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Term Paper Principles of Management Course- MKT 112 Business Legislation of Bangladesh Submitted to: Md.

Abdul Quddus Super-numerary professor Department of Marketing Faculty of Business Studies University of Dhaka Submitted by: Syed Ahmad Nafisul Abrar Roll- 06 Section- B Department of Marketing 19th Batch CONTENTS 1. Overview 2. The Legal system 3. The Enterprises 4. Foreign investment 5. Required Permits & Procedures 6. Taxation 7. Labor regulations 8. Intellectual Property 9. Different Business laws in Bangladesh Reference Business in Bangladesh by MGI solutions Doing business in Bangladesh: International Financial Corporation Wikipedia businesslawbd.wordpress.com/ Legal aspects of doing business in Bangladesh by A.B.M. Badrud Doulah

Overview Bangladesh is a combination of competitive market, business-friendly environment and cost structure that can give the best returns. Bangladesh offers a well-educated, highly adapti ve and industrious workforce with the lowest wages and salaries in the region. 57.30% of the popula tion is under 25, providing a youthful group for recruitment. The country has consistently develop ed a skilled workforce catering to investors needs. English is widely spoken, making communication easy . Bangladesh is strategically located next to India, China and ASEAN markets. Bangladesh has pro ved to be an attractive investment location with its 146.6 million population and consistent economic gr owth leading to strong and growing domestic demand. Energy prices in Bangladesh are the most competitiv e in the region. Bangladesh offers the most liberal FDI regime in South Asia, allowing 100% forei gn equity with unrestricted exit policy, easy remittance of royalty, and repatriation of profit s and incomes. Bangladesh offers export-oriented industrial enclaves with infrastructural facilities and l ogistical support for foreign investors. The Legal system

Bangladesh's highest legal forum is the Supreme Court, which is divided into hig h court and appellate divisions. The president appoints judges and the chief jus tice. Most of the commercials cases are initiated in the District Court Level. The basic law of Bangladesh is the constitution of the People's Republic of Bang ladesh, as amended from time to time; fifteen amendments have been made till dat e. All laws of the country are subordinate laws made by the elected Sangshad. Im portant laws of the country may be classified under some broad heads such as lan d and property laws, personal laws, commercial laws, labor and industrial laws, election laws, law of crimes, service laws, fiscal laws, press laws and laws rel ating to the remedies. All laws, rules or regulations made by the competent authority are applied in th e Courts and Tribunals. In addition, there are various other laws on different subjects regulating diffe rent fields and spheres of activities of national life. To seek remedy a person has to file a case before the appropriate court or to an Authority. Claims regarding money, property, compensation etc is to be filed before the civ il court Presided over by the assistant judge or subordinate judge according to value of the claim, and complaint against commission of crime is to be filed either with the local police station. English common law forms the basis of Bangladesh's legal system, which, since 19 71 has been updated in areas of company, banking and bankruptcy laws. As the cou ntry's capital, Dhaka is also its legal centre, and the vast majority of law fir ms are based here, except for a few small practices and branch offices in Chitta gong. The Enterprises According to types of Establishments the options for establishing a legal entity in Bangladesh may be classified into two classes as follows: The First option is to establish a new company, i.e. enterprise in Bangladesh The Second option is to setup a representing legal entity in Bangladesh register ed with Bangladesh Authority, for an enterprise that already stands established outside Bangladesh. Forming an Enterprise To form any type of enterprise the incorporation or registration is done by the Registrar of Joint Stock Companies and Firms, Dhaka. The promoters must register the Memorandum of Association with the Registrar of Joint Stock Companies and F irms in Bangladesh. The Memorandum of Association constitutes the basis for the existence of the company as a corporate body and determines the ambit of its pow er, inter alia. It is to be accompanied with the Articles of Association. In bri ef, the procedures may be outlined as follows: Selection of a Company Name and verifying its availability Preparation & Filing of Memorandum of Association (MOA) & Articles of Associatio n (AOA) Application for Registration. SOLE PROPRIETORSHIP Definition In the sole proprietorship, known alternatively as sole tradership, the propriet or is to take all risks. Some of the favorable characteristics of a sole proprietorship business are the ease of initiation, low cost of commencement, freedom in keeping liability to certain limits, right to control, ease of winding up, minimum legal restrictions, liberty in making quick decisions and the like. The sole trader bears unlimited liability. A sole trader-ship business has no legal identity other than that of its owner.

