Jurisdiction: Bangladesh

Firm: The Legal Circle

Authors: Masud Khan,

Bhuiya,

Jarif Ahmed

1. What is the general situation for foreign companies in your jurisdiction?

In evaluating the general situation for foreign companies and investors in Bangladesh, it is
appropriate to review:
(a) the key laws and regulations that constitute, and the government agencies and regula- tors that
play a key role in the regulatory framework that governs foreign companies and investors; and
(b) the various legal forms or options available to foreign companies and investors under such
regulatory framework, and the relative advantages and disadvantages of each of such legal forms
or options.
The key laws and regulations that govern for- eign companies and investors are:
(a) the Foreign Exchange Regulations Act 1947, as amended by the Foreign Exchange Regulation
(Amendment) Act, 2015 (‘FERA’), and the regulations promul- gated thereunder by the
Bangladesh Bank (‘BB’), the central bank of Bangladesh, which regulations are compiled by
the BB in the Guidelines for Foreign Exchange Transactions Volume 1 & Volume 2 (2009), and
updated by BB’s circulars issued from time to time (collectively, the ‘FX Guidelines’); and
(b) the Companies Act, 1994 of Bangladesh (Act No. XVIII of 1994) (‘CA 1994’).

The key Bangladeshi government agencies or regulatory bodies that impact or regulate foreign
companies and investors are:
(a) the Bangladesh Investment Development Authority (‘BIDA’), formerly known as the Board of
Investment, which facilitates foreign investment by advising foreign investors and assisting them
with utilities, land acquisition, etc;
(b) BB, Bangladesh’s central bank, which regu- lates the outward repatriation of capital and capital
gains; and
(c) the Registrar of Joint Stock Companies and Firms (‘RJSC’), which registers both foreign
companies establishing a place of business in Bangladesh and foreign-owned locally
incorporated companies.


The general situation of foreign companies and investors in Bangladesh concerning the
challenges faced by them and/or the advantages provided to them in Bangladesh is determined by
the legal form or option a foreign company or investor chooses to establish a place of busi- ness
in Bangladesh:
(a) foreign companies incorporated outside of Bangladesh registering (a) with BIDA as a Liaison
Office or Branch Office, with a noti- fication to BB within 30 days of the BIDA notification, plus
(ii) with RJSC as a foreign company under sections 378 and 379 of CA 1994: in addition to not
having a separate legal personality, such foreign companies face a number of challenges:

Jurisdictional Q&A – Bangladesh 9

(i) such registration is for a specific period and must be renewed upon expiry; and
(ii) their activities are strictly restricted. Specifically, if a foreign company registers itself
with BIDA as a Liaison Office, it may engage only in market- ing and other non-
revenue generating activities, which are to be funded only by inward remittances sent in
by the foreign office (i.e. a Liaison Office is a cost centre prohibited from engaging in
any commercial or other revenue generating activities). If registered as a Branch
Office, a foreign company may engage solely in the activities necessary to execute its
work under a project agreement or other contract as specified in the application with
BIDA. If so specified in its application to BIDA, a foreign company may fund its
Branch Office from local revenues earned from its specified contract and, with prior
approval of BIDA and BB, repatriate Branch Office profits to the foreign office.
(b) foreign companies or investors register- ing with the RJSC a locally incorporated
foreign wholly-owned or partially owned/ joint venture company limited by shares (a
‘foreign-owned company’) under sections 5 and 6 of CA 1994. If such foreign owned
company is set up as an industrial venture, it may register with BIDA to take advantage
of BIDA’s foreign investment advisory and facilitation services.

