Joint Venture Company in Bangladesh: Legal Framework and Structuring in 2026

Joint venture Bangladesh structuring: the 2026 legal framework

Every joint venture Bangladesh investors build is assembled from general law rather than from a single code. There is no Joint Ventures Act. A foreign-local venture is a stack of instruments: a company under the Companies Act 1994 or a contract governed by the Contract Act and the Partnership Act 1932, an investment registration under the Invest Bangladesh Act 2026, foreign exchange rules administered by Bangladesh Bank, the Competition Act 2012, the Income Tax Act 2023 and, where the state is a counterparty, procurement or public-private partnership law. Those layers must be aligned before the first taka is invested.

This guide compares the JV company with contractual, consortium and PPP structures, sets out the agreement terms that decide outcomes, and explains approvals, foreign exchange for a foreign partner, competition review and tax. Where TRW has published detailed analysis of a related subject, we link to it.

Summary: Most foreign-local ventures in Bangladesh use a private limited company owned by both partners, governed by articles of association and a shareholders' agreement that must say the same thing. Contractual and consortium ventures suit single projects and tenders but carry partnership-style joint and several liability. PPP projects must be run through a project company. Whatever the structure, the venture has to clear investment registration, sector licensing, Bangladesh Bank's foreign exchange rules, competition law and tax planning, and the exit route should be designed at the start.

Key point: Section 28(8) of the Invest Bangladesh Act 2026 prohibits a change in the ownership of a registered industrial project without the Authority's prior permission. A JV agreement that promises a quick buy-out, drag-along or deadlock sale must build that approval, and Bangladesh Bank's March 2026 valuation rules, into its timetable.

At a glance

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Table of Contents

How joint venture Bangladesh law works in 2026

A joint venture is an arrangement in which two or more parties pool capital, assets, know-how or market access for a shared business, sharing control and risk. Bangladeshi law does not define the term for general purposes. The legal consequences flow from the vehicle chosen, not the label: a profit-sharing contract called a joint venture may still be a partnership, and a JV company is an ordinary company under the Companies Act 1994.

The practical stack for a foreign-local venture has six layers. Corporate law decides governance and the relationship between shareholders.[1] Investment law decides registration and the incentives the project can claim.[3] The Foreign Private Investment (Promotion and Protection) Act 1980 gives the foreign partner statutory protection.[4] Bangladesh Bank's foreign exchange regime decides how money moves in and out.[5] Competition law polices both the formation of the venture and the restrictions the partners agree.[8] Tax law decides what the venture and its owners actually keep.

Why investors choose a joint venture in Bangladesh

Bangladesh permits wholly foreign-owned companies in most sectors, so a joint venture Bangladesh investors form is usually a commercial choice. The local partner brings land, licences, distribution and regulatory relationships; the foreign partner brings capital, technology, brand and export channels.

Where local participation is required

In some activities local participation is effectively mandatory. BIDA's investor guidance, still relevant under the 2026 framework, lists activities requiring local ownership, including freight and cargo forwarding agents, shipping agents, courier service agents, buying houses and indenting agents, advertising agents and for-profit educational institutions.[7] It states no single percentage, so check the permitted foreign stake with the licensing authority. Controlled sectors such as banking, insurance, power, telecommunications, aviation and seaports need a no objection certificate from the relevant ministry before investment registration, and often carry their own ownership limits.[7]

Choosing the structure: JV company or contractual JV

The first structuring decision is whether to form a company or cooperate under a contract. It turns on the duration of the business, the assets it will hold, the liability each partner can accept and any form a regulator requires.

The incorporated JV company

For a continuing business, the standard joint venture Bangladesh vehicle is a private limited company incorporated with the Registrar of Joint Stock Companies and Firms. The Companies Act 1994 defines a private company as one whose articles restrict the right to transfer shares, prohibit any invitation to the public to subscribe for its shares or debentures, and limit its members to fifty, excluding employees.[1] Transfer restrictions are therefore built into the vehicle, which can hold land, employ staff, borrow and obtain licences in its own name.