Most sole proprietors conduct small businesses such as retail shops that sell stationary, groceries, confectioneries, spare parts, and wholesale stores. . Sole trader-ships in Bangladesh are usually classified as small, medium and large depending on the size of capital employed. Principle Legislation All the laws related to an individual are applicable to a sole proprietorship. General Requirements to Start a Sole Proprietorship Business: Trade License from City Corporation/Municipality/Union Council (Local Government Bodies); Taxpayer s Identification Number (TIN) VAT Registration (in the cases where applicable) IRC (in the case of business related to import) ERC (in the case of business related to export) License/Permission from the authorities according to the nature of business/prof ession Bank Account Membership of Trade Body PARTNERSHIP FIRM Description Partnership Business a form of business organization created through voluntary a greements of minimum two and maximum 20 persons (the maximum is 10 in the case of banking bus iness), with the intention of making and sharing profits among themselves. A partnership can aris e only as a result of an agreement or contract, expressed or implied, between the partners. In Bangladesh , a partnership firm is to be formed under the provisions of the Partnership Act 1932. By definition, a partnership is illegal if it consists of more than 20 persons in case of a general business and more than 10 persons in case of business in banking. A non-profit making association is not a partnership in law of Bangladesh. In general, institutions or associations cannot be a member of a partnership. Principle Legislation The Partnership Act, 1932; General Requirements to Start a Partnership Business: The Partnership Deed; Minutes of Partners Meeting; Trade License from City Corporation/Municipality/Union Council (Local Government Bodies); Taxpayer s Identification Number (TIN) VAT Registration (in the cases where applicable) IRC (in the case of business related to import) ERC (in the case of business related to export) License/Permission from the authorities according to the nature of business/prof ession Bank Account LIMITED COMPANIES Description Limited company is a company in which the liability of the members or subscriber s of the company is limited to what they have invested or guaranteed to the company. Limited compani es may be limited by shares or by guarantee. Business in Bangladesh may be carried on by a company formed and incorporated lo cally or by a company incorporated abroad but registered in Bangladesh. The incorporation or r egistration is done by

the Registrar of Joint Stock Companies and Firms under the provisions of the Com pany's Act 1994. Companies could be classified in following categories: a. Company Limited by Shares i. Public Limited Company and ii. Private Limited Company b. Company Limited by Guarantees; c. Unlimited Company

Private Limited Company: Restricts the rights to transfer the shares; Limits the number of its members to minimum 2 and maximum 50 excluding the perso ns employed in the company; Prohibits any invitation to the public to subscribe for the shares or debentures of the company and Entitles to commence business from the date of its incorporation. Public Limited Company: May issue invitation to the members of the public to subscribe the shares and de bentures of the company through a prospectus which complies with the requirements of the Compani es' Act 1994, the Securities and Exchange Ordinance, 1969 and the Securities and Exchange Comm ission Act, 1993 as amended from time to time. Has minimum 7 members but there is no maximum limit. Has at least 3 Directors. May a private company converted into a public company. JOINT VENTURES Description Joint venture (JV) is a business agreement in which parties agrees to develop, f or a finite time, a new entity and new assets by contributing equity. They exercise control over the ent erprise and consequently share revenues, expenses and assets. There are other types of compa nies such as JV limited by guarantee, joint ventures limited by guarantee with partners holding shares. Principal Legislation The Companies Act, 1994; The Investment Board Act, 1989; The Foreign Investment Promotion and Protection Act, 1980 General Requirements to Set Up a Joint Venture: Joint venture agreement Application Form Trade License Limited Company Certificate of Incorporation Memorandum and Articles of Association Name and address of other shareholder/director(s) of the project Additional documents for projects in certain sectors Copy of rental agreement or lease deed for premises or land purchase document TIN Certificate Registration Fee (Bank Draft) 4. Foreign Investment All foreign investments in Bangladesh must be at first permitted by the Board of

Investment. The Board of Investment (BOI) was established by the Investment Boa rd Act of 1989 to promote and facilitate investment in the private sector both f rom domestic and overseas sources with a view to contribute to the socio-economi c development of Bangladesh. It is headed by the Prime Minister and is a part of the Prime Minister's Office. Major Functions of BOI include: Providing necessary facilities and assistance in the establishment of industries . Implementing investment related GOB policies. Preparing investment schedule. Registering private sector industrial projects; and identifying competitive investment sectors and facilitating investment by provid ing information and services. The foreign investment options in Bangladesh are as follows: A. Joint venture/100% foreign investment proposals in the private sector No prior approval or no objection certificate is required for setting up of a jo int venture / 100% foreign direct investment. To avail of facilities and the ins titutional support services provided by the govt. entrepreneur/investors are adv ised to apply for registration to BOI in a simple prescribed form. B. Self financed local investment proposals including industries sanctioned/ fin anced by financial institutions or commercial banks. The entrepreneurs of such projects are to fill up a simple prescribed applicatio n form and submit to BOI for registration. After a first hand scrutiny of the in formation, BOI issues registration letter. C.Permission for setting up joint venture industrial units with the public secto r corporations Any individual entrepreneur either local or foreign can set up an industry with public sector corporation. Such joint venture is required to be r egistered with the BOI if the private sectors contribution is more than 50% of t he project cost and in such case it is treated as private sector project. For an y public sector which makes contribution out of their own fund needs approval of the concerned ministry. If the contribution of the corporation is 50% or above, it is treated as a public sector project. The public sector project is processe d by the concerned ministry for approval of the Planning Commission. 5. Required Permits & Procedures A. Registration with Factories Act: Any manufacturing company employing ten or more workers is required to be regist ered under the Factories Act, 1965 with the office of the Chief Inspector of Fac tories and Establishment. The act is primarily to regulate working conditions an d to ensure safety in the factory.

