesh declares that every

citizen shall have the right to the

privacy of his correspondence and

other means of communication.

Under the Information and

Communication Technology Act

2006 unauthorised entry into any

computer system is a punishable

offence. In addition, it is a

punishable offence to disclose any

record, book, register, message

exchange, data or ﬁle to another

person, even if authorised to

view or process those materials

without the permission of the

concerned person(s).

The Information and Communication

Technology Act, 2006 is related

to the protection and legality of

information and communication

technology, Cyber Crimes and

relevant issues therein. According

to the Right to Information Act

2009, all individuals have the

right to access information about

state agencies apart from issues

concerning national security or

public interest. Nevertheless, no one

has the right to intervene in one’s

Legal overview

personal information unless (s)he

willingly discloses it.

Exchange controls

Bangladesh operates an

exchange controlled economy

under the Foreign Exchange

Regulation Act, 1947. All inward

and outward remittances are

regulated by the Central Bank of

Bangladesh (that is, Bangladesh

Bank). Foreign investor rights

are protected under the Foreign

Private Investment (Promotion

and Protection) Act, 1980 which

ensures legal protection against

nationalisation and expropriation. It

also guarantees non-discriminatory

treatment between foreign and

local investment, and repatriation

of proceeds from sales of shares

and proﬁts. Bangladesh Bank

has outlined relevant procedures

and formalities for all inward and

outward remittance in its Guidelines

for Foreign Exchange Transaction.

The Guidelines cover the procedures

for, among others:

• Foreign dealings in securities

• Remittance of royalty/technical

assistance fees

• Foreign ownership

• Mergers and acquisitions

• Divestments

• Remittance of proﬁt, dividends,

capital gains

• Foreign and local borrowings

• Retention quota of exporters

Any transaction that has not been

outlined in the Guidelines for Foreign

Exchange Transactions must

obtain speciﬁc approval from the

Bangladesh Bank.

Bangladeshi ‘Taka’ (BDT) is

convertible for current external

transactions. Individuals or ﬁrms

resident in Bangladesh may conduct

all current external transactions,

including trade and investment

related transactions, through banks

in Bangladesh authorised to deal

in foreign exchange (Authorised

Dealers) without prior approval from

Bangladesh Bank.

Similarly, non-resident direct

investment in industrial enterprise

and non-resident portfolio

investment through stock

exchanges do not require prior

approval of the Bangladesh Bank.

Remittance of post-tax dividends

or proﬁts on non-resident direct

or portfolio investment does

not require prior approval. Sales

proceeds, including capital gains on

non-resident portfolio investment,

may also be remitted abroad without

prior approval.

Prior approval from Bangladesh

Bank is required for the repatriation

of sale proceeds of non-resident

equity investment in public limited

companies that are not listed on

the stock exchange, and private

limited companies. In determining

the repatriable amount, Bangladesh

Bank works out the net asset value

of the shares on the basis of audited

ﬁnancial statements as on the date

of the sale and the net asset value

is thus calculated is considered

repatriable.

Money laundering regulations

In line with international initiatives

and standards, Bangladesh

promulgated the Money Laundering

Prevention Act (MLPA), 2002.

Subsequently, MLPA, 2009 was

enacted to expand the deﬁnition

of money laundering and coverage

of the offence. To strengthen the

AML/CFT regime of Bangladesh and

meet the international standards,

MLPA, 2012 was promulgated

repealing the MLPA, 2009 and

Anti-Terrorism Act (ATA), 2009 as

amended in 2012 and 2013. Both

Acts have empowered Bangladesh

Bank (BB), thus Bangladesh

Financial Intelligence Unit (BFIU) to

perform an anchor role in combating

money laundering and terrorist

ﬁnancing.

According to section 25 (2) of

MLPA, 2012, if any reporting

organisation violates the directions

mentioned in sub-section (1)

of section 25 of MLPA, 2012,

Bangladesh Bank may impose a

ﬁne of at least BDT50,000 but not

exceeding BDT2,500,000 on the

reporting organisations. Additionally,

Bangladesh Bank may cancel the

license or the authorisation for

carrying out commercial activities

of the said organisation or any of its

branches, service centres, booths

or agents. Alternatively, the Central

Bank shall inform the corresponding

registration or licensing authority

about the violation for the relevant

authority to take appropriate

measures against the organisation.

Intellectual Property Rights

Intellectual Property Rights are

established in the Constitution of

Bangladesh. Bangladesh’s main

intellectual property laws comprise:

the Trademarks Act, 2009, the

Patents and Designs Act 1911 and

the Copyright Act, 2000.

Further intellectual property

provisions can be found in a

number of sectorial speciﬁc

regulations. Bangladesh is also a

member of the World Intellectual

Property Organization (WIPO)

and signatory to the treaties

administered by WIPO. Provisions

with regard to protection of

Intellectual Property Rights can be

summarised as follows:

producers of cinematography ﬁlms and sound recordings etc. The rights given in the Copyright law include, inter alia,

rights of reproduction, communication to the public, adaptation and translation of the work. However, there may be slight

variations in the composition of the rights depending on the nature of the work. There is no copyright available for ideas.

Protection

granted

Sections 14 and 15 of the Copyright Act, 2000 laydown the broad scope of copyright protection.

• Reproduce the work in any material form

• Publish the work

• Perform the work in public

• Produce, reproduce, perform or publish any translation of the work

• Make any cinematographic ﬁlm or a record in respect of the work

• Communicate the work by broadcast or any other similar instrument

• Make any adaptation of work, etc

Infringements

(a) original literary, dramatic, musical and artistic works

(b) cinematograph ﬁlms

Also for published works, whether in Bangladesh or abroad, the author has to be citizen/permanent

resident of Bangladesh either at the time of publication or death.

authorised licensee, performs any of the above listed acts, eg publishes, reproduces, distributes or

imports any form of the copyrighted work.

Duration

In Bangladesh the term of copyright varies according to the nature of the work and whether the

author is a natural person or a legal person. In the case of literary, dramatic, musical or artistic

works, other than a photograph, the copyright lasts: the lifetime of the author plus 60 years from

the beginning of the calendar year following the year in which the author dies.

PATENTS

Patents protect inventions. An application for patent has to be made in a prescribed form to the Department of Patents,

Designs and Trade Marks in the prescribed manner. In order to be patentable an invention should have the following

characteristics: the invention should relate to a manner of manufacture, the manner of manufacture should be novel, it

should be the outcome of inventive ingenuity, it should have utility and it should not be contrary to law or morality.

Protection

granted

A patent provides the owner with the exclusive right:

• To make the product

• To sell the product

• To use the product

• To authorise others to do the above acts in whole or in part

Infringements

The statute confers on the patentee exclusive monopoly rights to make, sell, use, exercise or

distribute the invention and infringement occurs when such rights are violated.

Duration

Generally, the term of the patent 16 years from the application date; this may be extended further

by application.

