Bangladesh University of Professionals

Term Paper

Legal Environment of Businesses in Bangladesh

Course Title: Legal Environment of Business

Course Code: ALD 1205

Submitted To

Mst. Sharmin Sultana Sumi

Lecturer

Department of Finance & Banking

Bangladesh university of Professionals

Submitted By
Group- 9
Name ID
Rifat Abdullah 2222151059
Shadman Sakib 2222151093
Mazedur Rahman 2222151109
Faiyaz Hassan Chowdhury 2222151123
Kazi Golam Tasdid 2222151147
Department of Finance & Banking
Bangladesh University of Professionals

Date of submission: 14 May, 2023

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 Letter of transmittal

Date: 13th May 2023

Mst. Sharmin Sultana Sumi

Lecturer

Department of Business Administration in Finance and Banking

Bangladesh University of Professionals

Mirpur Cantonment, Dhaka – 1216

Subject: Application for accepting the term paper on the given topic

Respected faculty,

Ma'am,

We want to draw your kind attention to the fact that we are now submitting the final report
titled “Legal Environment of Businesses in Bangladesh". This study was compiled using
previously published publications, websites, and other relevant papers, in addition to
documents obtained from other sources. Throughout the study we have given our best efforts
to understand the assignment you have assigned us and performed to the best of our ability to
accommodate as much information and relevant issues, we hope that you will find our paper
satisfactory, and we eagerly await your feedback for resolving any shortcomings in our paper.

Sincerely

The members of Group 9

Section A

Batch-2022

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 Acknowledgment

I would like to take this opportunity to express my gratitude to all those who have supported
me throughout this research project. Primarily, I would like to thank our respected supervisor,
Mst. Sharmin Sultana Sumi, for their guidance, encouragement, and support throughout the
project. Their insights and feedback were invaluable in shaping the direction and scope of this
research.

I would like to thank our family and friends for their unwavering support and encouragement
throughout our academic journey. Their love and encouragement kept us motivated and
inspired throughout the project.

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Executive Summary

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 Table of contents

Contents
Chapter I - Introduction ............................................................................................................. 7

Origin of the study ................................................................................................................. 7

Scope of the study ................................................................................................................. 7

Objective of the study ............................................................................................................ 7

Methodology.......................................................................................................................... 8

Limitations of the study ......................................................................................................... 8

Chapter II - About the Ceramics Sector ..................................................................................... 8

Value Creation Process: ......................................................................................................... 9

Targeted customers ............................................................................................................... 9

Products ............................................................................................................................... 10

Strategies ............................................................................................................................. 10

Business Drivers ................................................................................................................... 10

Chapter III - Top Players of the Ceramics Sector ..................................................................... 11

RAK Ceramics (Bangladesh) Ltd. .......................................................................................... 11

Shinepukur Ceramics Ltd. .................................................................................................... 12

Monno Ceramics Industries Ltd. .......................................................................................... 13

Chapter IV - Laws, Rules and Regulations to Comply for Operating the ceramics Industry ... 15

Overview of regulations ....................................................................................................... 15

Environmental regulations................................................................................................... 16

Tax regulations ..................................................................................................................... 21

Labor regulations ................................................................................................................. 22

Chapter V - Compliance of Companies with Regulations ........................................................ 25

Company Registration.......................................................................................................... 25

Factory Registration and Licenses ....................................................................................... 28

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 Environmental Regulations .................................................................................................. 28

Labor Laws ........................................................................................................................... 29

Taxation and Financial Regulations ..................................................................................... 31

Chapter VI ................................................................................................................................ 32

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Chapter I
Introduction

Origin of the study

This report is a requisite for passing the course ‘Legal Environment of Business (Course code:
ALD1205) for the program BBA in Finance and Banking.

Mst. Sharmin Sultana Sumi, Lecturer in the Finance & Banking Department, assigned this term
paper.

Scope of the study

This report discusses the ceramics industry of Bangladesh. Chapter 2 of the report discusses
the overview of the ceramics sector of Bangladesh. Specifically, Value creation process, Target
customers, Products, Strategies, and Business drivers. Chapter 3 discusses the top three
companies of the ceramics industry: Monno Ceramics, Shinepukur Ceramics, and RAK
Ceramics. Chapter 4 discusses the laws, rules, and regulations imposed on the ceramics
industry and Chapter 5 is about how the companies mentioned before comply with the
regulations discussed in Chapter 4 of the report.

Objective of the study

The objectives of this study are:

1. Understanding the business of the ceramics industry

2. Understanding the legal environment surrounding the company in the ceramics
sector.
3. Gaining knowledge about different government regulatory agencies.

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 4. Obtaining a deeper insight into the different kinds of rules a particular company must
follow.

Methodology
The information to make this report is sourced from the internet. Particularly, the websites
of government agencies and the companies discussed in the report. Documentations from
the national portal were analyzed to find the laws, rules, and regulations, and company data
are sourced from the latest annual report from the company websites. The relevant
information was then discussed and interpreted to create the report.

