Company registration process in Bangladesh
Every businessman begins his journey with a dream to be an established businessman in the country, to contribute to the nation’s economy by establishing his company as a multinational brand. In order to do that it requires company registration in Bangladesh. Generally, they start with a proprietorship trade licence, but soon they realise in order to be a real player in the market they need to be a registered company. In recent days educated and experienced entrepreneurs are taking a different approach; they understand the benefit of a company, the legal and business benefit as well as the safeguard for their investment; therefore, from the very beginning, they are starting their business as a company to avoid future hassle. However, many people often get confused in the matter of company registration and processes afterwards. Many of us do not know the process of company registration in Bangladesh, where to go, how to draft the legal document and who’s advice to seek. In this article, we will discuss all these matters.
The process of company registration is very straightforward in Bangladesh, you have to follow a few steps to incorporate a company in Bangladesh. Such as Pre Plan of the company, taking Name clearance of the company, Drafting Documents, Online submission, File submission, communication etc. The registration process can be completed from anywhere in the world via the Registrar of Joint Stock Companies And Firms (RJSC) website. However, it is advised to take professional assistance for your core documentation like; Memorandum of Association (MOA), Articles of Association (AOA) etc. to keep your company problem-free in the future. These matters are discussed below.
Why run your business as a company?
Often traditional business persons do not understand the benefit of a company. They merely incorporate their business as a company to meet the demand of lucrative projects, though this article is about the registration process of a company in Bangladesh; however, to understand the importance of company registration it is better to have a general idea of key benefits of a company.
- Brand value and recognition: A registered company is recognized all over the world, it carries a significant value for your Brand. General people and investors trust a company over the traditional proprietorship or partnership.
- Separate legal personality: A company is a separate legal personality. It has its own asset and liability, which means if a company face any legal or financial challenges (case, debt etc) it does not affect the shareholders.
- Perpetual succession: A company has no legal death unless it is done by the mechanism of the law. After death of a shareholder, his share will be distributed to his hires as per his personal law. Whereas other forms of business extinguish at the time of the death of the proprietor or the partner, which creates a mountain of problems for his heirs.
- Books of account, Law, and Transparency: A company must maintain its books of account, it must be duly audited and a return must be duly submitted to RJSC and NRB to maintain the transparency which ensures the interest of the shareholder. A company also ensure the interest of minority shareholders to ensure their rights, the majority of directors can not act according to their wish they must follow the law for the benefit of the company, not for personal benefit thus ensuring the prosperity of the company.
- Investment, Capital gain: Due to the legal mechanism a good company can easily get investment from bank, financial institution or from any other business. They can go into joint ventures with other companies or people, which can not be done with a traditional partnership entity. Moreover, A company can allot its share for capital gain as its books of account are maintained in accordance with law and verified by government organizations.
- Business operation flexibility: A company is an organized institution, if you start your business as a company it can bring all your business under one umbrella, and it can help you to share your asset among multiple branch offices, factories etc. On the other hand, if you start a company from the very beginning with time your company profile will get more and more experienced, It will have all tangible and intellectual property under one unified name but if you start with a trade licence or as a partnership business then those experience shall not add enough value to your new company.
- Economic benefit, Salary & Tax benefit: A company will give various economic benefits regarding your brand value and its unified structure. MD, Chairman & Directors can take remuneration for their service and that can be shown in your audit as spending along with other spending and investment, which help you present the true profit of the company in the balance sheet, thus reducing the overall government tax and provide tax benefit in comparison to proprietorship or partnership, where owners can not take any salary form the business thus increase taxes.
There are many more benefits of forming a company. Now, as we know some key reasons why you should form a company the next question that comes to the mind is “What kind of compay?”. Well, there are various bookish classifications for companies but let’s ignore those boring classifications and make our own classification in the next part of this article.
Types of companies in Bangladesh
In Bangladesh, we can classify companies in five broad headings as per their incorporation method, investment process, liability and activities. Which are,
- Private Limited Company: This is the most common form of company, this is also the easiest to incorporate and maintain. Almost 98-99% of the company in Bangladesh are private limited company. As the name suggests, a private company is a company of private persons, which means shares can not be traded publicly and it has some limitations too. Such as limited liability, a limited number of shareholders (2- 50 person), limited investment etc. In this article, we will discuss the process of registration of a Private Limited Company.
- Public Company: Public company is a company which can have unlimited shareholders, unlimited investment etc. It requires fulfilling some prerequisites to be incorporated as a public company in Bangladesh. It has more procedures to follow during the operation of the company. It must be approved by both the RJSC and BSEC before full operation.
- One Person Company: One person company is more like a private limited company but here only one person can open a company. There is no need for any other person thus decisions of the company must be made by that one person. Another important note is, in order to form a One Person Company (OPC) there must be a minimum paid-up capital of 25 Lac BDT.
- Not-for-profit Company: Under sections 28 & 29 company can be formed with unlimited liability which is quite opposite of limited liability. Generally, social welfare organizations, clubs etc. form this type of company to do business but the founders do not get the dividend/profit they dedicate all the revenue for the advancement of the company or for their special social welfare purpose.
- Foreign Company / Company by foreigners: Bangladesh allows foreign nationals and foreign companies to invest in Bangladesh. Foreigners can invest any percentage of share to total 100% of the company in Bangladesh / Bangladeshi company, on the other hand, foreign companies can establish their Branch office or Liaison office, they can run business as a trading company or establish industry. However, there are certain rules to be followed. In order to invest in Bangladesh, a foreign person or foreign company must get BIDA permission first and deposit the paid-up capital to a non-operative bank account in a scheduled bank in Bangladesh.
