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First published in Bangladesh
by Legal Counsel
© Legal Counsel, 2025
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LEGAL COUNSEL
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“Foreign direct investment is a key driver of
economic development, bringing not only capital but
also technology, skills, and access to global markets.”
— Kofi Annan (1938-2018)
Bangladesh, on the brink of graduating from a Least Developed Country to a Developing Country, is actively positioning itself as an attractive destination for foreign investment. Emphasizing “Trade, not aid,” the country seeks increased global business engagement.
This booklet provides foreign investors with a comprehensive overview of Bangladesh’s legal framework for trade, commerce, and investment. It outlines key procedures for establishing and managing businesses, covering labor laws, taxation, foreign exchange regulations, intellectual property rights, real estate laws, contract enforcement, and data privacy. It also explores business structures such as locally incorporated companies, branch offices, and liaison offices, along with dispute resolution mechanisms.
Legal Counsel, having supported numerous businesses in establishment and operations, recognized the need for a structured guide. This booklet, the third in our pro-bono ‘Quest’ series, serves as a practical resource for those entering the Bangladeshi market or already operating here.
I extend my sincere gratitude to our associates for their dedication in bringing this publication to life. We look forward to your valuable feedback to enhance this initiative further.
Omar H. Khan
Barrister-at-Law, The Hon’ble Society of Lincoln’s Inn, UK
Advocate, Supreme Court of Bangladesh
Head of Chambers, Legal Counsel
07 April 2025 | Dhaka, Bangladesh
Bangladesh, on the brink of graduating from a Least Developed Country to a Developing Country, is actively positioning itself as an attractive destination for foreign investment. Emphasizing “Trade, not aid,” the country seeks increased global business engagement.
This booklet provides foreign investors with a comprehensive overview of Bangladesh’s legal framework for trade, commerce, and investment. It outlines key procedures for establishing and managing businesses, covering labor laws, taxation, foreign exchange regulations, intellectual property rights, real estate laws, contract enforcement, and data privacy. It also explores business structures such as locally incorporated companies, branch offices, and liaison offices, along with dispute resolution mechanisms.
Legal Counsel, having supported numerous businesses in establishment and operations, recognized the need for a structured guide. This booklet, the third in our pro-bono ‘Quest’ series, serves as a practical resource for those entering the Bangladeshi market or already operating here.
I extend my sincere gratitude to our associates for their dedication in bringing this publication to life. We look forward to your valuable feedback to enhance this initiative further.
Omar H. Khan
Barrister-at-Law, The Hon’ble Society of Lincoln’s Inn, UK
Advocate, Supreme Court of Bangladesh
Head of Chambers, Legal Counsel
07 April 2025 | Dhaka, Bangladesh
The objective of this Booklet is to enlighten the potential and existing foreign investors about the basic legal regime of Bangladesh in relation to FDI so that the information may facilitate their investment decisions. The Booklet only focuses on the prevailing legal structure relevant to FDI and related matters as of the date of publication. Other factors relevant for FDI decision-making, such as, market analysis, sectoral analysis, infrastructure and transportation, political and economic climate, demography etc. are not incorporated within the scope of this Booklet.
Bangladesh maintains an open and welcoming policy in terms of private investors investing into diverse sectors without any limitation or restriction at large. Private investment is possible in almost every sector, save as only 4 (four) ‘reserved sectors’, reserved for government. As per the National Industrial Policy 2022, the said reserved sectors in Bangladesh are mentioned below:
Besides, there are some sectors, which are ‘controlled’. It is possible to invest into the controlled sector by any private enterprise. However, in order to invest into such controlled sectors, NOC (No Objection Certificate) from the relevant government ministry needs to be obtained.
As per the National Industrial Policy 2022, the Controlled Sectors are mentioned below for your reference:
Advantages of investing in Bangladesh
Bilateral Investment Treaties or BITs offer a set of guarantees to investors of either contracting parties, including fair and equitable treatment, protection from expropriation, free transfer of means and full protection and security. So far, Bangladesh has signed BITs with 33 countries including United Kingdom, Austria, Bahrain, Belarus, Belgium-Luxembourg Economic Union (BLEU), Cambodia, Canada, China, Denmark, France, Germany, India, Indonesia, Iran, Japan, Kuwait, Malaysia, Netherlands, Pakistan, Philippines, Poland, Republic of Korea (South Korea), Romania, Singapore, Switzerland, Thailand, The Democratic People’s Republic of Korea (DPRK or North Korea), Turkey, United Arab Emirates, United States of America, Vietnam,
Bangladesh has ratified the BITs with most of the countries apart from Belarus, Cambodia, Denmark, Korea (Republic of Korea/South Korea), Kuwait, Singapore, The Democratic People’s Republic of Korea (DPRK or North Korea), Turkey,
This Act was enacted with a view to safeguard the interests of foreign investors, provide statutory protection to the foreign investment and to facilitate foreign investment in Bangladesh.
