Admiralty Law in Bangladesh | Everything you need to know in 2023

Admiralty Law in Bangladesh | Everything you need to know in 2023

Admiralty Law in Bangladesh and Ship Arrest in Bangladesh in 2023

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24 Jan 2022

Barrister Tahmidur Rahman
Director, The Law Firm in Bangladesh

This article will explain in details about admirlty law in Bangladesh and ship arrest procedure with details.

Nature of Admiralty law in Bangladesh

The Admiralty Court Act of 2000 (which revoked the Admiralty Court Act).The High Court Act (1891) confers original jurisdiction on the High Court Division for accepting cases in the first instance. Chapter 3 of the 2000 Admiralty Act. The statute specifies that the High Court Division shall serve as the Court of Admiralty. Cases under the statute are decided by a special statutory procedure.

The Court has exclusive jurisdiction under the Act itself. Nonetheless, there is a There is a misunderstanding among attorneys regarding the correct terminology. should be assigned to the High Court’s admiralty jurisdiction. Division. There is a common misconception that lawsuits are decided by the Different statutes designate the High Court Division as a court of initial instance.

Ordinary Civil Original Jurisdiction is exercisedA sectional bench ofThe former Dhaka High Court, commenting on such a case, stated: This jurisdiction opined that it would be a misnomer to refer to it in this manner. as Original Civil Jurisdiction Ordinary.

The Honorable Mr. Justice Ruhul Islam accurately recognized the legal position upon observation: “Admiralty jurisdiction differs significantly from both ordinary original civil jurisdiction and extraordinary original civil jurisdiction of the United States.” the Supreme Court.

Admiralty Suits and Admiralty law in Bangladesh:

 

The High Court Division of the Supreme Court of Bangladesh is vested with admiralty jurisdiction. Article 101 of the Constitution of the People’s Republic of Bangladesh provides that the High Court Division shall have such jurisdiction as are conferred on it by the Constitution and by other laws.

Section 3 (1) of the Admiralty Court Act, 2000 proclaims that the High Court Division of the Supreme Court shall be the Court of Admiralty.

Sub-section (2) narrates the jurisdiction of the Court in details. Section 8 of the Act permits the hearing and disposal of admiralty suits by a single bench of the High Court Division. However, the Chief Justice may constitute a Division Bench comprising two or more judges for hearing and disposal of such suits.

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Nature of Admiralty Action in Bangladesh:

 

Maritime law has long allowed a plaintiff to proceed not only in persona (e.g. against a shipowner) but also in rem (against the thing itself, e.g. the ship). Therefore, admiralty action is an action in rem as well as in personam. Admiralty suit is an action in rem generally and cause of action arises due to collision of ships in the seas and/or for causing damage to cargo.

Thus, in admiralty law in Bangladesh, the remedy in an admiralty suit is essentially a remedy by way of compensation in money and that is why the Act of 2000 and Admiralty Rules provide for arrest of ships when it is within the territorial limits of Court.

The Act also provides for the release of an arrested ship on furnishing of adequate security for the claim amount. An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res. The ship is for this purpose treated as a person.

Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the plaintiff in personam.

Proceeding For Ship Arrest in Bangladesh

In admiralty law in Bangladesh, It is however, imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started. It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff.

The arrest of the foreign ship by means of an action in rem is thus a means of assuming jurisdiction by the competent court.

A suit against a foreign ship owned by a foreign company not having a place of residence or business in Bangladesh is liable to be proceeded against on the admiralty side of the High Court Division by an action in rem in respect of a cause of action alleged to have arisen by reason of a tort or a breach of obligation arising from the carriage of goods from a port in Bangladesh to a foreign port. 

A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction. If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which proceedings in rem have been instituted, he submits himself to jurisdiction.

Procedure of an admiralty suit in Bangladesh:

 

The procedure for commencing an action on a claim under the admiralty jurisdiction of the High Court Division is as like as filing of a civil suit in a court of original jurisdiction.  

Institution of Admiralty suits in Bangladesh:

Section 6 of the Admiralty Court Act, 2000 of admiralty law in Bangladesh provides for filing of a suit in the Admiralty Court through a plaint in accordance with the provisions of the Code of Civil Procedure. Section 6 reads as: “suit under admiralty jurisdiction to be instituted by a plaint drawn up, subscribed and verified by the claimant as plaintiff according to the provisions of Code of Civil Procedure 1908 of Bangladesh”. Rule 3 of the Admiralty Rules, 1912 provides:

 

“In admiralty law in Bangladesh, a suit shall be instituted by a plaint drawn up, subscribed and verified according to the provisions of the Code of Civil Procedure, save what if the suit is in rem the defendants may (subject to such variations as the circurnstances may, require) be described as “the owners and parties interested in” the vessel or other property proceeded against instead of  name”.

 

The plaint must be signed and verified by the plaintiff, if he be an individual, and in the case of a firm by any one of its partners, and, it a corporation, by a director, the secretary or other principal officer. When the claimant seeks to arrest the vessel, the vessel would be named as a defendant. If the owners of the vessel are known they will be impleaded and named as other defendants. In addition, the defendant may also be described as

“the owners and parties interested in the vessel cases, the local agent of the ship is also impleaded as a defendant.

