In this article, I’ve discussed about the How you can Register a Private Company In Bangladesh if you’re a Bangladeshi or wants your business to operate from Bangladesh.
Most Bangladeshi companies are registered as private limited liability companies (commonly known as private limited companies). There is a provision for One Person Company (OPC in short).
However, owing to certain restrictions, we do not advise to form an OPC. A private limited company in Bangladesh is a separate legal entity and shareholders are not liable for the company’s debts beyond the amount of share capital they have contributed.
As per the Companies Act 1994, any person (foreign or local) above the age of eighteen can register a company in Bangladesh.
What is Private Limited Company?
A large number of companies in Bangladesh are registered as private limited companies (LLC). The liability is limited to shareholders’ shared capital and LLCs in Bangladesh could be completely foreign owned.
Eligibility Criteria for Company Registration in Bangladesh
The following eligibility criterion is required for company foundation in Bangladesh:
Type of Structure
The applicant for company registration has to select an appropriate structure for company registration in Bangladesh. All the benefits and drawbacks must be cautiously analyzed by the applicant.
Usually, the minimum capital essential for subscribing to the memorandum of association of a company registered in Bangladesh is USD 1. This would be applicable for private companies as well as public companies. Though, if the applicant wants to hire a foreign worker or foreign worker, then a payment of USD 50,000 must be provided.
No of Shareholders
Usually before opening the company, the required number of shareholders must be hired. For a private limited company, the number of shareholders hired must be two and for a public limited company the number of shareholders employed must be seven.
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Pre-requisites for Company registration in Bangladesh
The following stages must be considered for Incorporation of a Company in Bangladesh:
Name of Company
Before incorporation of a company in Bangladesh, the name of the company must be accepted for use.
As per the Companies Act, 1994 there must be minimum of two directors for a company. This requisite is for a private limited company. For a public limited company, the requirement of minimum number of directors is more. The directors must be more than 18 years of age and not be bankrupt or criminally sentenced of any form of act.
There must be minimum shareholders for a company registered in Bangladesh. Minimum of two shareholders must be existing in the company. The upper limit of shareholders is 50. The director and shareholder could be the same person or entity. There is 100% foreign ownership allowable by a shareholder.
Authorized Capital Requirement
The amount of capital which is subscribed to the Memorandum of Association and Articles of Association must be declared. There is no minimum amount of capital which is specified. Some of the capital might be issued to the shareholders.
The Company must have a registered office during the time of incorporation. This needs being a physical address.
Step By Step Process as to how to Incorporate a Private Limited Company in Bangladesh
The step-by-step process for the registration of a Private Limited Company by shares in Bangladesh are described below: –
STEP 1: GET NAME CLEARANCE LETTER
Application for name clearance to RJSC along with the following info:
- Application Form.
- Proposed Name.
STEP 2: DOCUMENTATION PREPARATION
- Drafting of Memorandum of Articles and Articles of Association and other requisite documents,
- Directors’ resolution to open a new Company in Bangladesh.
- Obtaining and filling up the following forms for registration of the Company to RJSC:
- Form I: Declaration on registration of Company.
- Form VI: Notice of situation of registered office.
- Form IX: Consent of director to act.
- Form X: List of persons consenting to be directors.
- Form XII: Particulars of the directors, manager and managing agents.
STEP 3: FORMALITIES ASSOCIATED WITH BANK ACCOUNT
- Directors shall open a temporary bank account in the name of the proposed Company with any scheduled bank with the state that the account shall be legalized once the Company is duly registered with Company House.
- Capital contribution into the bank account.
- Encashment certificate from the bank which expresses that the sum requisite for capital contribution has been duly dispatched in the temporary bank account of the proposed organization.
STEP 4: SUBMISSION OF DOCUMENTS TO RJSC
Application to RJSC along with the documents executed as listed above.
Post registration compliances for a Private Company limited by shares
(a) Trade License
The Companies have to get trade license from the appropriate City Corporation. The proposed Company is requisite to file its application at the nearest City Corporation along with appropriate documents and proper fees.
(b) Tax Identification Number (“TIN”)
A Company has to get E-TIN from the commended website of National Board of Revenue (NBR).
(C) VAT Registration Certificate
The newly incorporated Company has to accumulate a VAT registration certificate. In this regard, the application has to be made to the National Board of Revenue (NBR).
(d) Fire Certificate
Fire certificate is provided by the Bangladesh Fire Service and Civil Defense Authority.
(e) Environment Clearance Certificate
An environment clearance certificate from the Division of Environment has to be got by a company if it’s involved in an industrial project, by executing the prescribed form.
Special Case (Investment in kind, etc.)
The concept of ‘investment in kind’ is not detailed under Companies Act 1994. However, in practice, substantial investment is made by investing in machineries and other equipment in a Company by a shareholder or a proposed shareholder in a Company incorporated in Bangladesh. Although CA 1994 does not govern the process, the following steps are followed while carrying out such investment in kind:
- The concerned company has to be properly registered with RJSC,
- The concerned investors have to fill up the relevant Form(s),
- The concerned investors are requisite to have a vendors’ agreement between them.
- The filled-up Form(s) and the vendors’ contract have to be filed with RJSC.
- The RJSC will then record the investment and monitor whether the appropriate procedure has been duly followed.
Time Required for Incorporation?
Once the above-mentioned formalities are complied with, RJSC usually provides with the certificate of incorporation (Company registration certificate) in 6-8 working days. It usually takes 2-3 weeks to register a Company from the date of submitting all the documents to RJSC.
When the name clearance is obtained, the clearance remains effective for 6 months. Generally, 3 working days are requisite to get a name clearance. After obtaining the Name Clearance certificate a bank account requisite to be opened wherever the initial paid up capital need to be transferred from the shareholders’ account. If there is any foreign investment, then the amount for paid up capital need to be remitted over the newly opened bank account following appropriate process.
Fees Required for Incorporation.
The governmental fees of the Company registration depend on the amount of Authorized Capital. For issuance of Incorporation Certificate governmental charges shall be BDT 1000.
Frequently Asked Questions
What is the cost for company registration in Bangladesh?
The cost for company registration in Bangladesh would depend on the kind of company which is formed.
Do I need a physical office to be present for the process of company registration?
Yes, a physical office is requisite for the procedure of registration of a company in Bangladesh.
How long would it normally take for the above process?
Usually, the procedure of company registration would take about 6 to 8 weeks.
When is it appropriate to take a name for the company?
Taking the name for the company would be the first step which is carried out in the company registration procedure. This is carried out by the RJSC.
Would it be faster to consider a local registered agent for the procedure of company registration?
Yes, having a local registered agent would be requisite for the course of company registration in Bangladesh.
What is the number of shareholders which are requisite for company registration in Bangladesh?
Typically, only minimum of two members are essential for the process of company registration in Bangladesh. However, the maximum limit of shareholders is 50.
What is the status of companies which are incorporated in Bangladesh?
All companies which are incorporated in Bangladesh would have the limited liability status.
Is 100% foreign investment and ownership allowable in Bangladesh?
Yes 100% of foreign investment is allowable for most sectors in Bangladesh. Even when it comes to ownership, foreign ownership is allowable in these segments.