Limited liability is the main attraction, subject to guarantees given to lenders, and a partner can exit by selling shares rather than unpicking assets. The cost is formality: directors, meetings, registers, audited accounts and annual filings, covered in our guide to company law in Bangladesh. Note one trap: section 241 allows the court to wind up a private company whose membership falls below two, so a buy-out of one partner by the other needs planning.[1]

Contractual joint ventures and consortiums

A contractual JV leaves each partner a separate legal person, cooperating under an agreement. It suits a single construction contract, a tender or a technology collaboration, and is quicker to set up and unwind, but carries a risk parties often underestimate.

Under section 4 of the Partnership Act 1932, partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.[2] A contractual JV that shares profits and allows each party to act for the venture can meet that definition, whatever the agreement calls it. If it does, section 25 makes every partner liable, jointly with the others and also severally, for all acts of the firm done while it is a partner.[2] Section 69 also prevents an unregistered firm, or a partner of one, from suing to enforce contractual rights.[2]

Decide deliberately: either accept partnership treatment, register the firm and allocate liability through indemnities, or give each party a defined, separately paid scope. Our overview of commercial agreements in Bangladesh covers the contract-law background.

Consortiums in public procurement

In public tenders, JV bids are routine and tender documents typically require joint and several liability and a lead partner. The Public Procurement Rules 2025 replaced the 2008 Rules, and the Bangladesh Public Procurement Authority has identified compulsory inclusion of a local partner in a JV for international competitive tendering as one of the major amendments made by the Public Procurement (Amendment) Act 2026, gazetted on 10 April 2026.[14] Settle the consortium agreement before the bid, not after award. Our note on public procurement amendments in 2026 explains the wider changes.

PPP project companies

PPPs now fall under the Invest Bangladesh Act 2026. Section 41 requires the finally selected private partner to form a company limited by shares under company law, before or after the PPP agreement is signed, and vests the private partner's rights and obligations in that project company once the agreement is executed.[3] A material change to the project company's memorandum, articles or other governing documents needs the contracting authority's approval.[3] A sponsors' JV agreement therefore sits beneath a PPP agreement whose terms, under section 39, can cover risk allocation, security interests, governing law, arbitration and termination.[3] Our guide to PPP projects in Bangladesh covers procurement and concession terms.

The table below compares the main structures. On a phone, scroll it sideways.

Joint venture structuring with a foreign investor

Shareholdings, contributions and funding are hard to change later, because Bangladesh Bank looks back at how each share was paid for when the foreign partner exits.

Equity split and control

The equity split drives control. A majority partner controls ordinary resolutions and usually the board; a minority partner protects itself through reserved matters, board seats and a holding large enough to block a special resolution, which is needed to alter the articles.[1] A 50:50 venture gives each side a veto over everything, which is attractive in negotiation and dangerous in operation unless a deadlock mechanism is in place. Sector rules may also cap the foreign partner's stake, so the agreed split must be tested against the relevant licence conditions.[7]

Cash, machinery and technology contributions

Under Bangladesh Bank's foreign direct investment rules, shares can be issued to a non-resident without prior central bank permission against an inward remittance through the banking channel or against imported capital machinery, but only after the money has arrived or the machinery has cleared customs.[5] A foreign partner that wants to contribute equipment should therefore document it as a capital machinery import, with valuation and customs records, from the start.

Know-how, trademarks and software are not on that list, so the foreign partner usually subscribes cash and licenses its technology to the JV company separately. Outward remittances of royalty, franchise and technical fees above 6 per cent in any year need prior approval under BIDA's published guidance, and licence fees attract withholding tax.[7] [10] Negotiate the licence alongside the shareholders' agreement.

Funding beyond the initial equity

BIDA's guidance permits short-term working-capital loans from overseas parents or affiliates for foreign-owned manufacturers, subject to reporting, but requires prior approval for long-term foreign loans, which may not be used as working capital, and applies a debt-to-equity ratio of 70:30, or 80:20 for power generation.[7] The agreement should say who funds what, by equity or loan, and what happens if a partner will not contribute. Our analysis of equity or parent loan funding compares the two routes.

