How to Register Liaison Office in Bangladesh

A liaison office in Bangladesh is a non-commercial entity established by foreign companies to act as a communication bridge between their parent company and Bangladeshi counterparts. Unlike branch offices, liaison offices do not engage in revenue-generating activities but focus on promoting trade, conducting market research, and overseeing local operations. The first step in registering a liaison office in Bangladesh is to obtain approval from the Bangladesh Investment Development Authority (BIDA).

Registration Process with BIDA

The process of registering a liaison office involves several steps, starting with securing the necessary permissions from the Bangladesh Investment Development Authority (BIDA).

Step 1: Obtain BIDA Approval

The first and most critical step is obtaining approval from BIDA. The parent company must submit a detailed application via the BIDA web portal, accompanied by government fees for processing.

Documents Required for BIDA Approval:

·      Incorporation Certificate of the foreign company

·      Memorandum and Articles of Association (translated and attested)

·      Audited financial statements of the foreign company (last two years)

·      Board resolution for setting up the liaison office

·      Details of shareholders and directors

·      Declaration of activities for the parent company and proposed liaison office

·      Authorization letter for the consultant handling the process

·      Application Form and Government Fees: A fee of BDT 25,000 (Twenty-five thousand) is required, which must be paid via bank payment order. The original copy of the payment order must then be submitted to BIDA to obtain permission for establishing a liaison office in Bangladesh.

It is important to note that the required documents must be certified by either the Bangladesh Embassy or High Commission in the country of origin, or by the leading Chamber of Commerce of the originating country. After thoroughly reviewing all documents, BIDA officials will forward the application and related records to the Inter-Ministerial Committee. The committee may examine the documents and request additional information or a physical presentation, if necessary. Once satisfied, they will grant approval for the liaison office in Bangladesh. The Inter-Ministerial Committee typically meets twice a month, and the approval process usually takes about a month or less.

The letter of approval /permission from BIDA serves as the essential legal document required to obtain recognition as an authorized liaison office. It is valid for a period of 03 (three) years, and a renewal application must be submitted at least 02(two) months before the current license expires.

Step 3: Open a Bank Account

The liaison office must open a local bank account within two months of receiving BIDA approval. A minimum remittance of $50,000 from the parent company is required to cover initial operational costs. If this deadline is missed, the parent company must remit an additional 5% penalty on top of the original remittance.

Step 4: Obtain Bangladesh Bank’s (Central Bank) Approval

In 2015, the Bangladesh parliament amended the Foreign Exchange Regulations Act of 1947, leading to the withdrawal of Bangladesh Bank's 18B Approval criteria. Under this amendment, a Branch Office, Liaison Office, or Representative Office must report to the Bangladesh Bank within 30 days of receiving permission from the Bangladesh Investment Development Authority (BIDA).

Additionally, since the amendment, the government or Bangladesh Bank has the authority to request that any individual residing in Bangladesh repatriate their foreign exchange holdings, foreign securities, immovable property, or any industrial, commercial undertakings, or companies that they own, operate, or manage abroad.

Step 5: Registering with the RJSC

Once approvals from both Bangladesh Bank and BIDA are obtained, the liaison office must be registered with the Registrar of Joint Stock Companies and Firms (RJSC). To complete this process, several documents are required, including the BIDA Letter of Approval, Bangladesh Bank's approval letter, and a certified copy of the company’s memorandum and articles of association or statutory documents. Additionally, the company must provide the complete address of its registered or principal office, a list of its directors and secretary (if applicable), and the name(s) and address(es) of individuals residing in Bangladesh authorized to accept legal documents on the company's behalf. The full address of the company's primary place of business in Bangladesh must also be submitted.

Advantages of a Liaison Office

Ease of Setup: Liaison offices do not require the formal incorporation of a private limited company, making the setup process simpler and more cost-effective.

Low Operational Costs: Since a liaison office cannot engage in profit-making activities, its operational expenses are relatively lower, and the parent company covers all costs.

Market Exploration: A liaison office can serve as a preliminary step for companies exploring market opportunities in Bangladesh without committing to full-scale operations.

Facilitating Trade: The office can focus on building trade relationships, conducting feasibility studies, and establishing technical and financial cooperation with local businesses.

Limitations of Liaison Office Compared to a Branch Office

While a liaison office offers several advantages, it comes with certain limitations, particularly when compared to a branch office:

No Revenue Generation: A liaison office is prohibited from engaging in any income-generating activities, unlike a branch office, which can conduct business activities, including signing contracts and earning revenue.

Limited Scope: The activities of a liaison office are restricted to communication, coordination, and market research, whereas a branch office can engage in a broader range of business functions.

Operational Restrictions: Liaison offices cannot enter into legally binding agreements or engage in technical assistance or shipping operations within Bangladesh. A branch office has more freedom in this regard, with the ability to conduct full-fledged operations, subject to BIDA approval.

Overall, a Liaison Office offers a simplified registration process and allows companies to explore the market and build relationships. However, the significant limitation of not being able to generate revenue means that companies aiming for broader operations may consider setting up a branch office instead. Both options offer different levels of involvement in the Bangladeshi market, and the choice depends on the company's strategic goals and long-term plans.