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Starting a business in Bangladesh can be a strategic move for entrepreneurs looking to enter a growing economy. Among the different business structures, incorporating a Private Limited Company is one of the most popular options due to its limited liability, flexibility, and ease of operation. This section provides a detailed step-by-step guide on the company formation process, post-registration compliance requirements, and essential legal obligations to ensure a smooth and successful business operation.
Key Services We Covered:
- Company Formation in Bangladesh
- Foreign Subsidiary Business Formation in Bangladesh
- Company Compliance in Bangladesh
- Board Resolution &
- Protection of Minority Shareholder in a company.
For any queries or legal assistance, please reach us at E-mail: info@counselslaw.com Call: +8801700920980.
Company Formation in Bangladesh
Investors frequently seek guidance on the process and timeline for setting up a business in Bangladesh. Depending on the nature and scale of the business, different legal structures are available
Furthermore, people want to know the period of business formation and the procedure for its incorporation in Dhaka, Bangladesh. This article will focus on guidance on how to register a company in Bangladesh and completing the steps of company formation in the following topics.
- Industry Set up
- Private Limited Company
- Public Limited Company
- One Person Company
- Formation of Partnership and Legal Proprietorship Business.
Industry Set Up in Bangladesh
Both local and international investors often inquire about the legal requirements and costs associated with setting up an industry in Bangladesh. Establishing a manufacturing or industrial business requires compliance with various legal regulations and obtaining approvals from relevant government authorities. This section outlines the process involved:
- To set up a Limited Company.
- To take the required BIDA Permission.
- To take the required licenses from the concerned authorities.
Private Limited Company
A Private Limited Company is the most preferred structure among entrepreneurs as it offers limited liability protection and flexibility in operations. Below is a comprehensive breakdown of the registration process:
- Name clearance
- Drafting Memorandum of Association (MOA)
- Drafting Article of Association (AOA)
- Opening Bank Account
- Share money Deposit
- Registration to RJSC
- Required documents and information for company formation in Bangladesh
- Incorporation certificate
- Company Tax Identification Number (TIN)
- Company Trade license
- RJSC Return Filling
- Value Added Tax (VAT) Certificate
Public Limited Company
A public limited company is a business entity that issues shares to the public and has a separate legal identity from its shareholders. The legal requirements for a public limited company in Bangladesh are more extensive:
- Obtain Name Clearance Letter
- Documentation
- Fulfilling Requirements Related to a Bank Account
- Submitting Documents to the Registrar of Joint Stock Companies and Firms (RJSC)
- Trade License
- Tax Identification Number (TIN)
- VAT Registration Certificate
- Fire Certificate
- Environment Clearance Certificate
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Sole Proprietorship
A single individual owns and operates a sole proprietorship, which represents the most straightforward structure of the business organization. The legal requirements for a sole proprietorship in Bangladesh include:
- A sole proprietorship is not a separate legal entity, making the owner personally accountable for business liabilities.
- Bangladeshi citizens over 18 can establish a sole proprietorship, requiring a local commercial address.
- Profits are treated as the owner’s income and taxed accordingly.
- Sole proprietorships cannot register other businesses due to their non-entity status.
- Auditing is not mandatory; profits are taxed as personal income.
- Obtaining and renewing a Trade License is essential for a sole proprietorship in Bangladesh.
- A sole proprietor is not required to register before RJSC.
Partnership Company Formation in Bangladesh
A partnership is a relationship formed by two or more people who have agreed to split the earnings of a business run by all or some of them. The Partnership Act of 1932 governs their formation. To register a Partnership Firm in Bangladesh, specific steps are outlined:
- Choosing The Partnership Name
- Prepare A Partnership Deed
- Register Partnership Deed With The Registrar of Joint Stock Companies and Firms (RJSC)
Foreign Subsidiary Business Formation in Bangladesh
Foreign investors can incorporate a fully or jointly owned subsidiary company in Bangladesh. An entrepreneur has to follow the following procedures and legal steps to incorporate a foreign subsidiary company in Bangladesh.
- Name Approval
- Drafting Required Documentation
- Opening a Non-Operating Bank Account
- Inward Equity Remittance
- Filing to RJSC Web-portal Online
- Take Company Registration Documents
- Obtain Other Registrations and Licenses.
- Activating the Final Bank Account
Branch Office Formation in Bangladesh
A branch office is an extension of a foreign company operating in Bangladesh. Legal requirements for a branch office include:
- Submitting Documents to Bangladesh Investment Development Authority (BIDA).
- Opening Bank Account to set up a branch office.
- Bangladesh Bank Approval.
- RJSC Registration for Branch office.