Sequencing the investment

The order of steps matters. A proposed company can open a temporary Non-Resident Taka Account with an authorised dealer bank to receive foreign equity and meet preliminary expenses before incorporation, without Bangladesh Bank's prior permission; if the venture is never formed, the balance can be remitted abroad.[5] After shares are issued and RJSC formalities are complete, the authorised dealer must report the issue to the Foreign Exchange Investment Department within 14 days.[5] Each step creates the paper trail the foreign partner will need for dividends and exit.

The JV agreement: terms that decide outcomes

The JV agreement, called a shareholders' agreement where the venture is a company, holds the bargain. A few provisions decide whether a joint venture Bangladesh partners sign survives its first serious disagreement.

Shareholders' agreement and articles of association

Section 22 of the Companies Act provides that, once registered, the memorandum and articles bind the company and its members as if each member had signed them.[1] A shareholders' agreement binds only its parties as a contract. If the two documents conflict, the company acts on its articles, and a partner's remedy for breach of the shareholders' agreement may be limited to damages. Section 20 also allows the articles to be altered by special resolution, so a majority holder can sometimes change the articles in ways the shareholders' agreement forbids.[1]

The answer is to entrench the key terms in both documents: board composition, quorum, reserved matters, transfer restrictions, pre-emption, deadlock and exit provisions should appear in the articles of association as well as the shareholders' agreement, with an undertaking by every partner to vote to give effect to the agreement. Our guide to articles of association in Bangladesh explains how to draft them.

Board composition and management

Board seats normally track equity. The agreement should deal with the chair and any casting vote, quorum (with an adjourned-meeting fallback so a partner cannot block business by staying away), virtual meetings, and appointment of the managing director and finance head. Nominee directors owe their duties to the company, not their appointing partner. Our analysis of directors' duties and corporate governance covers those duties.

Reserved matters

Reserved matters are decisions that need the consent of each partner, or of a specified majority, whatever the voting position on the board. For a minority foreign partner they are the most important protection in the deal. A typical list covers changes to the articles, share issues, the budget and business plan, borrowing and security above thresholds, related-party transactions, new business lines, acquisitions and disposals, auditors, dividends and winding up, split between shareholder and board reserved matters and repeated in the articles of association.

Too long a list paralyses the venture; too short exposes the minority. Reserved matters also sit alongside, not instead of, statutory majorities such as the special resolution needed to alter the articles.

Deadlock resolution

Deadlock arises when partners with equal votes, or a minority holding a veto on reserved matters, cannot agree. Without a contractual mechanism the fallback is litigation. Section 241 of the Companies Act lets the court wind up a company where it considers that just and equitable, and section 233 lets members seek relief from unfairly prejudicial conduct, including orders regulating the company's affairs or amending its articles.[1] Neither is a commercial solution, and both are covered in our analysis of shareholder disputes in Bangladesh.

A good deadlock clause escalates: senior executives, then mediation, then a final mechanism such as a Russian roulette or Texas shoot-out, a put or call option at a formula price, expert determination or, last, winding up. Each must work within Bangladesh's approval and foreign exchange rules. A shoot-out that forces a resident partner to buy a foreign partner's shares at a price above Bangladesh Bank's fair-value limits may not produce a repatriable payment without approval.[6]

Transfer restrictions and pre-emption

The usual package is a lock-in, a right of first refusal or offer, tag-along and drag-along rights, and change-of-control provisions that treat a change in a partner's ownership as a transfer. Chambers' 2026 Bangladesh guide notes that private companies may require a selling shareholder to offer its shares first to existing shareholders on identical terms, by contract or in the articles, but that public companies cannot.[9]

Section 38(7) preserves a company's power to refuse to register a transfer in accordance with its articles.[1] Section 155 sets a pro rata offer procedure for further shares, with an acceptance period of at least fifteen days, which anti-dilution provisions in the agreement should mirror.[1] Share transfers themselves have formalities: section 38(3A) requires the transferor to confirm the transfer in person before the Registrar, and a foreign or overseas transferor's documents must be certified by the relevant embassy.[1] See our guide to share transfer in Bangladesh.

