Company Registration in Bangladesh - An Overview
Bangladesh is one of the emerging hubs for finance, technology and capital. Apart from being characterised as one of the largest exporters in the textile industry, this country is emerging as one of the largest hubs for different forms of investment. Hence it would be credible to consider different forms of investment opportunities in the country.
Company Registration in Bangladesh requires some form of minimum paid up capital which is required to be subscribed to the Memorandum of Association. Usually most companies formed in the country are private limited companies.
About 100% foreign investment is allowed in different sectors in Bangladesh. However, there are few sectors which require prior approval from the government. Such investment would include both foreign investment as well as local investment. Companies are allowed freely to purchase any form of property in their own name. Through this different form of tax incentives would be provided to the company.
Benefits of Company Registration in Bangladesh
The following are the benefits of company registration in Bangladesh:
- Growth Oriented Economy
Over the years Bangladesh has improved its performance when compared to other countries in South Asia. It has a steady growth rate of 6% which is increasing. This is due to the combined efforts of various sectors.
- Foreign Investment Allowed
100% foreign investment is allowed in most sectors. This makes it very lenient for foreign companies to operate. Even when it comes to ownership, foreign shareholders are allowed to control the company.
- Repatriation Allowed
Any profits or money which is earned in Bangladesh can be repatriated to the home country.
- No Minimum Capital Required
There are different structures which are utilised for company registration in Bangladesh. However, there is no requirement for any form of minimum capital.
- Tax Exemptions for Entrepreneurs
There are different form of tax exemptions available for different types of entrepreneurs. Such tax exemptions would include interest on the loans, specific amount of capital gains tax on sectors, and remuneration for carrying out foreign services in particular sectors.
Types of Companies in Bangladesh
An applicant has to choose the appropriate company structure before going for the process of company registration in Bangladesh. The following structures are present in Bangladesh:
- Private Limited Company
In a private limited company, the liability of the company is limited to the amount of capital subscription which is provided by the members. There is 100% foreign ownership in a private limited company. However, the minimum paid up capital for this form of company is USD 1. As this company has the status of limited liability, it can be utilised for all forms of activities. Only two members or shareholders are required to start this form of entity.
- Public Limited Company
A public limited company has to be differentiated from a private limited company. Usually, the shares of a public limited company are registered in a stock exchange. Such shares can be traded publicly. A minimum number of seven shareholders are required to form this type of company. The minimum share capital for company registration in Bangladesh as a public limited company is USD 1. As this company has the status of limited liability, it can be utilised for all forms of activities.
- Subsidiary Company
A subsidiary company is a legal entity which is controlled by a parent company. The minimum number of shareholders or members of a subsidiary company is two and the capital requirements for subsidiary company is USD 1. For foreign investment in the company, only between 51 to 100 % foreign investment is allowed in a subsidiary company.
- Branch Office (Foreign Owned)
When a foreign company wants to start its operations in Bangladesh then it can go for a branch office. This is another mode of company registration in Bangladesh. There is no amount of minimum capital requires for starting a branch office in Bangladesh. Apart from this, there is no requirement for having any amount of minimum members present in the company. As the company is controlled by the foreign parent company, 100% foreign direct investment is allowed.
- Representative Office (Foreign Owned)
Usually this form of entity would carry out marketing activities or research & development activities for the main office. A representative office is also known as a liaison office. There is no amount of minimum capital require for starting a representative office in Bangladesh. Apart from this, there is no requirement for having any amount of minimum members present in the company.
Eligibility Criteria for Company Registration in Bangladesh
The following eligibility criterion is required for company formation in Bangladesh:
- Type of Structure
The applicant for company registration in Bangladesh has to choose an appropriate structure for company registration in Bangladesh. All the advantages and disadvantages must be carefully analysed by the applicant.
- Minimum Capital
Usually the minimum capital required 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. However, if the applicant wants to hire a foreign worker or foreign employee, then a remittance of USD 50,000 must be provided.