- Trade License from the Local City Corporation.
- Income Tax Registration & VAT Registration.
Liaison Office Formation in Bangladesh
A liaison office is set up to represent a foreign company within Bangladesh. While similar to a Branch office, a liaison office is restricted from engaging in any business or income-generating activities in Bangladesh. Legal requirements for a liaison office include:
- Permission from Bangladesh Investment Development Authority (BIDA)
- Opening Bank Account
- Bangladesh Bank Approval
- RJSC Registration
Joint Venture Company Formation
A joint venture (JV) company is a a legal entity and is formed and regulated by Companies Act of 1994 and the VAT and Supplementary Duty Act, 2012. That is such company is formed between two or more entities, including one local and one foreign individual or organizations. Importantly, shareholders are only liable for the company’s debts up to the amount of share capital they have contributed. To register a Joint Venture Company in Bangladesh, specific steps are outlined:
- Joint Venture Agreement Drafting.
- Obtain Name Clearance from the RJSC.
- Prepare the MOA and AOA.
- Prepare and Execute Form XII and Form IX
- Open a Temporary Bank Account for Foreign Share Capital.
- Submit Documents to RJSC for Incorporation.
Company Compliance in Bangladesh
After successfully completion of all the above mentioned steps of company formation, the company will be registered and incorporated as a limited company in Bangladesh. Thereafter, some steps of post Company registration Compliances have to be taken-
Steps to be taken post Company registration Compliances
- To obtain the company Tax Identification Number (TIN).
- To obtain the company Trade license.
- To open a bank account under the name of the company
- To file annual return or Returns Filing for any change in an entity.
- To obtain the company Value Added Tax (VAT) Certificate.
Board Resolutions and Minority Shareholder Protection
Board Resolutions
A board resolution is a formal decision made by a company’s board of directors during a board meeting. It serves as an official record of decisions, approvals, and directives taken on various corporate matters. Board resolutions can address governance, financial matters, corporate transactions, and policy implementations.
Types of Board Resolutions
Board resolutions generally fall into three categories:
Extraordinary Resolution
An extraordinary resolution is one that requires at least 75% of the votes in favor by the members present. The notice of the meeting must explicitly state the intent to propose the resolution as extraordinary.
Special Resolution
A special resolution also requires approval by at least 75% of the members; however, the notice of the meeting must be provided at least 21 days in advance, clearly indicating the intent of passing a special resolution.
Ordinary Resolution
An ordinary resolution is passed by a simple majority, meaning more votes in favor than against. These resolutions typically address routine matters such as appointing directors or approving financial statements.
Regulatory Requirements for Board Resolutions with RJSC
Certain board resolutions must be submitted to the Registrar of Joint Stock Companies and Firms (RJSC) along with relevant documents to effect corporate changes. Various RJSC forms apply based on the nature of the resolution. For example, to transfer shares, Form 117 must be filed with RJSC, along with supporting documents such as an affidavit from the seller, a board resolution approving the transfer, and a Certificate of Transfer of Shares.
Protection of Minority Shareholders
A minority shareholder is an individual or entity holding a less-than-majority ownership interest in a company. Due to their smaller stake, minority shareholders may face challenges in influencing corporate decisions.
Legal Framework
The Companies Act, 1994 provides legal protection for minority shareholders. Section 233 outlines their rights and available legal remedies.
Eligibility for Protection
- A minority shareholder holding less than 10% of shares in a company with share capital is ineligible for protection under Section 233.
- For companies without share capital, at least one-fifth of the members must collectively apply for protection.
Joint Claims and Legal Recourse
Minority shareholders may file joint claims if they believe the company, its directors, or majority shareholders are acting in a prejudicial or discriminatory manner. The court has the authority to issue necessary orders to safeguard their interests.
Compliance and Reporting
If the court grants protection under Section 233, the company must notify the Registrar within 14 days. Failure to comply can result in fines and penalties for the company and its officers.
Bangladesh also allows action in cases of discrimination against any member or debenture holder, broadening protection for minority shareholders.
For expert legal advice on corporate governance and shareholder rights, contact Counsels Law Partners (CLP)—your trusted advisors in corporate legal matters.
Are You Looking for Corporate Lawyer in Bangladesh
The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly experienced at assisting clients through the entire process and legal provisions relating to corporate and business matters in Bangladesh. For any queries or legal assistance, please reach us at E-mail: info@counselslaw.com, urgent@counselslaw.com Phone: +8801700920980. +8801947470606. Address: Jamilla Villa (3rd Floor), Flat No-C2, House No. 4/A/1, Road No. 02, Gulshan-1, Dhaka-1212.