Regarding inward remittances of foreign exchange by foreign investors, under section 13(1)(s)
of FERA and Chapter 9, paragraph 1 of the FX Guidelines, foreign investors are free to invest
in a foreign-owned company in Bangladesh, provided that such investments are brought in and
recorded in an Authorised Dealer (‘AD’) bank. No permission of BB is needed to set up such
companies if the foreign investors use their own funds (if funding of

such foreign-owned companies is by foreign loans, as per Chapter 15 of the FX Guidelines,

such foreign loans must be: (a) registered with, and the interest payments thereunder
approved by BIDA; and (b) funded from institutional lenders, except for loans with a term
of 12 months or less, which may be provided by the foreign investor/shareholder). Except
where a foreign-owned company needs to register with BIDA for work permits for foreign


employees (in which event, the minimum foreign invest- ment into the share capital of
such company is required to be at least US$50,000), foreign investment into such
companies is not subject to a minimum amount.
Regarding outward remittances of foreign investment by foreign-owned companies to their
foreign shareholders, under section 5(1) of FERA and Chapter 10(31)(a) of the FX Guidelines,
foreign-owned companies may remit via their AD bank dividends to their foreign shareholders
by applying to their AD bank in the prescribed form. Such outward remittance payments of
dividends may be made freely without any prior approval of BB.
Regarding an exit by a foreign investor by dis- posal of shares in a foreign-owned
company, under section 13(1)(d) of FERA and Chapter 9, paragraph 3(B) of FX
Guidelines (as amended by BB Circular 32 of 31 August 2014):
(a) if the shares are in a public limited company listed on either the Dhaka Stock Exchange
(‘DSE’) or the Chittagong Stock Exchange (‘CSE’), the capital and capital gains from the
disposal of shares may be remitted outward to the foreign investor freely and without any
prior approval of BB, subject to the remitted amount not exceeding the market price of such
shares;
(b) if the shares are unlisted shares of a public limited company or are in a private limited
company, and are sold to a resident of Bangladesh, then prior approval of BB is required
for the outward remittance of the capital and capital gains, subject to such

10 LexisNexis Company Law Guide 2017-2018

remittance amount being equal to or less than the ‘fair market value’ of the shares as certified
by a licensed merchant bank or chartered accountant (whose certificate is to be submitted with
the application made to BB for such prior approval). If the shares in such foreign-owned
company are sold to a non-resident, then under a general exemption specified in Chapter 14 of
the FX Guidelines, such sale may be consummated without BB’s prior approval.

Regarding the registration requirements under CA 1994, a foreign-owned company is registered with
the RJSC in substantially the same manner as a wholly Bangladeshi- owned company. The
incorporation procedure commences by obtaining ‘Name Clearance’ from the RJSC for the name of
the proposed company. The procedure is complete upon the issuance of a Certificate of Incorporation
by the RJSC. The incorporation procedure for foreign-owned companies does not involve anything
significantly different from that of locally owned companies, except for the requirement under Chapter
9, paragraph 2(b) of the FX Guidelines that foreign exchange brought into an AD bank must be first
enca- shed in a proposed company account prior to the issuance of shares. Accordingly, unlike a
wholly Bangladeshi owned company, a for- eign-owned company must open a proposed company
bank account in Bangladesh under the proposed company’s name by submitting the Name Clearance
Certificate obtained from the RJSC to the bank. Prior to filing incorpo- ration documents with the
RJSC, the foreign investor/shareholder must: (a) remit in foreign exchange the applicable share capital


amount into such account; and (b) thereafter obtain from the AD bank an encashment certificate
evidencing the conversion of such share capital funds in foreign exchange into Bangladesh Taka. At
incorporation, the encashment cer- tificate must be filed with the RJSC along with the new company’s
memorandum and articles of association and other prescribed RJSC forms.