Limitations of the study

1. Time was not sufficient for a report of this depth.
2. A lot of relevant information is not present on the web.
3. The government portal of Bangladesh is very poorly designed. As a result, finding
policies from government websites was tedious.
4. Not all companies had up-to-date annual reports available on their websites
5. A lot of information is sourced from secondary sources.

Chapter II
About the ceramic sector

Bangladesh's ceramics industry is a growing industrial sector. The industry has grown greatly
over the years. There are now more than 21 ceramic industrial regions in Bangladesh, which
employ more than 500,000 people. Local enterprises provide 85% of the ceramic market in
Bangladesh, while imported items meet the remaining need.

Business model: The primary objective of the ceramic business is the manufacturing and
supply of high-quality ceramic items to both domestic and international consumers. To meet

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client requests, the industry focuses on value propositions such as cheap pricing, high-quality
goods, and a variety of design alternatives. Ceramic objects bring in more money, both locally
and internationally. The purchase of raw materials, conception and development of the
product, production, quality assurance, marketing, distribution, and customer service are all
critical activities. Among the most significant resources are manufacturing facilities, qualified
workers, raw materials, and technology. Partnerships with vendors, distributors, architects,
and trade organizations aid in the success of the industry. The cost structure includes
marketing, labor, raw material, and facility investments. Despite restrictions such as high-
energy prices and competition, opportunities can be found in expanding local demand, export
opportunities, federal support, technical advancements, and ecological efforts.

Value Creation Process:

1. Research and development to identify market trends and innovative designs

2. Sourcing premium raw materials
3. Designing and developing ceramic products in accordance with customer preferences
4. Efficient manufacturing and production processes with strict quality control measures
5. Effective marketing and sales strategies to generate demand, and streamlined
distribution and logistics.

These are the key points to follow for the ceramic sector in Bangladesh to create value,
expand, and increase the market by producing high-quality ceramic items that fulfill
customers’ desires and preferences through several interconnected stages.

Targeted customers

The ceramic market in Bangladesh serves a diverse range of clientele, including private
consumers, builders, architects, contractors, and businesses involved in construction and
interior design projects. Homeowners account for a major section of the industry and are
interested in ceramic products such as flooring, wall tiles, and bathroom fittings. Contractors
and builders require ceramic materials for residential and commercial construction projects.
Architects and interior designers consider factors like beauty, usability, and durability while
specifying and recommending ceramic objects for their projects.

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Products

Bangladesh's ceramic sector provides a comprehensive range of goods to meet the demands
of its customers. Ceramic tiles for floors and walls are available in a variety of sizes, styles, and
finishes to suit both interior and outdoor uses. Sanitaryware, which includes bathroom
fixtures such as toilets, basins, and bidets, is also a popular choice. The industry manufactures
porcelain and ceramic tableware, which includes dinnerware, tea sets, and decorative pieces.
Decorative ceramics such as vases, figurines, and wall art are also produced to improve
interior design. To suit the changing demands of both domestic and foreign markets, the
product line is always growing, adding unique designs, patterns, and textures.

Strategies

To maintain its competitiveness and promote expansion, Bangladesh's ceramic sector uses a
number of tactics. To begin, it prioritizes constantly product design and innovation
development in order to match changing client demands and remain ahead of market trends.
The sector also focuses on cost reduction through efficient production methods, competitive
raw material procurement, and effective supply chain management. Also, marketing and
branding tactics are used to raise product recognition, strengthen customer connections, and
broaden market reach. The sector also takes advantage of export potential by pursuing
international markets and forming alliances with distributors and retailers globally. Another
technique for showing ceramic items in projects and increasing awareness is a collaboration
with architects, interior designers, and industry groups. Finally, investments in technology,
research, development, and sustainability programs help to ensure the industry's long-term
growth and sustainability.

Business Drivers

Several main business factors contribute to the growth and success of Bangladesh's ceramic
sector. For example, the country's growing urbanization and infrastructure development fuel
the demand for ceramic materials in the building and interior design sectors. Furthermore,
the growing middle class and rising disposable incomes lead to greater consumer expenditure

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on contemporary housing and interior design, which drives up demand for ceramic tiles and
sanitaryware. The industry's focus on cost competitiveness, product quality, and design
diversity strengthens its market position even more. Furthermore, government assistance in
the form of infrastructure, tax breaks, and research and development projects fosters the
expansion of the business. The capacity of the industry to embrace innovative technology,
participate in sustainable practices, and seek export potential improves its business drivers
and prepares it for future market success.

Chapter III
Key Players in the Industry

The ceramics industry in Bangladesh is mainly focused on the production of tableware and
tiles. The industry is concentrated in the district of Narayanganj, which is home to several
major ceramics manufacturers. Shinepukur Ceramics, Monno Ceramic Industries, and RAK
Ceramics are some of the biggest names in the ceramics industry. RAK Ceramics has almost
30% of the market share in the sanitary ware market and 16% market share in the tiles
market. Shinepukur is another giant, which has 18% of market shares in the tableware
market. Monno Ceramics, a household name in the tableware market, has thrived in the
market for four decades now.

