Company Formation

Key Facts About Company Formation

Company Name: To establish a limited company in Bangladesh, the directors must choose a unique company name and obtain approval before incorporation.

Directors: A company in Bangladesh must have at least two directors, who can be local or foreign, at least eighteen years old, and free from bankruptcy or malpractice convictions. They must hold qualification shares as per the Articles of Association. Corporate shareholders can appoint a nominee director.

Shareholders: A private limited company in Bangladesh requires 2 to 50 shareholders, who can be individuals or corporate entities. A director may also be a shareholder. Most sectors allow 100% foreign or local ownership. Shares can be issued or transferred any time after incorporation.

Authorized Capital: The Memorandum and Articles of Association must specify the authorized capital, which defines the maximum share capital a company can issue to its shareholders. A portion of this capital may remain unissued. Bangladesh does not impose any minimum or maximum limits on authorized capital.

Paid-up capital: Paid-up capital is the actual amount contributed by shareholders after incorporation. While there is no upper limit, businesses often set a higher amount based on operational needs. It can be increased anytime by issuing additional shares, with changes reported to RJSC. A higher paid-up capital boosts credibility and financial stability. For foreign investment, BIDA requires the initial capital to be remitted and deposited in a bank within a reasonable time for shareholder registration benefits.

Registered office address: As per the Companies Act 1994, every company in Bangladesh must have a physical registered office address for legal notices, official correspondence, and record-keeping. Any change in the address must be reported to the RJSC within the prescribed time to avoid legal consequences.

For Foreigners: After receiving name clearance from RJSC, open a bank account in the proposed company’s name and deposit the initial paid-up capital to incorporate in Bangladesh.

Necessary Documents:

1. Name Approval Certificate from RJSC.
2. Memorandum of Association and Articles of Association.

• Directors / Shareholders Particulars: (NID, TIN, Copy of passport for foreigners)

1. Registered Address.
2. Singed Form IX and Subscriber Page.
3. Bank Account Application for opening a non-operating account.

• For corporate shareholders, Incorporation Certificate, MOA, AOA, and last year’s audit report are required.

Company Registration Procedure:

Step 1. Name Clearance:

To set up a company in Bangladesh, the first step is to obtain name clearance for the proposed company name. Start by visiting https://app.roc.gov.bd and creating a username. After registration, you can apply for name clearance. Once the application is submitted, you will receive a bank payment slip and need to pay BDT 575 at the designated bank. After making the payment, log in to your account on the RJSC website to receive the name clearance. The approved name will be reserved for one month from the date of clearance, and if needed, you can extend the reservation by filing an extension request before the expiry date.

Step 2: Bank Account Opening and Remittance of Paid-Up Capital:

This step applies only if the proposed company has foreign shareholders. You must open a bank account in the company’s name with a scheduled bank in Bangladesh. Following the account opening, the foreign shareholder(s) must remit an amount equal to the value of their shares into the account from abroad. The bank will then issue an Encashment Certificate, which is a necessary document for company incorporation with the Registrar of Joint Stock Companies and Firms (RJSC).

Step 3. Drafting Documents

• Prepare and draft the Memorandum of Association (MOA), Articles of Association (AOA), and other required documents.
• Key forms to fill out include:

1. Form I: Declaration of company registration.
2. Form VI: Notice of registered office location.

• Form IX: Consent of directors.

1. Form X: List of persons consenting to be directors;
2. Form XII: Details of directors and managing agents.

Step 4: Online Submission to RJSC

To finalize the company registration process, submit the Memorandum of Association (MOA), Articles of Association (AOA), signed forms, and the Encashment Certificate through the RJSC portal. Upon completing all formalities, a bank payment slip will be issued for the registration fees and stamp duty. After making the payment, follow up with the Registrar of Joint Stock Companies and Firms (RJSC) to obtain the incorporation certificate.

The RJSC officials will review the submitted documents, and upon verification, they will issue the following digitally signed documents:

1. Certificate of Incorporation
2. Memorandum of Association (MOA)

• Articles of Association (AOA)

1. Form XII

These documents will be sent to the email address associated with your RJSC account.

Step 5: Additional licenses required post-registration include:

1. Trade License
2. Tax Identification Number (E-TIN)

• VAT Registration (BIN)

1. Chamber of Commerce Membership (for imports/exports)
2. Import/Export Registration Certificate (if applicable)
3. Fire Certificate

• Environment Clearance Certificate

Liabilities and Compliance Requirements

A private limited company in Bangladesh must adhere to specific liabilities, including:

1. Annual General Meeting: The Annual General Meeting (AGM) must be held within 18 months of the company’s incorporation. Subsequently, the interval between two AGMs must not exceed 15 months.
2. Statutory Auditor: Must appoint an auditor and submit audited financial reports.

• Tax Returns: Annual income tax filings is mandatory.

1. VAT Returns: Monthly VAT return is mandatory.

In reality, you must file over thirty returns (tax and VAT) annually. You will encounter difficulties and be fined for noncompliance.

How much time is required for incorporation?

As per the Companies Act 1994, the Registrar of Joint Stock Companies and Firms (RJSC) may take up to one month for approval after online submission. However, in practice, company registration is typically completed within 6 to 8 working days from the date of submitting all required documents to RJSC.