Some key features are as follows:
A foreign investor can establish places of business in Bangladesh in several ways. Based on the nature and purpose, the appropriate type needs to be determined.
LOCALLY INCORPORATED COMPANY
A locally incorporated company limited by shares is the most flexible vehicle for foreign investors aiming to generate profit in Bangladesh with a relatively long-term business plan.
Key Features:
Incorporation Procedure of a Locally Incorporated Company:
After incorporation, the company shall have to obtain Tax Identification Number (TIN), VAT registration, Trade License from the regulatory authority, project registration with Bangladesh Investment Development Authority (‘BIDA’), if applicable and any other sector-based license/permits (if applicable).
INVESTMENT IN EXISTING COMPANIES
A foreign investor may invest in an existing company in Bangladesh by way of buying shares in the same, whether from an existing shareholder or through newly allotted shares in the company. In order to effectuate the investment in this manner, a share transfer or a share allotment filing with the RJSC needs to be carried out with relevant documents, and in accordance with the memorandum and articles of association of the company and the applicable laws. Similarly, foreign investors may also acquire an existing company in Bangladesh. An acquisition generally occurs when a larger company acquires a smaller company, thereby absorbing the business of the smaller company or to give effect to a global M&A deal. An acquisition entails a procedure similar to a share transfer.
BRANCH OFFICE
A foreign investor may establish its place of business in Bangladesh in the form of a branch office. A branch office, as the name suggests, is essentially a branch office of a company incorporated outside of Bangladesh. Branch offices, unlike locally incorporated companies, are not separate legal entities. The establishment of a branch office is regulated by BIDA under its specific regulatory scheme. The branch office activities are restricted to those allowed under the BIDA terms and conditions, these are usually service based and trading activities. However, upon obtaining a waiver from BIDA by providing proper justification, branch offices may earn profit locally.
The foreign company has to make an application to BIDA seeking permission to open a branch office in Bangladesh, specifying the activities it shall engage into and also the timeline, after which the permission needs to be renewed. If approved, BIDA shall issue a permission letter that shall include the terms and conditions that the branch office must comply with on a continuing basis. The foreign investor will have to remit a minimum sum of USD$ 50,000.00 to the branch office’s bank account to meet initial expenditures of the branch office, within two to three months from the date of the permission. Usually the bank account is primarily only allowed to receive funds from the head office for the purposes of operational, functional and establishment costs, including the salaries of the employees, rents etc. Outward remittances are usually not allowed. However, provided the branch office is permitted by BIDA to generate revenue, they may remit post-tax profit outside of Bangladesh. The branch office is usually a suitable option if the investors are looking for project-based establishment.
LIAISON OR REPRESENTATIVE OFFICE
A liaison office in Bangladesh may only engage in non-revenue generating activities such as promotional activities and maintaining relationship/liaison with clients. They also act as a communication channel between the foreign company and the Bangladesh market. Similar to a branch office, in order to set up a liaison office a foreign investor is required to obtain prior approval from BIDA. In addition, a foreign investor will have to remit a minimum sum of USD 50,000.00 to the liaison office’s bank account with an Authorised Dealer (‘AD’) bank, within two months from the date of the permission, to meet initial expenditures of the liaison office. Outward remittances are not permitted through a liaison office’s bank account. All expenditures of the liaison office must be paid through inwards remittances by the head office. Liaison offices, unlike incorporated companies, are not separate legal entities.
Procedure of establishing a Branch or Liaison Office:
An application has to be submitted by the foreign company with supporting documents such as particulars of proposed activities, Memorandum and Articles of Association of the foreign company, latest audit report of the parent company etc. The documents are required to be attested by the respective Bangladesh Embassy in the country of origin of the foreign company. BIDA may request for further documents or information as part of the application process. Upon satisfaction of requirements and verification, BIDA will issue an approval letter. The approval is usually valid for 3 (three) years and is perpetually renewable for 2 years on each occasion.
After the permission letter is provided, the branch/liaison office needs to submit the same to Registrar of Joint Stock Companies and Firms (RJSC) and subsequently receive a certified copy of filing from RJSC. The branch/liaison office needs to obtain Tax Identification Number (TIN) and other licenses as may be required. It is important to note that, unlike a limited liability company or branch office, a trade license is not required for a liaison office.