Exit and termination

Every joint venture ends, so negotiate the exit while the partners still agree. The agreement should list the triggers (breach, insolvency, change of control, prolonged deadlock, loss of a licence), the options each gives (put, call, compulsory transfer, winding up) and the valuation method. On valuation, Bangladesh Bank accepts fair value based on net asset value, market multiples or discounted cash flow, and requires an independent valuation above set thresholds when sale proceeds are repatriated.[6] A contractual formula that ignores those rules invites a dispute about whether the price can actually be paid. Our analysis of M&A law in Bangladesh explains how a partner's stake is sold to a third party.

Non-compete and exclusivity

Non-compete and exclusivity covenants must be proportionate. Section 15 of the Competition Act 2012 prohibits agreements that have an adverse effect on competition, and treats as anti-competitive agreements between parties dealing in identical or similar goods or services that limit or control production, markets or investment, or divide markets by geography or customers, as well as exclusive supply and exclusive distribution agreements that adversely affect competition.[8] There is no joint venture exemption, so tie restrictions to the venture's business, territory and duration.

Dispute resolution

Most international JV agreements choose arbitration. Under section 3 of the Arbitration Act 2001, the Act applies in full where the seat is in Bangladesh; where the seat is abroad, only the provisions on recognition and enforcement of foreign awards apply.[12] Section 7A allows the District Judge, or for an international commercial arbitration the High Court Division, to grant interim measures such as injunctions against transferring property and the appointment of a receiver.[12] Seat choice affects urgent relief against assets in Bangladesh.

For disputes that reach court, the commercial court regime matters. The Commercial Courts Ordinance 2026, since replaced by the Commercial Courts Act 2026 (Act No. 23 of 2026), listed joint venture agreements, shareholder agreements and partnership agreements expressly among commercial disputes.[13] A foreign-law shareholders' agreement must still work alongside articles governed by Bangladeshi law. Our guide to drafting an arbitration clause in Bangladesh contains model wording.

Regulatory approvals for a joint venture Bangladesh partners must plan

A joint venture Bangladesh regulators will recognise needs a defined approvals path.

Invest Bangladesh registration

The Invest Bangladesh Act 2026 (Act No. 104 of 2026, dated 16 July 2026) repealed the Bangladesh Economic Zones Act 2010, the Public-Private Partnership Act 2015, the BIDA Act 2016 and the One Stop Service Act 2018, dissolved BEZA, the PPP Authority and BIDA, and transferred their functions to the new Authority.[3] Actions under the repealed laws are treated as taken under the new Act.[3] BIDA's guidance confirmed that joint ventures follow the same registration process as local and foreign projects.[7]

Section 28 requires a person establishing a private-sector industry to apply for project registration, and allows the Authority to issue time-bound decisions on foreign loans, land, customs, utilities, visas and work permits.[3] For joint ventures, section 28(8) is the provision to watch: without the Authority's prior permission, no one may use a benefit granted for the project for another purpose, change the approved type of industry or change its ownership.[3] Make partner transfers, buy-outs and new investors conditional on that permission. See also our analysis of investment approvals in 2026.

Sector licences and no objection certificates

Ventures in controlled sectors need a ministry no objection certificate before registration, and then the operating licence from the sector regulator.[7] Licence conditions often restrict changes of shareholding, so the JV agreement's transfer and exit provisions must be read against them.

Competition notification

The Competition Act 2012 defines a combination as acquiring or taking control of a business, or merging or amalgamating with one.[8] A JV that takes over a partner's existing business, or acquires joint control of a company, can fall within it. Section 21 prohibits combinations that cause or are likely to cause an adverse effect on competition, and allows the Bangladesh Competition Commission to approve, on application and after inquiry, combinations that do not; the cases needing approval are to be specified by regulations.[8] Chambers reports that draft combination rules had not been circulated for public consultation, so there are no statutory filing thresholds in force.[9]

The prohibition applies regardless, so a venture between competitors should be assessed for an application; a greenfield venture between non-competitors rarely raises concern.