TRADE MARKS

A trade mark must be a sign capable of distinguishing goods and services of one undertaking from those of another

undertaking. Those signs can be: words, personal names, designs, letters, numeral slogans, sounds, smells, signs and

distinctive colours.

Protection

granted

Trade marks are registered under the Trademark Act 2009 (as amended). A registered trade mark

allows the entrepreneur to plan the marketing of the products or service for which it is to be used.

One who has designed or used the trademark ﬁrst is entitled to claim proprietorship thereof, unless

he/she has subsequently abandoned this right and it is taken up by someone else.

Infringements

When a person uses any trade mark in the course of trade, in relation to the same goods for which

the mark is registered, without the authority of its proprietor, it will amount to an infringement of

that trademark.

A registered trade mark will be deemed to be infringed by a person (not being a registered

proprietor or a person using by way of permitted use) where he uses same mark, similar mark or

confusingly similar and such use is like to cause confusion on the part of the public, or which is

likely to have an association with the registered trademark.

Enforcement of a trademark right against any violation is undertaken through the courts; the right

can be enforced by order of injunctions, seizure and conﬁscation and relevant damages.

Duration

A registered trade mark is valid for an initial period of seven years from the date of ﬁling and

renewable thereafter for successive periods of ten years.

DESIGNS

The proprietor of a new or original design shall have the right to apply for registration of the said design under the Patents

and Design Act 1911. While this is also called copyright, it is different from the copyright conferred under the Copyright

Act 2000.

Protection

granted

When a design is registered, the proprietor of the design shall, subject to the provision of the Act,

have exclusive copyright in the design.

Infringements

During the existence of any copyright in a design it shall be unlawful for any person:

• To apply the design, or cause the design to be applied, to any article in any class of goods in

which the design is registered or any fraudulent or obvious imitation thereof

• To import, for the purpose of sale, without consent of the proprietor, any article belonging to the

class in which a design has been registered

• To publish or expose, or cause to be published or exposed, for sale any article in any class of

goods in which a design has been registered

Enforcement of the design right against its violation is undertaken through the courts: the right can

be enforced by order of injunctions, seizure and conﬁscation and relevant damages.

Duration

Once obtained, a design right is protected for a period of ﬁve years from the date of ﬁling of the

application. It can then be renewed for one or two periods of ﬁve years each up to a total term of

15 years.

Business entities

Any foreign company or individual

wanting to do business in

Bangladesh will need to decide

under which form they want to

operate. The various business

entities available in Bangladesh are

described below.

It is important to note that those

that do not create a legal entity

in Bangladesh in order to carry

business in the country might still

be subject to certain limitations

and obligations under state law.

Companies wanting to provide

goods or services in Bangladesh

need to carefully assess whether

their activities establish a presence

in Bangladesh which might make

them liable to pay taxes in the

country and oblige them to make

public ﬁlings.

As per the relevant publications

of the Board of Investment

(BOI), local investors may

setup a business under several

organisational structures such as

sole proprietorship, partnership

and limited company. In the case

of a foreign investor, only a limited

company may be established.

Companies limited by shares

Business in Bangladesh may be

led by an organisation framed

and incorporated locally or by an

organisation incorporated abroad,

however enrolled in Bangladesh.

The incorporation or enrolment

is carried out by the Registrar of

Joint Stock Companies and Firms

(RJSC) under the provisions of the

Companies Act 1994. The following

corporate forms are available:

• Company Limited by Shares

– Private Limited Company

– Public Limited Company

• Company Limited by Guarantees

• Unlimited Company

Private Limited Company:

The main characteristics of a Private

Limited Company are:

• Restricts the rights to transfer the

• Limits the number of its members

to minimum two and maximum

50 excluding the persons

employed in the company

• Prohibits any invitation to the

public to subscribe for the shares

or debentures of the company and

• Is entitled to commence business

from the date of its incorporation

Public Limited Company:

A Private Limited Company may

be converted into a Public Limited

Company or a company can be

incorporated as Public Limited

Company.

Public limited company can be of

two types: i) listed and ii) unlisted

The main characteristics of a Public

Limited Company are:

• May issue invitation to the

members of the public to

subscribe the shares and

debentures of the company

through a prospectus which

complies with the requirements of

the Companies Act, 1994, Has a

minimum of seven members with

no maximum limit

• Has at least three directors

• Shall not commence any business

until obtaining the Certiﬁcate of

Commencement of Business

For listed public limited companies

(which are listed with BSEC for

trading shares in public), in addition

to the above, they must also comply

with the requirements of the

Securities and Exchange Ordinance

1969 and the Securities and

Exchange Commission Act 1993.

Annual ﬁnancial

statements

must be duly

approved by

an approving

body within

six months of

the balance

sheet date.

Conducting business

in Bangladesh

Formation

To establish a company in

Bangladesh, the promoters must

Companies & Firms (RJSC&F).

The following documents must

be registered:

• Name Clearance: this involves

submitting an application to the

ofﬁce of RJSC&F through the

website alongside the applicable

fees. The name cannot match or

closely resemble any other name

already taken

• Memorandum and Articles of

Association: the Memorandum

and Articles of Association must

be prepared and submitted,

alongside a scanned copy of the

encashment certiﬁcate received

from a local bank. A registration

fee must also be paid to the

designated bank

• Registration: the promoters

of the new entity (having name

clearance) apply for registration

with necessary documents,

prescribed forms & fees as

appropriate to the type of entity

with the ofﬁce of the RJSC&F.

• Certiﬁcate of Incorporation:

RJSC&F issues a Certiﬁcate of

Incorporation upon satisfaction

that the promoters submitted

the above mentioned

documents properly

Following registration, companies

must also obtain the following

before commencing business:

• Trade License from City

Corporation/Municipality/

Union Council (Local

Government Bodies)

• Taxpayer’s Identiﬁcation Number

(Twelve Digit TIN)

• VAT Registration (in the cases

where applicable)

• Import Registration Certiﬁcate

(in the case of business related

to import)

• Export Registration Certiﬁcate

(in the case of business related

to export)

• License/Permission from the

authorities according to the nature

of business/profession

• Bank account

• Membership of trade body

Foreign investors will also need

to register with the Board of

Investment. This comprises

submitting an application form,

alongside the MOA/AOA, attested

copies of deed/documents in

support of project land, background

of the promoters, a project proﬁle

(if the total project cost exceeds

BDT100 million) and a fee. Further

information may also be required if

the project is ﬁnanced by a loan.

After receiving the application

duly ﬁlled in, signed and with the

required documents enclosed, the

BOI reviews the application and,

if found suitable, the registration

certiﬁcate is issued. BOI registration

makes the industrial unit eligible

for all the incentives and facilities

provided by the Government

of Bangladesh.

Capital requirement

Companies do not have any

minimum capital requirements

unless they appoint expatriates

as employees. In this case, the

minimum capital requirement is

USD50,000.

Constitution

The constitution of the company

is set out in the Memorandum of

Association (MOA) and Articles of

Association (AOA).

