How to set a representative office or branch office of a foreign company?

Whether a representative/ liaison office can engage in a business activity?

A foreign company or business entity can set up a branch office or liaison office in Bangladesh with the permission of the Bangladesh Investment Development Authority, hereinafter referred to as the BIDA. 

What is the distinction between liaison office and branch office?

Representative / Liaison Office: Foreign companies may establish representative or liaison offices in Bangladesh by obtaining a registration from the BIDA. BIDA usually specifies the number of foreign and local staff that may be employed in representative offices.

No business may be carried out through representative office and as such it will not be permitted to import equipment or goods except in a limited set of circumstances as stated in the Import Policy Order, 2021-2024[1] (yet to be translated in English). However, a bank account may be opened and maintained by a representative office. Funds may be remitted from outside Bangladesh to run and operate the representative office and pay salaries to the staff employed at such office.

A liaison or representative office can maintain and coordinate between principle and local agents, distributors, exporters’ institutions through correspondences and personal contacts. It can collect, compile, analyse and disseminate business information related to its field of activities as mentioned in the approval letter.

Branch Office: Foreign companies may establish a place of business, i.e., a branch office, in Bangladesh by registering with BIDA and Registrar of Joint Stock Companies and Firms under Section 379 of the Companies Act.

Prior permission from Bangladesh Bank is required before a foreign company may be registered with the Registrar of Joint Stock Companies and Firms. There is a requirement for a minimum of US$ 50,000 inward remittance for registration of branch offices in Bangladesh which would cover the cost of initial establishment and six months’ expenses for operation.

By registering under the Companies Act, the branch office can engage in commercial activities. However, to do so, prior approval from BIDA is required.

What documents are required to establish a branch office or liaison office?

To set up a branch or liaison office, the following documents are required:

(i)          Audited accounts of last financial year of the principal company;

(ii)          A resolution of the board of directors of the principal company regarding opening of office in Bangladesh;

(iii)         Proposed organogram of the office showing the posts to be occupied by both expatriates and local personnel;

(iv)        Details of activities of the principal company and details of the activities to be performed through the proposed branch office in Bangladesh;

(v)         Name and nationality of the directors / promoters of the principal company;

(vi)        Memorandum and articles of association of the principal company;

(vii)        Certificate of incorporation of the principal company; and

(viii)       An inward remittance of USD 50,000 for setting up a branch office is required.