Company and tax registrations

The JV company then follows the ordinary path of RJSC incorporation, bank account, tax and VAT registration, trade licence and permits. The main bodies are below.

Foreign exchange for foreign partner contributions and returns

Foreign exchange is where a joint venture Bangladesh investors thought straightforward most often stalls. The core rules sit in Chapter 9 of Bangladesh Bank's Guidelines for Foreign Exchange Transactions 2018, supplemented by circulars, and are applied by the authorised dealer bank.[5] Our guide on how to invest in Bangladesh covers the general inward investment rules; the points below are specific to a foreign partner in a venture.

Statutory protection and dividends

Section 8 of the 1980 Act guarantees the transfer of capital, returns and liquidation proceeds, subject to the Government's right to act in exceptional financial and economic difficulties, and the Act protects against expropriation except for a public purpose with adequate compensation.[4] Cash dividends, net of tax, may be remitted to non-resident shareholders without Bangladesh Bank's prior approval or post-facto reporting, so the dividend policy should address timing, reserves and tax rather than permission.[5]

Share transfers between partners

Bangladesh Bank's FEID Circular No. 01 of 8 March 2026 governs transfers of unlisted shares involving non-residents. Transfers from a resident to a non-resident, or between non-residents, need no prior approval if made at fair value; deals above BDT 10 million need a valuation report.[6] When the foreign partner sells to the local partner, the authorised dealer may repatriate the proceeds without Bangladesh Bank approval only if the price is within net asset value on the latest audited accounts, does not exceed BDT 10 million with a joint statement, or does not exceed BDT 1 billion with an independent valuation; every other case needs approval.[6]

The circular adds conditions that JV exit clauses must respect. Buyer and seller must sign a dated memorandum of understanding, and the transfer must be completed within 45 days of that MoU or of Bangladesh Bank's approval, whichever is later. The price must be consistent with any share issue in the previous year. The non-resident must pay capital gains tax and stamp duty with funds brought in from abroad, and the JV company must not bear them.[6] Our analysis of capital repatriation in Bangladesh walks through the file.

Liquidation proceeds

On a winding up, a non-resident's share of the surplus can be repatriated only with prior permission of the Foreign Exchange Investment Department, so a share sale is usually the faster exit.[5]

Tax structuring for joint ventures

Tax shapes the joint venture structure as much as control does. The headline rates for assessment year 2026-27 are 27.5 per cent for non-listed companies, reduced to 25 per cent where all transactions are made by bank transfer, with lower rates for listed companies; associations of persons and firms are taxed at 27.5 per cent.[11] See our guide to corporate income tax in Bangladesh.

Taxing the returns of a foreign partner

A foreign partner earns through dividends, royalties, technical fees, interest and eventually sale proceeds, and each is taxed differently. PwC's summary, reviewed on 31 July 2026, gives withholding rates for non-resident companies of 20 per cent on dividends, 10 per cent on interest, 20 per cent on royalties and licence fees and 10 per cent on technical services, with lower rates available under a double taxation agreement and an NBR certificate procedure for reduced or nil deduction.[10] Settle the holding jurisdiction and how technology is paid for before signing.

Transfer taxes

The Income Tax Act 2023 taxes gains on the transfer of securities at 15 per cent, and stamp duty is charged at 0.2 per cent of the consideration on a share purchase agreement and 1.5 per cent on the transfer instrument for a non-listed company.[9] Allocate these costs in the exit clause.

Contractual JVs and permanent establishment

A contractual JV or consortium can be assessed as an association of persons, and a foreign member working on a construction, installation or service project in Bangladesh may create a taxable presence. The agreement should say who files and who bears the tax. Our tax structuring practice advises on these questions.