EXIT OPTIONS
Closing a Branch/Liaison Office
In order to close the branch/liaison office, the board of directors of the parent company of the branch/liaison office needs to approve the same in a board meeting.
Following this approval, a public notice must be issued in a daily newspaper in Bangladesh, at least three months prior to the intended closure date of the branch/liaison office. This notice serves to inform the public and relevant authorities about the closure, ensuring compliance with regulatory requirements and providing adequate time for any necessary procedural steps to be completed before the office is officially closed.
The applicant is then required to apply to BIDA for the closure of the branch/liaison office through the online portal with the required documents. All the documents (except the documents which are being attested by the respective Bangladeshi Embassy), needs to be attested/signed by the Country Manager or any other authorized representative of the branch office.
Upon verification of the required documents, BIDA shall issue a certified copy confirming the closure of the branch/liaison Office.
Winding up of a Company
The process of winding up is covered under Companies Act 1994 and can be generally divided in two categories as mentioned below:
1. Winding up by the Court
2. Voluntary winding up
1. Winding up by Court:
In this category of winding up the process of winding up is initiated when the Company itself or creditors or RJSC, files the petition to court for winding up and subsequently official gazette is published in the newspaper by the order of the court. The Court appoints receiver and can also appoint liquidator for the purpose of conducting the winding up process.
2. Voluntary winding up:
In the category the process is initiated usually by the members of the Company through a special or extraordinary general meeting and the liquidator is appointed to conduct the process of the liquidation. It is important to note that at any stage of the voluntary liquidation the Court may make an order, based on the petition filed by any member of the Company or creditors of the Company, that the voluntary winding up shall continue subject to the supervision of the Court.
Sale of shares by the foreign Investor
The first step of share transfer/sale for both foreign and local shareholders is to offer the same to the existing shareholders of the company, if any and to check if there is any restriction on the shareholding ratio of the Foreign and Local shareholder which is to be maintained as per any existing the laws. For eg. in the freight forwarding industry a company needs to have at least 60% local shareholders. Thereby, while making any share transfer/sale, the company and the foreign shareholder have to check that whether any such restriction applies to their company and if yes, then the proposed transaction shall not violate the same.
Foreign shareholders usually sign a share transfer/sale agreement with the buyer. In addition, a board resolution and Form 117 must be executed. If shares are sold to non-existing shareholders, a No Objection Certificate from existing shareholders is required.
Furthermore, since it is not convenient for foreign shareholders to travel to Bangladesh for signing the share transfer documents in front of the RJSC, which is a requirement for local shareholder for transferring/sale shares, the foreign shareholders can attest all the related documents from the respective Bangladesh Embassy and courier the same to Bangladesh which then needs to be re-verified by the Ministry of Foreign Affairs before submitting the same to the RJSC for their approval.
The share transfer/sale transaction may also require Form IX and Form XII to be submitted to RJSC if the specific share transfer/sale brings any change in the existing board of directors.
Once the share transfer/sale is completed and a certified document is obtained from the RJSC, RJSC needs to ensure that the said transfer/sale which are mentioned in share register are kept at their records.
There are four recognized bodies namely, Bangladesh Investment Development Authority (BIDA); Bangladesh Economic Zone Authority (BEZA); Bangladesh Export Processing Zone Authority (BEPZA) and Bangladesh Hi-Tech Park Authority, which are considered as the Central One Stop Service (OSS) centers. These authorities are empowered by the Act to grant registration, issue clearance, permits and other documents within their respective jurisdiction and the One Stop Service (OSS) centers under these bodies help to avoid bureaucracy and save time. The Operation of the OSS is expected to commence soon.
INTRODUCTION TO INVESTMENT RELATED AUTHORITIES
Bangladesh Investment Development Authority (BIDA)
BIDA (formerly known as Board of Investment-BOI) is the apex investment promotion agency (IPA) of Bangladesh under the Chief Adviser’s Office (formerly known as the Prime Minister’s Office). BIDA promotes and facilitates private investment. BIDA also provides regulatory services for companies outside the EPZ/SEZ etc., including approval of branch/liaison office, project registration by companies, issuing recommendation letter for work permit and issuing work permit for expats etc.
Bangladesh Export Processing Zone Authority (BEPZA)
BEPZA is the official government agency responsible for promoting, attracting, and facilitating foreign investment in the Export Processing Zones (EPZs). Additionally, as the competent authority, BEPZA oversees and inspects compliance with regulations related to social and environmental concerns, workplace safety and security, and ensures the maintenance of harmonious labour-management and industrial relations within the EPZs.