The MOA states the name of the

company, whether it is public,

private or limited and the location

of the registered ofﬁce. The MOA

should clearly spell out the main

objectives, the authorised capital,

the divisions of this capital into

shares of ﬁxed amount and liability

of its members.

The AOA are the regulations

governing the internal management

of the affairs of the company and

the conduct of its business. These

articles are subordinate to and

controlled by the MOA.

Management

The business of a company is

managed by the Board of Directors.

The company may appoint or

employ any individual as its

Managing Director for a term not

exceeding ﬁve years at a time.

The business and all other affairs

of the company are managed by

the Managing Director who is in

turn supervised by the Board of

Directors. The Board of Directors

may elect a Chairman and decide

his/her tenure of service and his/

her function. The Chairman shall

preside all the meetings of the

Board of Directors and other

meeting(s) whether an Annual or

Extra-Ordinary General Meeting of

the Company. The Chairman and the

managing director shall not be the

same person.

Filing requirements

Companies must ﬁle annual reports

and directors notes alongside

audited accounts within 21 days of

the annual general meeting. Other

statutory returns may be required,

eg tax and VAT returns.

Partnerships

A Partnership can be established

with at least two and no more

than 20 persons, with the aim of

making and sharing proﬁts among

themselves. An organisation

can emerge as an aftereffect

of an agreement or contract,

communicated or inferred between

the partners. In Bangladesh, a

partnership ﬁrm is to be structured

under the provisions of the

Partnership Act 1932.

Under the Partnership Act 1932, the

deed of partnership does not need

to be registered. Furthermore, the

enrolment of such ﬁrm is not legally

required. However, once registered,

a partnership ﬁrm may receive some

legitimate rights and facilities.

Branch/Liaison/Representative

of Foreign Companies

For foreign investors that do not

wish to incorporate a company in

Bangladesh, a branch, liaison or

representative ofﬁce may be the

most suitable forms.

A branch ofﬁce is established to

undertake the same business as

its head ofﬁce. The activities of

a branch ofﬁce must be clearly

stated in its letter of endorsement.

These ofﬁces can have local

sources of ﬁnance and carry out

business in approved foreign

investment sectors.

A liaison ofﬁce of a foreign

organisation is only permitted to

provide services of contact or

coordination between its principal

and local agents, distributors/

exporters’ establishments through

correspondences, individual

contacts and other electronic media.

The ofﬁce is not allowed to earn

income from Bangladesh sources.

No outward remittance of any

sort from Bangladesh sources will

be permitted with the exception

of the sum accumulated from

abroad (the unspent part). The

liaison ofﬁce must acquire foreign

currency in Bangladesh from the

guardian company and all costs

should be covered from that inward

remittance. For this purpose,

the ofﬁce shall have to open an

account with any scheduled bank of

Bangladesh as per the instructions

contained in the guidelines for

foreign exchange transactions.

The activities of Branch/Liaison/

Representative ofﬁces of foreign

entities are restricted to those stated

in the authorisation of the BOI.

Generally, no outward settlement of

any sort from Bangladesh sources

is permitted with the exception of

the cases allowed by the foreign

exchange regulations. The Branch/

Liaison/Representative ofﬁce

of a foreign entity must submit

an income tax return to the tax

authority concerned. Security

clearance may be needed from

the Ministry of Home Affairs.

Liaison Ofﬁces need to bring

inward remittance of a minimum of

USD50,000 within two months from

the date of the issue authorisation

letter as establishment expenses

and six months’ operational costs.

Formation

Permission will be required from

BOI in order to open up a Branch/

Liaison/Representative Ofﬁce.

An application in the prescribed

form along with the following

documents must be submitted:

MOA/AOA of principal company,

certiﬁcate of incorporation, details

of directors/promoters of principal

company, board resolution to open

the ofﬁce, audited accounts of

the principal company for the last

year, organisational structure of the

proposed ofﬁce and list of activities

of the proposed ofﬁce.

All papers must be attested by

the competent Bangladesh High

Commission/Commission of the

respective country in Bangladesh/

respective country’s apex business

chamber. Permission must be

sought from Bangladesh Bank for

the opening of a branch/liaison ofﬁce

in Bangladesh by foreign entities

including airlines and ﬁrms under

Section 18B of the Foreign Exchange

Regulation Act, 1947. The permission

is sought from Bangladesh through

the Authorised Dealer.

Following the above processes, any

foreign company which establishes

a place of business in Bangladesh

shall, within one month of the

establishment, register the required

documents at the Registrar of RJSC.

Generally,

no outward

settlement of

any sort from

Bangladesh

sources is

permitted with

the exception

of the cases

allowed by

the foreign

exchange

regulations.

Corporate Income Tax (CIT)

Income tax in Bangladesh is administered under the

Income Tax Ordinance, 1984 and the Income Tax Rules,

1984, as well as notiﬁcations made under said Ordinance.

Scope

For the purposes of CIT, no major distinction is

made between foreign owned companies and

Bangladeshi-owned companies; although some

companies may qualify for certain tax incentives

depending on the nature of their business. Companies

incorporated in Bangladesh and foreign companies

registered in Bangladesh (eg branch ofﬁces) are tax

resident. Tax resident businesses are taxed on their

worldwide income, subject to International Financial

Reporting Standards and any double taxation avoidance

agreements that may be in place. Non-tax resident

businesses are subject to tax on any income accrued

in Bangladesh.

Taxable income and tax rates:

Nature of Company Rate

1 General:

Publicly Traded Company 25%

Non-Publicly Traded Company 35%

2 Bank, Insurance and Financing Institution

(Other than Merchant Bank):

Publicly Traded Company 40%

Non-Publicly Traded Company 42.5%

3 Merchant Bank 37. 5%

4 Mobile phone operators:

Publicly Traded Company 40%

Non-Publicly Traded Company 45%

5 Cigarette Manufacturing

Company

45%

6 Registered Cooperative

Society

15%

7 Minimum tax

Minimum tax payable on

Business Turnover

0.30% (0.10%

for ﬁrst 3 years for

any manufacturing

industrial

undertaking)

Variation in rates:

Particulars Incentive/Rate

Manufacturer of Jute Products 15%

Textile and Yarn Manufacturing

Industries

15%

Transfer of minimum 20% shares

of paid-up capital of a non-publicly

traded company through IPO

10% rebate

on applicable

income tax in the

year of transfer

Capital Gain (General) 15%

Capital Gain from sale of shares traded in stock

exchanges:

General Individual Nil

Company 10%

Sponsor shareholder/ Sponsor

director of speciﬁc type of

companies

Shareholders holding more than 10%

share in the paid-up capital of any

publicly traded companies except

some speciﬁc type of companies

Capital gains

Every company is liable to pay tax at the rate of 15 per

cent on the capital gains derived from transfer of capital

assets and at 10 per cent on the capital gain derived from

the transfer of shares of listed company.

Groups

Bangladesh tax laws do not speciﬁcally address the issue

relating to tax on group consolidation. In practice, the

members of a group are taxed separately.

