Selling a Factory in Bangladesh 2026: Asset or Share Sale, Licences, Workers, Tax, Boilers, Feed Mills and Tea Estates

How to sell a factory Bangladesh buyers will close on: the 2026 framework

Owners who want to sell a factory Bangladesh law will treat as cleanly transferred must decide one thing before anything else: are they selling the company that owns the plant, or the plant itself? That choice fixes which documents are signed, which licences survive, whether workers move automatically, how the bank releases its security and how the proceeds are taxed. Get it wrong and a signed deal can stall for months at the sub-registry, the Department of Inspection for Factories and Establishments or the lender's credit committee.

This guide is written from the seller's side of the table. It covers the asset sale and the share sale, transfer of land and buildings, the licences that do not travel with the factory, workers and the Labour Act, bank liens and RJSC charges, tax on the sale and the due diligence a buyer will run. It then deals with three specialist assets that change the analysis: steam boilers under the Boilers Act 2022, feed mills under the Fish Feed and Animal Feed Act 2010, and tea estates under the Tea Act 2016, including tea gardens held on government lease.

Summary: A factory in Bangladesh is sold either by transferring the shares of the company that owns it, which leaves land, licences and employment contracts in place, or by selling the land, buildings and machinery to a new owner, which requires registered conveyances, fresh or amended licences and a planned transfer of the workforce. Charges must be released at the sub-registry and the RJSC, capital gains and VAT must be priced into the deal, and boilers, feed licences and tea garden leases carry their own transfer rules.

Key point: Most operating permits are issued to a named holder for named premises. In an asset sale the buyer must obtain or amend its own trade licence, factory licence, environmental clearance, fire licence and boiler registration; a boiler cannot be transferred or relocated without complying with section 23 of the Boilers Act 2022.

At a glance

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Table of Contents

Two ways to sell a factory Bangladesh law recognises

Every factory exit runs through one of two legal routes. In a share sale the seller transfers the shares of the private limited company that owns the land, buildings, machinery and permits. The company does not change; only its owners do. In an asset sale the company sells the land, buildings, plant and stock to a buyer, who becomes the new owner and operator. A third route, the amalgamation or transfer of an undertaking under section 229 of the Companies Act 1994, is court-sanctioned and is used mainly in group reorganisations.[8] [9]

The share sale

A share sale is usually faster and keeps continuity. Title deeds stay in the company's name, so no conveyance of land is registered, and the factory licence, environmental clearance and boiler registration remain with the same licensee. The trade-off is that the buyer inherits every historic liability of the company: unpaid tax, VAT disputes, wage claims, environmental breaches and guarantees. Buyers respond by demanding warranties, indemnities and a retention from the price. The mechanics of transferring shares, board approvals and RJSC filings are covered in our guide to share transfer in Bangladesh.

The asset sale

An asset sale lets the buyer choose what it takes and leave historic liabilities with the seller's company. It is the natural structure where the owner holds the factory personally or in a partnership, where only one plant out of several is being sold, or where the company carries risks the buyer will not accept. The cost is administrative: each parcel of land must be conveyed by registered deed, every permit must be obtained afresh or amended, and the workforce must be dealt with expressly. Employment does not transfer automatically under an itemised sale of assets.[9]

Choosing between them

The right way to sell a factory Bangladesh owners hold follows the facts rather than habit. If the company is clean, holds land on good title and has long-dated permits, a share sale preserves value. If the company has tax exposure, contested land or unrecorded workers, an asset sale is easier to finance and insure. Foreign buyers should also consider how each route interacts with investment registration and remittance rules; our note on BIDA and BEPZA investment approvals explains the regulators involved.

Land and buildings: transferring the site

In an asset sale the land and buildings pass only by a registered sale deed. The seller must produce an unbroken chain of title, current record-of-rights entries, a mutated khatian in the seller's name, paid land development tax and, where the site is mortgaged, the lender's release. Buyers will commission a title search going back at least through the survey records, and gaps that a seller has lived with for years become price issues overnight. Our guide to land ownership verification sets out the checks a buyer's counsel will run.

Registration costs, stamp duty, local government tax and the income tax collected at source by the sub-registrar fall on the transaction and are usually allocated in the agreement for sale. The current schedule is set out in our note on property registration fees, and the registration steps in our property registration process guide. After registration the buyer must apply for mutation so that the land records reflect the new owner; see land mutation in Bangladesh.

