Share Money Deposit, Encashment Certificates and Reporting Share Issues to Non-Residents

In this guide: Before incorporation: the temporary account · The encashment certificate and the reporting ID · Holding the equity in foreign currency · The 360-day rule · Reporting the issue within 14 days · Repairing a broken trail

The short answer

Open the temporary account in the proposed company’s name before anyone remits, so that the first dollar arrives as the company’s equity and not as a director’s personal money. Tell the investor to remit from an account in their own name with the purpose stated as equity investment in the named company, and collect the encashment certificate from the bank showing the foreign currency, the taka, the investor and the reporting ID. Allot the shares, file Form XV at the RJSC, and do it well inside 360 days. Then make sure the bank sends its 14-day report to Bangladesh Bank and keep the endorsed copy with the company’s permanent records, because that report is what the bank will produce when it remits the first dividend or the sale price. If the company wants to keep the equity in foreign currency for capital-goods payments abroad, it may, in a foreign-currency account for up to a year. If any of this was missed in an earlier year, it can be repaired, with a late report and the original certificates, before the next remittance is attempted rather than during it. Our company registration guide places these steps in the incorporation sequence; this guide is the detail.

Before incorporation: the temporary account

Under Bangladesh Bank’s standing instructions an authorised-dealer bank, or the offshore banking unit of a local bank, may open a temporary non-resident taka account in the name of a company that does not yet exist, on the application of its foreign promoters, without prior Bangladesh Bank approval. The account receives only inward remittances from abroad; it holds the foreign equity and may pay pre-incorporation expenses (name clearance, stamp duty, lawyers, rent deposits); after incorporation the balance is transferred to the company’s own account and the temporary account is closed; and if the venture is abandoned before incorporation, the balance net of expenses may be remitted back without Bangladesh Bank approval. A temporary foreign-currency account may be opened alongside it on the same terms. The arrangement also applies to companies proposed for an export processing zone or economic zone. Its value is that the investor’s money is identified as the company’s equity from the first day, which is what the encashment certificate then records; money that first passes through a director’s personal account, or a local nominee’s, cannot be certified as the foreign investor’s share money without correspondence that banks are reluctant to write.

The encashment certificate and the reporting ID

When the remittance arrives the bank converts it (or credits a foreign-currency account) and issues an encashment certificate in the form at Appendix 5/39 or 5/40 of the Guidelines, stating the remitter, the beneficiary company, the foreign-currency amount, the rate and the taka equivalent, the date, and the purpose. Since FEID Circular 01 of 27 January 2025 the certificate must also carry the FX Transaction Reporting ID generated by Bangladesh Bank’s online inward remittance monitoring system when the bank reports the inflow; a certificate without the ID is not accepted by the Registrar for a foreign-owned company, nor by Bangladesh Bank later. The same circular fixes the issue-side rules: the money must arrive before the shares are issued, through the banking channel, and for the purpose of equity; shares may not be issued against money still in transit, against a promise, or against a remittance labelled for something else. Shares issued for consideration other than cash, typically imported capital machinery, are reported to Bangladesh Bank with the bills of entry rather than certified by the bank. Form C, which some advisers call an FDI form, is the general declaration an inward remittance above US$20,000 requires before the account is credited; it has been filed electronically since March 2023 and wage-earner remittances are exempt. The investor’s share money passes through it like any other inflow, and the resident seller of shares to a non-resident files it for the price received; it is not a separate FDI return.

Holding the equity in foreign currency

A company outside the zones that would rather not convert its foreign equity on arrival may, under FE Circular 10 of 21 June 2023, hold it in a foreign-currency account with its authorised-dealer bank for up to one year, use it to pay for capital expenditure abroad (machinery, software licences, technical services) and convert the balance when needed; at the end of the year the account is closed and the remainder encashed. The encashment certificate is issued for the converted portion as and when conversion happens, and the bank’s report of the share issue refers to the foreign-currency credit and the later encashments together. Companies in an export processing zone, economic zone or hi-tech park need not encash foreign equity at all and operate in foreign currency under the zone rules. The option matters when a factory is being equipped from abroad: it avoids buying taka at one rate and dollars back at another within the same year.

The 360-day rule

FEID Circular 02 of 5 February 2020 requires that share money received from a non-resident be converted into shares, in practice including the return of allotment to the Registrar, within 360 days of receipt; for deposits already held when the circular issued, the 360 days ran from its date. Until the shares are issued the money may be used only for the company’s main business and may not be placed in interest- or profit-bearing instruments. The consequence of missing the period is often misstated. The circular does not convert the deposit into a loan, does not require it to be refunded and imposes no penalty. What it does is exclude the unconverted deposit from equity when a debt-equity ratio is calculated: for a foreign-currency loan or a parent-company loan under the Bangladesh Bank circulars, and for a taka term loan to a foreign-owned company (where the ratio is now 60:40). The deposit still appears in the financial statements under the accounting standards, and Bangladesh Bank may ask about it at the next inspection or remittance. Where the capital to be issued exceeds the Securities and Exchange Commission’s exemption limit for private placements, the Commission’s consent is obtained before the allotment. On the Companies Act side, the allotment is by board resolution, the return of allotment in Form XV is filed at the RJSC within the s.151 period (60 days in practice), and the register of members and the share certificates follow; the stamp duty and fee mechanics are in our capital increase guide.

Reporting the issue within 14 days

After the RJSC formalities the company’s bank reports the issue of shares to the non-resident to the Foreign Exchange Investment Department within 14 days, under Chapter 9, paragraph 2(A) of the Guidelines as continued by FEID Circular 01 of 2025. The report attaches the certificate of incorporation, the Memorandum and Articles, Form XV, Form XII, the encashment certificate (or bills of entry for machinery) and, when available, the audited accounts; the Department returns an endorsed copy, which is the company’s proof. Reporting is required once cumulative issues to non-residents exceed Tk 10 lakh; for cash issues up to that amount the bank reviews the documents and sends the Department a declaration in Annexure A, in three originals, within the same 14 days, and receives one back endorsed. Shares issued against imported capital machinery, and any discrepancy, are forwarded to Bangladesh Bank for decision. A transfer of shares to or from a non-resident is reported within the same 14 days under paragraph 2(B), with Form 117, the valuation and the memorandum where applicable, now under the March 2026 master circular on transfers. Banks also send quarterly foreign direct investment data to Bangladesh Bank’s Statistics Department from their own records; the company is not asked for that. What the company must do is keep the endorsed 14-day reports in the statutory file: our repatriation guide explains why the dividend file fails without them.

Repairing a broken trail

Companies incorporated in a hurry, or by advisers who treated the bank as a formality, often reach their first dividend with a gap: a certificate without a reporting ID (pre-2025 certificates are accepted as issued; the ID is required for inflows after the 2025 circular), an issue never reported, an allotment made after 360 days, or share money that came through a director’s account. The repairs, in rising order of difficulty: a late 14-day report with the incorporation documents and certificates, which the Department accepts with an explanation; a re-issued encashment certificate from the bank where the original was lost, against the bank’s own records; a late allotment with the consequence for later loan ratios explained to the lender; and, for money that arrived through the wrong account, a bank confirmation tracing the remittance from the investor, which banks will give only where the SWIFT record is clean. None of these is quick, and all are easier before a dividend is declared or a buyer is waiting. We begin every repatriation engagement by reconstructing this file.