Thin capitalisation

All foreign borrowing by private sector industrial

enterprises requires permission from the Board of

Investment. Approval is subject to the fulﬁlment of a

number of conditions namely:

• The debt-to-equity ratio must be within 70:30; this may

vary as determined by BOI

• The fund cannot be used exclusively as working capital

Losses

The Income Tax Ordinance 1984 provides for the

offsetting of losses and carrying forward of losses under

Tax system

Total Income Rate (%)

First BDT 220,000 – For Male Nil

First BDT 275,000 – For Female

First BDT 275,000 – For Individuals aged

65+ years

First BDT 350,000 – For Disabled Individuals

First BDT 400,000 – For War-injured

freedom ﬁghter

Next BDT 300,000 10

Next BDT 400,000 15

Next BDT 500,000 20

Next BDT 3,000,000 25

Balance Income 30

the relevant categories of income.

Losses can be carried forward for

six years. Unabsorbed depreciation

can be carried forward for an

unlimited time period.

Dividend income

Dividends paid to shareholders are

subject to withholding taxes at the

following rates:

• Resident/non-resident

Bangladeshi company:

20 per cent

• Resident/non-resident

Bangladeshi individual:10 or 15 per

cent (subject to having twelve

digit TIN)

• Non-resident non-Bangladeshi

individual: 30 per cent

The rate of deduction of tax at

source from the remittance of

dividends to foreign investors is

determined upon the consideration

of the provisions of the applicable

double taxation avoidance

agreement. Tax credits are available

regarding tax deducted at source.

Withholding tax

Interest payments are subject to a

withholding tax at a rate of 20 per

cent if paid to non-residents; the

rates for companies are listed above.

Intellectual property royalties

payable to non-residents are subject

to a withholding tax at a rate of

20 per cent; this is the ﬁnal tax

settlement.

Administration

A company is obliged to submit an

annual income tax return by 15 July

following the income year or, where

15 July falls before the expiry of six

months from the end of the income

year, before the expiry of such six

months.

Controlled foreign companies

The proﬁts of a foreign subsidiary

are not required to be imputed to a

parent company that is tax resident

in Bangladesh.

Transfer pricing

The transfer pricing regulations in

Bangladesh were enacted on 1

July 2014 by the Finance Act, 2014.

Under these regulations, the pricing

of any income or expense arising

from international transactions

between associated enterprises will

need to be determined with regard

to the arm’s length price principle

applying the appropriate method(s)

prescribed in Section 107C of the

Income Tax Ordinance, 1984.

The most appropriate method or

methods will be selected from the

prescribed methods on the basis

of the nature of transaction, the

availability of reliable information,

functions performed, assets

employed, risks assumed or such

other factors as may be prescribed.

Every person who has entered

into an international transaction

shall provide, along with the annual

income tax return, a statement of

international transactions in the

Bangladesh

levies customs

duty on imports

using the

Harmonised

Tariff System

for tariff

classiﬁcation.

form and manner as may be prescribed. The statement

of international transactions, to be provided under section

107EE of the Income Tax Ordinance, 1984, shall be in

the form speciﬁed in Rule 75A of the Income Tax Rules,

1984, and signed and veriﬁed by the person responsible

for signing the return of income under Section 75 of the

Income Tax Ordinance, 1984.

Tax incentives

The following tax incentives are available for companies:

• Newly established industrial undertakings and physical

infrastructure facilities set up between the periods of

July 2011 to June 2019 will enjoy exemption from tax at

varying rates for certain periods

• Industrial undertakings engaged in the manufacturing of

goods, not eligible for a tax holiday, set up between the

periods of July 2014 to June 2019 outside the territory

of City Corporation will enjoy exemption from tax at

varying rates for certain periods

• Accelerated depreciation on the cost of machinery and

plant is admissible for new industrial undertakings, set

up between the periods of July 2014 to June 2019, in

the ﬁrst three years of commercial production at 50, 30

and 20 per cent respectively

• Exemption on income derived on the export of

handicrafts for the period from July 2008 to June 2019

• 50 per cent exemption on income derived from export

business

• Exemption on income derived from Information

Technology Enabled Services or software development

or Nationwide Telecommunication Transmission

Network until 30 June 2024

• Exemption on income of Private Power Generation

Companies

• Initial depreciation in addition to normal depreciation

where any building has been newly constructed or any

machinery or plant has been installed in Bangladesh

after the thirtieth day of June, 2002

• Reduced tax rates are applicable for speciﬁc types of

business and certain areas subject to conditions set

forth in the relevant provisions of laws

• Rebate on the amount spent to perform speciﬁed CSR

activities

• Avoidance of double taxation on the basis of bilateral

Double Taxation Avoidance Agreements

Personal Income Tax (PIT)

Scope

Income tax provisions can be found in the Income Tax

Ordinance 1984, the Income Tax Rules 1984 and all

relevant notiﬁcations under the Ordinance.

The income liable to tax can be classiﬁed under the

following seven categories: employment income,

investment income, residential income, agriculture,

business income, capital gains and other sources.

Some categories of income are exempt.

Bangladesh has concluded double taxation treaties

with over 30 countries to mitigate the effects of

double taxation.

Individuals liable to Bangladesh income tax

An individual’s liability to income tax is dependent on

their status of residency. Bangladesh-resident individuals

must pay income tax on their worldwide income, while

non-residents must pay on any income accrued in

Bangladesh.

Individuals are considered resident if they have been

in Bangladesh for a period of 182 days or more in the

relevant year or 90 days or more in the relevant tax year

and they have been in Bangladesh for a period of 365

days or more during the four years preceding the relevant

tax year.

Individual responsibilities in relation to

Bangladesh tax

All taxpayers must ﬁle annual tax returns by 30

September, following the end of the tax year (30 June).

This date may be extended by up to three months by

the Deputy Commissioner of Taxes by an individual

undergoing assessment.

Tax rates – 2015

Total Income Rate (%)

First BDT 250,000 – For Male Nil

First BDT 300,000 – For Female

First BDT 300,000 – For Individuals aged

65+ years

First BDT 375,000 – For Disabled

Individuals

First BDT 425,000 – For War-wounded

gazetted freedom ﬁghters War

Next BDT 400,000 10

Next BDT 500,000 15

Next BDT 600,000 20

Next BDT 3,000,000 25

Balance Income 30

Minimum Tax Payable for Individuals

Location of taxpayers Amount (BDT)

Dhaka City Corporation and

Chittagong City Corporation

5,000

All other City Corporations 4,000

All areas/places other than City

Corporations

3,000

In addition to payment of tax at the aforementioned rates,

an individual is supposed to pay a surcharge if he/she

has net wealth exceeding BDT22.5 million as shown in

the statement of assets and liabilities. The surcharge is

calculated on the amount of tax payable after deduction

of investment rebate. An individual that has net wealth

exceeding BDT22.5 million shall pay surcharge applying

the following rates determined on the basis of following

slab of net wealth:

Net wealth Rate (%)

First BDT25,000,000 Nil

More than BDT25,000,000 but less

than 100,000,000

More than BDT100,000,000 but less

than 200,000,000

More than BDT200,000,000 but less

than 300,000,000

More than BDT300,000,000 25

In accordance with budget 2015-16, the tax free limit

for wealth tax will be raised from BDT20,000,000 to

BDT22,500,000, and a minimum surcharge is to be paid of

BDT3,000.

