Nowadays foreign companies are keen to develop their business operation in Bangladesh because of the country’s low labour costs and competitive business environment. The nation welcomes foreign investment in a wide range of industries. Bangladesh’s geographical location makes it perfect for international trade. Bangladesh is endowed with an abundance of water, fertile soil, and natural gas. For this reason, a lot of foreign businesses now want to establish companies here. This blog explores the legal aspects and the procedures of registering a company in Bangladesh.
A Step-by-Step Procedure for Private Limited Company Registration in Bangladesh
Bangladesh has become a desirable nation, particularly for foreign companies. Getting your company registered is one of the first steps you need to take in order to grow your business here. However the registration procedure is elaborate and complex. We have described the process of company registration in Bangladesh along with its benefits and requirements in this blog.
What is a Private Limited Company?
A private limited company refers to a privately held corporation that is owned by private investors. In this instance, there is a limited partnership liability structure. Private companies can invest in long-term strategies, maintain the confidentiality of their financial data, share values, and operate with freedom and flexibility. It can conduct its pertinent business operations and declare its profits in Bangladesh. A foreign company can own the company in its entirety in Bangladesh.
Benefits of a Private Limited Company
- A private limited company has a distinct legal standing.
- The business has an unending line of succession.
- The barriers to entry and exit are almost none.
- This is an ideal choice for a new business.
- Private enterprises are highly attractive to foreign direct investment.
- The liability of shareholders is limited.
- It possesses a very low paid-up capital threshold.
- Any member of the company can readily acquire the shares.
The Requirements For a Private Limited Company:
- The company must first get name clearance before incorporating in Bangladesh.
- The least number of directors is 2 and the most number of directors is 50. The directors can be of foreign origin or Bangladeshi. All directors, shareholders, and members must be over 18 years old and have a sound mind. They can’t have a prior malpractice conviction or be bankrupt. A director is required by law to have the qualifying shares specified in AOA. A nominee director may be chosen by a shareholder who is not a natural person, such as a corporation.
- The lowest number of shareholders is 2 and the highest number of shareholders is 50. The shareholders may be natural persons or artificial persons (corporate). A director or shareholder can be the same or separate persons.100% foreign shareholdings are allowed.
- The lowest amount of share capital is BDT 1 by each shareholder. Following the Bangladeshi company’s incorporation, shares may be issued again or given to a different individual at any moment.
- The permitted capital must be specified in the association’s articles and memorandum. It is the highest share capital that the business is permitted to distribute to its owners.
- The private limited company needs to have a registered address in Bangladesh.
In addition, yearly audited account submission, filing of yearly returns, and filing of tax returns must be followed as part of yearly compliance conditions.
The Liabilities of a Private Limited Company:
- A private limited company is liable to call an annual general meeting.
- A private limited company must have a statutory auditor.
- All board meeting reports and financial statements must be presented.
- A private limited company should file income tax returns annually.
Documents Needed to Set up the Private Limited Company:
For a non-operating bank account in Bangladesh.
- Name approval certificate from RJSC
- Create MOA and AOA of the proposed company in Bangladesh
- Board Resolution/ Promoters’ Meeting Minutes
- NID/ Passport copies of all shareholders
- 3 copies of photographs of all shareholders and directors of the proposed company
- Completed and signed Bank Account Application Form
For a corporate shareholder, additional prerequisite documents-
- Share tree analysis for a corporate shareholder
- Passports and Photographs of all nominee directors
- Passports and Photographs of all shareholders of the parent company/corporate shareholder
- Incorporation certificate, Memorandum, and Article of Association (AOA) audit report of the previous year of corporate shareholders (All must be translated into English and notarized)
For Company Registration:
- Copy of the MOA and AOA of the proposed company
- Signed Subscriber Page
- Signed Form-VI (declaration of registered address)
- Signed Form-IX (consent of the directors)
A Comprehensive Process of the Private Limited Company Set-Up
Name Approval of the Company
Choosing a name for the business is the first stage in establishing a private limited company in Bangladesh. The name clearance certificate can only be obtained by the applicant once they have applied for name clearance to the web portal of RJSC. The company must pay the fees associated with name clearing and verification. Usually, the certificate arrives in one or two days. The validity of name clearance approval is viable for 30 days.
