This guide will give you a comprehensive overview of the company registration process, including the necessary steps, time frames, types of companies, and requirements for establishing and operating a limited company in Bangladesh. Similar to other jurisdictions, Bangladesh has basic and continuous regulatory compliance obligations.
if you are thinking about starting a new company or proceeding your current one to Bangladesh keep in mind that the majority of businesses in Bangladesh are registered as Private Limited Liability Companies (often referred to as Private Limited Companies)
Understanding the Business Landscape in Bangladesh
- Types of Companies in Bangladesh
In Bangladesh, only registered companies are considered as the Company under the Companies Act, 1994. Hence, registration of a Company under the Companies Act, 1994 is the primary step towards developing a Company in Bangladesh. The following Business entities are popularly running in Bangladesh:
- Private Limited Company
- Public Limited Company
- One-person Company
- Companies limited by guarantee
- Companies with unlimited liabilities
How to register / incorporate a Company in Bangladesh
Incorporating a business in Bangladesh has been simplified over the years due to interventions by the Government. Foreign Investors (“Promoters”) intending to invest in Bangladesh has multiple options to incorporate their business in Bangladesh. Out of these options, registering a limited company is considered most suitable for long term operation. This article is designed to guide and assist the Promoters by providing an easy step-by-step guideline on the Company Registration in Bangladesh. Please note that the registration process can be completed remotely through the lawyers and any investor is not required to visit Bangladesh.
Choosing the Right Business Structure for Bangladesh Company Registration
Choosing the right business structure is vital when forming a company. Different types of business structure offer various benefits and drawbacks, so it’s essential to carefully consider a business structure (goals, size, industry, and long-term plans). Seeking advice from a legal advisor is a wise step in this process. The legal consultant will offer guidance on the best type of business structure as per requirements. The limited liability company (LLC), usually referred to as a company limited by shares, is generally the most common kind of company in Bangladesh. Plans for businesses future growth and whether you may seek external funding. So business structure may be more attractive to investors.
Navigating the Legal Landscape for Businesses in Bangladesh
In Bangladesh, establishing a business involves complying to certain laws and regulations. In addition to registering their company, business owners need to get a trade license, register for taxes, receive an ECC if needed, secure a work permit for foreign workers if needed, open a bank account, get insurance, abide by labor rules, and safeguard their intellectual property rights. In order to be sure, they are in compliance with all legal obligations, business owners should consult with legal and accounting professionals .
Step-by-Step Guide to Registering or Incorporating a Company in Bangladesh
The following detailed steps outline the procedure for registering a company in Bangladesh:
The regulatory authority: Registrar of Joint Stock Companies and Firms (RJSC)
Company is registered under the Companies Act 1994. The Regulatory body for incorporating a company is the Registrar of Joint Stock Companies and Firms ( RJSC ) which facilitates formation of companies and firms. The body is also responsible for keeping track of all ownership related issues as prescribed by the laws in Bangladesh.
Promoters should keep in mind that except for some very exceptional cases, Bangladesh allows the incorporation of a company with 100% foreign shareholding, and no local joint venture is required.
Obtaining Name Clearance:
Firstly, the promoters should fix a desired name for the Company and apply for name clearance in the RJSC server. Upon application, the promoter will receive a Computer-Generated Receipt. Investors are required to make payment of the requisite fees to RJSC for name clearance and upon verification; RJSC provides a name clearance certificate to the prospective promoters. These name clearance documents serve as the base for all further processes for Bangladesh company registration service.
It is to be noted that the promoters can remotely incorporate a company in Bangladesh through their authorized lawyers/agents in Bangladesh.
Drafting the Memorandum and Articles of Association:
It is of vital importance to draft a solid and consolidated constitution document of the company. The Memorandum of the Company should state the primary business objectives, the amount of paid-up capital & authorized capital, and state the list of the shareholders along with their respective shareholdings. It is to be noted here Bangladesh does not allow a One Person Company (OPC) and a minimum of two (2) shareholders are required to set up a private limited company. However, in the case of a public limited company, the total number of shareholders required is seven (7). Recently the government has also allowed the opening of one-person companies and you can browse through our article on the subject.