Incentives
Facilities
Bangladesh Economic Zone Authority (BEZA)
BEZA is the central authority for economic zones empowered under Bangladesh Economic Zones Act, 2010. These economic zones offer different business and trade incentives than the rest of the country. A non-exhaustive list of incentives is provided as follows.
Incentives for developers:
Exemption from dividend tax Incentives for unit investors:
Other Incentives:
Bangladesh Hi-Tech Park Authority (BHTPA)
bhtpa is the authority that manages and develops technology business parks and in Bangladesh. Investing in hi-tech parks offers several incentives such as follows.
Foreign Exchange transactions are highly regulated in Bangladesh by the central bank, namely, the Bangladesh Bank (‘BB’). The key legislations in this regard are Foreign Exchange Regulation Act 1947, (‘FERA’), and the regulations promulgated and circulars issued by BB from time to time.
Inward Remittances: There are generally no restrictions on inward remittances (Chapter 5, Section II, Guidelines for Foreign Exchange Transactions 2018 ‘GFET’). Foreign investors are free to invest and make remittances to Bangladesh through AD banks. Permission of BB is not required if the foreign investors use their own funds for equity investment. However, if such inward remittance is made using foreign loans, prior approval of BIDA shall have to be obtained. Prior approval is not required to be obtained for outward remittances of repayment of interest and principal installments, as per the approval, against such foreign loans. The application for foreign loan has to be submitted to BIDA in the prescribed form with supporting documents such as loan agreement, bank document, entity documents etc. to support credit worthiness.
Outward Remittances: Foreign owned companies may repatriate dividends to their foreign shareholders through their AD banks. No prior approval of BB is to be obtained by the foreign investor to repatriate dividends. However, ADs are subject to a number of guidelines by the BB while making outward remittances. Under Chapter 5, Section I, of GFET, 2018 Vol 1, ADs must exercise utmost caution to ensure that foreign currencies remitted or released by them are used only for the purposes for which they are released; they should also maintain proper records for submission of returns to BB as also for the latter’s inspection from time to time. ADs are also required to ensure that the remittance is being made in BDT. Then the value in BDT is converted into the equivalent foreign currency using the conversion rate published by the Bangladesh Bank (‘BB’) on the date of remittance. While making an outward remittance of dividends, companies are required to submit relevant documents to the bank such as Audited Balance Sheet and Profit & Loss Account of the company for the year to which dividend relates, final income tax assessment order etc. While the timeline may vary from bank to bank, a remittance process through an AD usually takes about 2-3 (two-three) working days if all documents are duly provided.
Shareholders’ Loan: As per FE Circular No. 32 dated August 22, 2019, foreign owned/controlled industrial enterprises engaged in manufacturing activities may avail and pay interest on short term loans extended by parent companies/shareholders abroad in their home currency subject to observance of the following instructions:
(a) Interest on Taka proceeds of short term loan shall be payable in Taka at prevailing 3-month interest rate for Taka term deposit applicable by AD on the date of encashment of loan received from parent companies/shareholders.
(b) Repayment of principal and accrued interest on maturity shall be repatriable after conversion of payable Taka into currency of sourced country at prevailing exchange rate.
(c) Repayment as mentioned in para b above is subject to deduction of applicable taxes/duties and payment thereof.
Short term interest bearing loan facility from parent companies/shareholders abroad under the above authorization shall be admissible for maximum 3 (three) years from the date of inception of manufacturing activities by the borrowing industrial enterprises. The short term loan so availed may be renewed/extended for further periods within the applicable period of 3 years.
As per the Foreign Exchange Circular No.4 dated January 19, 2021 of Bangladesh Bank, short-term borrowing can be accessible by foreign owned companies engaged in service activities (except trading businesses). Such short-term borrowings can be admissible in convertible foreign currencies maximum for 6 (six) years from the date of inception of service activities, with options to renew/extend the tenure within these 6 (six) years. Borrowing companies may pay interest maximum at the rate of 3.0% per annum. Additionally, borrowing companies have to report to Bangladesh Bank about obtaining and repaying the loan.
The National Board of Revenue (NBR) under the Ministry of Finance is the regulatory authority for all tax matters (Income Tax, VAT and Customs) in Bangladesh.
Income Tax
The Income Tax Act, 2023 is the governing law for income tax related matters in Bangladesh. In accordance with the said Act, every company in Bangladesh (including branch and liaison offices) is required to submit an annual income tax return and return of tax deducted or collected at source using prescribed formats half yearly to the tax authorities.
