A Branch or Liaison office is a legal entity which consider as an extension of a foreign company but not a separate legal entity. Also this branch or liaison office is liable or can be held liable for all debts and liabilities. In general sense it can be says that branch or liaison office is options for foreign investors wishing to setup their presence in Bangladesh.

In order to open a branch or liaison office by the foreign investors the permission from BIDA must require. Firstly, the investors have to submit application along with required documents, which must be attested by the concerned Bangladesh Mission or the Embassy of the relevant nation in Bangladesh as well as the national business chamber and local business chambers. As per the guidelines published by BIDA primarily they will provide license for three years and after this period if these branches satisfies the authority then the license may extend for more two years.

Some required documents or Prescribed application form for BIDA approval is- memorandum of association and articles of association of the principal company, certificate of incorporation of the principal company, name and nationalities of the directors of the principal company, board resolution to open a branch office in Bangladesh, audited accounts of the last financial year, list of activities of the proposed office or representative office and others.

Some key facts about the liaison or representative offices in Bangladesh– these offices can perform very limited activities like maintain coordination between principal and local agents, exporters or personal contracts and others. Then they can also collect, compile analyze and disseminate business information related to its field of activities as mentioned in the approval letter.

Also some other facts are liaison office it have no jurisdiction or local source of income in Bangladesh. All setup includes any operational costs includes salaries and others have to borne by the parent company aboard.

Some key facts about the branch offices in Bangladesh– a branch office of a foreign company can engage in commercial activities but with the prior approval. Also apart from liaison office a branch office may have local source of income from the approved field of business activities in Bangladesh and with the prior approval of BIDA.

Approval- the approval to open branch or liaison office is for a period of three years but it can be extended or renewed.

In the following discussion has been made in general about the registration and approval, but in this article we will focus about the closing of branch or liaison or representative office.

Chapter 10 of the Guidelines for Foreign Exchange Transactions-2018 states that some authorized Dealers (ADs) are permitted to remit profits of branches of foreign firms and companies operating in Bangladesh.

Under this guideline mentions that henceforth all entities including branches of foreign firms and companies established in Bangladesh with permission from competent authorities for business or profit motive and operating are allowed to remit profits to their head offices abroad through their nominated AD’s without prior approval of Bangladesh Bank.

To remit such an application has to submit within thirty days of profit remittance along with relevant documents to Foreign Exchange Investment Department, Bangladesh Bank, Head Office, Dhaka. The relevant documents are as follows-

In terms of residual amount repatriation to the head office or company of that branch or liaison or representative offices recently BIDA has published a guideline, as per that-

At least two months before in two national newspapers a notice has to publish about the closing of such and the creditor may then come demand the amount, it is not fact whether the audit report mentions about any loan or not.

Secondly, if within two months no creditor found then the residual amount must keep in any scheduled bank. After the closing of branch or liaison or representative offices any creditor may contact to the bank to collect their credit and the bank with consent of the office may release the amount. It is to be mention that the name and details of the scheduled bank must state in the newspaper advertisement.

As per the Limitation Act, 1908 if no creditor found within three years of advertisement then the time to rescue the amount by creditor will expire and the amount shall transfer to government account.

It has to consider that after recovering all the amount of the creditors’ , the residual amount may transfer to head office or company of foreign state but subject to following the regulations of Foreign Exchange Regulation Act, 1947 and Guideline for Foreign Exchange Transactions, 2018.

Lastly, after following the above mention formalities it will take sixteen working days to close a branch or liaison or representative office subjects to approval of inter-ministerial committee.


FAQs


Q: What is BIDA?

A: BIDA stands for Bangladesh Investment Development Authority. It is the government agency responsible for promoting and facilitating investment in Bangladesh.

Q: What are branch offices, liaison offices, and representative offices?

A: Branch offices, liaison offices, and representative offices are types of business establishments set up by foreign companies or organizations in a host country to carry out specific activities related to their operations. These offices serve as extensions of the parent company and facilitate various functions such as marketing, business development, or coordination.

Q: What are the regulations regarding the closing of branch or liaison or representative offices as per BIDA?

A: The regulations regarding the closing of branch or liaison or representative offices in Bangladesh are governed by BIDA. The specific requirements and procedures for closing these offices may vary based on the applicable laws and regulations, and BIDA provides guidelines and assistance in this process.

Q: What are the common reasons for closing a branch or liaison or representative office?

A: There can be various reasons for closing a branch or liaison or representative office. Some common reasons include the completion of the intended purpose, strategic changes in business operations, financial considerations, market conditions, or changes in the regulatory environment.

Q: What are the steps involved in closing a branch or liaison or representative office as per BIDA regulations?

A: The exact steps involved in closing a branch or liaison or representative office will depend on the specific circumstances and the applicable regulations. However, some general steps may include notifying BIDA and other relevant government authorities, settling any outstanding liabilities, fulfilling reporting requirements, obtaining necessary approvals, and completing the necessary documentation for closure.

Q: Are there any specific timelines or notice periods to be followed for closing these offices?

A: The timelines and notice periods for closing branch or liaison or representative offices may be outlined in the applicable laws and regulations. It is advisable to consult with BIDA or seek legal advice to ensure compliance with the specific requirements and timelines.

Q: Are there any financial obligations or penalties associated with closing these offices?

A: Depending on the circumstances and the applicable regulations, there may be financial obligations or penalties associated with closing branch or liaison or representative offices. These obligations may include settling outstanding taxes, fees, or any other financial liabilities. It is important to consult with BIDA and other relevant authorities to understand and fulfill these obligations.

Q: Can a branch or liaison or representative office be transferred or converted into another type of business entity?

A: The possibility of transferring or converting a branch or liaison or representative office into another type of business entity will depend on the local laws and regulations governing such conversions. It is recommended to consult with BIDA and legal professionals familiar with the local regulations to explore the available options and procedures.

Q: What are the implications of non-compliance with the regulations for closing these offices?

A: Non-compliance with the regulations for closing branch or liaison or representative offices can lead to legal and administrative complications. This may include fines, penalties, or other enforcement actions by the relevant authorities. It is essential to adhere to the prescribed procedures and fulfill all obligations to avoid any potential negative consequences.

Q: Where can I find more information or guidance regarding the regulations for closing branch or liaison or representative offices as per BIDA?

A: For more detailed information and guidance on the regulations for closing branch or liaison or representative offices in Bangladesh, you can refer to the official website of Bangladesh Investment Development Authority (BIDA) or contact their office directly. They can provide the most up-to-date and accurate information related to the specific requirements and procedures.

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