Key Investment Sectors:

• Frozen food & seafood export
• Handicrafts & jute products
• Readymade garments
• IT & tourism
• Agriculture & food processing
• Power plants

Many global enterprises have already set up offices in Bangladesh, making it a prime investment hub in South Asia.

Joint Venture company Registration Procedure in Bangladesh

1. Conduct a promoters’ meeting and document minutes, including proposed company names and sponsors’ signatures.
2. Define shareholding positions of directors and outline business objectives.
3. Reserve the company name with RJSC (e.g., XYZ LIMITED).
4. Remit the paid-up capital (partially or fully) to a designated account and submit proof of encashment to RJSC.
5. Draft the Memorandum and Articles of Association (MoA & AoA) per the Company Act, 1994.
6. Pay government fees and additional charges required for registration.
7. Obtain directors’ or investors’ income tax certificates from NBR.
8. Complete prescribed RJSC forms (XII, VI, IX, X) and submit directors’ special information with signatures.
9. Provide scanned copies of sponsors’ passports; original passports may be needed for income tax certification.
10. Upon approval, receive three key documents from RJSC: Incorporation Certificate, Form XII, and MoA & AoA with official seal.
11. Apply for business income tax registration after receiving RJSC documents.
12. Obtain a Trade License from the city corporation or local authority based on business location.
13. Open a corporate bank account using RJSC papers, Income Tax certificate, and Trade License.
14. Apply for a VAT certificate at the regional VAT office.
15. Register with the Chamber of Commerce, BGMEA, BKMEA, or relevant business associations.
16. Apply for an export and import license by submitting the required documents.
17. Obtain an environmental certificate if setting up a factory.
18. Draft and execute a joint agreement between stakeholders as necessary.

Following these steps ensures a smooth registration process for a Joint Venture or Limited Company in Bangladesh.

Steps to Set Up a Joint Venture Company in Bangladesh

To register a Joint Venture Company with RJSC, follow these steps:

1. Submit the Memorandum and Articles of Association online.
2. Upload scanned subscriber details and signed Form IX.
3. Provide the Joint Venture Agreement to RJSC.
4. Submit the Encashment Certificate.
5. Pay registration fees to a scheduled commercial bank.

Upon satisfactory review, RJSC will issue the Incorporation Certificate.

Key Elements of a Joint Venture Agreement

1. Identification of the Parties: Clearly define the parties entering the joint venture.
2. Business of the Joint Venture: Outline the scope, purpose, and objectives of the joint venture.
3. Contribution of the Parties: Specify the financial, technical, and other resources each party will contribute.
4. Assets and Ownership: Define ownership structure, asset distribution, and rights of each party.
5. Management & Control: Establish governance structure, roles, and responsibilities of each party.
6. Voting Rights: Determine voting rights based on shareholding or other agreed terms.
7. Majority and Minority Issues: Address the rights of majority and minority stakeholders.
8. Dividend Policy: Define the method and frequency of profit distribution.
9. Pre-emption Rights: Restrict the sale of shares to third parties without consent from other parties.
10. Lock-In Period and Put Option: Establish restrictions on selling shares within a specific timeframe and provide an exit strategy.
11. Material Breach: Define what constitutes a material breach and the consequences thereof.
12. Term and Termination: Specify the duration and conditions under which the joint venture will be dissolved.
13. Due Diligence and Compliance: Ensure financial and regulatory due diligence and compliance obligations.
14. Indemnities: Outline liabilities and indemnification clauses to protect parties.
15. General Legal Clauses: Include governing law, confidentiality, and other standard provisions.
16. Dispute Resolution: Establish mechanisms for resolving disputes, including arbitration under the Arbitration Act of Bangladesh.
17. Taxes: Define tax obligations and responsibilities of each party.

Board Formation and Administrative Arrangements

The JVA typically allows each party to appoint a designated number of directors to the Joint Venture Company (JVC). Specific roles, such as chairman and executive managers, should also be identified. The agreement outlines decision-making processes, including matters requiring board or shareholder approval. Additionally, operational responsibilities such as financial management, business strategy formulation, budgeting, and financial reporting are clearly defined.

Financial Contributions

A key element of the JVA is detailing the financial responsibilities of each party. Contributions may include capital, land, raw materials, machinery, intellectual property, technical expertise, or business names. Explicitly stating these contributions ensures alignment and prevents disputes.

Management and Operations

Many joint venture disputes arise from management and operational issues. The JVA must specify the composition of the board, director appointment criteria, powers of the Managing Director and Board, operational mandates for bank accounts, and minimum shareholding requirements for board membership. Equal representation policies or rotational director appointments can also be included.

Protection of Minority Stakeholders

Minority investors often seek protective measures to secure their interests. The JVA may include veto rights on crucial decisions, approval requirements for share issuances, restrictions on admitting new investors, and policies governing dividend distribution and financial commitments. These protections can be structured at both board and shareholder levels.

Pre-emption Rights

Pre-emption rights ensure existing shareholders have the first right to acquire shares before they are sold to third parties. Though the Companies Act 1994 already incorporates such rights, a detailed contractual clause enhances protection. Lock-in periods may restrict share sales within a specific timeframe, while put options provide exit opportunities under certain conditions.

Due Diligence and Compliance

Due diligence is critical in assessing the financial stability and business prospects of the parties involved. The agreement should obligate all parties to adhere to legal and regulatory requirements, including obtaining necessary licenses and maintaining compliance throughout the joint venture’s operation.

Dividend and Profit Sharing

To avoid conflicts, the JVA must clearly define the procedures for declaring and distributing dividends. Profit-sharing arrangements, including adjustments against outstanding loans or liabilities, should be explicitly outlined.

Dispute Resolution

A robust dispute resolution mechanism is essential for handling conflicts that may arise. The JVA should specify a process beginning with informal discussions, followed by mediation, and, if necessary, arbitration under Bangladesh’s Arbitration Act before resorting to legal action.

Termination

The agreement must outline conditions for termination, such as mutual agreement, expiration of the joint venture’s term, completion of its objectives, sale of shares by one party, or material breach of contract. Well-defined termination provisions allow for an orderly exit when necessary.

A well-drafted Joint Venture Agreement is essential for preventing disputes, ensuring aligned expectations, and fostering a successful business partnership.