2. What are the key laws and regulations that govern company law in your
jurisdiction?

The primary statute that governs companies in Bangladesh is the CA 1994. It consists of 404
sections divided into 11 parts which cover, among others, a company’s constitution and
incorporation, share capital, registra- tion, liability of directors, management and administration
(including all procedures for administering matters of the board of directors and shareholders),
and winding-up.
CA 1994 also contains 12 schedules of regula- tions and forms which include, among others,
templates of memorandum and articles of association, requirements of annual financial statements
etc. Schedule I of the CA 1994 sets out regulations that apply to the management of a company
limited by shares which can be adopted by a company in its articles of associ- ation, including
some mandatory regulations which cannot be excluded by the articles of association.
The Companies Rules, 2009 (No. 7309G) (‘CR 2009’) is also an integral piece of legislation wthat
governs company law in Bangladesh. The CR 2009 contains Forms relevant to different aspects and
stages in the running of a com- pany and in company law proceedings, which include, among others,
petition for reduction of capital, notice to creditors, affidavit by sureties, notice of dividend, and notice
of appointment of liquidator.
The Securities and Exchange Ordinance, 1969, the Securities and Exchange Rules, 1987 and the
Securities and Exchange Commission Act, 1993 (‘SECA 1993’) are of particular importance to issuers
of securities that are listed on either of the two stock exchanges of Bangladesh: the DSE and the CSE.
These laws regulate the activities of issuers and set out the penalties for violations.
The Bangladesh Securities and Exchange Commission (‘BSEC’), which regulates capital markets
in Bangladesh, also issues various

Jurisdictional Q&A – Bangladesh 11

rules, orders, notifications and directives from time to time which have the effect of law and
regulate the activities of companies.
Other laws and regulations that impact company law, specifically in regards to the personal
liability of a company’s directors, are the Bankruptcy Act of 1997, the Money Laundering
Prevention Act, 2009 and Negotiable Instruments Act, 1881.

3. What are the most common types of companies in your jurisdiction?

There is no official method to fast-track the incorporation of a company. However, for foreign-
owned companies registering with BIDA as industrial ventures, it may be noted that
Bangladesh is in the process of passing legislation to set up a one-stop service centre at BIDA,
under which BIDA would assist with the incorporation of foreign-owned companies by
ensuring the completion of registration with RJSC within 48 hours of filing.

5. What are the main registration

requirements for companies in

your

Private companies limited by shares (‘private limited companies’) and public companies
limited by shares (‘public limited companies’) are the most common types of companies
formed in Bangladesh. Section 2(q) of CA 1994 defines a private company as one which
by its articles restricts the right to transfer its shares, if any, prohibits any invitation to the
public to subscribe for its shares or debenture, if any, and limits the number of its members
to 50 not including persons who are in its employment. Section 2(r) of CA 1994 defines a
public company as a company which is not a private company. In addition, an association
not for profit under section 28 of CA 1994 and a company limited by guarantee under
section 29 of CA 1994 may be formed to engage in not- for-profit activities.

4. How long does it take to set up a company in your jurisdiction?

Provided that the memorandum and articles of association have been drafted beforehand
and are ready for filing with the RJSC and an encashment certificate has been received
from the AD bank in the name of the proposed com- pany (where it is a fully or partly
foreign-owned company), usually it takes approximately 10–15 working days to
incorporate a company in Bangladesh, starting from the Name Clearance application to the
issuance of a Certificate of Incorporation.

jurisdiction? What are the fees?

The registration of companies commences with the application for Name Clearance to the
RJSC and obtaining a Name Clearance Certificate from the RJSC. After obtaining a Name
Clearance Certificate, a company with a proposed foreign shareholder must open a bank
account in the name of the proposed entity and remit the initial share capital (paid-up
capital) to the said account and obtain an encashment certificate issued by the bank.
The following documents have to be submitted to the RJSC to process the incorporation of the
entity:


(a) memorandum and articles of association
(b) encashment certificate (for foreign-owned companies)
(c) Name Clearance Certificate
(d) Tax Identification Number (TIN) Certificate
(e) Treasury Challan
(f) Form I (Declaration on registration of company)
(g) Form VI (Notice of situation of registered office and of any change therein)
(h) Form IX (Consent of directors to act)
(i) Form X (List of persons consenting to be directors)
(j) Form XII (Particulars of Directors, Managers, Managing Agents and of any change)