Draft Required Documentation
- Memorandum of Association (MOA)
- Article of Association (AOA)
- Form-VI (notice of situation of registered address)
- Form-IX (consent of the directors to act)
- Board Resolution/ Promoters’ Meeting Minutes
The above-mentioned documents must be crafted.
Opening a non-operating bank account
Before applying to RJSC for company registration, a non-operating bank account with any scheduled commercial in Bangladesh must be formed in order to get inward remittance, according to the Bangladesh Foreign Exchange Regulations. The bank will give you an Encashment Certificate with the purpose of payment after they have received the remittance. Before the confirmation of the company registration is ensured, RJSC will check with the issuing bank this Encashment Certificate.
Inward Equity Remittance in Bangladesh
Following the Bangladesh Foreign Exchange Regulations, the procedure of inward equity remittance must be completed before the submission of the company registration application to RJSC. The procedure is as follows-
- The paid-up capital must be put down by the shareholders to the non-operating bank account.
- Remittances must be sent through SWIFT.
- It may require around 48-72 hours to receive the payment in Bangladesh.
- An Encashment Certificate will be given by the bank upon receipt of the equity remittance.
- The reason for the remittance must be listed as “Equity Investment” on SWIFT.
Online Filing to RJSC Web-portal
- Memorandum of Association (MOA) and Article of Association (AOA)
- Signed Form-VI and Form-IX
- Signed Subscriber Page
- Encashment Certificate
The above-mentioned capital must be uploaded to the RJSC Web Portal.
Then, the registration process will be complete.
Company Registration Documents
The documents mentioned here will be sent by RJSC as evidence of approval of company registration after the register of RJSC has approved the online application:
- Incorporation Certificate
- Certified Copy of Memorandum of Association (MOA) and Article of Association (AOA)
- Certified Copy of Form- XII (Particulars of Directors)
Other Licences and Registration
After the company registration has been completed, there are some other significant registrations and business licences required. They are as follows-
- Trade License
- Tax Registration (E-TIN)
- Vat Registration (BIN)
- Membership from the Chamber of Commerce (for import and export businesses)
- Import Registration Certificate (for import businesses)
- Export Registration Certificate (for export businesses)
Based on the field of your work, you could additionally require other licences and registrations from the relevant government authorities
After going through all the steps your private limited company will be ready to begin its operations.
Khan Akber & Co. is more than happy to assist if you need help to get through this intricate process. We assist foreign companies in establishing their business in Bangladesh as well as offering standard accounting and compliance services.
Summary
Many foreign firms now prefer Bangladesh for their businesses due to the economic growth of the country. In Bangladesh, a private limited company is a business that provides advantages such as legal standing, low paid-up capital requirement, and easy entry and exit which appeals to foreign investment. However, foreign companies must follow the legal requirements for company registration in order to stay clear of any troubles. This blog details how a company operates and the benefits of opening a private limited company here. It also explores the statutory requirements as well as the required documentation for company registration. It gives an extensive guide to company registration in Bangladesh. Follow the guide properly and you will be good to go. If you need further help, contact Khan Akber & Co.
Frequently Asked Questions (FAQs)
What are the disadvantages you may face if you set up a private limited company?
A private limited company prohibits quotes for stock exchange rates, caps the number of shareholders, and requires a laborious compliance process.
What is the bare minimum of directors needed to register a private limited company?
The minimum and maximum numbers of directors for a private limited company are 2 and 50.
What does a private limited company must comply with?
All private limited company must hold their annual general meetings no later than six months after the end of their fiscal year.
What is the bare minimum of shareholders needed to register a foreign private limited company?
The minimum and maximum numbers of shareholders for a private limited company are 2 and 50.
Can a foreign private limited company be registered in Bangladesh?
By adhering to Bangladesh’s legal requirements as outlined in the blog, any foreign company can open a business here.