RAK Ceramics (Bangladesh) Ltd.

The company was established in 1998 as a private limited company and started its commercial
production in 2000 as a joint venture project between RAK Ceramics PSC, a UAE-based
company, and a local investor, Mr. S.A.K. Ekramuzzaman.

With an annual turnover of over BDT 3248 million, RAK Ceramics (Bangladesh) Ltd has firmly
established itself as one of the top manufacturers of high-quality ceramic wall and floor tiles,
as well as sanitary ware products in Bangladesh. The company's core business is the

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manufacture and sale of ceramics and fully vitrified tiles, bathroom sets, and all types of
sanitary ware.

The company has over 1000 models of ceramic and porcelain tiles available in various sizes
ranging from 20 cm x 30 cm up to 60 cm x 60cm, and over 40 models of sanitary ware. It
regularly adds new designs to its product portfolio and is known for producing products of
high quality.

RAK Ceramics (Bangladesh) Ltd is an ISO-certified organization and is widely recognized as the
largest and most respected tiles and sanitary ware brand in Bangladesh. The company has
around 25% market share in the tiles sector and around 65% market share in the sanitary
ware sector based on production capacity.

RAK Ceramics (Bangladesh) Ltd has a strong market reputation in Bangladesh and a wide
network of 98 dealers nationwide. Its customers include construction developers,
government institutions, and local consumers.

The company has received strong support from RAK Ceramics PSC, UAE, in terms of
technological expertise, management, and marketing support. As of December 31, 2015, the
ownership of RAK Ceramics (Bangladesh) Ltd comprises 75.89% held by the sponsors (71.67%
by RAK Ceramics PSC, UAE, and 4.22% by local investor Mr. S.A.K. Ekramuzzaman) and the
remaining 24.11% held by the general public, including institutional investors.

RAK Ceramics (Bangladesh) Ltd converted into a public limited company in 2008 and was
listed on the stock exchanges of Bangladesh in 2010. The company has anchored its position
on the basis of its market-leading capacities, world-class manufacturing technologies, high
production utilization, optimized cost structures, vibrant sales and distribution network, and
robust customer engagement programs.

Shinepukur Ceramics Ltd.

The company was incorporated as a private limited company in January 1997 and started its
commercial production at the end of 1998. SCL is a member of BEXIMCO Group, the largest

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private business conglomerate in Bangladesh, with diversified interests in seafood,
pharmaceuticals, textiles, denim, garments, real estate, engineering, media, computers, and
the IT industry.

SCL has made a total investment of US$ 35 million in its manufacturing facilities and has
recently invested an additional US$ 10 million to expand its bone China unit. The company's
manufacturing units are located at the BEXIMCO Industrial Park in Savar, about 20km from
Dhaka, and cover an area of about 41 acres with a covered area of 111,000 sq. ft.

SCL has a well-equipped laboratory facility for testing and quality control, as well as its own
captive gas-based power generation capability, water supply, medical and sanitary facilities,
and effluent discharge mechanisms. The company is ISO certified and an ICMG11 & GMP
certified company.

SCL produces a wide range of high-quality bone china, porcelain, and ivory china tableware
for retail and hospitality industries, and its products are exported to various countries such as
Australia, Argentina, Canada, Denmark, France, India, and many others. The company has a
substantial export market and contributes about 0.1% to the national tableware export
turnover of Bangladesh.

SCL has successfully maintained its market share in the top-end global market of bone china
tableware with its strategic alliances with leading brand manufacturers in Europe and the
USA. SCL has become a pioneer in the field of bone china manufacturing in Bangladesh with
its technical collaboration with the Japanese company, TAFELSTERN, the master of bone china
makers in Japan, which has helped the company break the technological barrier.

Monno Ceramics Industries Ltd.

Monno Ceramic Industries Ltd. is a leading manufacturer of ceramic tableware based in

Bangladesh. With a diverse product portfolio, that includes English bone, porcelain, silk
porcelain, Monno Italia, and bespoke, Monno Ceramic has established itself as a trusted and
high-quality brand in the industry.

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As the flagship company of the Monno Group, one of the largest private business
conglomerates in Bangladesh, Monno Ceramic has grown over the past four decades through
hard work and perseverance in various industries, including porcelain and bone china
tableware, jute, textiles, ready-made garments, trading, power generation, printing and
packaging, healthcare, educational institutions, and retail. The company has always
maintained strict ethical standards in all its business operations, making it a recognized name
synonymous with trust and quality in Bangladesh.

Monno Ceramic's success as a tableware manufacturer began in 1984 with the production of
porcelain tableware and securing its first export order the following year. The company
continued to expand its product range and manufacturing capabilities, eventually venturing
into Fine Bone production in China in 2001. Monno Ceramic's state-of-the-art technology and
creative designs give it a competitive edge, making it a strong player in the global tableware
manufacturing industry.