12 LexisNexis Company Law Guide 2017-2018

Additional identification documents for the foreign shareholder and/or the nominee director (where the
foreign shareholder is a corporate shareholder) are also required by the RJSC to complete the
incorporation.
The fees for the incorporation of a company are calculated (in part) on the basis of its author- ised
share capital. For example, a company with an authorised share capital of Taka 50 million would incur
the following charges:
(a) registration fee: Taka 76,250;
(b) registration filing fee: Taka 2,400;
(c) stamp fee for the memorandum and articles of association: Taka 9,150;
(d) fee for certified copies of the memoran- dum of association, Form XII and Digital Certificate
of Incorporation: Taka 2,220.
The registration costs are subject to change, and it is very likely that additional administrative
costs may have to be incurred to complete the incorporation process.
Other important registrations for a company include:
(a) value added tax (‘VAT’) registration under the VAT Act, 1991;
(b) depending on the location of the office or place of business, a trade licence from the local
government authority (union parishad/pourashava/city corporation office) for the company’s
specific type of trade or business;
(c) depending on the nature and size of the business and its premises, building fire licences,
specific clearances from rele- vant ministries of the government and/ or licences which
involve the handling of particular substances and commodities etc.
The fees for these registrations vary depending on the location of the office or place of business as
well as the company’s share capital.


6. What are the main post-registration reporting requirements for companies in
your jurisdiction?

The main post-registration reporting require- ments for companies in Bangladesh are listed
below. The documents are filed with the RJSC in its prescribed forms and/or in the forms set out
in CA 1994 or CR 2009, as applicable:
(a) Form VII (Statutory Report): within a period of not less than one month and not more
than six months from the date at which the company is entitled to com- mence business,
every company limited by shares and every company limited by guarantee and having a
share capital must hold a general meeting of the members of the company, which is defined as
a statutory meeting under the CA 1994. The board of directors is required to prepare a report
which is referred to as a statutory report and must forward the report to every member of the
company at least 21 days before the day on which the statutory meeting is to be held;
(b) Form VIII (Specia l Resolution/ Extraordinary Resolution): a copy of every special and
extraordinary resolution must be printed or typewritten and duly certi- fied under the signature of
an officer of the company and filed with the RJSC within 15 days from its passing;
(c) Schedule X (Annual Summary of Share Capital and List of Shareholders, Annual Summary of
Directors): under section 36(1) of CA 1994, a company must file with the RJSC an annual
summary of share capital and list of shareholders within 18 months of its incorporation and
annually thereaf- ter. A private company must submit with the annual return a certificate signed by
a director or other officer of the company that the company has not issued any invitation to the
public to subscribe for any shares or debentures of the company;

Jurisdictional Q&A – Bangladesh 13

(d) Form XLI (Notice of Alteration in the Address of the Registered Principal Office of the
Company): notice of any change in the registered address of a company must be given
within 21 (twenty-one) days after the change to the RJSC;
(e) Balance sheet and profit and loss account: under section 190 of CA 1994, a company must
file with the RJSC copies of its balance sheet and profit and loss account within 30 days from
the date on which the balance sheet and the profit and loss account are laid before its
annual general meeting.
The above is not an exhaustive list. Other reporting requirements are triggered in dif- ferent
situations such as a transfer of shares, return of allotment, changes to the board of
directors.
As per the CA 1994, it is not mandatory for a company in Bangladesh to have a company
secretary.

7. Are there any controlling factors or restrictions on foreign companies in your


jurisdiction?