In most the plaint contains the names, description and place of residence of the plaintiff and the defendant/defendants; the statements of facts giving rise to the cause of action to the claimant for the suit and the time when it arose; the nature of claim as well as statements that the suit is maintainable within the admiralty jurisdiction of the court. The plaintiff in the plaint will seek appropriate relief or reliefs, i.e., the decree to be passed in the suit.

 Application for arrest of a ship or for injunction in Bangladesh

An application for arrest of a ship in admiralty law in Bangladesh or application for injunction, or direction requires affirmation. Affirmation is made by swearing an affidavit by the claimant or on his behalf by his authorised agent before the Commissioner of Oaths of the High Court Division. Until an affidavit by the claimant or his agent is filed no warrant of arrest shall be issued.

Rule 4 of the Admiralty Rules, 1912 prescribes that in suits in rem a warrant for the arrest of property may be issued at the instance either of the plaintiff or of the defendant at any time after the suit has been instituted, but no warrant of arrest shall be issued until an affidavit by the party or his agent has been filed.

 The affidavit shall state the name and description of the party at whose instance the warrant is to be issued, the nature of claim or counter-claim, the name and nature of the property to be arrested, and that the claim or counter-claim has not been satisfied.

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How the plaintiff moves the plaint:

Upon filing the plaint, the plaintiff moves the same before the Admiralty Court the concerned bench of the High Court Division assigned to hear admiralty matters) and such court normally orders registration and admission of the suit and gives directions for issuing summons upon the defendants, fixing a date for their appearance and for filing the written statement.

Thereafter, the application for arrest of the vessel is. Moved and, if the court is prima facie satisfied with the submission of the plaintiff in favour of the claims, the Court passes an instant order for arrest of the ship and for keeping the same in the custody of the Marshal of the Admiralty Court.

The Marshal is appointed by the Chief Justice to execute the process of the Admiralty Court. The Court would further order that the vessel, the other defendants and the Port Authority, Customs Authority and the Port Police be informed about the order of arrest of the vessel and would also direct that the Port Authority, Customs Authority and the Port Police Authority render all necessary assistance to the Marshal of the Court in securing the arrest of the vessel.

While passing an order for arrest, it is usual for the Court to pass an order that, in the event of the defendants satisfying the Court that the vessel is under no obligation to pay the claimant or in the event of furnishing such security as against the amount to be determined by the Court, the ship may be released from arrest. The necessary orders of the Court admitting the suit and the arrest would be required to be drawn up by the office.

Signing of the Order by the judge:

Thereafter, the order would be signed by the judge presiding over the Admiralty Court and the party at whose instance the arrest order is passed would take out the necessary warrant and summons which shall be served by the Marshal of the Admiralty Court on the vessel, other defendants and the Port and Customs Authorities. 

Sometimes the Admiralty Court, instead of passing an instant order of arrest, will direct the defendants to show cause within a certain period of time, say within three or four days from the date of service of the order, as to why on the allegations of the plaintiff contained in the application for arrest, the vessel should not be arrested, and similar procedures, like those for the service of the warrants of arrest order will be folfowed in respect of the service of the said “show cause” notice on the defendants.

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Execution of warrant of arrest:

 

Service of a warrant against a ship is to be effected by nailing or affixing the original writ or warrant for a short time on the main mast or on the single mast of the vessel and by taking off the process, leaving a true copy of it nailed or affixed in its place.

Normally, upon a warrant of arrest, the Marshal along with his assistants will proceed towards the Port where the ship is anchored for service of the same and the Marshal will go on board the ship and call the Master or in his absence the Officer-in- Charge of the ship and inform him by handing over the warrant of arrest that the vessel is under arrest of the Admiralty Court.

If the Master of, in his absence, the Officer-in-Charge of the ship refuses to accept the warrant, the Marshal will leave the warrant of arrest on board and will submit his report to the Court stating either that the writ has already been served or about the refusal to accept the writ of arrest and the fact of leaving the writ on the vessel because of refusal by the Master to accept it. 

If a writ of arrest is left on board by the Marshal because of the Master’s refusal to accept it, this would be deemed by the Court to amount to a good service of the arrest order. The Port having jurisdiction over the vessel will also be informed and served with the writ of arrest for the purpose of information and, upon receipt of the same, the Port Authority will not give any port clearance to the vessel until a release order is served upon them for the purpose of information.

Similarly, the Commissioner of Customs having jurisdiction over the vessel would also be informed about the arrest of the vessel and be served with the writ of arrest. He also will not grant any clearance to the vessel until a writ of release order is served on him for the purpose of information. The other defendants will also be served with the order of arrest of the vessel.62

Custody of the ship while under arrest

From the time of arrest the ship will be under the custody of the Marshal of the Admiralty Court and any interference with the same might be regarded as contempt. The Marshal requests the Port Authority to keep watch over the ship.

