Company Registration Process in Bangladesh

by Tahmidur Remura Wahid | Apr 27, 2024 | Corporate, M&A, Finance

A company registration is a registry of organizations that are registered in the jurisdiction in which they do their business. Not to be confused with a Company Registration, a statistical business register serves a distinct function. At a national statistics office, a statistical register is an essential component of an official economic statistics system. This is in contrast to a commercial or trade register, which serves the aim of providing protection, responsibility, and control.

Bangladesh, a South Asian country with a rapidly expanding economy, provides a hospitable environment for the growth of enterprises. The nation offers a wealth of prospects for business owners who are interested in establishing a presence in the area as a result of its advantageous location, expanding market potential, and beneficial regulations implemented by the government.

Initiating the Company Registration Process

Initial Documentation and Preparation

Preparing for business registration requires careful paperwork. Prepare the necessary papers before starting:

• Memorandum and Articles of Association
• Incorporation Form
• Bank Statement
• Passport-sized Photographs of Directors
• Registered Office Address Proof

Submission to the Registrar of Joint Stock Companies and Firms (RJSC)

Submit all required documentation to the RJSC with the registration fee. The RJSC regulates Bangladeshi business registrations.

Company Registration Process in Bangladesh

To successfully go through the process of registering a corporation, there are several steps involved, each of which requires strict adherence to a certain set of norms and laws.

Name Clearance and Reservation

The first thing that has to be done is to ensure that the RJSC gives their approval for the proposed name of the firm. The selected name need to be in accordance with the regulatory framework and should not be similar to any other business names that are already in use.

Memorandum and Articles of Association (MoA)

The drafting of the memorandum of association is an essential part of the registration procedure. This document lays the groundwork for the company's legal identity by providing an overview of the company's goals, organizational structure, and operational guiding principles.

Filing Incorporation Documents

Once the name of the business and the memorandum of association have been approved, the paperwork necessary for incorporation, including Form 1, should be sent to the RJSC. The completion of this phase marks the beginning of the legal life of your firm, which is the formalization of the registration procedure.

Obtaining Certificate of Incorporation

Following the successful submission and verification of paperwork, the RJSC will issue the Certificate of Incorporation, which will formally acknowledge the foundation of your business in Bangladesh.

Essential Requirements and Compliance

Tax Identification Number (TIN) Registration

In order to meet tax duties and ensure conformity with the rules governing taxes in Bangladesh, it is necessary for a registered organization to get a Tax Identification Number (TIN).

Opening a Bank Account

Establishing a bank account in the name of your firm will make it easier to conduct financial operations without any complications. Choose a bank that has a good reputation and provides extensive financial services that are adapted to the requirements of your Company Registration.

Overview of legal entities in Bangladesh

Requirements for company registration in Bangladesh

Allowed foreign ownership

When it comes to foreign ownership, Bangladesh is fairly open-minded, allowing up to one hundred percent of foreign ownership in the majority of industries. However, in many industries, you are required to get prior clearance from the government, and there are a few industries that ban both domestic and international investment.

For the same reason, additional advantages consist of the opportunity to acquire land and property in the name of the business, as well as tax breaks and other advantages.

Minimum capital requirement

In Bangladesh, there is no statutory need for a minimum amount of capital available. As a result of this, one dollar is regarded to be the minimal amount of capital investment. Nevertheless, investors should bear in mind that in order to engage foreign workers, they are required to pay an internal transfer of at least fifty thousand dollars.

Types of legal entities available in Bangladesh

#1 Private Limited Company Registration

It is estimated that a significant percentage of businesses in Bangladesh are registered as limited liability corporations (LLCs). The responsibility is restricted to the owners' pooled capital, therefore limited liability companies (LLCs) in Bangladesh may be held entirely by foreign entities.

A individual who is at least 18 years old is qualified to form a corporation or business. In addition, the legislation stipulates that there must be a minimum of two shareholders and a maximum of fifty stockholders, as well as two directors. You should also be aware that you have the option of forming a joint venture with a local business in order to maximize the benefits and minimize the dangers.

#2 Public Limited Company Registration

A public limited company, on the other hand, is often registered on a stock market and has the ability to invite members of the general public to hold shares.

It is not possible to restrict the number of shareholders in a public limited company; nevertheless, the minimum number of members is seven, and there are three directors. The stockholders of the company may be any legal person or any individual who is at least 18 years old and meets the requirements set out by Bangladeshi law.

The public might be asked to contribute money to it. It is necessary for it to conform not only with the Companies Act of 1994 but also with the Securities and Exchange Commission Act of 1993.

The step-by-step process of company registration in Bangladesh

It is estimated that the whole registration process in Bangladesh takes between forty-five and sixty days on average.

Step 1: Name clearance

First and foremost, you are required to get authorization from The Registrar of Joint Stock Companies and Firms (RJSC) for the moniker of your business.

Step 2: Drafting of required documents

The second step is to write the Article of Association (AoA) and the Memorandum of Association (MoA) for the organization being formed. It is necessary for you to design it together with other forms as needed for compliance with RSJC when you are preparing those responsibilities.

Step 3: Opening of bank account

You are required to create a bank account in the intended name of the firm and make an inward transfer of at least fifty thousand dollars in the United States of America if you want to hire personnel from other countries. Creating the bank account is something that Emerhub is able to help you with.

Step 4:  Submission of documents to the RSJC

At this stage, you are expected to hand over all of the necessary documents to the RJSC and pay the expenses associated with registration. You may also investigate RSJC in order to get the incorporation certificate throughout the time period that is considered standard.

Step 5: Post-registration compliance

You have a freshly incorporated company in Bangladesh at this point, and you have the certificate of incorporation, the Articles of Association (AoA), and the Memorandum of Association (MoA) in your possession.

You also need to proceed to some additional licenses and registrations:

• Trade License
• Tax Identification Number (TIN)
• VAT Registration Certificate
• Fire Certificate
• Environmental Clearance Certificate (if necessary)

Alternatives to setting up a company in Bangladesh

Branch

A branch is not a distinct corporation that is formed in its own right; rather, it is an extension of the parent firm. To put it another way, the parent business is accountable for the duties and obligations of its subsidiary.

As long as the BIDA gives its clearance, a branch is allowed to participate in commercial activity. On the other hand, the Exchange Control Guidelines conducts a stringent monitoring of its activities.

Fourty-five to sixty days is the typical amount of time required to open a branch in Bangladesh.

Representative/ Liaison office

One of the key requirements for a liaison, which is also known as a representative office, is clearance from the BIDA. This is similar to the situation with a branch. It is required to have a parent company located outside of Bangladesh, and its operations are restricted since it is only used as a communication or coordination tool for the commercial resources that are located in Bangladesh.

One further thing to keep in mind is that a liaison office in Bangladesh is not allowed to generate any local revenue. When it comes to expenditures and operating charges, the parent firm is responsible for paying them everything via remittance.

With the exception of the money that is brought in from outside the country, Bangladeshi resources are not permitted to send any form of remittances to other countries. In the same vein, it is also in accordance with the standard procedure for registering a company venture in Bangladesh.

Franchise operation with local promoters

There is also the possibility for foreign-owned businesses to establish franchises in Bangladesh. You have the ability to provide local promoters permission to use your brand, offer them technical help, and charge them fees or commissions based on the activity they engage in via the usage of a franchise.An enterprise that is a franchise is one that abides by both the purchase agreement and the licensing agreement.

Are you planning to register a company in Bangladesh?

To get in contact with Emerhub, please fill out the form that is provided below. When it comes to registering your business in Bangladesh, our advisors would be happy to be of assistance to you.