See question 1 in relation to foreign exchange regulations applicable to foreign-owned

companies.
Furthermore, the National Council for Industrial Development (‘NCID’) lists a total of 17
of industries designated as ‘controlled indus- tries’: (a) fishing in the deep sea; (b) banks/
financial institutions in the private sector; (c) insurance companies in the private sector; (d)
generation, supply and distribution of power in the private sector; (e) exploration,
extraction and supply of natural gas/oil; (f) exploration, extraction and supply of coal; (g)
explora-

as fuel); (j) medium and large industries using natural gas/condescend and other minerals as
raw materials; (k) telecommunications services (mobile/cellular phone services and landlines);
(l) satellite channels; (m) cargo/passenger aviation; (n) sea-bound ship transport; (o) sea-
ports/deep sea-ports; (p) VoIP/IP telephone; and (q) industries using heavy minerals accu-
mulated from the beach.
In these sectors, the government reserves the right to fix the equity ratio for foreign investors/
shareholders to local investors/shareholders. NCID has the right to expand or amend the list as
it sees fit. Enterprises in these controlled sectors cannot be registered with the BIDA without
prior approval from the relevant min- istries of the government.
In addition to the broader restriction stated by NCID, in some cases, sector-specific
legislation also imposes a maximum ceiling for a foreign stake in the licensee entities for
some of these controlled industries. Examples include certain services in the
telecommunications sector such as licences granted for International Gateway (IGW),
Interconnection Exchange (ICX) and VoIP Service Provider (VSP).
The government of Bangladesh has also listed certain sectors as ‘reserved sectors’ where for-
eign investment is restricted for the purpose of national security or other reasons: (a) arms and
ammunition and other military equipment and machinery; (b) nuclear power; (c) security
printing and minting; and (d) forestation and mechanised extraction within the boundary of a
reserved forest.
8. What is the typical structure of directors (or family management structure)
and liability issues for companies in your jurisdiction?

tion, extraction and supply of other mineral

resources; (h) large-scale infrastructure pro- jects (e.g. f lyovers, elevated expressways,
monorails, economic zones, inland container depots/container freight stations); (i) crude oil
refineries (recycling/refining of lube oil used

Directors, other than directors nominated by corporate shareholders, must own qualifying
shares, the number of which can be specified in the articles of association. Directors
nominated by corporate shareholders are not required to

14 LexisNexis Company Law Guide 2017-2018

own qualifying shares. Directors must execute a Form IX: Consent of Director (in a prescribed
format, as set forth in the Schedules to CA 1994). This executed Form IX must be filed with the
RJSC for the directorship to become effective. Furthermore, a Form XII: Particulars of Directors,
Managers and Managing Agents (in a prescribed format, as set forth in the Schedules to CA
1994) must be executed by the Managing Director and filed with the RJSC. For subsequent
appointment of directors (post-in- corporation), directors must be appointed at a general meeting
of the shareholders, provided, however, casual vacancies on the board can be filled pursuant to a
meeting of the existing board of directors. CA 1994 allows non-resident and/or foreign
individuals to be appointed as directors of private limited companies.
Under the CA 1994, companies may be formed with the liability of shareholders limited by

9. What is the minimum number of directors and shareholders required to set up a

company in your jurisdiction? Are there any requirements that a director must be a
natural person?

As per sections 2(q) and 90(1) of the CA 1994, private limited companies in Bangladesh are
required to have a minimum of two directors and two shareholders and a maximum of 50
shareholders. Under section 90(1) of the CA 1994, public limited companies and private limited
companies which are subsidiaries of public limited companies are required to have at least three
directors and a minimum of seven shareholders.
Section 90(3) of the CA 1994 expressly states that a director must be a natural person.

10. What are the requirements on how shares are offered in your jurisdiction?

shares or limited by guarantee (a limited

company), or with the liability of shareholders unlimited (an unlimited company). Section 5(a) of the
CA 1994 defines a company limited by shares as ‘a company limited by shares, that is to say, a
company having the liability of its member limited by the memorandum to the amount, if any, unpaid
on the shares respectively held by them’. The limited liabil- ity of a company limited by shares is
further emphasised in section 235(iv) of the CA 1994, dealing with the liability of contributories of
past and present members on the winding-up of a company: ‘in the case of a company limited by


shares, no contribution shall be required from any member exceeding the amount, if any, unpaid on
the shares in respect to which he is liable as a present or past member’.