Other taxes

Value Added Tax

VAT is imposed on goods and services at the stages of

import, manufacturing, supply, and trading. VAT is imposed

on services provided in Bangladesh and also on the services

rendered from outside Bangladesh. A uniform VAT rate of

15 per cent is applicable for both goods and services.

A registered VAT taxpayer is entitled to claim back the VAT

paid on purchase of inputs subject to compliance with the

provisions of VAT laws. 15 per cent VAT is applicable for

all business or industrial units with an annual turnover of

BDT8,000,000 and above, except in the cases speciﬁed in

VAT laws.

Turnover tax at the rate of three per cent is levied where

annual turnover is less than BDT8,000,000. Truncated rate

also applies in the cases speciﬁed by VAT laws which have

been determined on the basis of assumed percentage

of value addition. A taxpayer paying VAT at the truncated

rate will not be entitled to claim input VAT rebate. Under

the 2015-16 budget, the tax is reduced to 0.1 per cent of

turnover for the ﬁrst three years for industrial undertakings.

Supplementary Duty (SD) is applicable as per the 3rd

Schedule of the VAT Act, 1991, at the rates speciﬁed for

particular goods or services.

Exemption of VAT or imposition of VAT at zero per cent

is regulated by Section 3 (Export or Deemed Export),

Section 14 (goods/service declared by the government),

1st and 2nd Schedule of the VAT Act, 1991.

Customs duty

Bangladesh levies customs duty on imports using

the Harmonised Tariff System for tariff classiﬁcation.

Imports are generally taxed at the following rates, unless

speciﬁcally exempted:

• Capital machinery: one per cent

• Basic raw materials: ﬁve per cent

• Intermediate raw materials and semi-ﬁnished products:

10 per cent

• Finished products: 25 per cent

Exports are generally exempt from customs duties.

Supplementary Duty

Supplementary duty is levied on luxury goods imported

into Bangladesh as well as non-essential or socially

undesirable goods produced and supplied in the country.

The rates vary from 10 to 500 per cent depending on the

nature of the goods.

Labour

In Bangladesh, employment

is regulated by the contractual

agreement between employer and

employee. Other than the contract,

the Bangladesh Labour Act 2006 (as

amended in 2013) and Bangladesh

Labour Rules 2015 govern the

employment of ‘workers’. ‘Worker’

is deﬁned under Section 2(65) of

the Bangladesh Labour Act 2006

to mean “any person including

an apprentice employed in any

establishment or industry, either

directly or through a contractor

in whatever name referred to, to

do any skilled, unskilled, manual,

technical, trade promotional or

clerical work for hire or reward,

whether the terms of employment

be expressed or implied, but

does not include a person

employed mainly in a managerial

or administrative, supervisory role

or managerial capacity.” The main

issues covered in the Act include:

• Conditions of service and

employment

• Employment of adolescents

• Provisions relating to health,

hygiene

• Employee welfare

• Working hours and leave

• Wages and payment

• Wages boards

• Workers compensation for injury

by accident

• Trade union and industrial relations

• Disputes, labour court, labour

appellate

• Tribunals, legal proceedings

• Workers participation in

companies’ proﬁts

• Regulation of employment and

safety of dock workers

• Provident funds

• Apprenticeship

• Penalties and procedure

Moreover, as per the Bangladesh

Labour Act 2006, organisations

which do not fall within the scope of

the Act, cannot have any employee

rules, regulations and beneﬁts less

favourable than those provided

under the Act.

Under the Bangladesh Labour Act

2006, read with Bangladesh Labour

Rules 2015, any contracting agency

which, on contract, supplies workers

to different organisations in different

posts has to obtain a license from

the Chief Inspector.

Employment contract

In Bangladesh, a letter of

appointment is mandatory in the

absence of a written contract.

The terms of the contract are

binding between the employee and

employer, providing they do not

contravene the provisions of the

Labour Act.

Typically, the letter of appointment

or written contract will include:

• Working hours

• Salary

• Role title

• Nature of work

• Working time and leave

• Procedures for dismissal

Minimum wage

Wages and beneﬁts of

public sector employees are,

determined by the government

on recommendation from the Pay

Service Commission. For the private

sector, in certain sectors such as for

workers in trade and industry the

government through the Minimum

Wages Board ﬁxes the minimum

wages. Otherwise, there is no

regulatory body for the private

sector to determine the wages

and beneﬁts.

On 5 December 2013, the

government of Bangladesh

issued the Gazette on Minimum

Wages which deﬁned a new

wage structure for the readymade

garment (RMG) industry with an

increase of the gross monthly

minimum wage from BDT3,000 to

BDT5,300. No increases have been

announced since.

Working time and leave

As per the Bangladesh Labour Act

2006 (amended in 2013), no adult

shall ordinarily be required or allowed

to work in an establishment for more

than eight hours in any day and more

than 48 hours in any week.

No women shall, without her

consent, be allowed to work in an

establishment between the hours

of 10.00 PM and 6.00 AM. Consent

must be given in a prescribed form,

as per the Bangladesh Labour Rules

2015.

Where an employee works in an

establishment on any day or week

for more than the hours ﬁxed under

Bangladesh Labour Act 2006, he

shall, in respect of overtime worked,

be entitled to an allowance at the

rate of twice his ordinary rate of

basic wage and dearness allowance

and ad-hoc or interim pay, if any.

The Bangladesh Labour Act 2006

(as amended in 2013) stipulates

that any worker employed in a

shop, commercial establishment or

industrial establishment is entitled

to one and a half days of rest per

working week. Those employed

in a factory are entitled to one day.

Those employed in an establishment

which is a road transport service

are entitled to 24 consecutive hours

of rest in each working week.

This should not have any effect on

wage allowances.

Annual leave

As per Bangladesh Labour Act

2006 (amended in 2013), every

adult, who has completed one

year of continuous service in an

establishment, shall be allowed

fully paid annual leave calculated

as follows:

• In the case of a shop or

commercial or industrial

establishment or factory or road

transport service, one day for

every 18 days of work

• In the case of a tea plantation, one

day for every 22 days of work

• In the case of a newspaper

worker, one day for every 11 days

of work

Healthcare and beneﬁts

Large local and multinational

companies typically provide

employees with private health

care, car facilities, subsidised meals

and other fringe beneﬁts.

Employers must also pay

compensation to employees who

suffer a personal injury arising

out of and in the course of his

employment.

