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Exit Options for Foreign Investors in Bangladesh

Table of Contents

Foreign investors planning to cease operations or divest from their business ventures in Bangladesh must navigate specific legal and regulatory procedures. The appropriate exit strategy depends largely on the initial structure established (e.g., incorporated company vs. unincorporated office) and the specific circumstances surrounding the exit.

Understanding these pathways is crucial for ensuring compliance, managing liabilities, and facilitating the potential repatriation of funds.

Primary Exit Routes for Foreign Investors:
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Winding Up a Locally Incorporated Company:
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  • This involves the formal dissolution and liquidation process for a private or public limited company registered under the Companies Act, 1994.
  • It typically follows a Members’ Voluntary Winding Up procedure if the company is solvent.
  • Requires appointing a liquidator, settling all debts, obtaining tax clearance from the National Board of Revenue (NBR), filing final documents with the Registrar of Joint Stock Companies and Firms (RJSC), and potentially seeking Bangladesh Bank approval for repatriating surplus funds to foreign shareholders.

Learn more: Winding Up a Company in Bangladesh

Selling/Transferring Shares in a Company:
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  • This is a common exit method where foreign shareholders sell their ownership stake (shares) in a Bangladeshi company to another party (local or foreign).
  • The process is governed by the Companies Act, 1994, the company’s Articles of Association, and foreign exchange regulations managed by the Bangladesh Bank.
  • Key steps include executing a Share Purchase Agreement, paying applicable Stamp Duty on the Instrument of Transfer, and crucially, pre-paying any Capital Gains Tax (CGT) due under the Income Tax Act, 2023 before the transfer can be registered by the company/RJSC.
  • Repatriation of sale proceeds by the foreign seller requires specific documentation and approval via an Authorised Dealer (AD) Bank, including proof of CGT payment.

Learn more: Transferring Shares in a Bangladeshi Company

Closing a Liaison Office (LO), Branch Office (BO), or Project Office (PO):
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  • These unincorporated offices follow a distinct closure process overseen primarily by the Bangladesh Investment Development Authority (BIDA), as they are extensions of the foreign parent company.
  • The procedure involves obtaining a parent company board resolution, publishing newspaper notices, settling all liabilities (employees, creditors, etc.), securing tax clearance and Business Identification Number (BIN) cancellation from the NBR, applying to BIDA for a closure order, notifying RJSC, closing bank accounts, and obtaining Bangladesh Bank approval for repatriating any unspent funds originally remitted.

Learn more: Closing Down a Liaison, Branch or Project Office

Choosing and executing the correct exit strategy requires careful planning and adherence to regulatory requirements.

Key Contact

For assistance with navigating the legal requirements for exiting a business or investment in Bangladesh, please reach out to: