FORMATION OF A PRIVATE LIMITED COMPANY (ENTIRE PROCESS)

Most Bangladeshi companies are registered as private limited liability companies, commonly known as private limited companies. 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. According to the Companies Act 1994, any person (foreign or local) above the age of 18 can register a company in Bangladesh.

Pre-Registration: Key facts

- Company Name: The name must be approved (cleared) before incorporation of the company in Bangladesh.

- Directors:  Minimum two directors are mandatory for a private limited company. Directors can be either local or foreign nationals. Directors must be at least 18 years of age and must not be bankrupt or convicted for any offence in the past. The law requires that a director must own qualification shares stated 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.

- Shareholders:  A private limited company in Bangladesh can have a minimum of 2 and maximum of 50 shareholders. A director and shareholder can be the same or a different person. The shareholder can be a person or another legal entity such as another company or trust. 100% local or foreign shareholding is allowed. New shares can be issued or existing shares can be transferred to another person anytime after the Bangladeshi company has gone through the incorporation process.

- Authorized Capital:  The amount of authorized capital has to be stated in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that the company is authorized to issue (allocate) to shareholders. Part of the authorized capital can remain unissued. There is no minimum or maximum limit for authorized capital in Bangladesh for local company. However, for practical reasons and to obtain full flexibility regarding expatriation and bringing in foreign expatriates a minimum of USD 50000/- is required to be invested in the Company.

- Paid-up Capital: Minimum paid-up capital for registration of a Bangladeshi company is Taka 1 (local) and USD 50000 for foreign owned company. Paid-up capital, which is also known as share capital, can be increased anytime after the incorporation of the company.

- Registered Address:  In order to register a company in Bangladesh, a local address has to be provided as the registered address of the company. The registered address must be a physical address and cannot be a P.O. Box.

- Memorandum and Articles of Association: The company to be incorporated must have its own Memorandum of Association and Articles of Association.

Required Documents for Company Registration in Bangladesh

For the purpose of company incorporation in Bangladesh, the following information is required by the RJSC:

- Company Name: A name clearance must be obtained.

- Memorandum of Association and Articles of Association: RJSC requires that the object clause in the Memorandum of Association has to be within 400 words and 7 clauses.

- Shareholders Particulars: Copy of the National Passport is required if the shareholder is a Bangladeshi citizen.

- Particulars of the Directors, including the Tax Identification Numbers are required.

- Registered Address.

- Signed Form IX and Subscriber Page: Signed and scanned copy in pdf are required.

- For foreigners: Copies of passports of shareholders and directors are required.

Registration Procedure of Company in Bangladesh

Company registration procedure in Bangladesh is partially computerized. There are three steps involved in the Bangladeshi company setup procedure, which are as follows: a) Name Clearance; b) Bank account opening and bringing the paid up capital into Bangladesh; and c) Company Registration. Step b is only applicable if there is any foreign shareholder in the proposed company.

Step 1: Name Clearance

To set up a Bangladesh company, the first step would be to obtain a name clearance for the proposed company name. One has to visit www.roc.gov.bd and create a username first and then apply for the name clearance. After the application for name clearance is made, a bank payment slip will be received, with which Tk. 600 will have to be to the designated bank. After making the payment, the name clearance can be obtained from the RJSC website.

Step 2: Bank account opening and bringing in the paid up capital

This step is only applicable if the proposed company has foreign shareholding.

A bank account will have to be opened in the proposed company name with any scheduled bank in Bangladesh. After opening the account, money equal to the shares to be owned by the foreign shareholders from outside of Bangladesh has to be remitted into the account. The Bank will issue an Encashment Certificate which will be required by the RJSC for incorporation.

Step 3: Registration of the Company

The last step is to submit all the required information in the RJSC’s website. After submission, a bank payment slip will be received for paying the registration fees along with stamp duty.

After making the payment in the bank, the application for registration process is completed. Regular follow up of RJSC has to be carried out in order to obtain the Certificate of Incorporation. RJSC officials will check the documents and information. If they are satisfied, they will issue the Certificate of Incorporation.

Post-Registration Formalities

The following documents are issued after the registration formalities are over.

- Certificate of Incorporation: RJSC will issue a Certificate of Incorporation of the company. The certificate will have the registration number, name of the company and the date of incorporation.

- Form XII: Form XII contains the list of directors of the incorporated company.

- Certified copies of Memorandum of Association and Articles of Association.

Applying for Trade License, Tax Identification Number, VAT registration and other licenses

After the incorporation, the company should either purchase a commercial space or rent some space in any commercial area.

Subsequently, it must apply for a Trade License, VAT registration and a Tax Identification Number. Depending on the company’s business activities, it may need to obtain further business licenses. We will provide service for the first six (6) months for preparation of VAT return documentation and VAT (Musak) filing.

Other Licenses, Permits and Registration

1. Registration with any Chamber of Commerce & Industry (optional but mandatory for obtaining either Import Registration Certificate - IRC or Export Registration Certificate - ERC)
2. Import Registration Certificate (IRC) for commercial purpose or for industrial raw materials by making application to the Chief Controller of Import & Export in prescribed form

• Export Registration Certificate (ERC) by making application to the Chief Controller of Import & Export
• BIDA recommendation is needed for issuance of Industrial IRC
  
  Any other license depending on the nature of any particular business activity.

Return Filing Requirements

- Annual Return:  Each calendar year, an Annual General Meeting (“AGM”) must be held. The AGM must be conducted within 18 months of company incorporation, after which no more than 15 months can elapse between one AGM and the next.

- Regular Return: In case of any change in the board of directors or in the shareholding structure or any other change, a relevant return must be filed with the RJSC within a certain period of time.