Foreign investors

Who are Foreign Investors?

• Any foreigners residing in Bangladesh or abroad willing to invest in Bangladesh Capital Markets are considered Foreign Investors.
• Bangladesh provides a very friendly and open investment atmosphere for foreign investors.
• No Capital Gains Tax on individuals.
• A long-established legislative and legal framework protects foreign investment in Bangladesh.

How to start

• Open a NITA Account with an AD (Authorized Dealer) of the foreign currency department of any financial institution, or through a custodian.
• Select a Custodian in Bangladesh (HSBC, Standard Chartered, Dhaka Bank, Southeast Bank, AB Bank, or Citi NA).
• Open a BO account through the custodian.
• Open a Trading Account with your preferred broker (optional — the custodian can provide the service through the cash account/NITA on behalf of the investor).
• Start trading.

What is a NITA Account?

• The Non-resident Investment Taka Account (NITA) is an account for channeling foreign currency in, as well as repatriation of earnings from investment.
• All earnings from investments (e.g. cash dividends) are credited to the NITA account.
• An audited statement certifying that all proper taxes are withheld from earnings (usually handled by the custodian) is used for fund repatriation.

Common services provided by local Custodians

• Account services
• Trade settlement services
• Registration services
• Safe-keeping services
• Corporate Action services
• Foreign Exchange services
• Cash management services
• Market expertise
• Escrow services

Trading (Custodian ↔ Broker)

• The custodian usually receives orders via SWIFT or another acceptable standard and carries out share and monetary transactions with the local broker.
• DVP (Delivery versus Payment): delivers shares from the FI's BO to the broker's BO upon receiving payment — applicable for sale orders.
• RVP (Receive versus Payment): receives shares to the FI's BO and makes payment — applicable for buy orders.

What is a BO account?

• BO stands for Beneficiary Owners account. It holds shares purchased or credited due to corporate declarations.

Requirements — Individuals

• Attested photographs
• Bank statements
• Copy of pay slip or tax return (optional, as part of KYC)
• Copy of employment certificate or trade license
• Copy of passport
• Nominee photographs and details
• Other relevant forms

Requirements — Institutional

• Memorandum & Articles of Association
• Certificate of incorporation
• Board resolution permitting investment/trade in Bangladesh
• Custodian details
• Board resolution naming authorized persons with identification and specimen signatures

Tax Rates

• No Capital Gains Tax on individuals (subject to the condition that the assessee is entitled to a similar exemption in their country of residence).
• Income tax is 25% for individuals.
• 25% tax at source is deducted by the issuer on cash dividends.

Custodian Banks in Bangladesh

Full contact details are available in the DSE foreign investor guide.

• HSBC
• Standard Chartered Bank
• Dhaka Bank
• Southeast Bank
• AB Bank (Arab Bangladesh Bank)
• BRAC Bank
• Citi N.A.
• Agrani Bank

Source: Dhaka Stock Exchange — Foreign Investor Guide.