As a pioneer in ceramic tableware manufacturing in Bangladesh, Monno Ceramic is proud to

promote the country as a manufacturer of high-quality ceramic tableware. With impeccable
product quality and continuous demand from both local and international customers, Monno
Ceramic Industries Ltd. remains the largest ceramic tableware manufacturer in Bangladesh
and a respected brand in the industry.

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Chapter IV
Laws, Rules, and Regulations to Comply for Operating in that Particular Industry

Overview of regulations

Every industry significantly affects a nation’s economy, environment, and people. As such,
there are some regulations in place to ensure better economic growth, environmental
protection, and proper workplace for the people employed in the industry. In the case of the
ceramics industry of Bangladesh, a few regulatory boards ensure the industry is operating as
per the national code. The regulatory boards are:

1. Bangladesh Investment Development Authority (BIDA)

2. Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA)
3. Department of Environment, Ministry of Environment and Forests
4. National Board of Revenue, Ministry of Finance
5. Department of Labor, Ministry of Labor and Employment

BIDA is a government-run investment promotion agency and BCMEA is an industry

association that works to protect the interest of the ceramic sector of Bangladesh. They both
work to promote and develop the market and sector of ceramic. The Department of
Environment manages the environmental impact of industries in Bangladesh and ensures the
sustainable growth of industry and economy. The National Board of Revenue is the apex
authority for taxation and fiscal policies. NBR is responsible for properly taxing the industries
to ensure both national and industrial growth. The Department of Labor ensures workplace
safety and the overall work conditions are suitable for the employees. Department of Labor
ensures safety and convenience and makes policies regarding employment, layoffs, and other
essential aspects of the workplace for the people working at the companies in the industry.

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Environmental regulations

The Department of Environment under the Ministry of Environment and Forest set the
environmental regulations the companies in the ceramic industry must adhere to. Every
company in the industry must obtain environmental clearance from DOE in order to start its
operation and remain operational.

Bangladesh Environment Conservation Act, 1995 (Amended 2010) is the main act governing
environmental protection in Bangladesh which replaced the earlier environment pollution
control ordinance of 1992 and provides the legal basis for Environment Conservation Rules,
1997 (ECR'97).

Environmental Conservation Rules, 1997 consists of a set of relevant rules to implement the
Environment Conservation Act, 1995.

According to the ECR’97, industrial units are classified into four classifications based on their
location and impact on the environment. The classifications are:

1. Green
2. Orange – A
3. Orange – B
4. Red

There are 14 schedules in ECR’97 that discuss the standards for air, water, and sound as well
as the acceptable limits of discharge, emissions, waste, and the fees to be realized by the
Department of Environment. A few of them are discussed below:

Schedule 1: Classification of industrial units or projects based on their location and impact
on the environment.
According to schedule 1 of ECR’97, the ceramics industry is classified in Orange-B Category.
The schedule also regulates the location of Orange-B category industries as follows:

(a) No industrial unit included in this list shall be located in any residential area.

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(b) Industrial units shall preferably be located in areas declared as industrial zones or in areas
where there is a concentration of industries or in vacant areas.

(c) Industrial units likely to produce sound smoke or odor beyond permissible limits shall not
be acceptable in commercial areas.

Schedule 2: Standards for Air

Being a production industry, monitoring the air quality of the plants is essential for the
environment.

Figure: Chemical standards for air

Industrial units located in areas not designated as industrial areas shall not discharge
pollutants, which may contribute to exceeding the standard for air surrounding the areas
specified.

Schedule 3: Standards for water

The standard for water is divided into two parts. Section A is about standards for inland
surface water and section B is about drinking water.

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 Figure: Standards for inland surface water

In Section B there is a detailed list of the chemical makeup of drinking water at the plant for
the employees for maintaining health.

Schedule 4: Standards for Sound

Figure: Standard decibel levels

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Schedule 5: Standards for Sound originating from Motor Vehicles or Mechanized Vessels

Schedule 6: Standards for Emission from Motor Vehicles

Schedule 7: Standards for Emission from Mechanized Vessels

Schedule 8: Standards for Odor

Schedule 9: Standards for Sewage Discharge

Sewage discharge is a very important element to control in industries as unregulated

discharge can cause the inland water to get contaminated causing soil damage.

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Schedule 10: Standards for Waste from Industrial Units or Projects Waste

Schedule 11: Standards for Gaseous Emission from Industries or Projects

Schedule 12: Standards for Sector-wise Industrial Effluent or Emission

Schedule 13: Fees for Environmental Clearance Certificate or Renewal

Schedule 14: Fees to be realized by the Department of Environment for supplying various
analytical information or data or test results of samples of water, effluent, air and sound

These schedules make up the rules a company must follow to obtain clearance from DOE to
start and maintain operations. The companies in the ceramic industry also have to report
their feasibility and show plans for Effluent Treatment Plants (ETP) and Environment
Management Plans (EMP) to operate. The clearance certificate has to be renewed each year
after a site visit to make sure all criteria are met.