The applicable income tax rates for companies are as follows:
The tax rates (and tax governance mechanism) generally changes every year during the end of June through the national budget called the Finance Act.
All companies incorporated in Bangladesh are required to obtain an e-TIN from the concerned authority, namely, the National Board of revenue (NBR). Companies are required to file their tax returns using prescribed formats annually.
Other filings:
The following entities are required to submit a return of tax deducted or collected at source using prescribed formats half yearly to the tax authorities:
Avoidance of Double Taxation
Bangladesh has signed Avoidance of Double Taxation Treaty (DTT) with 36 countries. Hence double tax impact can be avoided at the time of repatriation of fees and other payments to non-resident subject to taking approval from National Board of Revenue (NBR).
Value Added Tax (VAT)
VAT is a key component of Bangladesh’s tax system, and understanding its structure is crucial for investors looking to do business in the country. Introduced in 1991, VAT is a consumption tax levied on goods and services at different stages of production and distribution. The standard VAT rate in Bangladesh is 15%, though certain goods and services, especially essential items, are be subject to different reduced rates or exemptions. Since VAT is applied at each step of the supply chain, companies must maintain proper documentation to ensure compliance with tax laws. This includes issuing VAT invoices, registering for VAT, and filing periodic returns. Non-compliance can result in penalties, which can impact profitability. The government has made strides in reforming the VAT system, including the introduction of the new VAT and Supplementary Duty Act in 2012. These reforms aim to streamline VAT procedures and encourage more transparent tax practices, which could benefit investors by reducing red tape. A VAT registration is done in the form of registering a BIN (Business Identification Number).
Customs
Understanding customs laws is essential for any businessman involved in import or export activities. Bangladesh’s customs law is governed by the Customs Act of 1969, along with various amendments and regulations, which aim to regulate the import and export of goods, safeguard the country’s revenue, and prevent illegal trade. The Bangladesh Customs Department, under the National Board of Revenue (NBR), is responsible for implementing these laws and ensuring that all goods entering or leaving the country comply with applicable tariffs, duties, and documentation requirements. Bangladesh applies a system of customs duties based on the value of goods (ad valorem), with rates varying depending on the type of product. It is essential for business owners to maintain accurate documentation, understand the specific regulations applicable to their goods, and work closely with clearing agents who are familiar with the local customs procedures. In recent years, Bangladesh has taken steps to improve customs efficiency, such as implementing the Automated Customs Management System (ACMS) to streamline the clearance process. The government has also introduced various trade facilitation measures and initiatives aimed at reducing the cost and time of doing business, which is beneficial for both local and foreign investors.
The operation of any establishment requires it to deal with and perform under a various type of contracts, be it a procurement of goods/ services agreement, employment agreement, lease agreement, dealer/distributor agreement or any other types of agreement. Therefore, knowing the basic, albeit important matters, for a contract is very important to avoid future hassles, problems and disputes and for smooth operation of the organization.
In the following circumstances the Court, if satisfied, may enforce specific performance of contracts:
There are instances where specific performance of contract is not available, which are:
When a contract is violated, the non-defaulting party is entitled to receive compensation from the party violating the contract for any loss or damage resulting from such infringement, which inevitably resulted from such infringement in the ordinary course of events. Further, it is to be noted that such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Where a penalty has been levied for infringement of the contract, where a sum is specified in the contract as the amount to be paid in the event of such infringement, or where the contract includes any other clause by way of penalty, the party complaining of the infringement is entitled to receive the amount from the contract, whether or not the actual damage or loss has been found to have been incurred thereby.
Any person interested in a contract in writing may sue for having it rescinded, and such rescission may be permitted by the Court in the following cases–
Moreover, a party to the contract who rightly rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfillment of the contract.
It is important to have dispute resolution clause in the contracts so that the parties may first attempt to resolve the dispute without resorting to court proceedings. Formal negotiation may be included along with well- articulated provisions for arbitration.
Enforcing contract:
It is very important that a contract can be enforced efficiently by the innocent party against the party in breach. As per the last available data of World Bank Enforcing Contracts, Bangladesh scored poorly in the global index and also in comparison to its counterparts. The World Bank’s enforcing contracts indicator measured the time and cost for resolving a commercial dispute through a local court of first instance, and the quality of judicial processes index, evaluating whether each economy had adopted a series of good practices that promote quality and efficiency in the court system. However, measures have been taken in the recent years to improvise the efficiency in enforcing contracts in Bangladesh as well as by way of popularizing various methods of ADR, including commercial mediation and arbitration.
