Description
Private Limited Company Registration/Incorporation Procedure in Bangladesh
Private Limited company registration procedure in Bangladesh may not be that complicated any more since the Registrar/Company House (RJSC) has mostly been digitalised. However, in relation to the drafting, consolidating and liaison it is highly advisable to opt for a consultant before proceeding to incorporate a company in Bangladesh.
When it comes to entity incorporation in Bangladesh, one of the most preferred option to start a business is to take resort to incorporating a Private Limited Company in Bangladesh. Although there are many other options to start a business in Bangladesh, out of which the most common and useful modes are either registering a branch office or incorporating a private limited company in Bangladesh, therefore, the procedure of registering a private limited company in Bangladesh has been mentioned down below.
Before moving on to the procedure of registering a private limited company in Bangladesh, it is worth mentioning that there is another option, which is registering a liaison office in the Bangladesh investment development authority (BIDA), that is commonly known as BIDA. However, to operate as a liaison office in Bangladesh there are also backdrops such as, the liaison office cannot transact in business, the liaison office can only maintain liaison between its parent company and the possible vendor or clients, but when it comes to making business transaction, only the parent company can transact under the restriction and supervision of the Bangladesh Bank and other relevant authorities as a foreign company. Therefore, it appears that Liaison offices are not a viable option, until or unless simply maintaining a degree of liaison with the vendors in Bangladesh is the intention of the parent company registered outside of Bangladesh.
What is a Private Limited Company?
As per section 2(q) of Companies Act 1994, A Private Company is a Company which by its Articles of Association restricts the right of transfer of the share, limits the number of members to fifty and prohibits invitation to the public to subscribe to the shares or debentures of the Company.
What are the characteristics of a Private Limited Company defined in Companies Act 1994?
The Companies Act 1994 has mentioned the following characteristics of a Private Limited Company:
- It restricts the rights to transfer the shares [s. 2(q)];
- The minimum number of members is 2 (two) [s. 5];
- The maximum number of the members is 50 (fifty) excluding the persons employed in the Company [s. 2(q)];
- It must have at least two directors [s. 90 (2)];
- It prohibits any invitation to the public to subscribe for the shares or debentures of the Company [s. 2(q)];
- It does not have to fulfill the requirement of statutory meeting or statutory report [s.83(12)].
- Subject to obtaining other licenses mentioned below in the post registration section of this Report, a Private Company can commence business as soon as it is registered with the RJSC.
How to Incorporate a Private Limited Company in Bangladesh?
In order to understand the step by step procedure as to how to incorporate a private limited company in Bangladesh, one must understand that The Companies Act 1994 does not provide the step by step procedure on how to set up a Company rather deals with the statutory requirements of Company incorporation. It is dealt by the RJSC, the appropriate body; which provides the detailed guideline on its official website regarding the procedure of setting up a Company from name clearance to incorporation.
Step By Step Procedure as to how to Incorporate a Private Limited Company in Bangladesh
The step by step procedure for the registration of a Private Limited Company by shares in Bangladesh are detailed below:-
STEP 1: OBTAIN NAME CLEARANCE LETTER
Application for name clearance to RJSC along with the following information:
a) Application Form;
b) Proposed Name.
STEP 2: DOCUMENTATION PREPARATION
a) Drafting of Memorandum of Articles and Articles of Association and other required documents,
b) Directors’ resolution to open a new Company in Bangladesh;
c) Obtaining and filling up the following forms for registration of the Company to RJSC:
- Form I: Declaration on registration of Company;
- Form VI: Notice of situation of registered office;
- Form IX: Consent of director to act;
- Form X: List of persons consenting to be directors;
- Form XII: Particulars of the directors, manager and managing agents.
STEP 3: FORMALITIES RELATED WITH BANK ACCOUNT
a. Directors shall open a temporary bank account in the name of the proposed Company with any scheduled bank with the condition that the account shall be regularized once the Company is duly registered with Company House;
b. Capital contribution into the bank account.
c. Encashment certificate from the bank which expresses that the sum required for capital contribution has been duly dispatched in the temporary bank account of the proposed organization.
STEP 4: SUBMISSION OF DOCUMENTS TO RJSC
Application to RJSC along with the documents executed as listed above.
Post registration compliances for a Private Company limited by shares
The Companies have to obtain trade license from the relevant City Corporation. The proposed Company is required to file its application at the nearest City Corporation along with relevant documents and appropriate fees.
A Company has to obtain E-TIN from the recommended website of National Board of Revenue (NBR).
The newly incorporated Company has to collect a VAT registration certificate. In this regard, the application has to be made to the National Board of Revenue (NBR).
Fire certificate is provided by the Bangladesh Fire Service and Civil Defense Authority.
An environment clearance certificate from the Department of Environment has to be obtained by a company if it’s involved in an industrial project, by executing the prescribed form.
Special Case (Investment in kind, etc.)
The concept of ‘investment in kind’ is not detailed under Companies Act 1994. However, in practice, significant investment is made by investing in machineries and other equipment in a Company by a shareholder or a proposed shareholder in a Company incorporated in Bangladesh. Although CA 1994 does not govern the procedure, the following steps are followed while carrying out such investment in kind:
- The concerned company has to be duly registered with RJSC,
- The concerned investors have to fill up the relevant Form(s),
- The concerned investors are required to have a vendors’ agreement between them;
- The filled up Form(s) and the vendors’ agreement have to be filed with RJSC.
- The RJSC will then record the investment and monitor whether the proper procedure has been duly followed.
How much time is required for incorporation?
Once the aforementioned formalities are complied with, RJSC generally provides with the certificate of incorporation (Company registration certificate) within 6-8 working days. It usually takes 2-3 weeks to register a Company from the date of submitting all the documents to RJSC.
Once the name clearance is obtained, the clearance remains valid for 6 months. Generally 3 working days are required to obtain a name clearance. After obtaining the Name Clearance certificate a bank account need to be opened where the initial paid up capital need to be transferred from the shareholders’ account. If there is any foreign investment then the amount for paid up capital need to be remitted through the newly opened bank account following proper procedure.
Fees required for incorporation?
The governmental fees of the Company registration depend on the amount of Authorised Capital. For issuance of Incorporation Certificate governmental fees shall be BDT 1000.
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