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Tax regulations
The National Board of Revenue under the Ministry of Finance is the authority for taxation in
Bangladesh. NBR governs the policies for taxation as well as the tax rates for companies in
the industry.

The ceramics industry is subjected to 3 main areas of taxation.

1. Corporate tax
2. VAT
3. Supplementary Duty (SD)

Corporate tax

Corporate tax is levied on the profits earned by the companies in the industry. Corporate tax
depends on the type and annual income of the companies in the industry. Ceramics
companies fall under the category of manufacturing companies. The tax brackets for company
tax are as follows.

Type of company Corporate Tax rate

One Person Companies 22.5%
Non Publicly traded companies 27.5%
Publicly traded companies that transfer ten 22.5%
percent or less than ten percent of their
paid-up capital through IPO

This is reflected through market analysis because Shinepukur Ceramics has income tax
obligations of 22.5% income tax whereas RAK Ceramics has income tax obligations of 27.5%
as mentioned in their annual report of 2022

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VAT

Value-added tax (VAT) is a type of indirect tax levied on goods and services for value added
at every point of production or distribution chain. Currently, the VAT rate in Bangladesh is
15% that we see the companies in the ceramics industry adhering to in terms of local sales.

Supplementary Duty (SD)

Supplementary duty is a type of indirect tax that’s levied on particular goods and services in
addition to other taxes such as Value Added Tax (VAT) or Customs Duty. Currently, the rate
of SD in the ceramics sector is 10%

Companies in the ceramics industry also pay taxes on the import of raw materials. Companies
have to import a huge amount of raw material from China to produce ceramic wares to be
sold in both the local market and global markets. Currently, the tax imposed on the import of
raw materials at 15%

Labor regulations

Operating in the ceramic industry in Bangladesh requires compliance with several labor
regulations. Here are some key labor regulations to comply with The Bangladesh Labor Act,
2006 this overarching legislation governs various labor-related matters, including
employment contracts, working hours, wages, leave entitlements, workplace safety, and
dispute resolution. Comply with the provisions outlined in this act.

1. Minimum Wage: Ensure that you pay your employees at least the minimum wage set
by the government for the ceramic industry. The minimum wage rates are periodically
revised, so stay updated with the latest rates and adjust wages accordingly.

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2. Working Hours: Abide by the regulations on working hours as specified in the Labor
Act. The standard working hours are generally 8 hours per day and 48 hours per week,
with allowance for overtime.

3. Overtime and Rest Breaks: If employees work beyond the standard working hours,
comply with regulations regarding overtime pay, which is usually higher than regular
wages. Provide employees with mandatory rest breaks during their shifts as per the
law.

4. Prohibition of Forced Labor: Eliminate all forms of forced labor, including bonded
labor, debt bondage, and human trafficking. Workers have freedom to choose
employment and have rights to terminate their employment with notice.

5. Occupational Health and Safety: Prioritize workplace safety and comply with the
requirements of the Labor Act related to occupational health and safety. Implement
safety measures, conduct risk assessments, provide necessary personal protective
equipment (PPE), and train employees on safety protocols.
6. Child Labor: Prohibit the employment of children below the age of 14 in accordance
with the labor laws of Bangladesh. Follow regulations related to the employment of
adolescent workers aged 14 to 18, ensuring they are not engaged in hazardous work.

7. Elimination of Discrimination: Eliminate discrimination in employment and in

occupation based on race, color, sex, religion, political opinion, national origin, social
origin, disability and other characteristics. Promote equal opportunity and treatment
in employment.

8. Employment Contracts: Provide clear, written employment contracts that outline the
terms and conditions of employment, including job responsibilities, working hours,
wages, leave entitlements, and termination procedures. Contracts must be fair,
transparent and followed by local laws.

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 9. Maternity Benefits: Provide maternity leave and benefits to female employees as
mandated by the Labor Act. This includes paid maternity leave, nursing breaks, and
protection against dismissal during pregnancy and maternity leave.

10. Trade Unions and Collective Bargaining: Recognize and respect the rights of workers
to form trade unions. Comply with regulations regarding trade unions, collective
bargaining, and dispute resolution mechanisms outlined in the Labor Act.

11. Social Dialogue: Promote social dialogue and establish mechanisms for effective
communication between employers and workers. Encourage participation and
consultation with workers and their representatives in decision-making processes that
affect their rights, conditions, and welfare.

12. Record-Keeping and Compliance: Maintain accurate records of employee

information, employment contracts, attendance, wages, and other relevant data.
Keep these records for the specified period and ensure compliance with record-
keeping requirements.
13. Inspections and Compliance: Be prepared for inspections by labor authorities to
assess compliance with labor regulations. Cooperate with inspectors and address any
issues or recommendations they provide.

The above information provides a general overview of labor regulations in Bangladesh's

ceramic industry. By following these labor regulations, businesses in the ceramic industry can
create a fair and safe work environment for their employees while contributing to the overall
development and well-being of the workforce in Bangladesh.

