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How to Setup Fisheries Business in Bangladesh

Fish is one of the imperative sources of protein for people all over the world irrespective of their economic ability. According to the Food and Agriculture Organization of the United Nations, Marine and inland fisheries is a source of income to around 820 million people around the world. Due to geographical position and other resources, Bangladesh has become one of the world’s top producers of farmed fish. As stated by the Department of Fisheries, Bangladesh “Fisheries sector contributed 3.57% to national GDP and 25.30% to the agricultural GDP and 1.5% to foreign exchange earnings by exporting fish and fish products in 2017-18”.
How to Setup Fisheries Business in Bangladesh

Fish and fisheries are an important part of Bangladesh's cultural heritage and economy. The sector is prominent in the country as it provides an essential source of earning foreign exchange, creates employment opportunities and enhances the country’s economic growth. 

Bangladesh is considered to be one of the most suitable zone for fisheries in the world, with the largest flooded wetland in the world and the third highest marine biodiversity among Asian Countries according to a report of Food and Agriculture Organization (FAO). Availability of cheap labor, resources and growing demand has made fishery as one of the profitable sector for business.

There are several laws and regulations to monitor the fishery business in Bangladesh. Among them, The Tanks Improvement Act 1939, Protection and Conservation of Fish Act 1950, Fish and Fish Products (inspection and quality control) Ordinance 1983, Fish and Fish Products (inspection and quality control) Rules 1997, Reservoir Protection Act 2000, Fish Feed and Animal Feed Act 2010, Fish Feed Rules 2011, Fish Hatchery Act 2010, Fish Hatchery Rules 2011 and Fisheries Quarantine Act 2018 play the vital role in this sector. In addition, The Marine Fisheries Ordinance 1983 also contains relevant provisions for the management, conservation and development of marine fisheries of Bangladesh. Besides these laws there are some other policies in this regards such as Fishery Policy 1918, Jal-Mahal Management Policy 2009, National Shrimp Policy 2014, Establishment of Fishery in Bhavadeh Area Policy 2019, Export Policy 2018-2021.

The Department of Fisheries (DoF) is the central agency with administrative power over aquaculture in Bangladesh, under the Ministry of Fisheries and Livestock. This department is directed by the Director General and has two major sub-departments, inland and maritime. It focuses on both regulatory and development works by preparing of schemes and the coordination of national policy in respect of fisheries, the prevention of fish disease, the conservation, management and development of fisheries resources, the management of fish farms and training. The activities of this department are supported by the Bangladesh Fisheries Research Institute (BFRI), which is responsible for conducting research on fishery; it also provides required training to entrepreneur and interested person in fishery sector. Moreover, the Bangladesh Fisheries Development Corporation (BFDC) supports DoF in developing the fishing industry. Functions of BFDC include, Establishment of fishing units for the collection, processing, distribution and sale of fish and fishery products.

License and Registration process:

In Bangladesh, fishery business can be operated through one of the following formats:

I. Sole Proprietorship;

II. Partnership;

III. Company.

I. Sole Proprietorship:

A sole trader or proprietorship refers to un-incorporated form of business with one shareholder paying personal income tax on profits received from the business. It is the simplest form of business structure, which is suitable only for small type of business, confined to a particular local area. This type of business is not available to foreign investors looking to start business in Bangladesh.

The following steps needs to follow to form Sole Proprietorship Business:

1. Firstly, a name for the business has to be chosen.

2. Secondly, take rent or lease a commercial space for operating the business.

3. Submit the filled up Trade License Application Form, to the respective local governmental authority (i.e. City Corporation/Municipal Corporation/Union Parishad).

4. Pay the governmental fees.

5. Obtain the License.

Required Documents for forming Sole Proprietorship Business:

a) Copy of Rent/Lease Agreement.

b) National ID copy for the owner.

c) Passport size photograph of the owner.

d) Receipt of payment of the governmental fees.

II. Partnership:

Two or more individuals share the ownership in a partnership firm. In this form of business, Partners will have a formal arrangement that sets out different rules regarding the partnership business. It is quite popular process to embark a business with couple of shareholder in a limited range. However, every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner of the firm, even if the wrongful act or omission has been committed by another partner in the ordinary course of the business of the firm. 