There is no specific definition of ‘Digital Contracts’ or ‘Electronic Contracts’ in the laws of Bangladesh. Generally, ‘Digital Contract’ or ‘Electronic Contract’ refers to a contract in which the parties reach an agreement electronically instead of in person. It is created when two or more parties negotiate using electronic tools, like email, when a person interacts with an electronic agent, like a computer program, or when two or more electronic agents interact and are programmed to identify the existence of a contract. As long as the essential elements of a contract are present, a digitally executed contract is also enforceable. Moreover, the recent amendment of the Evidence Act, 1872 in 2022 recognizes digital records as admissible in legal proceedings.
Digital Signature
The use of electronic/digital signatures gained legal recognition in Bangladesh through the Information and Communication Technology Act 2006.Electronic signatures facilitate the execution of contracts remotely, eliminating the need for physical presence. This has made contract formation more efficient, particularly in e-commerce and online transactions. It is a legal requirement for an individual or an entity to execute a commercial contract by means of a certified electronic signature from a certifying authority (CA) in Bangladesh from which the parties, both local and foreign, shall obtain a digital certificate.
A digital certificate shall be issued by a CA according to law, standards and policies set by the Bangladeshi Government. To obtain the digital certificate, an applicant must apply to a CA for a digital certificate. The evidential value of documents signed by E-signature by following the above criteria has strong evidential value if there is any dispute in relation to the signatures in the documents.
In Bangladesh, if someone is desirous of purchasing, leasing, or renting a property, it is of absolute importance that they perform a due diligence of the property in terms of title and peaceful possession.
Practically, like other developing countries, real estate industry in Bangladesh is not free from scams and unscrupulous brokers. Due to such issues, it is very important to conduct professional due diligence of the property prior to taking lease or purchasing.
The due diligence in terms of title is popularly known as property vetting. It is a series of steps that one has to take to ensure that a property in question is safe from any sort of hassle and if anyone purchases/ leases it, s/he would become the rightful owner/lessee of the said property.
In the process of vetting, there are several steps to be followed:
Note: The seller/lessor shall be able to provide the purchaser/lessee with all the documents stated above. In case of sale/purchase, original shall be collected. In case of lease, the landlord does not generally provide the originals and depending on the value and importance of the lease, such documents may also be verified with the land registry office for checking their authenticity.
Property Ownership by Foreigner:
A foreigner can own movable properties in Bangladesh, unless there is any specific restriction on any particular property. On the other hand, a foreign individual cannot own immovable property (real estate) in Bangladesh. However, if a company is incorporated in Bangladesh (whether as a joint venture or a fully foreign-owned company) it will be a considered as a local entity and hence, such company can own both movable and immovable properties in its name.
The Bangladesh Labour Act 2006 (‘BLA’) as well as the Bangladesh Labour Rules 2015 (‘BLR’) depict almost all matters associated with labour and workforce, including wage and salary, benefits and allowances, termination and grievances, work environment and health and safety, maternity, unionization, child labour and so on. The Act and Rules apply to most of the organizations including foreign-owned companies and organizations for their ‘worker’ category of staffs. Some salient features of the Act are discussed in brief below:
– At least 50% of the total salary shall be basic salary;
– 5% of the basic salary shall be minimum annual salary increment;
– 2 (two) festival bonuses per year, each equal to 1 (one) month’s basic salary
– 1 (one) month’s basic salary for each completed year of service as severance pay, except certain exceptions;
– Annual sharing of 5% net profit, if applicable;
– Provident Fund (not compulsory) to be created by equal monthly contribution by employer and worker;
– No separate need for pension fund.
Bangladesh does not have a general minimum wage, rather has industry-specific minimum wages for workers as set by the Bangladesh Minimum Wages Board. In majority of the sectors, there is no minimum wage and the employer is at the liberty to determine their own salary structure and wage based solely on their business case. The industries/sectors having minimum wages are as follows:
Work permit is a prerequisite for employment of a foreigner/expat in Bangladesh. BIDA is generally the relevant authority to issue work permits.
