Company Formation Procedure In Bangladesh: You Need To Know
When incorporating a new company or relocating an existing one to Bangladesh, keep in mind that the majority of Bangladeshi businesses are formed as private limited liability companies. In Bangladesh, a private limited company is a separate legal entity, and stockholders are only liable for the amount of ordinary shares they contributed to the firm. Any person foreign or local just above the age of 18 can incorporate a business in Bangladesh, according to the Company Law of 1994.
In FY21, 12,107 private enterprises were registered, gaining 34.37 percent from the previous year. In FY20, a total of 9,010 businesses were incorporated.
We recommend that you read our content if you are a foreign investor. It will assist you in comprehending Bangladesh's legal framework for foreign investment.
The Characteristics Of A Private Limited Company Under Companies Act 1994
The following features of a Private Limited Company are listed in the Companies Act of 1994:
1. It limits the ability to transfer shares [section 2(q)].
2. The minimum number of members is 2 (two) [s. 5].
3. The maximum number of members is 50 (fifty) excluding persons employed by the Company [s. 2(q)].
4. It must have at least two directors [s. 90 (2)].
5. It prohibits any invitation to the public to subscribe for the Company's shares or debentures [s. 2(q)].
6. It is not required to have a statutory meeting or submit a statutory report [s.83(12)].
7. A Private Company can start doing business as soon as it is incorporated with the RJSC, subject to obtaining the other licenses listed below in the post-registration portion of this Report.
Limited Company Formation Procedure In Bangladesh
To learn how to private limited company formation in Bangladesh, step-by-step instructions are provided. The RJSC, the relevant body, deals with it, and on its official website, it provides a full guideline on how to set up a company, from name clearance to company incorporation.
About Company’s Data from the RJSC showed In Bangladesh
Company Types
Numbers Of Company
Public limited companies
3,587
private limited companies
186,825
Foreign companies
974
Partnership firms
51,332
Trade organizations
1,143
Societies
15,253
The following is a step-by-step approach for Private limited company formation by Shares in Bangladesh:-
1. Get a Name Clearance Letter
RJSC must receive an application for name clearance together with the following information:
a. Fill out the application form.
b. Name proposal.
2. Complete Documentation
a. Drafting of the Memorandum and Articles of Association, as well as other relevant papers
b. The Board of Directors' decision to establish a new business in Bangladesh;
c. Getting and filling out the required forms for the Company's RJSC registration:
Form I: Declaration of Company Registration.
Form VI: Notification of the status of the registered office.
Form IX: Director's permission to act.
Form X: List of people who agree to serve as directors.
Form XII:Particulars of the directors, manager, and managing agents.
3. Related Formalities With Bank Account
a. Directors shall open a provisional bank account in the proposed Company's name with any scheduled bank, subject to the account being regularized after the Company is legally registered with Company House.
b. Deposit of funds into a bank account.
c. A bank encashment document stating that the appropriate capital contributions has been duly dispatched in the proposed organization's temporary bank account.
4. Document Submission To RJSC
Application to RJSC, along with the above-mentioned company Incorporation documents.Post-registration requirements for a limited-by-shares corporation
a. Trade Permit
The companies must receive a trade license from the local government. The proposed Business must submit an application, along with all necessary papers and payments, to the local City Corporation.
b. TIN (Tax Identification Number)
A company must obtain an E-TIN from the National Board of Revenue's recommended website (NBR).
c. Certificate of VAT Registration
A VAT registration certificate must be obtained by the newly formed company. In this case, an application to the National Board of Revenue is required (NBR).
d. Certificate of Fire Safety
Bangladesh Fire Service and Civil Defense Authority issues a fire certificate.
e. Certificate of Environmental Clearance
If a corporation is involved in an industrial project, it must get an environmental clearance certificate from the Department of Environment by completing the necessary form.
Special Case Study
The Companies Act of 1994 does not define the term "investment in kind." In practice, however, significant investment is made in a Company by a shareholder or a possible owner in a Company incorporated in Bangladesh by investing in machinery and other equipment. Despite the fact that CA 1994 does not dictate the practice, the following steps are taken when making such an in-kind investment:
1. The concerned company must be properly registered with RJSC.
2. The interested investors must complete the necessary Form.
3. The interested investors must have a vendor's agreement in place.
4. The completed Form and the vendors' agreement must be filed with RJSC.
5. The RJSC will then make a recording.
The Time Frame For Incorporation
6-8 working days taking for company registration certificate
normally takes 2-3 weeks to register a company
name clearance usually takes 3 working days
RJSC typically issues the certificate of company incorporation (Company incorporation certificate) within 6-8 working days after the aforementioned processes are completed. From the time all of the company incorporation documents are submitted to RJSC, it normally takes 2-3 weeks to register a company.
Once a name clearance has been acquired, it is valid for six months. Obtaining a name clearance usually takes three working days. After getting the Name Clearance certificate, you'll need to register a bank account and transfer the initial paid-up capital from the shareholders' account. If there is any foreign investment, the sum for paid-up capital must be transmitted via the newly formed bank account in accordance with the proper procedures.
Required Fees For Limited Company Incorporation
The fees for limited company formation with the government are determined by the amount of authorized capital. The government will charge BDT 1000 for the issue of an incorporation certificate.
Return Filing Requirements
Annual Return: An Yearly General Meeting is required to be held each calendar year. The AGM must be held within 18 months of the company incorporation, and no more than 15 months must pass between AGMs after that.
Regular Return: A relevant return should be submitted with the RJSC within a set amount of time if the board of directors, shareholding structure, or any other change occurs.
Conclusion
When it comes to company formation in Bangladesh, forming a Private Limited Company in Bangladesh is one of the most popular options for starting a business. Although there are numerous different ways to start a business in Bangladesh, the most frequent and practical methods are either opening a branch office or private limited company formation.
If you want to open a company in Bangladesh, contact us. We are ready to provide you Branch , liaison office, coworking office and also Remote office.
