Business

A Comprehensive Guide to Company Incorporation in Bangladesh

Company incorporation in Bangladesh is increasing with the passing days due to the alarming growth in Bangladesh’s business environment. The ease of registration of a company in Bangladesh is secured because of the diverse and strong corporate law. We at Enterslice ensure clarity to the process of company incorporation in Bangladesh through the desired blog. A detailed explanation of the process of company incorporation in Bangladesh can be read under the provisions of the Companies Act of Bangladesh enacted in the year 1994.

A Strategic Overview of Business Landscape in Bangladesh

The Business Landscape of Bangladesh provides for a business-friendly economy with emerging financial and technological developments in the nation. The strategic market of Bangladesh allows both national and foreign investment opportunities to enter and grow in Bangladesh’s promising economy. The business environment of Bangladesh also includes the legal landscape, which emphasizes the established laws and regulations that govern the corporate and business operations in Bangladesh. Certain other factors securing the business landscape in Bangladesh are targeted toward the benefits or advantages of company incorporation in Bangladesh, which are provided below:

1. Allows 100% overseas investment in most of the corporate sectors;
2. The strategic location of Bangladesh ensures good cordial relations with major markets like India, China, Bhutan, Nepal, Myanmar, and major areas of Southeast Asia;
3. Low cost of employment wages (according to the established labour laws);
4. Attracts lower rental costs in Bangladesh;
5. No minimum capital is required for company incorporation in Bangladesh;
6. Enjoys access to international air and sea routes in Bangladesh;
7. Investment-friendly government policies for attracting both domestic and foreign investment opportunities;
8. Offering a large and ever-growing consumer market;
9. Growth-oriented economy targeted by the surging rate of GDP in the economy of Bangladesh;
10. Easy access to the skilled, young, and cheap workforce;
11. Piercing of internet accessibility, smartphone usage, and e-commerce activities in the business landscape of Bangladesh;
12. Improved government goals to ensure sustainable growth in the corporate economy of Bangladesh;
13. Offers various tax holidays and exemptions to investors and business owners, etc.

Governing Authority for Company Incorporation in Bangladesh

The RJSC, which stands for the Registrar of Joint Stock Companies and Firms, is the Regulatory Body for Company Incorporation in Bangladesh established under the Ministry of Commerce, which stands as the sole authority responsible for facilitating the entire procedure of setting up a company in Bangladesh. The RJSC works in consonance with the corporate laws of Bangladesh, like the Companies Act of 1994, the Societies Registration Act of 1860, and the Partnership Act of 1932. The governing authority is headquartered in Dhaka, and it has three divisional offices in Chittagong, Khulna, and Rajshahi. The Registrar is the governing authority at the office of the RJSC, which holds the following authorities:

1. Authority for the lawful registration of a company in Bangladesh under the provisions of the Companies Act of 1994;
2. Authority for administering and enforcing provisions for regulating the company incorporation in Bangladesh.

Pre-Incorporation Formalities for setting up a company in Bangladesh

The pre-incorporation formalities must be reviewed before jumping into the procedure for the registration of a company in Bangladesh. The pre-incorporation formalities checklist the following standards for setting up a company in Bangladesh:

Decide upon the number of directors

The entrepreneurs willing to incorporate into a company in Bangladesh must mandatorily require the Directors of the company to play a significant role in the smooth operation of the company. The directors of the company must possess certain qualifications as provided below:

1. Either be a foreign or Bangladeshi national;
2. Must be above 18 years of age (i.e., of legal age);
3. Must be of sound mind;
4. Must not be a bankrupt;
5. Must not be convicted of any malpractice or a criminal offence;
6. Must possess and hold the qualification shares stated in the AOA;

The number of directors is decided according to the structure of the company registered in Bangladesh. Also, the nominee director is chosen by the shareholders (if required), who can either be a natural person or a corporation.

Decide upon the number of shareholders.

The next step is to decide upon the number of shareholders required to register a company in Bangladesh. A private limited company in Bangladesh is free to have a minimum of 2 and a maximum cap of 50 shareholders, and a public limited company must have at least 7 or more members who hold the following qualifications:

1. May either be the same as the director;
2. It may be a legal entity like another company registered in Bangladesh;
3. Maybe a foreign alien with 100% ownership;
4. It may be either a natural or artificial person.