Private Limited Companies

Shares may be offered at three different stages:
(a) at the time of incorporation: shares may be offered to members at incorporation pur- suant to the
memorandum and articles of association. The shares of a private limited company cannot be
offered to members of the public;
(b) transfer of existing shares: shares may be offered to new shareholders by trans- ferring one or
more of the shares held by the existing shareholders in the manner provided in the company’s
articles of asso- ciation. Per Regulation 18, Schedule 1, CA 1994, an instrument of transfer of
shares (namely, Form 117) must be executed by both the transferor and the transferee. The
transferor remains the holder of the share until the name of the transferee is entered in the register
of members. Furthermore, an affidavit must also be executed by the transferor confirming the said
transfer and duly notarised before a recognised Notary Public of Bangladesh;

Jurisdictional Q&A – Bangladesh 15

(c) return of allotment: under section 151 of the CA 1994, where a company having a share
capital makes any allotment of its shares, it is required to file a duly completed Form XV
with the RJSC.
Public Limited Companies
Shares may be offered to members of the public pursuant to:
(a) a prospectus registered with the RJSC under section 138 of the CA 1994; or
(b) a statement in lieu of a prospectus regis- tered with the RJSC under section 141 of the
CA 1994.
If the public limited company is not already listed on a stock exchange in Bangladesh, an
application must be made to the BSEC to make an initial public offering (IPO) of the
company’s shares. The company would have to comply with the BSEC regulations on
making an IPO and the applicable listing regulations of the respective stock exchange.

11. What are the key laws and regulations on employment in your jurisdiction
that companies should be aware of? Are there any aspects of employment law
that are heavily regulated?

The primary statute that governs employment and labour matters in Bangladesh is the
Labour Act, 2006 (‘LA 2006’). The Labour Rules, 2015 (‘LR 2015’) was enacted pursuant


to section 351 of the LA 2006. It sets out in more detail the matters covered in the LA 2006
and pro- vides greater clarity and specificity on certain aspects of the LA 2006. The LA
2006 and LR 2015 must be read together for an accurate and comprehensive understanding
of the labour law regime.
An important point to note regarding the application of the LA 2006 and LR 2015 is that
the pro-employee provisions of both LA 2006 and LR 2015 are applicable to employees
who fall within the definition of a ‘worker’ as

defined in the LA 2006. Section 2(65) of the LA 2006, as amended in 2013, defines ‘worker’ as
including all employees except for those engaged in a managerial, administrative [or
supervisory] capacity’. The Bangladesh High Court has defined ‘worker’ broadly by holding
that a manager etc. may be deemed a non- worker only if he or she has the power to make
hiring and/or firing decisions over employees under his or her management.
Any employee who falls outside the ambit of the term ‘worker’ is a ‘non-worker’. The terms of
employment of a non-worker are governed solely by the contract of employment between the
non-worker and the employer.
In addition, section 27 of the Contract Act of 1872 may be referred to in that it renders void
restrictive covenants that seek to restrain employees from competing after their employ-
ment has ended.
Furthermore, companies operating in an export processing zone would be subject to the
Bangladesh Export Processing Zones Authority Act, 1980 and the rules and regulations of
the Bangladesh Export Processing Zones Authority.

12. What is the nature of the corporate governance regime in effect in your
jurisdiction? What agencies or government bodies regulate corporate
governance?

The corporate legal framework in Bangladesh consists of various statutes, namely, CA 1994,
Securities and Exchange Commission Ordinance, 1969, SECA 1993, Bangladesh Bank Order,
1972, Bank Companies Act, 1991, Financial Institutions Act, 1993, Bankruptcy Act, 1997, and
the Foreign Exchange Regulation Act, 1947. Corporate governance in Bangladesh is mainly
regulated by RJSC, BSEC and BB. The existing system does not provide sufficient legal and
economic motivation for companies to inspire and implement corporate governance practices.