Leased sites and economic zones

Where the factory stands on leased land, the seller sells only its leasehold interest, and the lease will almost always require the landlord's consent to assignment. Plants inside economic zones and export processing zones are held under zone leases that the zone authority must approve before any change of control or assignment. Our analysis of economic zone leases and lender rights and of relocating a factory to an economic zone covers the zone-specific steps, so they are not repeated here.

Licences that do not travel when you sell a factory Bangladesh-side

Most operating permits are personal to the holder and tied to the premises. In a share sale they continue because the holder is unchanged, although many must be updated to record new directors or a new authorised signatory. In an asset sale the buyer becomes a new operator and must obtain its own permits or have the existing ones formally amended. A seller who promises that permits will simply transfer creates a warranty it cannot keep.

Trade licence

The trade licence is issued by the city corporation, municipality or union parishad to a named business at a named address. A buyer under an asset sale applies for its own licence before it starts trading from the site. The process and fees are described in our trade licence guide.

Factory licence from DIFE

The factory licence issued by the Department of Inspection for Factories and Establishments under the Bangladesh Labour Act 2006 is the core operating permit. Under the Bangladesh Labour Rules 2015 it has been renewable annually; in November 2025 the government approved a draft amendment to move factory, shop and establishment licences to a five-year renewal cycle.[12] Check which cycle applies at the date of sale. Layout approval, licence application and renewal are covered in our factory licence guide, so this article does not repeat them.

Environmental clearance, fire and other permits

The environmental clearance certificate issued by the Department of Environment is linked to the project and its operator, and a change of operator should be notified and the certificate amended or re-issued. Industrial units are categorised as green, yellow, orange or red under the Environment Conservation Rules 2023, and the category drives the documents required. The detail sits in our guide to environmental compliance. The fire licence follows the same pattern; see our fire licence guide. Bonded warehouse, import registration, export registration and VAT registration are all holder-specific and must be in the buyer's name before it imports raw materials or invoices customers.

Workers, wages and the Labour Act

Workers are the liability that most often derails a sale. In a share sale the employer does not change, so every contract, accrued leave, provident fund balance and gratuity entitlement simply continues, and the buyer prices them into the deal. In an asset sale the position is different. Employment does not transfer automatically, and an employee's consent is needed to move from one employer to another.[9]

How transfers are done in practice

Two methods are used. The first is a joint letter from seller and buyer, accepted by each worker, confirming that service will continue with the buyer on no less favourable terms and that past service counts. The second is resignation from the seller, payment of accrued benefits, and re-engagement by the buyer. Employees commonly expect accrued benefits to be paid before a change in control, and where the workplace moves more than 40 kilometres the employee is entitled to retrenchment benefits.[9] Where an undertaking is transferred under a court-sanctioned scheme under section 229 of the Companies Act 1994, liabilities move with the undertaking but employees are not protected against later dismissal unless the scheme or the court provides otherwise.[9]

The 2025 to 2026 labour reforms

The Bangladesh Labour (Amendment) Ordinance 2025 issued by the interim government changed several worker protections, and Parliament has since enacted the reforms, with amendments, as the Bangladesh Labour (Amendment) Act 2026 (Act No. 43 of 2026, 10 April 2026).[13] Because resignation, retrenchment and dismissal benefits drive the cost of a workforce transfer, a seller should model those costs under the text in force on the closing date. Our guides to terminating employees and labour law compliance set out the benefit calculations.

Two practical points matter on the seller side. First, settle or provide for all wages, overtime, festival bonuses and participation fund contributions up to closing, because unpaid wages are the first claim workers bring to the Labour Court. Second, do not announce the sale to the floor before the transfer letters and payment mechanics are ready. Unrest during the closing window gives the buyer leverage to renegotiate the price.