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Chapter V
Compliance of Companies with Regulations

Operating in the ceramic industry in Bangladesh requires compliance with various laws, rules,
and regulations. Here are some key legal aspects that ceramic manufacturers need to
consider:

Company Registration

In Bangladesh, the process of registering a company is partially computerized. The process

for setting up a business in Bangladesh consists of the following three steps: Name clearance,
creating a bank account and bringing the paid-up capital into Bangladesh, and company
registration are the first three steps. The second step is only applicable if the prospective firm
has any foreign shareholders.

 Selecting a Business Name: Manufacturers must first choose a name for their company
that closely represents the purpose and identity of the ceramic manufacturing
company. The name shouldn't be the same as or remotely related to any Bangladeshi
firm names already in use. Getting name authorization for the proposed company
name would be the first step in creating a Bangladeshi firm. One must first create a
username on www.roc.gov.bd before applying for name approval. After submitting an
application for name clearance, you will receive a bank payment slip, along with which
you must transfer Tk. 600 to the specified bank. The name approval can be obtained
via the Registrar of Joint Stock Companies and Firms (RJSC) website after completing
the required payment.
 Articles of Association and Memorandum (MOA and AOA): The MOA and the AOA,
specifically adapted to the ceramic manufacturing firm need to be prepared, which
need to conform with the provisions of the Companies Act 1994, after selecting the
name. The AOA specifies the internal rules, regulations and procedures for the

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 company’s operation and the MOA specifies the company’s goals, nature of business,
share capital, and members’ liability.

 Authorized and Paid-up Capital: The Memorandum of Association and Articles of

Association must specify the allowed capital amount. There is no minimum or
maximum approved capital for local businesses in Bangladesh. However, a minimum
of USD 50,000 must be invested in the company in order to acquire full flexibility
regarding expatriation and bringing in international expatriates for practical reasons.
One Taka (local currency) or $50,000 (foreign currency) must be paid up front to
register a Bangladeshi firm.

 Shareholders and Directors: In Bangladesh, a private limited company is a distinct

legal entity, and its shareholders are alone responsible for the share capital they have
invested. Any person (foreign or domestic) over the age of 18 may register a business
in Bangladesh in accordance with the Companies Act of 1994. The minimum number
of directors for a private limited company is two. Directors may be residents of the
country or foreigners. Directors must be at least 18 years old and have no prior
convictions for any crimes or bankruptcies. A director is required by law to own the
qualifying shares listed in the articles of association. A shareholder, which is not a
natural person (i.e. a company), can select a nominee director on its behalf.
In Bangladesh, a private limited corporation can have a minimum of 2 shareholders
and a maximum of 50. A shareholder and a director are two different roles that can
coexist. A person or another legal entity, such as a different corporation or trust, can
be a shareholder. 100% local or international ownership is permitted. Once the
Bangladeshi business has completed the incorporation process, shares may be issued
at any time or may be transferred to another individual.

 Required Documents: The RJSC requires the following information in order to register
a company in Bangladesh:
i. Company Name: A clearance for the name is required.

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 ii. Articles of Association and Memorandum of Association: According to RJSC,
the Memorandum of Association's object clause must not exceed 400 words
and seven clauses.
iii. Shareholder Information: If the shareholder is a citizen of Bangladesh, a copy
of the national passport is necessary.
iv. Information about the Directors, such as their tax identification numbers, is
needed.
v. The registered address.
vi. Signed Form IX and Subscriber Page: Both must be in pdf format and be both
signed and scanned.
vii. For non-US citizens: Copies of shareholders' and directors' passports are
necessary.

 Compliance with Environmental Regulations: The Bangladesh Environment

Conservation Act, 1995 (amended in 2010) is the primary legislation in Bangladesh
concerning environmental protection and it aims to provide a legal framework for the
conservation, improvement and sustainable use of environment in Bangladesh. The
companies require environmental clearance from the Department of Environment
(DOE), which assesses the potential environmental impacts of the project and
determining necessary mitigation measures to form. Preparation of an Environmental
Impact Assessment (EIA) is also needed to evaluate the project’s potential
environmental consequences and proposes measures to minimize or mitigate those
impacts. Other regulations include pollution control and waste management.

 Taxation and Financial Obligations: Companies need to obtain a Taxpayer

Identification Number (TIN) from the National Board of Revenue (NBR) and register
for VAT (Value Added Tax), Withholding Tax and Dividend Distribution Tax (DDT). The
companies then are required to maintain proper books of accounts and prepare
financial statements in compliance with the Companies Act, 1994, and the Bangladesh
Financial Reporting Standards (BFRS) and these should be audited by a qualified
auditor.