16 LexisNexis Company Law Guide 2017-2018

13. Does establishing a company in your jurisdiction grant any kind of residency
rights? Are there any conditions that in order to receive these residency rights (if
applicable) one must partner or establish a joint venture with a local (e.g. a citizen of


your jurisdiction)?

In establishing a foreign-owned company in Bangladesh, a foreign investor is not automat- ically

granted residency rights. However, a prospective foreign investor may obtain a mul- tiple-entry
three-year investor visa by applying for such investor visa with BIDA. Such investor visa allows
for entry into and short-term stay in Bangladesh for the visa holder, but does not allow for such
investor visa holder to work and earn a salary in Bangladesh. If a foreign investor wishes to reside
in Bangladesh as an employee of the investee foreign-owned com- pany, then subject to a
minimum amount of foreign capital and number of local employees, she/he may be eligible for
and be granted a work permit to work/reside in and earn a salary in Bangladesh.

14. When is a company subject to tax in your jurisdiction? What are the main taxes
that may apply to companies in your jurisdiction?

In Bangladesh, as per section 75 of the ITO 1984, it is mandatory for all companies incor- porated
in Bangladesh to obtain an e-TIN (Electronic Tax Identification Number) from the National
Board of Revenue (‘NBR’) and to file a tax return on the later date of six months from the end of
the accounting year or 15 July of the particular year. Such filing may be accompanied by an
audited financial statement, computation of total income with a supporting schedule and other
supporting documents. The

At present, the rate of corporate tax of a non-listed company is 35% of a company’s total income
in a year. The rate of VAT usu- ally depends on the respective HS Code (an internationally
standardised system of names and numbers to classify traded products) of the products and/or
services provided by the company. However, the most common rate of VAT in Bangladesh is
15%.

15. How does the competition law in your jurisdiction regulate companies?

The Competition Act, 2012 (‘Comp Act’) was promulgated to monitor the market and protect the
end consumers of products and services. It mandates the creation of the Bangladesh Competition
Commission (‘BCC’) which is vested with the power of overseeing the market and taking
necessary measures against unscru- pulous business practices and organisations.
Section 16 of the Comp Act restricts organisa- tions and groups from abusing their dominant position.
‘Dominant position’ is defined as a position of strength which is enjoyed by an organisation in the
relevant market by creating a monopoly situation. However, the Comp Act did not specify the precise
limit beyond which an act would be treated as anti-competitive. Besides, the Comp Act remains silent
on the issues which the BCC must take into account in order to determine a relevant market.
It is to be noted that although the BCC was established under the Comp Act, it has not become
effective yet, for many practical rea- sons, in respect of overseeing market practices and implementing


the provisions of the Comp Act.

16. What are the main intellectual property rights companies should be aware of
in your jurisdiction?

filing date can be extended upon application

for up to two months at first occasion and can be further extended for another two months.
The main taxes that may apply to companies in Bangladesh are corporate taxes and VAT.

The main intellectual property rights com- panies should be aware of in Bangladesh are
trademarks, patents and copyrights. Intellectual property such as industrial design

Jurisdictional Q&A – Bangladesh 17

does not play a significant part, and very few cases have reached the Supreme Court of
Bangladesh or have been reported.
In Bangladesh, an applicant can apply for trademark or patent registration at the Department of
Patent, Design and Trademark under the Ministry of Industries.
An application for copyright registration is to be submitted at the Copyright Office under
the Ministry of Cultural Affairs.
It takes around two years to register a trade-

(d) the Constitution of Bangladesh provides protection of privacy in general terms: the right to
the privacy of one’s correspondence and other means of communication is declared as a
fundamental right of a citizen of Bangladesh.
Additionally, BB issued a guideline in 2015 to ensure information, communication and
technology security in the financial sector.