Procedure to obtain Work Permit
Private sector industrial enterprises, outside Export Processing Zones (EPZ), branch/liaison/representative offices of foreign origin and local commercial enterprises desiring to employ foreign nationals are required to apply in advance to BIDA for work permits. For expatriate employees the guidelines are as follows:
Process flow:
Step 01: Apply for E-Visa recommendation letter from BIDA with all supporting documents
Step 02: Get the E-Visa from the concerned Bangladesh mission
Step 03: Arrive in Bangladesh with the E-VISA
Step 04: Apply for Work Permit
Step 05: Get visa stamping on the passport from the Immigration office
Documents requirement:
The following documents must be submitted with the application of work permit:
Data protection refers to the legal and technical measures taken to safeguard personal information, whereas privacy pertains to individuals’ rights to control their personal data. Bangladesh does not have any specific data protection laws yet. The only available laws in relation to data protection is the Information and Communication Technology Act 2006 (hereinafter referred to as the ‘ICT ACT 2006’) and the Cyber Security Act 2023 (hereinafter referred to as the ‘CSA 2023’) in Bangladesh. The Constitution of Bangladesh grants fundamental rights to individuals, including one for privacy. Even though this does not directly relate to data protection, it can still be interpreted to mean that individual information is somehow safeguarded through these rights.
One of the key features of The ICT Act 2006 and CSA 2023 is prohibition against disclosure of personal information belonging to an individual without the consent of that individual. This provision is critical in ensuring that individuals’ privacy is safeguarded, particularly in the context of digital transactions and online interactions. For foreign investors seeking to invest in Bangladesh, this legal framework provides a strong assurance that their personal and sensitive information, stored in electronic records within the country, will be protected from unauthorized access or disclosure. Investors can thus have confidence that their data will be handled in compliance with the strict data protection standards set forth in these laws, ensuring that their business operations are not unduly compromised by data breaches or unlawful disclosures. This legal protection promotes a secure and transparent environment for foreign investments, fostering trust and encouraging further participation in Bangladesh’s growing digital economy.
Additionally, the regulatory framework facilitates legal clarity with respect to data handling and processing, which aids investors in managing their data responsibilities and avoiding potential legal liabilities. By instituting strong safeguards against cyber threats and breaches, the laws further ensure the stability and continuity of business activities, providing investors with greater assurance in the security of their digital infrastructure.
Importation and Exportation of goods in Bangladesh are regulated by the Ministry of Commerce as per the Import and Export (Control) Act, 1950. Other rules, regulations include the Uniform Customs and Practice for Documentary Credits (‘UCP’) 600 (for Letter of Credit (LC), Foreign Exchange Regulation Act, 1947, as amended, Bangladesh Bank Circulars & Guidelines and the Customs Act 1969.
According to the 1950 Act the importer is required to be registered with the licensing authority. Various documents are required for opening a LC for import, such as Import Registration Certificate (IRC), Trade License, valid membership certificate from local chamber of commerce of related association, TIN, VAT certificate, etc. For importation of goods, the importer must obtain other relevant documents such as the application of letter of credit, pro forma invoice/purchase order/contract/agreement, Letter of Credit Authorization Form (LCAF) duly sealed & signed, insurance cover note, certificate of origin etc. Moreover, the importer shall have to be a customer of the bank for opening the LC.
A Letter of Credit (LC) is a written document presented by the importer’s bank on their behalf, assuring the exporter that the issuing bank will make the payment to the exporter for the international trade conducted. Types of LC include Revocable LC, Irrevocable LC, Standby LC, Confirmed LC, Unconfirmed LC, Transferable LC, Back-to-Back LC, Payment at Sight LC, Deferred Payment LC and Red Clause LC.
The LC works in the following manner:
Nonetheless, various difficulties are faced by foreign traders/exporters, such as the terms of LC may not be honored if not in conformity (i.e. if there exists material discrepancy), payments may be delayed beyond reasonable time, LC confirmation costs are higher, existence of lack of strict regulations involving the methods of payment, existence of fraudulent risks or events amounting to force majeure and leading to frustration of contracts. Where the terms of the LC are not settled, this amounts to a violation of c34 of Guidelines for Foreign Exchange Transactions. The said clause states that the Authorized Dealer Category Banks (AD) shall make payment of import liabilities as per LC/contracts (both local and foreign) on maturity and failure in settlement of import liability as per credit/contract terms may result in punitive actions including revocation of AD license by Bangladesh Bank. Moreover, non-payment further leads to the evitable consequence of breach of contract by the counter party and the aggrieved party may seek damages for the same.
Bearing the aforesaid difficulties in mind, certain steps may be adopted by a foreign exporter to mitigate the risks involved. This includes checking credit rating of banks, checking reputation of the local company in terms of promptness of making payments on time before entering into any form of legal relationship, carefully and critically reviewing all the requirements for the LC before moving forward with a deal, etc. Moreover, stipulation of relevant & stringent terms regarding consequences for non-payment into the Sales/Purchase Agreement between the parties may also be adopted by an investor to secure its own position.