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Factory Registration and Licenses
 Factory Location and Site Selection: Considering factors such as infrastructure, access
to utilities, transportation and proximity to raw material sources and markets,
companies need to select an appropriate location for the ceramic manufacturing
factory.
 Factory Registration: The factory needs to be registered with the Department of
Inspection for Factories and Establishments (DIFE), which includes submitting an
application, factory layout plan, lease agreement or land ownership documents,
environmental clearances and other relevant information.
 Factory License: The company then have to apply for a factory license from DIFE and
it requires factory registration documents, factory layout plan, EIA report, fire safety
measures and relevant documents.
 Compliance with Safety Regulations and Employment and Labor: Outlined by DIFE, the
company needs to comply with the safety regulations such as having adequate
emergency exits, installing fire extinguishing systems, maintaining proper ventilation,
providing personal protective equipment, etc. The company also needs to comply with
the working hours, minimum wages, employment contracts, occupational health and
safety of the employees.

Environmental Regulations

The use of sustainable waste management techniques is advocated among ceramic

manufacturers. This entails giving trash reduction a high priority, putting recycling systems
into place, and using appropriate disposal techniques.

 Environmental Clearances: Before beginning or extending their activities, ceramic

producers in Bangladesh must receive environmental approvals from the Department
of Environment (DoE). To ensure that the industrial operations do not significantly
negatively affect the environment, environmental approvals are sought. An
Environmental Impact Assessment (EIA) report must be submitted to the DoE for
review as part of the procedure. The potential environmental effects of the industrial

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 processes are evaluated in the EIA report, and mitigation strategies are suggested to
reduce or eliminate any negative effects.
The EIA report normally contains extensive information on a number of topics,
including air emissions, water use, waste production, and disposal techniques.
Additionally, it evaluates any potential effects on the local communities, biodiversity,
and ecosystem in the area. In the report, the ceramic company details the steps it will
take to reduce pollution, save resources, and safeguard the environment.
 Waste Management:
Solid Waste Management: Systems for sorting, storing, and managing solid waste
must be established by ceramic manufacturers. This entails classifying various wastes,
such as non-recyclable garbage and waste made of packaging materials, scrap
ceramics, and other materials. To reduce the amount of solid waste delivered to
landfills, the emphasis is placed on waste reduction, reuse, and recycling techniques.
Wastewater Management: It is essential for environmental protection to properly
treat and dispose of wastewater produced during ceramic production operations.
Manufacturers must have the necessary wastewater treatment facilities to eliminate
contaminants before releasing them into the environment. To guarantee wastewater
quality reaches defined limitations for variables including chemical oxygen demand
(COD), total suspended solids (TSS), and pH, compliance with effluent standards
established by the Department of Environment (DoE) is required.
Hazardous Waste Management: Because the production of ceramics uses a variety of
chemicals and materials, including glazes, pigments, and solvents, it is crucial to
manage hazardous waste properly in order to protect the environment and public
health. The requirements provided by the DoE for the safe storage, transportation,
and disposal of hazardous waste must be followed by ceramic manufacturers.

Labor Laws
A comprehensive piece of legislation that controls all facets of employment and labor
relations in the nation is the Bangladesh Labor Act. Here are some important specifics of
Bangladeshi labor law:

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  Working Hours: The labor legislation places restrictions on the weekly total of working
hours. The maximum workweek for general employees is 48 hours, with a daily limit
of 10 hours. Overtime compensation must be given whenever a worker works longer
than the required number of hours.
 Minimum Wages: The labor legislation sets minimum wage rates for several industries
and worker categories. The government notifies the public when the minimum wage
is changed. The rates vary based on elements including skill level, job category, and
region.
 Leave Rights: The labor law specifies many kinds of leave rights for employees, such
as yearly leave, sick leave, and maternity leave. For example: Female employees are
entitled to a total of 16 weeks of maternity leave under the labor laws. A pre-delivery
leave of 8 weeks and a post-delivery leave of 8 weeks each make up this leave
duration. If there are issues during pregnancy or labor, this time frame may change.

5. Quality Standards: The Bangladesh Standards and Testing Institution (BSTI) has set quality
requirements that ceramic manufacturers must adhere to. BSTI creates standards for a range
of goods, including ceramics, to guarantee their performance, quality, and safety.
Manufacturers may be subject to BSTI inspections, audits, and testing to ensure adherence
to the required requirements.

6. Import and Export Regulations: Import Regulations: When importing raw materials,
machinery, or equipment, ceramic manufacturers must adhere to Bangladesh's import laws.
In order to do this, import licenses or permissions must be obtained from the appropriate
agencies, such as the National Board of Revenue (NBR) or the Bangladesh Investment
Development Authority (BIDA). Additionally, manufacturers need to make sure that import
fees, taxes, and customs processes are followed.

Export Controls: Manufacturers of ceramic goods are required to adhere to export laws,
which include documentation requirements, customs processes, and destination country
requirements. They might need to abide by international trade agreements and norms and
get an Export Registration Certificate (ERC) from the Export Promotion Bureau (EPB).