The Articles of Association of the Company should include the list & number of the directors, power of the board, power of the Managing Director, meeting process, quorum, notice procedure, appointment of auditors etc. The minimum number of directors for private ltd company is two (2) for public ltd company is three (3).
Directors are required to hold a minimum one share (qualification share) in the Company; however, the qualification share requirement is relaxed in case Directors who are nominees of corporate entity shareholders. Also, it is possible to appoint Independent Directors.
Opening Temporary Bank:
Once name clearance is obtained, a temporary bank account is required to be opened by the proposed company. Along with the name clearance documents, a copy of the Draft Memorandum and Articles of Association needs to be submitted to the respective Banks. Bank accounts can be opened remotely.
Remitting Money to the Bank Account:
The Foreign Investors are required to remit the desired paid-up capital in the bank account of the company. The Bank will hold the remitted amount. Please note that for legal purposes, there is no minimum capital requirements for setting up a company; however, in order to obtain certain advantages including appointing foreign employees, the minimum requirement is USD 100,000 . Upon remittance of the paid-up capital, an Encashment Certificate needs to be obtained from the respective bank.
This requirement is not applicable if all shareholders are Bangladeshi Nationals.
Submission of Digital Documents:
Upon receipt of the encashment certificate, the Promoters are required to upload a digital copy of the Memorandum & Articles, Directors Consent Forms to the RJSC server. On submission of the documents in the RJSC server, an Electronic Payment Slip will be printed and equivalent amounts need to be submitted to designated bank accounts of RJSC.
Submission of Physical Documents:
Upon payment of fees to the designated bank account for governmental fees and charges as stipulated in the Electronic Payment Slip, a nonjudicial stamp needs to be affixed in the Memorandum and Articles of Association and the same need to be submitted to RJSC along with Directors Consent Form (Form IX), List of Consenting Directors ( Firm X), List of Directors and Managing Agents (Form XII); Original copy of the Encashment Certificate and Name Clearance Document and payment slip acknowledged by the Bank.
Obtaining Incorporation Certificate and other Documents:
Within 3-4 working days from submission, the Company will receive Incorporation Certificate, Digital Certified Copy of the Memorandum & Articles of Association and List of Directors (Form XII). Once a company receives the Certificates, a copy needs to be furnished to the Bank to convert the temporary account to regular account.
Registering with Bangladesh Investment Development Authorities:
Bangladesh Investment Development Authority (BIDA) is responsible to facilitate foreign investments in Bangladesh. BIDA’s responsibilities include issuing work permits for foreign employees, visa for foreign investors, processing loans from foreign sources, approval of remittance of royalties & technical fees, assisting in obtaining industrial plots, facilitating utility connections, approval of the foreign loan, suppliers’ credit, and assisting and advising on many investment-related issues. Foreign Investors with Industrial Projects are strongly advised to register with BIDA upon the incorporation of their limited company. However, for Commercial or trading Companies, there is no requirement for registration with BIDA. The typical time frame for obtaining registration is about 30 working days.
Post-Registration Obligations for Companies in Bangladesh
Obtain a Tax Identification Number (TIN Certificate):
In order to start business operations, every company must register for taxes at the appropriate taxation authority (Deputy Commission of Taxes of Company Circle, Zonal Taxation Department) under the National Board of Revenue ( NBR ) and obtain a tax identification number. Obtaining a TIN certificate is free of cost and it is done electronically through the NBR server.
Obtaining Trade License:
Companies have to obtain a trade license from the local governmental authorities in Bangladesh. For example, in the case of Dhaka, a trade license has to be obtained from the respective City Corporation. The proposed company will have to manually file its application at the nearest city corporation office. The cost of obtaining a trade license is approximately USD 200 and it can be renewed on yearly basis. The typical time frame is three-four working days.
Obtaining VAT Registration Certificate:
When registering a company in Bangladesh, it is essential to establish a registered office. This office serves as the official address of the company for communication and legal purposes. Additionally, for VAT compliance, companies must register with the Customs, Excise, and VAT Commission under the National Board of Revenue. VAT registration is overseen by the Customs, VAT, and Excise Department based on the company’s operational location. Registration for VAT usually takes approximately 5-7 working days to complete.