Authorized Capital

The authorized capital of the company is the maximum amount of share capital issued or allocated by the shareholders of the company being registered in Bangladesh. The exact amount of the authorized capital must be stated earlier in the Memorandum and the Articles of Association.

Paid up Capital

It is also known as the share capital of at least 1 Bangladeshi taka required for the registration of a company in Bangladesh. The amount of paid-up share capital can be increased at any time after the company’s incorporation. A payment of USD 50,000 is mandatory if the entrepreneur employs a foreign alien as an employee in the company.

Registered address

The next step is to decide and establish a local registered address for office use to complete the process of company formation in Bangladesh. The local address must be a physical address or a residential or commercial address to secure further business communications.

Required Documents

The entrepreneurs are mandatorily required to possess a list of necessary documents before getting into the process of company incorporation in Bangladesh. The list is differentiated according to the legal requirements of different forms of companies registered in Bangladesh under the provisions of the Companies Act of 1994.

The necessary documents required for the registration of a private limited company in Bangladesh include the following:

1. The facsimile of the name approval certificate;
2. The draft of the incorporation documents;
3. The resolution of the board meeting or the promoters’ meeting minutes;
4. The facsimile of the national identification proofs and visas of all the shareholders;
5. Completed and signed application form for opening a corporate bank account by the foreign aliens;
6. The complete details and particulars of the directors;
7. Signed copy of the Form IX, i.e., Consent of the Director to act and the subscriber page;
8. The facsimile of the Form I, i.e., the Declaration on Registration of a company in Bangladesh;
9. The facsimile of Form X contains the List of Persons Consenting to be Directors.

The list of documents required for the registration of a public company in Bangladesh includes the following:

1. The facsimile of the Form I containing the Declaration on Registration of a company;
2. The facsimile of Form VI containing the notice for any change in the registered address of the office;
3. The facsimile of the Form X containing The List of Persons Consenting to be Directors;
4. The facsimile of Form XII containing the complete details of the directors, managers, and other managing agents appointed during the process of registration;
5. The facsimile of Form XIV containing the declaration issued before starting the operations of the company filing statement in lieu of prospectus;
6. The facsimile of Form XI contains the agreement to hold qualification shares in the proposed company.

The list also extends to foreign companies’ registration in Bangladesh, which is accompanied by the following documents:

1. Copy of passports of all the shareholders and the directors;
2. The passport and photographs of all the nominee directors;
3. The facsimile of Form XXXVII, which contains the notice providing for the registered or principal official address of the foreign company;
4. The facsimile of Form XXXVIII, which contains the list of all the directors and managers engaged in the foreign company;
5. The facsimile of the Encashment Certificate from any Scheduled Bank;
6. A copy of the official permit from the office of the Bangladesh Investment Development Authority, i.e., BIDA;
7. The facsimile of the work permits;

Step-by-step Guide for Company Incorporation in Bangladesh

The Companies Act of 1994 holds the registration of a company in Bangladesh as one of the primary steps required for the development of a business enterprise in Bangladesh. The process of registration of a company in Bangladesh begins once the company’s documents are compiled, fulfilling the legal requirements as provided in the blog.

Step 1: Choose an optimal Business Structure

The primary step requires choosing the optimal business structure following the process of company incorporation in Bangladesh. Generally, this step plays a vital role in deciding the right business structure based on various factors like size, goals, industry, legal requirements, benefits, disadvantages, long-term plans, etc. The provisions of the Companies Act of 1994 provide for diverse forms of companies that can be incorporated in Bangladesh. The following diverse forms of company registered in Bangladesh are:

1. Company Limited by Shares;
2. Company Limited by Guarantee;
3. Limited Liability Company (LLC), including Private and Public Limited Companies;
4. Unlimited Liability Company;
5. One-person Company;
6. Foreign Company;
7. Subsidiary Company;
8. Branch Office or Foreign-Owned company;
9. Representative or Liaison Office