18. Are there any incentives to attract foreign companies to your jurisdiction?

mark or a patent and around 4–6 months to

register a copyright, provided that there is no objection from the registrar or any opposing
party.
Bangladesh is a member of the international treaty, Paris Convention for the Protection of
Industrial Property, along with 176 other countries. Bangladesh is also a member of the


international treaty, Berne Convention, along with 172 other countries. As per the Berne
Convention, if a copyright work is registered in one member country, it will have protection in
all member countries of the Berne Convention.

17. Does your jurisdiction have laws or regulations that govern data privacy?

Bangladesh does not have any specific law that governs personal information or data
privacy. However, the following statues may be noted in relation to their regulation of data
privacy:
(a) the Information and Communication Technology Act, 2006 provides relief against
computer hacking and unauthor- ised access of data;
(b) the Right to Information Act, 2006 pro- hibits disclosure of any information which
would harm an individual’s privacy or personal life;
(c) the LA 2006 imposes criminal sanctions on employees by way of penalty for wrongful
disclosure of an employer’s confidential information or trade secrets;

See question 1 in regards to the repatriation of dividends and capital/capital gains to

foreign shareholders of a foreign-owned company.
There are also tax incentives for foreign com- panies, as provided for in sections 44–47 of the
ITO 1984. For instance, under section 46A, 46B and 46C of the ITO 1984, there are tax exemp-
tions for the business of industrial undertaking and of physical infrastructure facilities for a
number of years as stated in the respective provisions. Moreover, under paragraph 33 of Part A
of the Sixth Schedule to the ITO 1984, as amended by Bangladesh Income Tax Paripatra
(Circular) 2015 and Finance Act, 2016, there is a tax exemption on any income derived from
the business of software development information technology, information technology enabled
services and nationwide telecommunication transmission network up to 30 June 2024.
Moreover, double taxation can be avoided in most cases as Bangladesh benefits from many
bilateral investment agreements with other countries.

19. What is the law on corporate insolvency in your jurisdiction?

The primary statues on corporate insolvency in Bangladesh are the Bankruptcy Act, 1997 and
sections 234–344 of the CA 1994.

18 LexisNexis Company Law Guide 2017-2018

20. Have there been any recent proposals for reforms or regulatory changes
that will impact company law in your jurisdiction?

The CA 1994 has been considered for amend- ment for a number of years. In this regard,


the Ministry of Commerce has published the draft Companies Act 2013 for comments, but
it has not yet been implemented and there is no confirmation as to when this bill will be
passed as an Act. We have to wait and see what changes this Act will bring and the impact
it will have in Bangladesh.

21. Are there any features regarding company law in your jurisdiction or in
Asia that you wish to highlight?

In Bangladesh, a minimum of two shareholders are required to incorporate a company,

whereas in many countries, a single shareholder can incorporate a company and is free to
hold 100% of the shares of the company. Furthermore,

Bangladesh law does not provide for any pass- through companies such as LLCs in certain
jurisdictions. Finally, the following provisions of the CA 1994 may be noted:
(a) section 106 provides that a shareholder- director may be removed only at a duly called
and quorumed extraordinary general meeting and upon the affirmative vote of three-
quarters of the shareholders present at such meeting. This provision does not apply to
nominee directors appointed by corporate shareholders, who as per a provision that
should be inserted in the articles of association may be appointed and removed at the
sole discretion of the appointing shareholder; and
(b) section 85(1) contains provisions as to meetings and votes which are to have effect
notwithstanding any provision in the articles of association, and section 85(2)
contains provisions which are to have effect in so far as the articles of association do
not make provision in that behalf.

About the Authors:

Masud Khan Ahnaf Chowdhury
Senior Partner, The Legal Circle Associate, The Legal Circle
E: [email protected] E: [email protected]

T: +88 019 2080 4522 T: +88 019 7262 4623

N.M. Eftakharul Alam Bhuiya Jarif Ahmed

Senior Associate, The Legal Circle
E: [email protected] E: [email protected]
T: +88 017 1112 0550 T: +88 019 1408 3954

Dhaka 1212, Bangladesh