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Taxation and Financial Regulations

 Tax Identification Number (TIN): The National Board of Revenue (NBR) requires
ceramic manufacturers to get a Tax Identification Number (TIN). The TIN is required
for tax registration, tax return filing, and payment of taxes due. Ceramic producers
must submit an application to the NBR along with the necessary paperwork, such as
the company's registration certificate, memorandum, articles of organization, and
other supporting documents, in order to obtain a TIN.
 Value Added Tax (VAT): Manufacturers may need to register for VAT and must abide
by VAT rules. Charge VAT on taxable products and services, keep accurate VAT
records, and submit VAT reports to the NBR are all examples of this.
 Financial Reporting: Ceramic producers are required to abide by financial reporting
regulations, which include keeping accurate books of accounts, preparing financial
statements in accordance with applicable accounting standards (like the International
Financial Reporting Standards), and going through audits by licensed auditors. The
balance sheet, income statement, cash flow statement, and financial statement notes
are often included in the financial statements. The audited financial accounts offer a
thorough analysis of the ceramic manufacturer's financial situation and performance.

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Chapter VI
Conclusion

Operating in the ceramic industry in Bangladesh requires compliance with a variety of laws,
rules, and regulations to ensure legal and sustainable operations. This report has highlighted
some key legal aspects that ceramic manufacturers need to consider in order to adhere to
these regulations. Key findings from the analysis of the legal aspects and regulatory
requirements for ceramic manufacturers in Bangladesh are as follows:

1. Company Registration: The process of registering a company involves name

clearance, creating a bank account, bringing paid-up capital, and company
registration. Foreign shareholders have additional requirements.

2. Factory Registration and Licenses: Selecting an appropriate factory location,

registering with the Department of Inspection for Factories and Establishments (DIFE),
and obtaining a factory license are essential steps for ceramic manufacturers.

3. Compliance with Environmental Regulations: Environmental clearances,

Environmental Impact Assessments (EIA), and proper waste management are
necessary to meet the requirements of the Bangladesh Environment Conservation Act
and ensure sustainable practices.

4. Labor Laws: Compliance with working hours, minimum wages, and leave rights
outlined in the Bangladesh Labor Act is crucial for maintaining a healthy and fair work
environment.

5. Quality Standards: Adhering to the quality standards set by the Bangladesh Standards
and Testing Institution (BSTI) ensures the performance, quality, and safety of ceramic
products.

6. Import and Export Regulations: Companies need to comply with import and export
regulations, including obtaining necessary licenses, following customs processes, and
meeting destination country requirements.

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 7. Taxation and Financial Regulations: Obtaining a Tax Identification Number (TIN),
registering for VAT, maintaining proper financial records, and undergoing audits are
important for tax compliance and financial reporting.

Implications for the industry:

Complying with the aforementioned legal aspects and regulatory requirements is crucial for
ceramic manufacturers in Bangladesh to operate legally, sustainably, and ethically. Failure to
comply may lead to legal consequences, reputational damage, and hindrances in business
operations.

Recommendations for companies:

1. Ensure thorough understanding: Ceramic manufacturers should familiarize

themselves with the laws, rules, and regulations related to company registration,
factory operation, environmental compliance, labor laws, quality standards, and
taxation.

2. Seek professional assistance: Companies should consider consulting legal experts,

industry associations like BCMEA, and relevant government agencies to ensure
compliance with the regulations and to navigate the registration and licensing
processes effectively.

3. Develop comprehensive compliance strategies: Establish internal systems and

processes to monitor and ensure compliance with legal requirements, such as
maintaining proper documentation, conducting regular environmental impact
assessments, implementing safety measures, and staying updated on changes in
regulations.

4. Prioritize sustainability: Emphasize sustainable waste management practices,

including waste reduction, recycling, and proper disposal techniques. Invest in
technologies and processes that minimize environmental impact and promote
resource efficiency.

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 5. Invest in employee welfare: Adhere to labor laws, provide a safe and healthy work
environment, and prioritize employee well-being. Regularly review and update
employment contracts, ensure fair wages, and promote equal opportunities for all
employees.

By embracing compliance, sustainability, and ethical practices, ceramic manufacturers in

Bangladesh can not only meet legal requirements but also contribute to the long-term growth
and success of the industry while safeguarding the environment and ensuring the well-being
of their employees. To summarize, compliance with various legal aspects, environmental
regulations, labor laws, quality standards, and taxation and financial regulations is crucial for
ceramic manufacturers in Bangladesh. Adhering to these regulations ensures legal and
sustainable operations while promoting environmental protection, workplace safety, and
economic growth in the ceramic industry.

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References

https://en.wikipedia.org/wiki/Taxation_in_Bangladesh#Income_tax

Section I, Tariff Schedule, National Board of Revenue, 2022, Found at

https://nbr.gov.bd/uploads/tariff_schedule/Chapter-69.pdf

www.ilo.org

https://bida.gov.bd/setting-bangladesh

Income Tax at a Glance, National Board of Revenue, Found at

https://nbr.gov.bd/uploads/publications/107.pdf

https://www.tbsnews.net/economy/budget/tax-cuts-corporates-436378

The Environment Conservation Rules, 1997, Department of Environment

Annual Report 2022, Monno Ceramics

Annual Report 2022, RAK Ceramics

Annual Report 2022, Shinepukur Ceramics

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