- No of Shareholders
Usually before opening the company, the requisite number of shareholders must be appointed. For a private limited company the number of shareholders appointed must be two and for a public limited company the number of shareholders appointed must be seven.
Regulatory Authority for Company Registration in Bangladesh
The main regulatory authority that carries out company registration in Bangladesh is the Registrar of Companies Bangladesh. The law which regulates companies in Bangladesh is the Companies Act, 1994.
Pre-requisites for Company registration in Bangladesh
The following steps 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 approved for use.
As per the Companies Act, 1994 there must be minimum of two directors for a company. This requirement is for a private limited company. For a public limited company, the requirement of minimum amount of directors is more. The directors must be more than 18 years of age and not be bankrupt or criminally convicted of any form of act.
- Minimum Shareholders
There must be minimum shareholders for a company registered in Bangladesh. Minimum of two shareholders must be present in the company. The upper limit of shareholders is 50. The director and shareholder can be the same person or entity. There is 100% foreign ownership allowed by a shareholder.
- Authorised Capital Requirement
The amount of capital which is subscribed to the Memorandum of Association and Articles of Association must be mentioned. There is no minimum amount of capital which is stated. Some of the capital may be issued to the shareholders. However, if the applicant wants to hire a foreign worker or foreign employee, then a remittance of USD 50,000 must be stated in the authorised capital of the company.
- Paid-Up Capital
The paid up capital for a company which is incorporated in Bangladesh is 1 Taka for a local company and a foreign owned company USD 50,000. This would be considered as the share capital of the company which can be increased.
- Registered Office
The Company must have a registered office during the time of incorporation. This requires being a physical address.
Procedure for Company Registration in Bangladesh
The following procedure has to be considered for company registration in Bangladesh:
- Clearance of Name
First and foremost the applicant has to apply for name clearance. For this the applicant has to visit the following website. A bank slip would require to be deposited for the process of name clearance, along with the payment of 600 Taka. Once the payment is made an official clearance would be issued by the RJSC website
- Corporate Bank Account
This step would only be required if the company is a foreign company registered in Bangladesh. The shareholding of the company would be considered for this step. If the company or the applicant plans to recruit a foreign employee, then an inward remittance of USD 50,000 must be carried out. After this step is carried out, the bank would provide an encashment certificate. Such certificate would be required by the RJSC for incorporation.
- Company Registration
This is the final step which is carried out in the process of company registration in Bangladesh. All the information is required to be submitted online on the RJSC website. Along with this information, the bank slip must be submitted stating the payment which is required to be carried out. Along with this the payment for the stamp duty must also be considered. Once the above process is completed the RJSC will scrutinise the documents. If there are no issues related to the company registration in Bangladesh, then the certificate of incorporation would be granted.
Post Registration Requirements
- The certificate of incorporation would be provided by the RJSC. Along with this the MOA and AOA would also be provided.
- Form XII must be submitted. This would be a list of directors.
- Apart from this the company has to apply for trade license, VAT registration and other forms of registrations.
- The MOA and AOA would be issued after the registration process is complete.
- If the company is carrying out any business related to import and export then Import Registration Certificate or an Export Registration Certificate must be secured.
- Annual Meeting of the Company must be held 18 months after incorporation. After this meeting, a period of more than 15 months lapse for the next meeting
- Apart from the above regular returns must be filed by the company.
Documents required for Company Registration in Bangladesh
The following documents are required for company formation in Bangladesh:
- Name Clearance Certificate from the RJSC
- Memorandum of Association(MOA ) and Articles of Association (AOA)
- RJSC requires that the clause related to the company must be about 450 words
- All the Schedules related to the objects clause must be filled up
- Form IX- Information must be fully filled up
- Subscribers Information and Directors Information must also be provided.
- Information on the registered address of the business
- TIN (Taxation Identification Numbers)
- Shareholders Information- if the shareholder is a foreign national then their passports have to be submitted.