Obtaining Work Permit : Work permit for foreign nationals is a pre-requisite for employment in Banglades h. Private sector industrial enterprises desiring to employ foreign nationals ar e required to apply in advance in the prescribed from of BOI. For expatriate emp loyment the guidelines are as follows: 1. National of the countries recognized by Bangladesh are considered for employm ent. 2. Employment of expatriate personnel be considered only in industrial establish ments which are sanctioned / registered by the appropriate authority. 3. Employment of foreign nationals is normally considered for the job for which local experts / technicians are not available and persons below 18 years of age are not eligible for employment. 4. Decision of the Board of Directors of the concerned company for new employmen t/ extension is to be furnished. 5. Number of foreign employees should not exceed 5% of the total employees inclu ding top management personnel.

6. Initially employment of any foreign national is considered for a term of 2 ye ars which may be extended on the basis of merit of the case. Environmental Legislation : Under the Environment Conservation Act 1995, all industrial project shall obtain environmental clearance from the Department of Environment. The main criteria f or obtaining clearance are set out in the Environment Conservation Rules 1997. Taxation Tax rate on income of all other companies including banks, financial institution s, insurance companies and local authorities is 40%. Capital gain tax deals with computation of income from capital gains. In the cas e of non-residents, capital gains arising from transfer of shares and debentures are computed in the original currency of acquisition so as to insure that no ta x is payable merely due to reduction in the value of the Bangladesh Taka Value Added Tax (VAT), previously known as sales tax, is a single point sales ta x at different rates fixed by the government and is levied on almost all goods i mported into Bangladesh or produced or manufactured in Bangladesh. Lately it has been also extended to various professions too. Bangladesh offers an abundant supply of disciplined, easyly trainable and low-co st work force suitable for any labor-intensive industry. Of late, there is an in creasing supply of professionals, technologists and other middle and low level s killed workers. They receive technical training from universities, college, tech nical training centers, polytechnic institutions etc. Labor Regulations Bangladesh offers an abundant supply of disciplined, easyly trainable and low-co st work force suitable for any labor-intensive industry. Of late, there is an in creasing supply of professionals, technologists and other middle and low level s killed workers. They receive technical training from universities, college, tech nical training centers, polytechnic institutions etc. A. Employment Conditions: The minimum age for workers in Bangladesh is 16 years in factories and establish ments. Contracts are made in the form of a letter of offer. Workers may also be engaged on verbal agreements. B. Labor Laws: In Bangladesh 47 labor laws are now in operation. These relate to (a) wages and employment, (b) trade union & industrial disputes, (c) working environment and ( d) labor administration and related matters. The main labor laws are: Workmen's Compensation Act, 1923, Payment of Wages Act, 1936 Maternity Benefit Act, 1936 Employment of Labor (Standing Orders) Act, 1965 Shops & Establishments Act, 1965 Factories Act, 1965 Industrial Relations Ordinance, 1969 D. Wages and Fringe Benefits: In the public sector, wages and fringe benefits of the workers are determined by the government on the recommendation of the National Wages Commission establish ed from time to time. In the private sector, the wages & fringes benefits of the workers and employees are determined through collective bargaining process. Sometimes private industr ies follow the public sector wages & salary structure for their workers and empl oyees respectively. E. Leave & Holidays: Leave & holidays of the workers & employees are regulated by the Factories Act, 1965 and shops Establishment Act, 1965. H. Working Hours: Workers in the public or private sector remain at their job for eight and a half hours daily (including half an hour for meal or rest) with Friday as weekly hol

iday marking 48 working hours a week. Intellectual Property In Bangladesh Intellectual Property laws comprise Trade Mark, Patent, Copyright, and Design. The protection of intellectual property is very much significant fo r doing business in Bangladesh or for technology transfer and use of Trade Marks , Patents and Copyright in Bangladesh Trade Marks In Bangladesh the law relating to Trade mark is Trade Marks Act, 1940 which conf er protection to the user of Trade Mark on his goods and to prescribe conditions for acquisition of trade mark. Brand, heading, label, ticket, name, signature, word, letter or numeral separately or in any combination thereof may be register ed as a Trade Mark in Bangladesh. Patent & Designs Patent right is a form of industrial property. The owner can sell the whole or p art of his property. These rights could be licensed for commercial purposes. Pat ent Law is governed by the Patents & Designs Act, 1911. An application for paten t for invention can be made by any person claiming to be the true and first inve ntor; any person being the assignee of the person claiming to be the true and fi rst inventor in respect of the right to make such application. Copyrights The Copyright Act, 2000 confers on the owner of the Copyright exclusive right to multiply copies of his work for commercial exploitation. It also grants the neg ative right to refrain others from illegally multiplying the copies of his work. The Copyright protection exists in published as well as, unpublished works. The works in which copyright subsists are literary, dramatic, musical, artistic, ci nematography film, records and computer programmes