Most of the companies in

Bangladesh provide provident and

gratuity beneﬁts to permanent

employees. Provident funds

are generally built through the

contribution of both the employees

and employers. Provident funds for

‘workers’ within the meaning of the

Bangladesh Labour Act 2006 have

to be as per the requirements set

out in the said Act.

Maternity beneﬁt

A woman is entitled to maternity

leave of eight weeks before and

eight weeks after the delivery

provided she has worked with the

employer for a minimum of six

months prior to the delivery. No

maternity beneﬁt shall be payable

to any woman if at the time of her

conﬁnement she has two or more

surviving children. However, she

will get leave if she is entitled to

sick and/or annual leave. Thereafter,

if further leave is required, the

employer can grant further leave

without pay. A government female

employee is entitled to maternity

leave of six months, twice during

her job-life.

Probation

The maximum probationary period

in Bangladesh is six months for

workers operating in a role of a

clerical nature and three months

for other workers. The period of

probation for skilled workers can

be extended by an additional three

months if it has not been possible

to determine the quality of the work

within the ﬁrst three months.

Dismissal

The termination of employment

contracts can be done through

discretionary termination, discharge,

disciplinary termination or collective

redundancies.

Typically, to terminate a permanent

employment contract unilaterally,

a period of notice must be given.

The employer must give 120

days’ notice, while the employee

is required to give only 60 days’

notice. The period is shortened for

temporary workers, whereby both

employee and employer must only

give 30 days’ notice.

Notice does not need to be given in

the case of disciplinary termination

on the basis of conviction for

a criminal offence. For other

disciplinary reasons, eg theft, fraud,

habitual late attendance, negligent

work or disorderly behaviour, the

employee is given seven days

to justify his misconduct. If the

employee is unsuccessful in this,

the employer is then obliged to call

a hearing to determine whether the

employee should be dismissed.

Prospective

employers

must be

registered with

the appropriate

authorities (BOI)

before they

can employ

expatriates.

Social security

Employees in Bangladesh are not

obliged to contribute towards any

social security funds. Companies

satisfying the criteria set out in the

Bangladesh Labour Act 2006 (as

amended in 2013) must pay ﬁve per

cent of their proﬁts into a Workers

Proﬁt Participation Fund which is

provided to all employees except

those who are the owner, partner

or directors who have been in

employment with the said employer

for a minimum of nine months.

Employment of non-resident

employees

Non-residents require a work permit

to take up employment contracts

in Bangladesh. This is subject

to a number of conditions. Only

residents of countries speciﬁed

by the Bangladesh government

can apply for work permits.

Furthermore, employers cannot

employ expatriates if there is a local

expert available for the position. The

number of expatriate employees in

an industrial enterprise should not

exceed 1:20 (foreign: local) ratio at

any time during regular production.

The ratio for commercial ofﬁces is

1:5 (foreign: local).

Prospective employers must be

registered with the appropriate

authorities (BOI) before they can

employ expatriates. An initial work

permit can be obtained for two

years; this may be extended as

reviewed by the relevant authorities.

To obtain a work permit, the

prospective employer must ﬁle

an application with the Board

of Investment for an E-visa

recommendation. Once received,

the Bangladesh Embassy provides

the employee with an e-visa which

lasts three months. Once the

individual arrives in Bangladesh,

the employer must apply to the

BOI for the work permit on behalf

of the expatriate. This application

will be ﬁled alongside a number of

documents, including: copy of the

employer’s incorporation certiﬁcate,

board resolution for the position of

employment, contract, a copy of the

advertisement for local recruitment

and an encashment certiﬁcate of

inward remittance of a minimum

of USD50,000.

Trade unions

The Bangladesh Labour Act 2006

(amended in 2013) contains a

number of provisions regarding the

establishment of trade unions.

Employees have the right to join and

form a trade union primarily for the

purpose of regulating the relations

between employees and employers

or between employees themselves.

Employers shall have the right to

form a trade union to regulate the

relations between employers and

workers or between employers.

They are also free to join any trade

unions of their choice.

Trade unions of employees and

employers shall have the right to

form and join federations and any

such union and federation shall

have the right to afﬁliate with any

international organisation and

confederation of employees’ or

employers’ organisation.

Trade unions and employers’

associations shall have the right

to draw up their constitutions and

rules, to elect their representatives

in full freedom, to organise their

administration and activities and to

formulate their programmes.

An application for the registration

of a trade union shall be made

to the Registrar of Trade Unions

of the relevant area. A trade

union of workers shall not be

entitled to registration unless

it has a minimum membership

of 30 per cent of the total

number of employees working

in the establishment in which it

is formed.

In Bangladesh, ﬁnancial reporting

is regulated under the Companies

Act of 1994. Annual accounts of

companies must be statutorily

prepared, audited and presented

to members in the annual

general meeting.

International Accounting

Standards and International

Financial Reporting Standards are

increasingly being adopted and

practiced as Bangladesh Accounting

Standards and Bangladesh Financial

Reporting Standards.

As per the Companies Act 1994,

annual auditing is compulsory for

all the companies and must be

conducted by independent qualiﬁed

chartered accountants (certiﬁed

by The Institute of Chartered

Accountants of Bangladesh).

Accounting standards

The primary source of accounting

principles is the series of approved

accounting standards issued by the

Institute of Chartered Accountants

of Bangladesh (ICAB). The ICAB

is a member of the International

Federation of Accountants

(IFAC) and adopts International

Financial Reporting Standards and

International Accounting Standards

as Bangladesh Financial Reporting

Standards (BFRS) and Bangladesh

Accounting Standards (BAS).

Listed companies and ﬁnancial

institutions are required to follow

the BAS and BFRS. Though not

mandatory, private and non-listed

public limited companies,

and other government and

non-government organisations, also

follow the BFRS and BAS to the

greatest possible extent.

The Companies Act 1994 sets forth

some disclosure requirements, but

does not promulgate any accounting

standards. The Companies Act

1994 does not specify an applicable

accounting convention.

As per the Stock Exchange

Requirements and Securities and

Exchange Rules, companies with

shares listed on Dhaka & Chittagong

Stock Exchange Limited must

comply with additional requirements

concerning disclosure and public

announcements as set forth in the

listing regulations. Such companies’

ﬁnancial statements must be drawn

up and reported upon by auditors

in accordance with requirements

of Securities and Exchange Rules

1987. Additionally, auditors of such

companies have to report whether

or not the ﬁnancial statements

audited have been duly prepared

in conformance with international

accounting standards and have to

conduct their audits strictly following

the international standards of

auditing.

Accounting records

To adequately explain its

transactions and to facilitate an

audit, a company must maintain

sufﬁciently detailed accounting

records. A company incorporated

under Companies Act 1994 must

keep proper books of accounts with

respect to:

• All sums of money received and

expended

• All sales and purchases

• Assets and liabilities of the

company

• Particulars relating to the

utilisation of materials, labour and

other items of overhead cost

The books of accounts are to be

kept at the registered ofﬁce of the

company.