Well, this process of foreign company requires a ton of work, I hope you got the necessary Idea here, I will write a separate article on this.
Now, it is not possible to cover the process of the type of company in one article, therefore, I will discuss the overall procedure of the incorporation of a private limited company as that would give you the basic idea of company incorporation in Bangladesh.
How to register a Private Limited Company in Bangladesh?
Registration of a Private Limited company is the easiest among all other formats of the company. This procedure will give you an idea about the key elements of a company and the procedure. We can separate the procedure into the following parts.
Before starting an entrepreneur must consider;
- what is the purpose of the company?
- what is the aim of his company? And;
- where does he want to see his company in the next 5-10 years?
He must also decide;
- how much he is going to invest in his new company? And;
- in the next 5-10 years how much does he want to invest in total?
He must also think;
- who would be the key personnel in the company? Namely, Managing Director & Chairman? and ;
- How many shares they must hold?
Based on these queries he can decide his paid-up capital/working capital of the company, authorised capital of the company and shareholders of the company.
Name of the company
Recently, getting the preferred name is quite challenging, therefore, it is advised to contact an experienced lawyer to calculate the probability of your desired name. though no one can certainly assure the name except RJSC but experience and certain procedures will help you to select 2-3 names that have the maximum possibility to achieve, otherwise, after starting the registration procedure if you need to change your company name in a hurry; later you may get dissatisfied with the registered name.
Based on the pre-plan and the proposed name (as mentioned above) you have to prepare two key documents and a few forms. The document are;
Memorandum of Associaiton
A Memorandum of Association (MOA), is a key element of a company, it can be considered equivalent to the preamble of the constitution of a country, it contains the reason for company formation, its address, the aim and objectives of the company, limit of authorised capital etc. It is one of the most important documents, you can not do anything beyond the scope of this document. Therefore, this document must be created with the utmost importance and it must be prepared by an experienced lawyer. Please keep in mind changing any part of this document requires the permission of the High Court Division of Bangladesh Supreme Court. So do not copy it form online and do not use a broker to prepare it. Talk directly to an experienced lawyer, tell him what you want, draft it, review it and then confirm it for final submission.
For a sample, you can visit this page; MEMORANDUM OF ASSOCIATION | Sample
Articles of Association
An Articles of Association (AOA) is a document of a company that contains the rules and regulations of a company as per the law. Generally, we follow the standard practice as per the guideline of RJSC. However, it must be drafted with care because RJSC often changes their policy and procedure. So if you are not updated and use old formates it can be rendered outdated and it can complex the operational procedure once you got approval. This document articulates the structural procedure of a company and distributes the power of the Chairman, Managing Director, Board of Directors etc. If his document is not done right it can create a lot of internal conflicts and management issues. Therefore, this document must be created with the care with consideration of the rights of all shareholders.
For a sample, you can visit this page; Articles of Association | Sample
Submission for registration
The company house of Bangladesh is called the Registrar of Joint Stock Companies And Firms – RJSC in short, and the Registrar of the RJSC is the sole authority to register the company.
After all documents and forms are prepared and signed these documents must be submitted to RJSC through their website, reasonable care must ascertain during this submission. It is often observed some local computer operators do the task of submission but as they are not educated enough, do not know the true procedure and do not understand the value of documents they often contribute to certain errors which you may have to carry in your original approved document for the lifetime if you proceed with them. It is also important to do proper formatting of your documents, use proper seal and signature upload documents with care. And finally, keep all the documents with care.
After online submission there will be a payment slip, you must submit the money to an authorised bank with the slip and save one copy of the slip for further reference.
This part is not mandatory in the standard procedure but in reality, you would like to follow this step for your betterment and to get the documents done properly and on time.
After the process mentioned above is done, you will get your certificate and other documents within 3-7 working days.
Required documents for company registration
In order to register a company, you must provide the following documents and information.
- NID or Passport
- e-TIN certificate
- Office Address
- Phone number
- E-mail address etc.
Three types of costs incurred during the preparation and registration of the company are;
Consultant and Documentation fee
This fee depends on the demand and philosophy of the lawyer. Generally, a standard amount is charged based on the complexity of the job, proposed authorised capital, required permission and time of the company. If you want a quotation for your company please contact us at firstname.lastname@example.org.
Government registration fee
Government registration fees are fixed; please have a look at the chart below to get an idea of the government fees.
Process fee and other expenses
Generally, lawyers charge it as they take the task of processing, during the processing time several other costs may occur for various reasons. You may not need to worry if you give this process task to us or any lawyer unless there is some unexpected matter that comes into play. But if you want to process the document on your own you must have some extra budget in your pocket.
I hope I have given an overall idea that why you should start your business as a company, the types of the company, company registration process and the documents and costs associated with the company registration in Bangladesh. So, now it is your time to make your decision. Feel free to communicate with us for any professional help or support. We are always ready to provide you with the best service. We would appreciate your visit to our chamber. My contact details are given below.
Adv. Rayhanul Islam
E-mail: email@example.com or firstname.lastname@example.org
Website: www.lawhelpbd.com and bangla.lawhelpbd.com
Evening office address:
Baul & Associates
House: 4/2, Block: C, Lalmatia, Dhaka – 1207
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