Step-by-step: structuring a joint venture in Bangladesh

This is how we run a joint venture Bangladesh partners agree, from term sheet to operation.

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Throughout, keep every remittance, valuation and filing traceable, and keep the shareholders' agreement and the articles of association in step.

What a joint venture lawyer does in Bangladesh

JV lawyer services fall into four stages: testing the structure, sector restrictions, competition exposure and tax; due diligence on the local partner, whose contributions the venture inherits; negotiating the term sheet, shareholders' agreement, articles, technology licence and any consortium or PPP documents; and taking the joint venture Bangladesh partners agree through incorporation, remittance, registration and licensing, then governance, disputes and exit. The most valuable advice comes early, while deadlock and exit terms are negotiable. TRW's joint ventures and strategic alliances practice acts for foreign investors and Bangladeshi sponsors, and our corporate and shareholder disputes practice handles ventures that break down.

Mistakes to avoid in a joint venture Bangladesh deal

• Generic articles of association: missing protections can be outflanked by a special resolution.[1]
• An accidental partnership: profit-sharing with mutual agency can create joint and several liability.[2]
• Technology as equity: non-resident shares are issued against remittance or machinery, so know-how belongs in a licence.[5]
• Unpayable exit prices: buy-sell formulas must fit Bangladesh Bank's fair-value rules and the Authority's ownership-change permission.[3] [6]
• No deadlock route: a 50:50 venture without one ends in court under section 233 or 241.[1]

What to watch in 2026 and beyond

Three developments will shape joint venture Bangladesh practice. First, Invest Bangladesh guidelines on registration, ownership changes and PPP procedure will decide how quickly ventures can be formed and restructured.[3] Second, any combination regulations made under section 21 of the Competition Act 2012 would introduce defined filing triggers for JV formations.[8] [9] Third, practice under the March 2026 master circular will show how readily banks process buy-outs without referral.[6] Agreements signed now should include change-in-law clauses. To discuss a venture, consortium or restructuring, contact TRW.

Frequently asked questions

Is there a joint venture law in Bangladesh?

No. A venture is formed under the Companies Act 1994 or by contract, with partnership, investment, foreign exchange, competition and tax law applying as relevant.[1] [2] [3]

Can a foreign investor own a majority of a Bangladeshi joint venture?

Usually yes. Outside reserved sectors, activities requiring local ownership and sector-specific caps, a foreign partner can hold a majority or all of the shares.[7]

What is the difference between a JV company and a contractual JV?

A JV company is a separate legal person with limited liability. A contractual JV may be a partnership if the parties share profits and act for each other, with joint and several liability.[1] [2]

Does a shareholders' agreement override the articles of association?

No. The articles bind the company and its members under section 22 of the Companies Act, while a shareholders' agreement binds only its parties. Key terms should appear in both documents.[1]

Does a joint venture need Invest Bangladesh registration?

A private-sector industrial project applies for registration under section 28 of the Invest Bangladesh Act 2026, and a registered project cannot change its ownership without the Authority's prior permission.[3]

Must a joint venture be notified to the Competition Commission?

There are no statutory filing thresholds yet, but section 21 of the Competition Act 2012 prohibits combinations that harm competition, so ventures between competitors should be assessed for an application.[8] [9]

Can a foreign partner contribute machinery instead of cash?

Yes. Shares can be issued to a non-resident against imported capital machinery once it has cleared customs, as well as against an inward remittance.[5]

How does a foreign partner exit a joint venture?

Usually by selling shares. Proceeds can be repatriated without Bangladesh Bank approval where the price is within net asset value, up to BDT 10 million on a joint statement, or up to BDT 1 billion on an independent valuation.[6]

What tax applies to dividends paid to a foreign JV partner?

Withholding tax of 20 per cent generally applies to dividends paid to a non-resident company, subject to any lower treaty rate.[10]

Where are joint venture disputes resolved?

Usually in arbitration. JV and shareholder agreements were also listed as commercial disputes under the 2026 commercial courts legislation.[12] [13]