Leading Corporate Law Firm in Bangladesh | Corporate and Business Matter

CLP’s Corporate group has extensive experience and knowledge in a broad range of corporate transactions, both domestic & international. Leading corporate law firm in Bangladesh provides services in areas like Mergers & Acquisitions, Securities Transactions, Joint Ventures, Corporate Representation, Corporate Governance, Regulatory & Compliance Issues, Directors’ Liabilities, Business Judgments, White Collar Crime and Due Diligence. CLP understands the value of money and efficiency as such we strive to deliver work which tries to achieve these two vital concepts. It is important for any business to move forward, and be the best in its field and by our legal help and services any corporation will be one step closer to their ultimate goal.

There are various ways to start a business in Bangladesh and one of the most preferred options and useful modes is to incorporate a Private Limited Company. This article has focused on an easy way of starting a business by forming a limited company and all other company related issues. Moreover, this article has focused on post-registration procedures and all other compliance of a company. Summarily, the article has covered the following issues-

1. Company Formation in Bangladesh
2. Foreign Subsidiary Business Formation in Bangladesh
3. Company Compliance in Bangladesh
4. Board Resolution &
5. 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

Company registration in Bangladesh is a popular query from investors. Furthermore, people want to know the period of business formation and the procedure for its incorporation in Dhaka, Bangladesh. Therefore, this article will focus on guidance on how to register a company in Bangladesh and complete the steps of company formation in Bangladesh in the following topics.

1. Industry Set up
2. Private Limited Company
3. Public Limited Company
4. One Person Company
5. Formation of Partnership and Legal Proprietorship Business.

Industry Set Up in Bangladesh

Industry set up process in Bangladesh by foreign or local investors, how to set up an industry in Bangladesh, and the cost of setting up a manufacturing company or industry in Bangladesh by foreign investors- are the most frequently asked questions to a Company Lawyer in Dhaka, Bangladesh. 

This article will help people to know the steps and procedures of setting up an industry or manufacturing company in Bangladesh by foreign and local investors.

An entrepreneur has to follow the following procedures and legal steps to set up an Industry or manufacturing company in Bangladesh.

1. To set up a Limited Company.
2. To take the required BIDA Permission.
3. To take the required licenses from the concerned authorities.

Private Limited Company

A private limited company is similar to a public limited company but restricts the transfer of shares and cannot offer shares to the public. The legal requirements for a private limited company include:

1. Name clearance
2. Drafting Memorandum of Association (MOA)
3. Drafting Article of Association (AOA)
4. Opening Bank Account 
5. Share money Deposit 
6. Registration to RJSC
7. Required documents and information for company formation in Bangladesh
8. Incorporation certificate
9. Company Tax Identification Number (TIN)
10. Company Trade license
11. RJSC Return Filling
12. 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:

1. Obtain Name Clearance Letter
2. Documentation
3. Fulfilling Requirements Related to a Bank Account
4. Submitting Documents to the Registrar of Joint Stock Companies and Firms (RJSC)
5. Trade License
6. Tax Identification Number (TIN)
7. VAT Registration Certificate
8. Fire Certificate
9. 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:

1. Choosing The Partnership Name
2. Prepare A Partnership Deed
3. 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:

1. Permission from Bangladesh Investment Development Authority (BIDA)
2. Opening Bank Account 
3. Bangladesh Bank Approval
4. 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 Resolution

Board resolution is a formal document that identifies and contains the outcome of a decision or any vote given in the board meeting regarding the company. Resolution passed in the board meeting is called board resolution.

Types of resolution: Generally, there are three Board resolutions which are discussed in below:

• Extraordinary resolution: A resolution is an extraordinary resolution when it is passed by at least 75% of the majority of members and in the notice of the meeting the intention of proposing the resolution as an extraordinary resolution has been specified. 
• Special resolution: A resolution is a special resolution when it is passed by at least 75% of the majority of members (i.e “special majority’’) but the notice of the meeting must be given at least 21 days before the meeting and the notice must specify the intention of proposing the resolution as a special resolution.
• Ordinary resolution: Resolution which is passed by ‘simple majority’ of members is an ordinary resolution. For a simple majority the number of vote in favor of the resolution needs to be more than the number of vote against the resolution. 

RJSC requirements for Board resolution

Certain board resolutions need to be submitted to the RJSC along with other specified documents in order to get return for change from the RJSC.  There are various forms in the RJCS which must be filled in depending on the change on which board resolution is done within a specified time.  For instance, in order to transfer shares Form 117 must be filled in the RJSC at the presence of the officials of RJSC. In addition to the Form, Affidavit by the seller; Board Resolution by the company approving the transfer of the shares; and Certificate of Transfer of Shares needs to be submitted in the RJSC.

Protection of Minority Shareholders 

A minority shareholder refers to an individual or entity possessing a less-than-majority ownership interest in a company, lacking control over decision-making processes.

Despite owning a smaller portion, minority shareholders may encounter challenges in influencing corporate policies compared to majority shareholders with controlling interests.

• Legal Framework for Minority Shareholders: Section 233 of the Companies Act, 1994 describes the legal right to protect the Minority Shareholder.
• Eligibility for Protection: A minority shareholder with, for example, 6% of shares is ineligible for protection under section 233.
• Minimum Ownership Percentage: The Companies Act in Bangladesh establishes a minimum ownership requirement, requiring minority shareholders to hold at least 10% of shares (with share capital) or one-fifth of members (without share capital) for protection under specific legal sections.
• Joint Claim for Protection: Under certain conditions, minority shareholders in Bangladesh can jointly claim protection. This is applicable when actions by the company, its directors, or majority shareholders are considered prejudicial or discriminatory.
• Court Authority: The court has the authority, under Section 233, to issue orders necessary for safeguarding the interests of the applicants and other affected members or debenture holders.
• Conditions and Limitations: Claims for protection under Section 233 are subject to the conditions specified in Section 195 of the Companies Act. These conditions outline the eligibility criteria and prerequisites for bringing such claims.
• Criteria for Minority Shareholders in Bangladesh: Section 233 specifies that holders of one-tenth of shares (for companies with share capital) or one-fifth of members (for companies without share capital) are eligible to apply.
• Application Criteria for Minority Shareholders:  In Bangladesh, applicants must collectively hold one-tenth of issued shares or, in the absence of share capital, comprise at least one-fifth of registered members.
• Grounds for Application: Minority shareholders can approach the Court when they believe the company’s affairs are being conducted in a manner prejudicial to their interests.
• Legal Process and Remedies: Upon receiving an application, the Court initiates a thorough examination and, if it finds merit, can issue various orders to rectify the situation.
• Reporting and Compliance: Once the Court issues an order under Section 233, the company must inform the Registrar within fourteen days. Failure to comply can result in fines for the company and its officers, ensuring transparency and accountability in implementing Court orders.

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.