The following steps needs to follow to form Partnership Business:

1. Firstly, a name clearance needs to be taken from the company house of Bangladesh. 

2. Secondly, take rent or lease a commercial space for operating the business.

3. Drafting a Partnership Agreement with all required terms and conditions.

4. Fill the Application Form I.

5. Submit Form I, along with supporting documents to the Registrar Office.

6. Pay the governmental fees.

7. Obtain the Registration Certificate.

Required Documents for forming Partnership Business:

a) Name Clearance of the Partnership Business.

b) Completely Filled in Application Form I.

c) Duly notarized Partnership agreement.

d) Personal Information’s of the Partners of the business.

e) Residential address of the Partners.

f) Percentage of the share of profit of each partner in the business.

g) Copy of Rent/Lease Agreement against registered address for the partnership business.

h) National ID copy of the partners.

i) Passport size photograph of the partners.

j) Receipt of payment of the governmental fees.

III. Company:

A Company duly registered in Bangladesh may engage in any business activities as per the Object Clause of the Company, set out in the Memorandum of Association of the Company. In Bangladesh, a company can be either public or private. To form a public company minimum seven shareholders shall be required. On the other hand minimum two shareholders are necessary to incorporate a private company. Private company cannot any issue invitation to the public to subscribe for its shares, while, public company can offer general public to acquire its shares. In practice, private company is the most popular form of company to foreign and local entrepreneurs. For foreign direct investment, there is no limitation pertaining to foreign equity participation, i.e. 100 percent foreign equity is allowed. Foreign investment enjoys full protection and security in Bangladesh, like other Locally Invested Companies. The laws of Bangladesh guarantees non-discriminatory treatment between foreign and local investment, and repatriation of proceeds from sales of shares and profit.

The following steps needs to follow to form Company:

1. A Name Clearance for the proposed Company needs to be obtained from Registrar of Joint Stock and Companies. 

2. Drafting and signing the following:

Memorandum and Articles of Association of the company;

Form I: Declaration On Registration Of Company;

Form VI: Notice Of Situation Of Registered Office;

Form IX: Consent of director to act;

Form X: List of Personal Consenting to be Directors;

Form XII: Particulars of the directors, manager and managing agents.


3. Opening a temporary bank account for the Proposed Company in any scheduled Bank in Bangladesh.

4. Remit the paid up capital amount from the account of each foreign shareholders to the Bank Account of the Proposed Company in Bangladesh.

5. Obtain encashment certificate for each foreign transactions from the Bank of the Proposed Company.

6. Submit all the required to the Company House. 

7. Pay the Govt Fees for the registration.

8. Obtain the registration certificate from the Company House.

Required Documents for forming a Company:

a) Copy of Valid Name Clearance for the proposed company;

b) Executed copy of Memorandum and Articles of Association of the Company.

c) Executed copy of Form I: Declaration On Registration Of Company;

d) Executed copy of Form VI: Notice Of Situation Of Registered Office;

e) Executed copy of Form IX: Consent of director to act;

f) Executed copy of Form X: List of Personal Consenting to be Directors;

g) Executed copy of Form XII: Particulars of the directors, manager and managing agents;

h) Copies of National ID of shareholders and directors (for Bangladeshi Nationals);

i) Copies of TIN Certificate of shareholders and directors (for Bangladeshi Nationals);

j) Copies of passport of shareholders and directors (for Foreign Nationals);

k) Passport size photos of shareholders and directors;

l) Bank Encashment Certificate with respect to each foreign shareholder;

m) Receipt of payment of the governmental fees.


After setting up the respective format of business to initiate the fishery business, some additional license or permissions may be required, depending on the expansion/scope of the business. Apart from setting up the above respective format a 100% foreign owned company can also register as Branch Office to initiate fishery business. Though, Branch office can only perform the function envisaged by the parent company by taking prior approval from Bangladesh Investment Development Authority. 

Further, it should be noted in Bangladesh, there are plenty of tanks, ponds, reservoirs available, the interested party can take lease the desired tanks, ponds, reservoirs thorough entering a lease agreement with the owner.

Additional Licenses

The additional license required for each format of business has been listed below:

Sole Proprietorship

Partnership

Company

1.              Personal TIN Certificate for the proprietor;

2.              Import Registration Certificate (applicable for Import Business)

3.              Export Registration Certificate (applicable for Export Business)

4.              Warehouse setup license (applicable for fish storing business)

5.              Supplier License (applicable for fish supplying business)

6.              Fish Exporter Permit (applicable for exporting fish)

7.              License for Conducting and Setting up Hatchery

 