Where a company has a branch

ofﬁce outside Bangladesh, the

transactions at the branch ofﬁce

are to be kept at that ofﬁce and a

properly summarised return, made

up to date at intervals of not more

than three months must be sent to

the company’s registered ofﬁce.

The statutory registers a company

must keep include:

• Register of Members to

record the names, addresses

and occupations, if any, their

shareholdings, amounts paid

for the shares and the dates on

which they become or cease to

be shareholders

• Register of Directors, Managers

and Managing Agents to

record their names, addresses,

nationality, occupations; and,

for directors, details of their

other directorships of public

companies and subsidiaries of

public companies

• Register of Mortgages and

Charges to record the assets

mortgaged or charged, the

amount of the charge, the date of

creation and the parties entitled to

the charge

• Register of Debentures to

record details concerning

debenture holders including their

names and addresses and the

debentures held

The registers are to be maintained

at the company’s registered ofﬁce

in Bangladesh.

Filing and submission of

statutory ﬁnancial statements

Under the Companies Act 1994, a

company must present its statutory

accounts to its shareholders at the

annual general meeting (AGM). This

ﬁrst AGM must be held no later than

18 months after incorporation.

The statutory accounts comprise

an audited statement of

Audit

ﬁnancial position, statement of

comprehensive income, statement

of cash ﬂows and auditors’ report

thereon. A directors’ report and an

auditors’ report must accompany

the accounts. The Companies Act

1994 speciﬁes the content for the

directors’ report.

The ﬁnancial statements must be

ﬁled with the Registrar of Joint

Stock Companies (RJSC) within

30 days from the date of Annual

General Meeting.

The ﬁnancial statements of a

company must be signed by at least

two directors, one whom must be

the Managing Director; if there are

less than two directors, it must be

signed by all directors. For banking

companies, this report must be

signed by at least three directors on

behalf of the board.

Audit requirements

Under the Companies Act 1994,

every company must appoint

one or more auditors to report to

shareholders on the accounts of

the company. The auditors must

express an opinion on the following:

• Whether or not they obtained all

the information and explanations

they required

• Whether or not, in their opinion,

the balance sheet and the proﬁt

and loss account referred to

in their report are drawn up in

conformity with the law

• Whether or not such balance

sheet exhibits a true and fair view

of the state of the company’s

affairs according to the best of

their information and explanations

given to them, and as shown by

the books of the company

• Whether, in their opinion, books

of accounts were kept by the

company as required by section

181 of Companies Act 1994

The directors may appoint the

ﬁrst auditors of the company but

the shareholders must approve all

subsequent appointments at the

annual general meetings. Auditors

hold ofﬁce until the conclusion

of the next annual general

meeting. An audit is conducted

by a practicing member of the

Institute of Chartered Accountants

of Bangladesh following the

Bangladesh standards on auditing as

adopted by the ICAB from ISA.

The auditing profession in

Bangladesh is regulated by The

Institute of Chartered Accountants

of Bangladesh (ICAB). ICAB was

established under Bangladesh

Accountants Order 1973

(President’s Order No. 2 of 1973).

Only members of ICAB are eligible

to apply for an audit (practicing)

license, which authorises them to

perform statutory audits.

The directors

may appoint the

ﬁrst auditors of

the company

but the

shareholders

must approve

all subsequent

appointments

at the annual

general

meetings

Foreign Direct Investment

Thanks to its liberal investment

policy, there are very few restrictions

on foreign ownership of businesses

or property in Bangladesh.

FDI comprises an overwhelming

part of the economy of Bangladesh

in its contribution to Gross

Domestic Product (GDP), export

and domestic investment as well

as overall economic growth. FDI

inﬂows have traditionally been in

the form of equity, reinvestment

and intra-organisation acquisitions.

While there are generally very

few restrictions on FDI, private

sector investment is prohibited

in the following sectors: arms

and ammunition, defence, forest

plantation, extraction of reserved

forests, nuclear energy, security

printing and mining.

Furthermore, the following

sectors will require investors to

obtain licenses before they are

able to commence business:

banking, ﬁnance, insurance,

telecommunications, aviation and

broadcasting.

Foreign investors that wish to

acquire stakes in local companies

will need to obtain approval from

the Bangladesh Bank if the control

of the business is subsequently

transferred to foreign shareholders.

Government incentives

Alongside the incentives outlined

in the tax section, the government

provides cash assistance and

other incentives for doing

business in Bangladesh in certain

export-oriented industries. Cash

incentives are available in the

following sectors, with different

cash incentive rates:

• Textile

• Agro products

• Bicycle

• Crashed bone

• Poultry

• Light engineering products

• Liquid glucose used in agro

product

• 100 per cent Halal meat

• Frozen shrimp & other ﬁsh

• Leather

• Ship export

• Finished leather

• Crushed leather

• Plastic pet bottle

• Jute products

Imports

Bangladesh’s imports mostly

comprise petroleum and oil

(11 per cent of the total imports),

textile (10 per cent) and food items

(nine per cent).

The import regime comprises: a

banned list, a restricted list, freely

importable items and certiﬁcation

requirements for all food products.

All other permitted imports require

a Letter of Credit Authorisation to

be completed.

Customs duties are outlined in the

tax section.

Trade

The ﬁnancial system of Bangladesh

is comprised of three broad

fragmented sectors:

• Formal sector

• Semi-formal sector

• Informal sector

The sectors have been categorised

in accordance with their degree

of regulation.

The formal sector includes all

regulated institutions, such as banks,

non-bank ﬁnancial institutions (FIs),

insurance companies, capital market

intermediaries such as brokerage

houses, merchant banks and micro

ﬁnance institutions (MFIs).

The semi-formal sector includes

those institutions which are

regulated but do not fall under

the jurisdiction of the Central

Bank, Insurance Authority,

Securities and Exchange

Commission or any other enacted

ﬁnancial regulator. This sector is

mainly represented by specialised

ﬁnancial institutions, such as House

Building Finance Corporation

(HBFC), Palli Karma Sahayak

Foundation (PKSF), Samabay Bank,

Grameen Bank, Non-Governmental

Organizations (NGOs) and discrete

government programs.

The informal sector includes

private intermediaries which are

completely unregulated.

Capital markets

The Bangladesh Securities

Exchange Commission (BSEC) is

the primary regulator for all activities

of the bourses and its members.

The BSEC is a ‘Category A’ member

of International Organisation of

Securities Commission (IOSCO).

With over 300 listed companies,

the capital market of Bangladesh

is considered to be one of the

emerging markets in the context

of the global ﬁnancial system. The

market has immense potential

for the country’s industrialisation,

development of infrastructure, in

particular, and economic growth

in general.

