Company Registration in Bangladesh: Full Process of starting your business in Bangladesh

Embarking on the journey of establishing a company in Bangladesh requires a thorough understanding of the legal landscape, procedural intricacies, and compliance requirements. This comprehensive guide, prepared by Dewey Leboeuf law firm in Bangladesh, aims to provide an in-depth overview of company registration, covering everything from prerequisites to post-registration formalities.

Pre-Registration Essentials

Company Structure

In Bangladesh, most companies opt for registration as private limited liability entities. Although the provision for One Person Company (OPC) exists, certain restrictions often discourage its formation. A private limited company establishes a separate legal entity, shielding shareholders from liabilities beyond their contributed share capital. According to the Companies Act 1994, individuals (foreign or local) above the age of 18 can register a company in Bangladesh.

Key Requirements for Formation

Company Name:

• The chosen name must undergo approval (clearance) before incorporation.

Directors:

• A minimum of two directors is mandatory, who can be either local or foreign.
• Directors must be at least 18 years old, not bankrupt, and without any past convictions for malpractice.
• Directors must own qualification shares as stipulated in the Articles of Association.

Shareholders:

• A private limited company can have 2 to 50 shareholders, who can be individuals or legal entities.
• 100% local or foreign shareholding is allowed in most sectors.
• Shareholders and directors can be the same or different persons.

Authorized Capital:

• The maximum amount of share capital the company is authorized to issue must be stated in the Memorandum of Association.
• There is no minimum or maximum limit for authorized capital in Bangladesh.

Paid-up Capital:

• Minimum paid-up capital for registration is Taka 1.
• Paid-up capital (share capital) can be increased after incorporation.

Registered Address:

• A local address must be provided as the registered address, which cannot be a P.O. Box.

Memorandum and Articles of Association:

• The company must prepare a Memorandum of Association (MoA) and Articles of Association (AoA).

Considerations for Foreigners

Foreigners planning to establish a company in Bangladesh should take note of specific considerations:

• Opening a bank account in the proposed company’s name is mandatory, along with obtaining name clearance.
• All incorporation formalities can be managed remotely, except for opening a bank account.
• All directors and shareholders can be foreigners.
• No special Bangladesh visa is required for incorporating a private limited company without plans of relocation.

Required Documents

For company incorporation in Bangladesh, the following documents and information are required:

• Company Name (with name clearance).
• Memorandum of Association and Articles of Association.
• Shareholders’ particulars (National ID for Bangladeshi shareholders).
• Directors’ particulars (including Tax Identification Number).
• Registered address.
• Signed Form IX and Subscriber Page.
• For foreigners: Copy of passport of shareholder and director.

Registration Procedure

The company registration procedure in Bangladesh involves three distinct steps:

Step 1: Name Clearance

1. Apply for name clearance on the Registrar of Joint Stock Companies and Firms (RJSC) website.
2. Pay Taka 600 to the designated bank after receiving the payment slip.
3. Log in to your RJSC account to obtain name clearance.

Tip: Use Internet Explorer or Mozilla Firefox for the RJSC website.

Step 2: Bank Account Opening and Capital Infusion

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

1. Open a bank account in the proposed company’s name with any scheduled bank in Bangladesh.
2. Remit money equal to the shares to be owned by foreign shareholders from outside Bangladesh.
3. Obtain an Encashment Certificate from the bank for RJSC incorporation.

Step 3: Register Company

1. Submit all required information on the RJSC website.
2. Upload Form IX and Subscriber Page.
3. Receive a bank payment slip for registration fees and stamp duty.
4. Pay the fees at the bank.
5. Follow up with RJSC for the issuance of the incorporation certificate.

Note: Delays may occur in rare cases, especially if shareholders or directors are of certain nationalities, prompting authorities to request additional information.

Post-Registration Formalities

Documents Issued by RJSC

1. Certificate of Incorporation:

• Includes registration number, company name, and date of incorporation.

2. Form XII:

• Contains the list of directors of the incorporated company.

3. Certified Copies of MoA and AoA

Additional Requirements

Upon registration, companies typically need:

• Share certificates for each shareholder.
• Register for shareholders, shares, and directors.
• Company seal.
• Rubber stamp.

Applying for Licenses

After incorporation, companies should:

1. Purchase or rent commercial space.
2. Apply for a Trade License and Tax Identification Number.
3. Obtain additional licenses based on business activities.

Return Filing Requirements

1. Annual Return:

• Hold an Annual General Meeting within 18 months of incorporation and subsequently every 15 months.

2. Regular Return:

• File relevant returns for any changes in the board of directors, shareholding structure, or other alterations.

Establishing a company in Bangladesh demands meticulous adherence to legal procedures and compliance requirements. This comprehensive guide serves as a roadmap, offering insights from pre-registration essentials to post-registration obligations. For professional assistance with company incorporation in Bangladesh, Dewey Leboeuf law firm stands ready to provide guidance and support, ensuring a smooth and compliant process for your business endeavors.

COMPARISON TABLE OF FOR DIFFERENT TYPES OF COMPANY REGISTRATION IN BANGLADESH

	Sole Proprietorship	Partnership	Limited Company	Branch/Liaison Office
Succession	till the owner passes away. The heirs will eventually carry it.	up to the partner’s death. Later, it will be carried by the heirs.	Perpetual in nature unless agreed otherwise	Perpetual in nature unless agreed otherwise
Equity based share allotment	Not applicable	Not applicable	Applicable	Applicable
Residential status of the owners	Must be BD Citizens	Must be BD Citizens	Not required	Not required
Liability	Owner is required to take on all liability.	Owners are required to take on all liability.	Limited liability applies to directors and shareholders.	Limited liability applies to directors and shareholders.
Taxation	Tax will be calculated on the proprietor’s individual head of business at the individual tax rate.	Tax will be calculated on the partner’s individual head of business at the individual tax rate.	Tax will be calculated using the corporation tax rate.	For the branch office, tax will be assessed at the corporate tax rate.
May be owned by another business, rather than individuals	No	Yes	Yes	Yes