Legal Framework for Foreign Equity
Sectoral Classification for Foreign Investment
Under the current regulatory landscape, sectors are categorized based on their sensitivity to national security and public interest. While most manufacturing and service sectors allow 100% Foreign Direct Investment (FDI), specific areas remain 'Reserved' or 'Restricted'.
| Category | Ownership Limit | Key Sectors | Governing Authority |
|---|---|---|---|
| Permitted Sectors | Up to 100% | Ready-made Garments (RMG), ICT, Pharmaceuticals, Power, Agro-processing | BIDA / BEZA / BEPZA |
| Restricted/Regulated | Joint Venture Required | Banking, Insurance, Telecommunications, Freight Forwarding | Bangladesh Bank / IDRA / BTRC |
| Reserved (Prohibited) | 0% (State Only) | Arms & Ammunition, Nuclear Energy, Forest Plantation, Security Printing | Ministry of Industries |
The Compliance Roadmap for 100% Foreign Entities
Establishing a 100% foreign-owned subsidiary requires a systematic approach to regulatory filings and capital repatriation setups.
Key Statutory Requirements
- Entity Formation: Registration as a Private Limited Company under the Companies Act 1994. Foreigners can be 100% shareholders and directors.
- Capital Remittance: Under Section 18B of the Foreign Exchange Regulation Act 1947, foreign entities must report inward remittances for share capital to Bangladesh Bank via an AD Bank.
- Taxation: Compliance with the Income Tax Act 2023 is mandatory, including obtaining a Tax Identification Number (TIN) and filing annual returns.
- Trade Licensing: Procurement of a Trade License from the respective City Corporation or Local Government body.
Consult Barrister Liton Asaduzzaman Sarkar
Navigating the negative list and securing BIDA approvals requires expert legal oversight. Ensure your investment is structured for maximum protection.
Schedule a Legal ConsultationFrequently Asked Questions
Can a foreign investor own 100% of a retail business in Bangladesh?
Yes, 100% foreign ownership is permitted in the retail sector under the National Industrial Policy 2022, provided the company is incorporated under the Companies Act 1994 and complies with BIDA registration requirements.
What are the 'Reserved Sectors' where foreign investment is prohibited?
According to the National Industrial Policy 2022, four sectors are reserved for the State: 1. Arms, ammunition, and other military equipment; 2. Nuclear energy; 3. Security printing and minting; 4. Forest plantation and mechanized extraction within the boundaries of reserved forests.
Is there a minimum capital requirement for 100% foreign-owned companies?
While the Companies Act 1994 does not specify a minimum, BIDA requires a minimum investment of USD 50,000 to facilitate investor visas and work permits for foreign employees.
◆ Related Statutory Guides & Practice Insights
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