Bank liens, RJSC charges and clearing the title

Almost every operating factory is financed, and the lender's security will cover the land, buildings, machinery and often the receivables and stock. No buyer will close against encumbered assets, so the seller must plan the release before signing. The Companies Act 1994 makes certain mortgages and charges void against a liquidator and creditors unless registered with the RJSC, and provides separately for registering satisfaction of a charge once the debt is repaid.[8]

Releasing the security

Release usually involves four steps. The lender issues a payoff letter and a no-objection certificate. The registered mortgage over land is discharged by a registered release or redemption deed at the sub-registry. The company files the memorandum of satisfaction with the RJSC so the charge register is cleared. Any hypothecation over machinery and stock is released in writing. Since Parliament passed the secured transactions law for movable assets in October 2023, which provides for registration of security over movables, a buyer may also ask for a search of that register.[14]

Where sale proceeds will repay the loan, closing mechanics must be choreographed: the buyer pays into a lender-controlled account, the lender issues releases the same day and registration of the sale deed follows. Our guides to mortgage deeds, loan security documentation and secured transactions explain each instrument. A seller in default faces a harder exit, because a lender may already have filed in the Artha Rin Adalat, and a sale then needs the lender's cooperation or the court's leave.

Tax on the sale: capital gains and VAT

Tax is where an owner who wants to sell a factory Bangladesh-registered company owns most often leaves money on the table. Capital gains on the transfer of capital assets, including shares, are generally taxed at 15 per cent.[10] In an asset sale the gain arises to the selling company; in a share sale it arises to the shareholders, which matters where shareholders are individuals, holding companies or non-residents. Our tax planning guide covers structuring, so this section concentrates on transaction points.

Tax collected at registration

When land or buildings are conveyed, income tax is collected at source by the sub-registrar before the deed is registered. It is not necessarily the final liability: the seller credits it against the tax due when the gain is declared. Price the deduction into the closing funds flow so the registration is not delayed on the day.

VAT on an asset transfer

VAT turns on how the deal is framed. The sale of a business as a going concern, including an independently operable division, is not treated as a supply, so no VAT arises.[10] A piecemeal sale of machinery is different. The National Board of Revenue has treated the transfer of capital machinery and spare parts between companies as attracting 5 per cent VAT, and in November 2024 waived it only for export-oriented companies holding bonded warehouse licences, on conditions.[11] Draft the agreement so that the going-concern treatment is supportable on the documents. Our VAT compliance guide covers the returns.

Non-resident sellers have a further step. Repatriation of sale proceeds goes through an authorised dealer bank under Bangladesh Bank foreign exchange rules, which will want evidence of tax clearance and a supportable valuation. Our note on foreign exchange regulations explains the framework.

Boiler registration certificate in Bangladesh

Steam boilers are standard in garments, textiles, food processing, rice mills, feed mills and tea factories, and they are the asset most likely to stop a closing. The Boilers Act 2022 (Act No. 6 of 2022) replaced the Boilers Act 1923, which is repealed by section 54.[1] The Act is administered by the Office of the Chief Inspector of Boilers, and the Boiler Rules 2025 were issued under section 52 and published in the Bangladesh Gazette on 29 June 2025.[1] [2]

Registration and the certificate to use

Section 18 requires a boiler to be registered and a certificate obtained before it is used; section 19 governs renewal of that certificate and section 20 cancellation. Section 21 restricts use of a boiler outside the terms of its certificate. Separately, section 9 requires those operating boilers to hold a boiler operation licence, with renewal, cancellation and classes of licence dealt with in sections 10 to 12.[1] Under the 2025 Rules an application for registration is supported by design drawings, strength calculations, manufacturing and testing certificates, a piping and instrumentation diagram and proof of the fee, and an imported boiler requires prior approval from the Chief Inspector.[2]

What happens to the boiler when you sell

Section 23 deals specifically with the transfer or relocation of a boiler, and breach is an offence under section 41.[1] Using an unregistered boiler is penalised under section 38 and breach of the use restrictions under section 39; the Act also provides for administrative fines, repeat offences and liability of company officers.[1]

In practice, an asset buyer should plan to deal with the Chief Inspector's office before it fires the boiler in its own name, and a move to a new site should be treated as needing fresh inspection. A seller should deliver the registration certificate, inspection reports and operator licences in the data room, and should not assume that a certificate in the seller's name will satisfy a buyer's lender.

Economic zone factories

Factories in economic zones use the same Act. The zone authority's one-stop service channels many permits, but the boiler registration certificate is still a statutory certificate under the Boilers Act 2022, and an inspector must still inspect the installation. Plan inspection dates early, because closings are often set around them.