1.              Trade License

2.              TIN Certificate

3.              VAT Registration Certificate;

4.     Membership Certificate;

5.              Import Registration Certificate (applicable for Import Business)

6.              Export Registration Certificate (applicable for Export Business)

7.              Fish Processing Factory License (applicable for fish processing business)

8.              Warehouse setup license (applicable for fish storing business)

9.              Supplier License (applicable for fish supplying business)

10.           Ice factory License (applicable for setting up ice factory)

11.           Fish Exporter Permit (applicable for exporting fish)

12.           License for Conducting and Setting up Hatchery

13.           Environment Clearance Certificate

1.     Trade License

2.     TIN Certificate

3.     VAT Registration Certificate

4.     Membership Certificate;

5.     Import Registration Certificate (applicable for Import Business)

6.     Export Registration Certificate (applicable for Export Business)

7.     Fish Processing Factory License (applicable for fish processing business)

8.     Warehouse setup license (applicable for fish storing business)

9.     Supplier License (applicable for fish supplying business)

10.  Ice factory License (applicable for setting up ice factory)

11.  Fish Exporter Permit (applicable for exporting fish)

12.  License for Conducting and Setting up Hatchery

13.  Environment Clearance Certificate


The process to obtain the additional licenses has been specified below:

Trade License:
In order to start up a business in Bangladesh, the most important requirement is acquisition of a trade license. It is compulsory for every business entity to obtain Trade License from the respective local governmental authority. In order to obtain the Trade License an application enclosed with necessary documents needs to be submitted to the concerned local governmental authority (i.e. City Corporation/Municipal Corporation/Union Parishad).

TIN Certificate:
The Government of Bangladesh provides a TIN Certificate, to individual or company to track tax payments. The National Board of Revenue (NBR) is the sole authority to provide TIN Certificate. In order to obtain the TIN Certificate an online application needs to be submitted to the NBR.

VAT Certificate:
Every Business in order to operate is required to have a Business Identification Number (BIN). A BIN can be obtained by VAT registration process to the National Board of Revenue. Every business entity must obtain a VAT registration certificate. In order to obtain the VAT Certificate an online application along with necessary documents needs to be submitted to the NBR.

Membership Certificate:
After setting up the respective business, the entrepreneur needs to be a member of a local Chamber of Commerce and Industry or relevant Trade Association. The application form to be a member is available at the office of the concerned Chamber of Commerce or Trade Association.

Import Registration Certificate and Export Registration Certificate:
An importer having Import Registration Certificate (IRC) and an Exporter having Export Registration Certificate (ERC) can Import & Export any permissible item without any value and quantity restrictions and without obtaining any permission from any authority. The Office of the Chief Controller of Imports and Exports (CCI&E) issues Import Registration Certificate and Export Registration Certificate to the desired applicant. In order to obtain the IRC or ERC an online application along with necessary documents needs to be submitted to the CCI&E.

Fish Processing Factory License / Warehouse setup license / Supplier License / Ice factory License / Fish Exporter Permit.

The licenses for Fish Processing Factory License / Warehouse setup license / Supplier License / Ice factory License / Fish Exporter Permit are provided by the Department of Fisheries. In order to obtain the required license an application along with necessary documents needs to be submitted to the Deputy Director of the Fish Inspection and Quality Control under Department of Fisheries.

License for Conducting and Setting up Hatchery
"Hatchery" is known to be, a facility where fish fry and fingerlings suitable for stocking in growing ponds are artificially developed through the method of induced breeding method. In order to establish Hatchery, an application needs to be submitted to the concerned District Fisheries Officer under the Department of Fisheries along with necessary documents. 

Environment Clearance Certificate

Environment Clearance Certificate (ECC) is one of the vital approvals in order to initiate an industrial unit or project in Bangladesh. In order to obtain such Certificate, the concerned entrepreneur of the industrial unit or project need to make an application to the Department of Environment along with the necessary documents. 


Legal Issues:

Foreign Investment Law:
Foreign entities or individuals who are considering investing in Bangladesh can get generous opportunities for investment under its liberalized Industrial Policy and export-oriented, private sector-led growth strategy. All sectors are open for private investment in Bangladesh except for some restricted sectors. Fishery sector is open to 100% foreign investment. The aim of the government is to serve as a facilitator to help create an enabling environment for the expansion of private investment, both domestic and international. The policy framework for foreign investment in Bangladesh is based on 'The Foreign Private Investment (Promotion & Protection) Act 1980, which ensures legal security for foreign investment in Bangladesh against nationalization and expropriation. This also ensures non-discriminatory treatment between international and local investment and the repatriation of proceeds from the selling of shares and income.

Apart from the above Act, the following Acts also deals with the foreign investment: Foreign Exchange Regulations Act 1947, The Bangladesh Export Processing Zones Authority Act 1980, Bangladesh Private Export Processing Zone Act 1996, Bangladesh Economic Zone Act 2010, and Bangladesh Investment Development Authority Act 2016.

