Ms. Sabrina Mahisha Ajanta
A Company is an Artificial & Legal Entity that a group of people forms with the purpose of operating a business or accomplishing a common object.
In Bangladesh, only registered companies are considered companies under the Companies Act of 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:
1. Private Limited Company
2. Public Limited Company
3. One-person Company
4. Companies limited by guarantee
5. Companies with unlimited liabilities
6. Sole Proprietorship
The nature of the Business mentioned above entities is discussed below:
1. Private Limited Companies: As per the relevant provisions of the
Companies Act of 1994 defines the Private Company as a company that, by its
Article of Association restricts the right to transfer its shares and
prohibits any invitation to the public to subscribe to its shares or debenture.
The members of the Private Limited Company will be limited from 2-50 and
require at least two directors to operate the Company. Although no minimum
& maximum limit for authorized capital of the Company is provided for the
local investors, for foreign investors, a minimum of USD Fifty Thousand
is required to be invested. Moreover, the minimum paid-up capital for
registering a Local company is one taka (local); on the other hand, for a
foreign-owned company, a minimum of USD Fifty Thousand is required to be paid.
2. Public Limited Company: Membership in Public Limited Company is open
to all. However, the minimum requirement of members is 7 (seven), and the
maximum is unlimited.
3. . One-person Companies: One Person Company [OPC] means and
includes a company whose shareholder is merely a natural person [Section 2 (1)
(Kha Kha) of the Companies Act, 1994]. The minimum paid-up capital of such a
company is BDT 2,500,000.00 only, and the maximum is BDT 5,00,00,000.00 (Five
Crore) only.
4. Companies limited by guarantee: Companies limited
by guarantee may or may not have share capital or shareholders but rather
owned by guarantors who agree to pay a set amount of money towards company
debts. However, if there is any share capital authorized by the Articles of
Association may increase or decrease the amount of share capital. In case of
liquidation, the shareholders promise to pay a certain fixed sum to cover up
the liabilities of the company.
5. Unlimited Companies: In this type, the liabilities of the Member
are unlimited, e.g., members are personally liable for the payments of all
liabilities of a company.
6. Sole Proprietorship: In the case of Sole proprietorship, the business
entity is not a separate entity from the owner. Hence, the Owner is generally
liable for the liabilities accrued from hisBusinesss. An 18-year-old
Bangladeshi can register as a sole proprietor of a particular business
and obtain a trade license on a yearly renewal basis. A sole proprietor is
not required to register before RJSC.
Apart from this, A Foreign investor can operate its businesses through a
Branch office or a Liaison office in Bangladesh.
1. Branch/Liaison Office: A Branch office is a legal entity that is
formulated as a part of the Foreign Company under the supervision of the
Parent Foreign Company. The Parent Company will be held liable for all the
liabilities of the Branch Office. The Branch Office Basically maintains a liaison
between the Branch office & the Parent Company. Approval from BIDA is
required to operate the Branch office in Bangladesh.
It is to be noted that a local or a foreign national can register his
Company in Bangladesh and operates itsBusinesss. Foreign nationals can operate
theirBusinesss through any entity other than registering a Company in
Bangladesh. However, unlike local nationals, foreign nationals have some
limitations when registering for any company in Bangladesh. In this regard,
what types of companies or entities a local & foreign national can register
in Bangladesh along with the procedure have separately been discussed below:
Local Nationals – Private Ltd. /Public Ltd./One Person Companies /Partnership Firms/ Sole Proprietorship
Foreign Nationals & entities– Private Ltd./ Public Ltd. / Subsidiary Companies/ Fully Owned/JV Ltd. Company/ Branch/ Liaison Office
To ensure a smooth transition when changing business ownership, it’s essential to understand the legal requirements and procedures involved. For detailed guidance, check out our comprehensive guide on how to successfully transfer business ownership in Bangladesh.
