Tuesday, June 17, 2008

Company Formation - Part III
June 17, 2008

(For an index of all of my Company Formation in Bangladesh blogs, click here: Forming a Company in Bangladesh)

Every day is a learning process. For the past few weeks I have been trying to figure out the investor visa process. I was told different things by different people. One person said that I had to apply for my investor visa from my home country, another said I could do it from Thailand, and a third person told me that I could do it from within Bangladesh. The requirements and time lines also varied depending on who I was talking to.

Today I met with another Director at the Bangladesh Board of Investment and I am choosing to believe what he tells me because he is saying things that I want to hear. I learned that there are two "sides" to the Board of Investment - the "commercial" side and the "industrial" side. I originally went to the director of the "commercial" side because I figured that a resort could not be categorized as "industrial". Apparently I was wrong though. "Commercial" is for people who are doing importing and exporting and who are setting up branches in Bangladesh. Their contact at the BOI is Director Jalul Hai. (The man I met with a few weeks ago.) "Industrial" is mainly for garment manufacturers, but apparently also encompasses the "industry" of tourism. That contact at the BOI is Director Mamood Hossain Alamgir, the man that I met with this afternoon.

I am quite glad to have moved over to the "industrial" side of the proverbial fence because I no longer have the $50,000 cash deposit requirement to apply for my investor visa. The fact that my project is going to be very large is sufficient enough. I also learned that I need to complete the Board of Investment Registration Form before I can do anything else and that in order to complete this form I need to have either purchased my land or have a lease for the land where my company will operate.

Since I no longer have to apply for my investor visa in the U.S. the time pressure is off a bit and I can wait to complete these processes until the land acquisition has gone through. The good news is that I did figure out how to create a bank account (albeit a non-operating bank account) before I get my work permit, etc... This allows my investors to deposit money into my company bank account now (something that I need in order to proceed with the land acquisition.)

I have revised my previous post on the topic - Company Formation Part II - to reflect the new things I learned about the company formation process. Items that are new or revised are marked as such in the blog entry.

Finally, a quick word on setting up corporate bank accounts in Bangladesh... Different people will tell you different things about what is possible in Bangladeshi banking, but it IS possible to set up a (non-operating) Taka company bank account in Bangladesh before you get your trade license and tax ID. (I just did it!) You will need a bit of patience and the following items, however. Each bank might be a little different, but here are the requirements for an HSBC account:
  • Completed account opening form (some parts of this require a stamp of your corporate seal, so be sure you have this first. See my blog entry How to Form a Company in Bangladesh - Part 2 for more information.)
  • Passport size photo for each signatory with signature on backside
  • Copy of passport for each signatory as proof of ID
  • Copy of Certificate of Incorporation
  • List of Directors with address in prescribed form (this should already be in your Articles of Association)
  • Memoradum and Articles of Association certified by the Bangladesh Joint Stock Registrar. (A copy of the certified articles is sufficient.)
  • Board Resolution mentioning permission to open account with your specific bank (in my case HSBC) which mentions who will have signing authority. This memorandum needs to have original signatures (no photocopies) and should be stamped with the corporate seal.
  • Copy of utility bill (gas/electric/telephone) to verify address
  • If any of the directors/ signatories are foreigners then a copy of the Work Permit from BOI (you can open a non-operating bank account without this)
  • Copy of Trade License (you can open a non-operating bank account without this)
  • Copy of Tax Identification Number Certificate (you can open a non-operating bank account without this)
After you submit these items to the bank you can get a non-operating bank account (unless you already have your trade license, TIN, and work permit, then you can get a fully operating account.) A non-operating account means that you can deposit money in the form of a wire transfer from outside, but you can't take money out. You also can't just walk up with cash and deposit it - the money must come from a documented source (like a wire transfer). After you obtain your trade license, TIN, and work permit you can submit those documents and they will make your account an operating account (so you can take money out and make cash deposits).

Also with a non-operating account, only company owners are allowed to deposit money into the account. So if you have a new investor you must first transfer the ownership to them and register the change with the Joint Stock Registrar. Then you have to submit copies of the changed articles of Memorandum and Association to the Bank. After they have accepted the changes then the new investor can deposit money...

I will keep you posted as I find out more about how to form a company in Bangladesh... In the meantime you can check out my previous blogs on the subject:

How to Form a Company in Bangladesh - Part 1
How to Form a Company in Bangladesh - Part 2


At Thursday, June 19, 2008 5:56:00 AM, Anonymous Amar said...

Seems like you went through plenty of obstacles. Anyways the BD govt is planning a National Tourism Authority this July, where tourism related investment will be streamlines under a single body. And good luck in your future endeavors.


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