Employment Law: The employment law in Bangladesh is mainly governed by the Labour Act, 2006. Apart from this Statute there are other rules and regulations in regards to this issue, the Labour Rules 2015, National Labour Policy 2012, Bangladesh Labour Welfare Foundation Act 2006, Bangladesh Labour Welfare Foundation Rules 2010, National Occupational Health and Safety Policy 2013, Domestic Workers Protection and Welfare Policy 2015 and National Child Labour Elimination Policy 2010. The Labour Act of 2006 deals with employment of labour, relation between employers and employees, payment of wages and compensation for injuries to workers, leaves, benefits, formation of trade unions, settlement of industrial disputes, welfare, health, safety and working condition in the establishment etc. Maternity benefits are also provided for a female employee.

Contract Law: Contractual agreement is the heart of the commercial world. It sets out the duties and responsibilities between the parties relating to the subject matter of the contract. A contract binds both parties of its all agreed and stipulated clauses, for example, what would be the party’s liability in the event of committing breach of contract and how far shall it cover the losses of the opposite party. It is advisable that, to take highest care during stipulating the terms and conditions of the contract so that it expresses the real intention of the parties. Every contract in Bangladesh is governed by the Contract Act, 1872. 

A force majeure event means an unusual occurrence or situation beyond the control of the contracting parties, such as an act of God, war or a natural calamity. An effective application of the force majeure clause usually relieves the parties of their respective contractual obligations and/or liability. A force majeure provision does not completely justify the non-performance of a faction, but only suspends it for certain period. In Bangladesh, the Contract Act 1872, contains the doctrine of frustration, which is provided in Section 56 of the Act of 1872. As per this doctrine, a contract becomes void when it becomes impossible to perform due to occurrence of an event, it becomes unlawful after it was entered into.

Compliances of the business entities- The entities are required to comply with the annual filing requirements, such has updating trade license at the respective city corporation, renewal of chamber membership, renewal of IRC & ERC, filing taxes, updating the annual filings at the RJSC, reporting to Bangladesh Bank, NBR etc.

Property Law: In order to complete the registration of the lease or purchase of the land, the laws in regards to property shall also be applicable. The key statutes in these areas are Land Reform Act 2014, East Bengal Tenancy Rules 1954, The Survey Act 1875, The Non-Agricultural Tenancy Act 1949, Registration Act 1908, and Transfer of Property Act 1882.

Introduction of FM Associates and Its services

FM Associates (FMA), is a full-service corporate law firms, which aims to offer a comprehensive range of services to the clients rather than focusing on just one specific area of law. It is one of the largest and well reputed law firms in Bangladesh offering clients, legal advice that meets needs and expectations of both domestic and International clients. FMA provides all range of services related to Company Incorporating, Sole Proprietorship business, Partnership Business, Foreign Company Registration etc. FMA has legal experts who can assure smooth legal process and assist in obtaining Certificates or License needed for setting up the business including VAT Certificate, IRC/ERC, TIN, Trade License and other necessary licenses.

In Order to set up Fisheries Business, the services FMA can provide are as follows:

FMA has an excellent and competent team who can proceed in setting up fisheries business smoothly and efficiently. The legal advisors of FMA can assist the clients through consultations and meetings and provide them guidelines on required type of business incorporation. 

In order to incorporate any type of business, several deed, agreements and documents are required to be drafted. FMA legal team can assist the clients in preparing and drafting those documents.

In order to establish a Fish Hatchery or a business entity it is essential to select a suitable land first. FMA can provide service to the client by searching for a preferable location for business establishment for the client. Moreover, FMA can assist in drafting lease agreement, Land vetting from respective land registry office, assisting for registering the lease or transfer of ownership documents etc.

FMA can also assist in making necessary payments of Government fees to the concerned authority, such as BIDA or RJSC and liaise with them to obtain relevant documents for business incorporation. FMA, legal experts have good working relation with government offices, which makes it easier to obtain any certificate/license.

FMA also provides services of obtaining or renewing any type of License, for conducting fisheries business, several licenses are required to be obtained. FMA legal team can assist in getting those licenses and if necessary, renew them at the right time.

FMA provides services related to labour matters, such as drafting of employment agreements, solving labour related disputes, providing legal opinion on labour law etc to the clients 


COVID-19 impact on Business
The coronavirus (Covid-19) has caused havoc all over the world and lockdown policy has resulted in border closures, travel bans, restaurant closures, community quarantines, supply chains and trade disturbances that have greatly impacted agricultural production, food supply and demand in Bangladesh. Covid-19 have also affected fish industries of Bangladesh due to restriction of export, import, temporary shutdown of production, restrictions of free movement, shortage of seasonal workers, higher controls on cargo vessels which is aimed at avoiding the further spread of the virus. All These barriers ultimately affect market price of fish and thus affecting the economy. 

