The Bangladesh Bank has introduced a new policy allowing local startup companies and individuals to invest up to $10,000 abroad by establishing legal entities.
The BB issued a circular in this regard on Thursday.
According to the notification, general permission is granted to establish a legal entity abroad with an amount of up to $10,000 dollar or equivalent by way of investment for supporting a startup business in Bangladesh.
To create overseas legal entities, these ventures must maintain strong economic ties with Bangladesh by eventually rerouting earnings and investments back home, it said.
Under the new guidelines, domestic enterprises can apply to banks for remittances to set up companies abroad.
The new policy specifically targets young, innovative startups as it stated that those operating for less than 10 years can apply for foreign exchange remittance through authorised dealers or ADs.
The funds must come from internal sources, not bank borrowings.
A key provision in the circular allows resident companies to acquire shares in foreign firms through share swaps, meaning they can exchange their own shares or securities for those of overseas companies.
However, these transactions require approval from the Bangladesh Bank and the swap ratios must align with global best practices.
The ADs will oversee the process, ensuring transparency and compliance with regulatory standards.
To monitor these investments, the Bangladesh Bank has mandated that investors submit annual progress reports and audited financial statements of their overseas entities.
Authorised dealers will conduct due diligence on applicants, verifying KYC norms, anti-money laundering standards and legitimacy of funds before processing remittances.
If an overseas entity is not established within a reasonable timeframe, any unutilised funds must be repatriated, the BB circular said.
This move is expected to encourage Bangladeshi entrepreneurs to explore international markets while maintaining strong economic linkages with the country, BB officials said.
By allowing limited outward investment, the Bangladesh Bank aims to create opportunities for domestic businesses to integrate into global supply chains, enhance their competitiveness and attract foreign investment, they said.
The BB expected that despite some capital outflow, the initiative would lead to increased inbound investment in the long run.
The introduction of this policy is seen as a step towards gradually opening capital account transactions, aligning with global economic trends.