Step 2: Obtaining a Name Clearance Certificate

The next step mandatory in the process of company incorporation in Bangladesh requires the entrepreneurs to choose a name for the proposed company. The name chosen must be cleared through a name clearance certificate issued by the Registrar of the Joint Stock Companies and Firms, i.e., RJSC. The application for obtaining the name clearance is required to be filed directly at the RJSC name clearance portal, supported by the payment of the application fee of approx. 600 Bangladeshi taka in the Form of bank challan. After completing the payment, a temporary name clearance certificate shall be issued for a period of 30 days, which can also be extended for another 60-90 days. The proposed name of the company must comply with the following requirements:

1. Must not be identical to any existing company’s name;
2. Must not infringe any trademark registered under the laws of Bangladesh;
3. Must not contain any vulgar or obscene content or words;
4. Must not already reserved;
5. Must be novel;

The proposed name of the company filed in consonance with the corporate laws of Bangladesh will be reserved for a period of 6 months in approx.

Step 3: Drafting Incorporation Documents

The entrepreneurs must draft relevant incorporation documents immediately after receiving the name clearance certificate from the Office of the Registrar of Joint Stock Companies and Firms. The incorporation documents are the consolidated form of constitutional documents underlying the primary objectives and operational strategy of the company’s incorporation in Bangladesh. The list of constitutional documents required for setting up a company in Bangladesh includes the Promoters’ resolution for company incorporation in Bangladesh and the Memorandum and Articles of Association for the company.

Memorandum of Association (MOA)

The Memorandum of Association is mandatorily required to be drafted and filed at the office of the Registrar of Joint Stock Companies and Firms for the successful registration of a company in Bangladesh. The memorandum of Association must contain the following details of the company as provided below:

1. The primary object of the company incorporation in Bangladesh;
2. The structure describing the paid-up and authorized capital in the company;
3. The details of the shareholdings in the company, etc.

Articles of Association (AOA)

The Articles of Association are held to be the constitution of the company, containing the following information:

1. The regulations describing the operations of the company;
2. Complete information regarding the directors, power of the board, chairman, and other members of the company;
3. Information regarding the company’s bank account;
4. Complete details of the meetings of the company, like quorum and process;
5. The details regarding the appointment of auditors, etc.

Step 4: Complete the bank Formalities

The next step, which authorizes opening a corporate bank account, only applies to foreign company incorporation in Bangladesh. The opening of the corporate bank account must be done with any scheduled commercial bank in Bangladesh. After the opening of the corporate bank account, the Bank of Bangladesh issues an encashment certificate necessary for setting up a company under the aegis of the Registrar of Joint Stock Companies and Firms of Bangladesh. The Bangladesh Foreign Exchange Regulations highlight the object (receiving inward equity remittances) of opening a corporate bank account for foreign company incorporation in Bangladesh.

Step 5: Successful Document submission

The next step allows the promoters or the entrepreneurs to successfully submit the gathered documents at the office of the Registrar of Joint Stock Companies and Firms of Bangladesh. The documents submitted must be accompanied by the RJSC registration fee and stamp duty which is ultimately decided based on the proposed authorized capital of the company.

Step 6: Receive the Certificate of Incorporation

After the successful submission of the documents, the Registrar of Joint Stock Companies and Firms of Bangladesh performs the last step by examining the documents and information submitted electronically and issuing the Certificate of Incorporation. The digitally issued Certificate of Incorporation, Memorandum of Association, and Articles of Association are held to be duly signed and mailed to the registered office of the company registered in Bangladesh. A copy of the Certificate of Incorporation is attached for your reference.