Bangladesh’s capital markets

comprise the Dhaka Stock Exchange

(DSE) and the Chittagong Stock

Exchange (CSE), incorporated in

1954 and 1995, respectively. Some

of main features of the market are

as follows:

• Both Dhaka and Chittagong Stock

Exchanges are members of South

Asian Federation of Exchanges

(SAFE), a forum in South Asia

to promote the development of

securities markets in the region

• Automated trading facilities have

been available at both bourses

since 1998

• The Central Depository

Bangladesh Limited (CDBL)

introduced its ﬁrst electronic book

entry in 2004

• Market intermediaries include

250 Trading Right Entitlement

Certiﬁcate (TREC) holders of

Dhaka Stock Exchange (DSE),

135 TREC holders of Chittagong

Stock Exchange (CSE), 55

registered merchant banks,

17 asset management companies,

and 10 custodians

Banking system

The banking system of Bangladesh

consists of Bangladesh Bank (BB) as

the Central Bank, six state owned

commercial banks (SCB), two

specialised banks (SDBs), 39 private

commercial banks (PCBs) of which

31 are commercial PCBs, eight

Islamic Sharia-based PCBs, nine

foreign commercial banks (FCBs)

and four non-scheduled banks.

With over

300 listed

companies, the

capital market

of Bangladesh

is considered

to be one of

the emerging

markets in the

context of the

global ﬁnancial

system.

Finance

Bangladesh Bank, as the central

bank, has legal authority to

supervise and regulate all banks

and non-bank ﬁnancial institutions.

It performs the traditional central

banking roles of note issuance

and of being the banker to the

government and banks. Given some

broad policy goals and objectives,

it formulates and implements

monetary policy, manages

foreign exchange reserves and

implements prudential regulations

and conducts monitoring thereof

as they are applied to the entire

banking system. Its prudential

regulations include, among others:

minimum capital requirements,

limits on loan concentration and

insider borrowing and guidelines

for asset classiﬁcation and income

recognition. Bangladesh Bank has

the power to impose penalties

for non-compliance and also to

intervene in the management of a

bank if serious problems arise. It

also has the delegated authority of

issuing policy directives regarding

the foreign exchange regime.

Under the ﬁnancial sector reform

program, a ﬂexible interest policy

was formulated. According to that,

banks are free to charge/ﬁx their

deposit and lending rates, other than

those related to export credit. Banks

can differentiate interest rates up

to three per cent. With progressive

deregulation of interest rates, banks

have been advised to announce

the mid-rate of the limit (if any) for

different sectors and the banks may

charge interest 1.5 per cent more or

less than the announced mid-rate on

the basis of the comparative credit

risk. Banks upload their deposit

and lending interest rate to their

respective website.

Insurance industry

The insurance sector is regulated

by the Insurance Act, 2010. The

Insurance Development and

Regulatory Authority (IDRA) was

instituted on 26 January 2011 as the

regulator of the insurance industry

being empowered by Insurance

Development and Regulatory Act,

2010 by replacing its predecessor,

Chief Controller of Insurance.

General insurance is provided by

45 companies and life insurance

is provided by 30 companies. The

industry is dominated by the two

large, state-owned companies: SBC

for general insurance and JBC for life

insurance, which together command

most of the total assets of the

insurance sector.

Investment management

industry

Bangladesh’s asset management

industry is very immature.

Nevertheless, a stable economic

outlook, political stability and

growing population have attracted a

number of global fund managers.

The primary regulator for the

industry is the BSEC which has, so

far, licensed 17 asset management

companies in the country. The asset

management companies manage

approximately BDT50 billion,

comprising less than three per cent

of the total market capitalisation.

Asset management companies

are authorised to act as issue and

portfolio managers of the mutual

funds which are issued under the

SEC (Mutual Fund) Rules 2001.

The overall quality and reliability of

infrastructure is a critical factor for

businesses across all sectors.

ICT

The Government of Bangladesh has

taken numerous steps to improve

and strengthen the ICT sector in the

country. Considerable improvement

has been made in the past decade.

Working in conjunction with industry

afﬁliations (BCS, BCC, BASIS

and BACCO) and international

trade support institutions, the

administration has taken both short

and long-term measures (Vision

2021, Digital Bangladesh) to upgrade

the country’s ICT infrastructure and

increase the export of ICT products

and services.

Transport

The transport sector of Bangladesh

comprises a mixture of road, air, rail

and waterways transport modes.

Road

In Bangladesh, road transport

is the most commonly used.

Bangladesh’s roads comprise a

total length of 20,948 km. The

Roads and Highways Department

(RHD) controls 4,659 bridges and

6,122 culverts.

The 4.8 km long Bangabandhu

Bridge, which was opened in

1998, is the eleventh longest

on the planet. It has built a vital

connection between the East

and the West of Bangladesh. It

is producing multifaceted proﬁts

to the individuals and increasing

local trade. Besides ensuring the

efﬁcient movement of goods, the

bridge facilitates the transmission of

electricity and natural gas and has

integrated telecommunication links.

Currently, a 6.15 km multipurpose

road-rail bridge across the Padma

River is planned to be constructed.

When completed it will be the

largest bridge in Bangladesh and

the ﬁrst ﬁxed river crossing for

road trafﬁc. It will connect the

South-West of the country to

northern and eastern regions.

Air

The Civil Aviation Authority is public

sector entity entrusted to develop,

maintain and oversee air terminals

and direct air movement.

The national airline, Biman

Bangladesh Airlines ﬂies to 26

international and eight national

destinations. Currently, there are 13

operational air terminals and Short

Take-off and Landing (STOL) ports

in Bangladesh. These are: Dhaka,

Barisal, Chittagong, Comilla, Cox’s

Bazar, Ishurdi, Jessore, Rajshahi,

Syedpur, Sylhet and Thakurgaon.

Of these, the air terminals at

Dhaka, Chittagong and Sylhet have

international ﬂights. Air freight and

STOL administrations have been

handed over to the private sector by

the Government of Bangladesh.

Rail

Around 32 per cent of the aggregate

zone of Bangladesh is served by

rail lines. Bangladesh railway has

2,835.04 km of railways and around

440 train stations.

Train services between

Dhaka-Kolkata started on 14 April

2008 with a speciﬁc end goal to

create communication between

Bangladesh and India. With the

incorporation of a track over the

Jamuna Bridge, a line interface from

the middle of east to the west zone

was created.

Waterways

Locally made crafts are the most

common mode of transport on the

waterways. They normally transport

travellers and merchandise on an

extensive scale. Bangladesh’s

waterways comprise 250 major

waterways which stream from the

North to the South.

Bangladesh Inland Water Transport

Authority (BIWTA) has been

enacted by the Government to

help increase the safety of ports

and channels.

The whole coast along the Bay of

Bengal is 710 km long. There are

two noteworthy ports in the nation:

Chittagong, the most seasoned

port, has been an entrance port

for no less than 1,000 years. The

Mongla port in Khulna area serves

the western parts of Bangladesh.

The current government has

a 20-year plan to invest in the

country’s infrastructure. It is working

to turn the Dhaka-Chittagong

highway into four lanes, constructing

elevated expressway from Shahjalal

International airport to Kutubkhali.

Additionally, to lessen the pressure

on the general transport system, the

government has taken an initiative

for a metro rail project.

Infrastructure

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