Private limited company
What is Private Limited Company?
Most Bangladeshi companies are registered as private limited liability companies, commonly known as private limited companies. A private limited company in Bangladesh is a separate legal entity and shareholders are not liable for the company’s debts beyond the amount of share capital they have contributed. According to the Companies Act 1994, any person (foreign or local) above the age of 18 can register a company in Bangladesh.
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.
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.