However, the Government of Bangladesh has taken numerous initiatives in order to tackle the situation. The Fisheries and Livestock Ministry through a press notice ref no. 2020/4/19-1, dated- 19.04.2020 notified that the Ministry is sending a proposal to the World Bank to ask for $100 million under its Livestock and Dairy Development Project as an emergency response fund for poultry and dairy sectors.

Through another press notice ref no. 2020/4/22-1, dated- 22.04.2020, The Ministry of Fisheries and Livestock has also given instructions to the Fisheries and Livestock Officers working at all district and upazilla level to take initiative for marketing fish, eggs, milk and poultry produced by the farmers and entrepreneurs.

Bangladesh Bank on 13.04.2020 published a ACD Circular no. 01 in regards to formulation of refinance scheme and management of policy for 5000 crore taka, for providing working capital in agriculture sector due to break-out of Novel Corona Virus. Under this scheme the entrepreneurs and farmers in fishery sectors shall get the facility to avail loan from the scheduled Banks of Bangladesh at maximum 4% interest rate.

Taxation
General rate of tax is 32.5% currently in the laws of Bangladesh. Nominal requirements for a limited company formed locally includes a number of reporting to be done to NBR, such as: Opening a TIN, Monthly Tax deduction statement, Half Yearly Withholding Tax statement, Yearly statement related to tax return submission of its employees, Yearly statement related to salary disbursed from company to its employees, Quarterly Advance tax deposition, Yearly Tax return submission, attending appeal/hearing session as required on behalf of the company, Monthly VAT return etc. FMA can advise and assist to satisfy all regulatory compliances to enable the company to run smooth and hassle free.  

Conclusion:
To encapsulate, the combination of export and buoyant domestic demand has improved the productivity and development of fishing activities. The fisheries sector in Bangladesh has been earning a notable amount of foreign exchange for the last decades However, the Bangladesh's fisheries industry has ample scope for development to strengthen the national economy. As an emerging sector fishery has an admirable prospect in Bangladesh, due to its geographical location, weather, and cheap workforce, available resources.  

Executive Summary
The fish industry is prominent in Bangladesh as it provides an essential source of earning foreign exchange creates employment opportunities and enhances the country’s economic growth. Total fish production of Bangladesh in 2016-17 was 41.34 lakh Metric Ton where aquaculture contributes 56.44% as per the report of Department of Fisheries. The contribution of fisheries to national GDP is 3.69 per cent and agricultural GDP is 23.12 per cent, making fisheries the second most important agricultural crop in Bangladesh.

The Department of Fisheries is the only agency with administrative power over aquaculture in Bangladesh under the Ministry of Fisheries and Livestock. This department is directed by the Director General and has two major sub-departments, inland and maritime. The main duties of the DOF include planning, expansion and training and development.

In order to proceed with fisheries business in Bangladesh, it is important to take permission from the concerned Department of Fisheries. To conduct fisheries business in Bangladesh, obtaining required license is also mandatory. A fisheries business could be done through sole proprietorship, company incorporation, and partnership. However, Except for conducting business as a proprietorship, the other forms of business, like partnership or Company, registration is compulsory prior to obtaining these licenses or certificates. The licenses requited in order to start fisheries business are, ERC, IRC, Trade License, VAT, License for cured fish plant, ice plant etc.

The employment law in Bangladesh Fisheries industry is governed by the labour Act, 2006 and the labour rules 2015. The Act of 2006 deals with employment of labour, relation between employers and employees, determination of minimum wages, payment of wages etc.

In Bangladesh development of Fisheries business can play a huge role in boosting up the overall economic condition of the country. In order to establish Fisheries business and industries, FMA legal team can provide various services related to business incorporation. FMA has an excellent and competent team who can proceed in setting up fisheries business in Bangladesh efficiently.

Recently the covid 19 outbreak has halted the development of fisheries business due to border closures, travel bans, restaurant closures, community quarantines, supply chains and trade disturbances etc. However, the Government of Bangladesh has taken some initiatives in order to mitigate the impact of the coronavirus on the country’s economy.

As an emerging sector fishery has an admirable prospect in Bangladesh, due to its geographical location, weather, and cheap workforce, available resources.  To make making fisheries business more profitable Concerned government departments, development partners, researchers and non-government organizations can play important role in advancement of the fisheries industries as well as mitigating covid 19 impact on the economy.