Feed mill Bangladesh rules: licensing under the Fish Feed and Animal Feed Act 2010

A feed mill is an ordinary factory for land, labour and environmental purposes, but it also needs a sector licence. The Fish Feed and Animal Feed Act 2010 (Act No. 2 of 2010) was published on 28 January 2010 and replaced the 2008 ordinance.[3] Section 4 prohibits producing, processing, importing, exporting, marketing, selling or distributing fish or animal feed without a licence. Under section 5 the licensing authority is the Director General of Fisheries for fish feed and the Director General of Livestock Services for animal feed, or a designated Class I officer.[3]

Licence term, renewal and cancellation

A licence is valid for one year from issue. Renewal must be applied for at least 30 days before expiry with the renewal fee, the authority must decide within 30 days and the licence remains valid until it does.[3] Section 9 allows suspension or cancellation after a show-cause opportunity, with an appeal to the government within 30 days. The Fish Feed Rules 2011 set out the application forms, licence categories and fee table for fish feed, and the Animal Feed Rules 2013, issued on 15 September 2013, set licensing conditions and feed standards for animal feed.[4] [5]

Quality, labelling and penalties

Section 14 bans antibiotics, growth hormones, steroids and insecticides in feed, and section 13 requires approved packaging showing the manufacturer, registration number, net weight, ingredients with percentages, lot number, target species and production and expiry dates.[3] Breach is punishable under section 20 by up to one year's imprisonment, a fine of up to Tk 50,000, or both, and company officers can be liable under section 17.[3]

Starting or selling a feed mill

For a new feed mill the sequence is: company formation, land, layout approval, environmental clearance, factory licence, trade licence, then the feed licence from the Department of Livestock Services or the Department of Fisheries before production starts, with boiler registration where steam conditioning is used. Our guide to factory setup in Bangladesh covers the common steps. On a sale, the feed licence is personal to the licensee and runs for a year, so an asset buyer must hold its own licence before its first production run; in a share sale the seller should warrant that renewals are current and that no cancellation proceedings are pending.

Tea estate Bangladesh law: Tea Board licences and land leases

Tea estates are the most regulated agricultural factories in the country. The Tea Act 2016 (Act No. 38 of 2016, dated 1 August 2016) repealed the Tea Ordinance 1977 and continued the Bangladesh Tea Board as a statutory body.[6] The Board's functions include registering gardens and factories and licensing garden owners, tea manufacturers, exporters, blenders, bidders, brokers, tea waste sellers and wholesale and retail sellers.[6]

Registration, licences and directions

Section 25 prohibits manufacturing tea except in a registered tea factory, and storing, buying or selling tea made elsewhere. Exporters need a Board licence under sections 19 and 21, and importers under section 22.[6] The Board can direct an owner to plant or replant a minimum area each year, and failure to comply carries an administrative fine of Tk 5,000 per acre per year until compliance under section 16(4). Section 17 empowers the Board to order that garden land is not used for purposes contrary to the Act.[6] General offences under section 29 carry imprisonment of six months to two years, or fines of Tk 50,000 to Tk 5 lakh for a garden, or both.[6]

Khas land and government leases

Much tea estate land is government land held on long-term lease rather than freehold. The Act defines an owner to include the lessee of a garden.[6] Leases are approved through the Ministry of Land; in one reported example the government renewed a Moulvibazar garden's lease over 661.55 acres in 2012 to run until 2052.[7] Such leases typically restrict use to tea, require government consent to assignment and can be contested by communities living on the land, as that case shows. Our guide to khas land in Bangladesh explains how government land is settled and recovered.

Setting up or selling a tea estate

Setting up a new estate means securing land, through purchase or government lease, registering the garden and any factory with the Tea Board, obtaining the factory licence, environmental clearance and boiler registration for the withering and drying lines, and putting worker housing and welfare in place. Selling an estate in practice usually means selling the company that holds the lease, because assigning a government lease needs ministry consent. The Board may itself sell gardens it has established or rehabilitated to Bangladeshi citizens or companies with government approval under section 14.[6] Buyers will ask for lease deeds, rent receipts, Board registration and licences, cess payment records and any show-cause notices under section 16.