Post-Incorporation Formalities for setting up a company in Bangladesh

After the successful completion of the registration of a company in Bangladesh, the next requirement is to fulfil the post-incorporation formalities. Some of the formalities are explained below:

Register with BIDA

After the registration of a Bangladeshi company with the Registrar of Joint Stock Companies and Firms, the next step is to register the company with the Bangladesh Investment Development Authority (BIDA) within the next 7-10 business days. The BIDA registration is necessary for the following reasons:

1. To facilitate foreign investment opportunities in the company incorporated in Bangladesh;
2. To issue work permits for foreign employees of the company incorporated in Bangladesh;
3. To issue visas for foreign investors;
4. To easily process loans from foreign sources;
5. To get easy approval of remittances of royalties and technical fees;
6. To get assistance in obtaining industrial plots for the company incorporated in Bangladesh;
7. To get the foreign loans and suppliers’ credit approved;
8. To get assistance and further advice on decisions related to investment opportunities during the company incorporation in Bangladesh.

Apply for Trade License

It is mandatory to apply for the necessary trade licenses, including general and industry-specific trade licenses, through an application for every company incorporated in Bangladesh. The application must include the following details:

1. The facsimile of the duly executed MOA and AOA of the company;
2. The photos of the managing directors and chairman of the company incorporated in Bangladesh;
3. The certificate of the Tax Identification number of the company;
4. The national Identification details of the promoters or entrepreneurs;
5. The facsimile of the recent receipt or ownership proof;
6. The facsimile of the work permit from the Board of Investment;
7. The facsimile of the fire certificate;
8. The statement of bank solvency;
9. The facsimile of the rent or lease agreement of the company;
10. The nature of the company’s business operations is incorporated in Bangladesh.

Apply for TIN

Every company incorporated in Bangladesh must mandatorily register for the TIN i.e., Tax Identification Number at the appropriate tax authorities of Bangladesh including the deputy commission of taxes of the company circle of Bangladesh and the zonal taxation department under the aegis of the National Board of Revenue (NBR) of Bangladesh. The TIN registration is necessary for the payment of corporate income tax for the company incorporated in Bangladesh.

Apply for VAT Registration Certificate

A company with an annual turnover exceeding 30 lakhs Bangladeshi taka must issue the VAT certificate for the payment of the value-added tax through the issued BIN number (which stands for unique business identification number) on the 15^th day of every consecutive month. BIN registration requires the following documents:

1. A facsimile of the TIN registration certificate;
2. A facsimile of the issued Trade License of the company;
3. A facsimile of the import and export registration certificate;
4. A facsimile of the bank solvency certificate;
5. The BOI registration certificate;
6. The facsimile of the constitutional documents of the company incorporated in Bangladesh.

Comply with filing the annual returns for the company.

The registered companies of Bangladesh are obligated to file the annual and regular returns in the prescribed manner with the Registrar of Joint Stock Companies and Firms. The annual returns containing documents related to the management and operations of the company are filed annually. Certain different types of annual returns filed by every limited company incorporated in Bangladesh contain an annual summary of the share list, the balance sheet of the company, details of the profit and loss account, and Form 23B containing notice by auditors of the company incorporated in Bangladesh.

Other Formalities

There are also certain other legal formalities crucial for the successful registration of a company in Bangladesh. The list containing other legal formalities includes:

1. Obtain Import and Export Registration Certificates (if conducting any import-export related business activity);
2. Lease commercial space for the company;
3. Maintain accurate records of the company;
4. Issuance of share certificates to all the shareholders;
5. Conduct annual meeting within 18 months of the company incorporation in Bangladesh;
6. Obtain rubber stamp for the company;
7. Issue the seal of the company;
8. Issue of work permits in compliance with the labour laws of Bangladesh;
9. Apply for other industrial certificates, including fire (from the Bangladesh Fire Service and Civil Defence Authority) and environment clearance (from the Department of Environment) certificates, etc.

Conclusion

The process of company incorporation in Bangladesh requires expertise and a robust legal structure to successfully enrol, with all the steps emphasizing the pre-incorporation, registration, and post-incorporation procedures. The nation is considered to be the most preferred economy with advanced business advantages in terms of setting up a company in Bangladesh. The process of company incorporation in Bangladesh is supported by flexible formats of companies existing in Bangladesh. Not only this, the registration of a company in Bangladesh must be carried out in compliance with the regulations of the regulatory government authorities providing for obtaining necessary business licenses and permits, opening a corporate bank account, ensuring the labour laws checklists, maintaining accounting checklists for the company, and so on.

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