In Bangladesh there are primarily two ways to resolve a dispute without seeking the assistance of a court, one being mediation and the other being arbitration. Alternative dispute resolutions have been gaining popularity in Bangladesh in the recent years due to the same consuming less time to settle disputes in contrast with courts, low costs and the flexibility and control these allow to parties to a dispute.
Mediation
In mediation, a neutral third party is appointed by the parties to a dispute who assist them in reaching a satisfactory settlement through effective dialogue and negotiation. Mediation is confidential in nature. Once a settlement is reached, the terms of the same is recorded in an agreement between the parties. If, however, the parties to a dispute are unable to reach a settlement, the parties may opt for litigation.
Arbitration
Arbitration has been one of the most preferred ADR modalities for amicably resolving disputes between parties. Arbitration allows the parties to submit their disputes to an independent and impartial arbitrator who decides the same and such decision becomes binding on the parties. Arbitration can be ‘institutional’ or ‘ad hoc’ and institutions like Bangladesh International Arbitration Centre (BIAC) and others chambers such as Bangladesh International Mediation Society (BIMS), Bangladesh Council for Arbitration (BCA) of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Bangladesh International Chamber of Commerce (ICC) in Bangladesh are engaged in offering institutional arbitration services as well.
In order to submit a dispute to arbitration, it is necessary that parties have a valid arbitration clause in the pre-existing legal instrument which binds them or they may have a separate arbitration agreement between them. With regard to the place, venue, language, procedural/evidentiary rules and number of arbitrators to be involved in the process of arbitration, the parties have the liberty to decide on the same. Appointment of arbitrators may be challenged by any party on the grounds of lack of impartiality, independence and so forth. An arbitral award made by the arbitral tribunal is final and binding on both the parties, although it can further be challenged in the appropriate court of law in limited cases e.g. if the proper procedure of arbitration is not followed. Arbitration brings about varying advantages to the parties such as reduced cost, time, omission of a technically obscure process, hurdles which are inevitably faced by people who commence litigation.
Enforcement of foreign arbitral award:
Section 45 of the Arbitration Act 2001 states that any foreign award which would be enforceable shall be treated as binding on the parties between whom it was made, and may accordingly be relied upon by those parties by way of defence, set-off or otherwise in any legal proceedings in Bangladesh. Please note that a foreign arbitral award shall, on the application being made to court by any party, be enforced by execution by the court under the Code of Civil Procedure 1908, in the same manner as if it were a decree (a decision) of the court under section 45(1)(b) of the Act. However, Section 46 of the Arbitration Act, 2001 also provides certain grounds for refusing recognition or execution of foreign arbitral award. In addition, under Section 48 of the Act, appeals shall lie to the Appellate Division of the Supreme Court of Bangladesh for court orders such as setting aside or refusing to set aside under Section 42(1), refuse to enforce the arbitral award under Section 44 and refusing to recognize or enforce any foreign arbitral award under Section 45 of the Act.
The courts in Bangladesh possess jurisdiction over matters only to the extent granted to them by the Constitution of Bangladesh or any other legislation. The Supreme Court of Bangladesh is bifurcated into two divisions, namely the Appellate Division and the High Court Division. It is the apex court of the country. The Appellate Division hears and determines appeals from judgments, decrees, orders or sentences of the High Court Division. Whereas, the High Court Division has original, appellate and other jurisdictions, powers and functions as are conferred by the Constitution and other laws of Bangladesh.
The District Judge Court/ Additional District Judge Court mainly has appellate jurisdiction, i.e. the initial cases are not mainly filed in these courts. However, The District Judge Court/ Additional District Judge Court’s pecuniary jurisdiction in relation to appeal is limited to suites where the total value of the suit does not exceed BDT 5,00,00,000. Anything beyond such value, falls under the appellate jurisdiction of the High Court Division. On the other hand, subordinate courts of District Judge Court/ Additional District Judge, as provided in the table below, have the original jurisdiction only.
The following table displays a brief of the pecuniary jurisdiction of the High Court’s subordinate civil courts in Bangladesh:
Essentially, the Court of Joint District Judge, Senior Assistant Judge and Assistant Judge are Courts of first instance with powers, functions and jurisdiction relating to subject matter, territory and pecuniary value determined by or under statutes. The remaining two are generally subordinate courts of Appeal in Civil matters. However, the Court of District Judge functions, to a limited extent, as a Court of first instance.
There are other specialized courts and tribunals which are established under the provisions of different statues. For instances, Labour Courts are established under the Bangladesh Labour Act 2006 and Environment Courts are established under the Environment Court Act, 2010.
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