Fire Certificate
An essential document issued by the fire services is a fire certificate. This document provides the security of any place. This is one of the essentials that all Bangladeshi industries should have the Firefighting Act of 2003 states that a fire license is required documentation for other companies as well as for clothing manufacturers.
Environment Clearance Certificate (if required)
Any business or organization intending to start a new project in Bangladesh or expand an already-existing one is required to obtain an environment license; this is especially the case if the scheme involves the use or manufacturing of hazardous materials or processes that have the potential to cause environmental harm. The license stipulates regulations and requirements that the business is obligated to in order to ensure that its operations are environmentally friendly and respectful to the environment.
In case of any query or fee quote, feel free to reach out to us.
Advantages Of Company Registration in Bangladesh
- Economy increasing rapidly
- A strategic location
- The accessibility of a young and adequate labor force
- Profitable Investment opportunities for foreigners
- Multiple trade agreements
Important Notes for Foreign Investors :
- The Company Registration service costs vary primarily dependent on the authorized capital of the Company.
- The company needs to have a place of business in Bangladesh and shelf companies are not permitted.
- Bangladesh Forex Rules allow full repatriation of profit and investment.
- Employment of foreign nationals is allowed at a 20:1 (local: ex-pat) ratio, subject to obtaining a necessary work permit.
- Except for very few limited areas, 100% FDI investment is allowed.
- Directors can be foreign or local nationals.
- Typical Corporate Income Tax varies between 22.5%-45%, depending on sector to sector and nature of the Company. However, the tax holiday is available between 5-7 years for selected sectors and areas.
- Also, there are additional financial incentives for investing in Special Economic Zones.
FAQ ( Frequently Asked Question)
What is the process for registering a company in Bangladesh?
- Name Clearance
- Opening Bank Account [ for foreign companies only and remittance of paid-up capital]
- Execution of documents
- Article of Association (AoA)
- Memorandum of Association (MoA)
- Directors’ consent form
- Submission of documents to the RJSC
- Additional licenses and registrations
- Trade License
- Tax Identification Number (TIN)
- VAT Registration Certificate
- Fire Certificate
- Environmental Clearance Certificate (if required)
Post-registration formalities
- Trade License
- Tax Identification Number (TIN)
- Directors Tax No. [ for foreign directors]
- Regularizing Bank Accounts and online banking.
- VAT Registration Certificate
- BIDA registration [ for industrial enterprises]
- Fire Certificate
- Environmental Clearance Certificate (if required)
Are there any specific legal requirements for registering a company in Bangladesh?
There are no specific legal requirements for Company Registration in Bangladesh; only a very few documents are required, including a passport and pictures of the natural person, and no notarization is required for registering a company in Bangladesh. But in the case of foreign shareholders, the paid-up capital must be deposited in a temporary bank account before registration.
How long does it typically take to complete the company registration process in Bangladesh?
The typical time frame for obtaining registration is about 30 working days.
What is the cost associated with registering a company in Bangladesh?
In the case of a minimum of USD 100,000 paid-up capital, USD 500 government fees are required. The total registration cost will be USD 1500. However, costs can be reduced if you lower the paid-up capital.
Can I register a company in Bangladesh as a foreign investor? How many shareholders are required?
Yes, you can register a company as a foreign investor in Bangladesh. Both foreign and natural persons and companies are allowed to register a company. As per Bangladeshi Law, at least 2(two) shareholders are required for registering a private company and for a public company at least 7(seven) shareholders are required.
How many directors are required in the company?
As per the law, every company shall have a minimum number of 3(three) directors in the case of a public company, and 2(two) directors in the case of a private company.
Does a director need to be a local person?
No, Bangladesh does not require a local director.
Bangladeshi labor laws need to be followed by business owners. Workplace safety rules, working hours, leave benefits, and minimum wage standards are all governed by labour law.
For one person company property valuation please see our other article. please send an email to info@juralaucity.com or contact +8801707108000.
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