Seller-side due diligence checklist

The buyer's lawyers will run a full due diligence exercise, so the best way to sell a factory Bangladesh buyers will fund quickly is to run the same exercise first and fix what can be fixed. Our guide to M&A due diligence explains the buyer's process, and our analysis of buying an existing factory and its liabilities shows the risks buyers price in. From the seller's side the data room should contain:

• Corporate: certificate of incorporation, memorandum and articles, share register, latest annual return and RJSC charge register.
• Land: title deeds, khatians, mutation records, land development tax receipts, layout and building approvals and any lease.
• Permits: trade licence, factory licence, environmental clearance, fire licence, boiler registration and operator licences, plus sector licences such as feed or Tea Board licences.
• Finance: loan agreements, security documents, lender consents and payoff letters.
• Tax: income tax and VAT returns, assessments, audits and open disputes.
• Workforce: worker register, contracts, wage records, provident fund and gratuity schedules, union and participation committee records and Labour Court cases.
• Litigation and compliance: pending suits, inspection reports, notices and any accident records.

Disclose problems early and in writing. A known issue disclosed against the warranties is a negotiation; an issue the buyer discovers after signing is a claim.

Step-by-step: how to sell a factory Bangladesh buyers will close on

The order matters more than speed. The sequence below reflects how we run factory exits for sellers.

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Keep one closing checklist that lists each deliverable, the person responsible and the date, and agree with the buyer which permits must be in hand before completion and which can follow under a transitional services arrangement.

Asset sale or share sale: side by side

The table compares the two structures on the points that most often decide the choice. On a phone, scroll it sideways.

Where the company is clean and the permits are long-dated, a share sale generally wins on speed. Where the land title is mixed, the company carries tax exposure or only part of the business is being sold, an asset sale is usually the better path despite the extra registrations. Our corporate transaction and due diligence practice structures both.

What to watch in 2026

Three developments affect anyone planning to sell a factory Bangladesh-side this year. First, labour reform: the Labour (Amendment) Act 2026 now sets the resignation and retrenchment benefits that drive the cost of workforce transfers.[13] Second, licence cycles: a move to five-year factory licence renewals would reduce the risk of a licence lapsing mid-deal.[12] Third, boiler enforcement: with the 2022 Act and the 2025 Rules now both in force, buyers' lenders increasingly treat boiler registration as a condition precedent.[2]

If you are preparing an exit, start with structure, title and permits, and leave price negotiation until you know what you are actually selling. For advice on a factory sale, a feed mill or a tea estate, see our industrial parks and manufacturing facilities practice or contact TRW.

Frequently asked questions

Is it better to sell the company or the factory assets?

A share sale is usually faster because land and permits stay with the company, but the buyer inherits all historic liabilities. An asset sale isolates liabilities but needs registered conveyances, new permits and a planned workforce transfer.[9]

Does the factory licence transfer to the buyer?

Not in an asset sale. The DIFE factory licence is issued to the operator, so a buyer must obtain its own or have the licence formally amended. In a share sale the licensee does not change, but director and signatory changes should be notified.[12]

Do workers automatically move to the buyer?

No, not in an asset sale. Employee consent is needed, usually through a joint transfer letter or resignation and re-engagement with accrued benefits paid. In a share sale employment simply continues.[9]

What tax applies when a factory is sold?

Capital gains on capital assets, including shares, are generally taxed at 15 per cent, and tax is collected at source when land is registered. A going-concern sale is not a supply for VAT, but a piecemeal sale of machinery can attract VAT.[10] [11]

How is a bank charge removed before sale?

The lender issues a payoff letter and release, the land mortgage is discharged by a registered deed and satisfaction of the charge is registered with the RJSC under the Companies Act 1994.[8]

Which law governs boiler registration in Bangladesh?

The Boilers Act 2022, which repealed the Boilers Act 1923, together with the Boiler Rules 2025. Section 18 requires registration and a certificate before use.[1] [2]

Can a registered boiler be moved to a new factory?

Only in compliance with section 23 of the Boilers Act 2022, which governs transfer or relocation of a boiler; breach is an offence under section 41.[1]

Who issues a feed mill licence?

The Director General of Livestock Services for animal feed and the Director General of Fisheries for fish feed, under the Fish Feed and Animal Feed Act 2010. Licences last one year.[3]

Which licences does a tea estate need?

Garden and factory registration with the Bangladesh Tea Board, and Board licences for manufacturing, export, import, blending and trading as relevant, in addition to ordinary factory and environmental permits.[6]

Can a tea garden on government land be sold?

The lease can usually be assigned only with government consent, so most estate sales are structured as sales of the company that holds the lease. Lease terms and any community claims to the land must be checked first.[7]