 

Appearance of defendants:

 

The defendants immediately upon receipt of the arrest order may cause their appearance in the suit through advocates and file written objections (W.O.) against the order of arrest, giving the grounds in favour of vacating such an order, or may furnish security by way of a Bank Guarantee executed by a local scheduled bank to the extent of the claimed amount, or such amount as determined by the Court for immediate release of the vessel, and file written objections in due course. Written objections are required to be affirmed by an affidavit on behalf of the defendants before the Commissioner of Oaths of the High Court Division.

Statement showing the extent of interest.

In an admiralty suit where a ship has been arrested any person not named in the writ but interested in the vessels may intervene and appear on the filing of an affidavit showing that he is interested in the vessel and may tille a statement showing the extent of his interest. Upon hearing of, the written objections filed by the defendant, if the Court is satisfied that the vessel has no obligation to pay the claimant of that the vessel is not liable to be arrested, the Court may set aside the order of arrest and order the release of the vessel. 

If the defendants furnish a Bank Guarantee through a local scheduled bank, for the immediate release of the vessel, the vessel will be released.

 Upon the furnishing of the Bank Guarantee, the maintainability of the arrest order can be challenged by filing written objections, and the Court may hear such objections and, if satisfied that the vessel is not under any obligation to satisfy the claims of the claimants, may return the Bank Guarantee to the bank concerned for cancellation.

In appropriate cases the Admiralty Court may consider to reduce the quantum of security to be furnished by way of Bank Guarantee for the release of the vessel. Hearing of such application for reduction of security amount may take some time.

Normally, written objections are taken up for hearing by the Court in due course and, unless there appears to be a very strong case in favour of the defendants and for release of the vessel, the Court would order that the objections be taken up at the time of the final hearing.

In a suit where only a notice to show cause as to why the vessel would not be arrested is passed by the trial Court, the defendants would appear and file written objections against such order and, upon hearing, if the Court is satisfied that the vessel is not liable to be arrested, the Court would reject the petition for arrest.

In the event the Court is satisfied that the vessel would be out of jurisdiction without satisfying the claims of the plaintiff, when a decree may be passed in his favour, the Court would order the arrest of the vessel.

Defendants possession as evidence in support of the defence

 

The defendants are required under the law to file a written statement in their defence in, reply to the allegations contained in the plaint. Where the defendants rely upon documents in their possession as evidence in support of the defence, they can produce and file the same in Court.

The defendants may also file such documents as they consider necessary for the defence before commencing the hearing of the suit. The Court also has the power to direct either the plaintiffs or defendants at any time during the pendency of the suit to produce such documents as are in their possession relating to any matter in question in the suit.

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Court fee for admiralty suits in Bangladesh:

 

Court fee for admiralty suit is an important issue. The Admiralty Court Act, 2000 provides for the application of the Court Fees Act, 1870 in an admiralty suit. First Schedule to the Court Fees Act prescribes the rate of  advalorem fees payable on the valuation of a suit.

Where the suit is valued to an amount below Tk 2 lakh or where the claim amount as stated in the plaint does not exceed the said limit, the court-fee is fixed at Tk 7,100.00. For any amount exceeding taka 2 lakh court fee would be 1% of the exceeding amount plus [15% VAT]° (value added tax) on the total court fee calculated as such.

Maximum advalorem court fee in Bangladesh Admiralty Law

Proviso to section 7 of the Admiralty Act, 2000 provides for a maximum advalorem court fee of taka one lakh for the enforcement of maritime claim or questions. The same proviso provides that, the fees chargeable on a plaint in case of a claim by a master or member of the crew of a ship for recovery of wages shall be taka one hundred. 

Enforcement of judgment and decree:

When a suit is decreed in favour of the claimant and if there is no Bank Guarantee or security in substitution of the vessel, a sale by public auction of the arrested vessel would be ordered by the Court. An order for sale pendente lite of a ship under arrest is very exceptional but can be made in certain serious situations. 

Sale by public auction is conducted by the Marshal of the Admiralty Court. The Marshal of the Admiralty Court for this purpose prepares an inventory of the said vessel and puts the vessel in public auction at a date and time fixed by him.

Notices for auction sale

Notices for such auction sale is generally published in two national dailies one in English and the other in Bengali and also in local papers’ where the ship is arrested. The decree-holder pays the necessary expenses for the preparation of the said inventory by the Marshall and his team, the cost of advertisement in the papers and all other incidental expenses.

All such costs and expenses in connection with or relating to the auction sale of the vessel are considered as the first charge on the sale proceeds of the vessel. The highest bidder at a public auction will be allowed to purchase the vessel. The sale proceeds of the auction sale is deposited in the account of the Court/Marshall as per rules. 

However, such a sale is to be confirmed by the Admiralty Court. If the Court finds that the bid offer is very low, then it may set aside the auction and may direct a fresh auction and, upon sale, the Court will disburse the amount of the claimants. If there is a Bank Guarantee substituting a vessel the decretal amount will be satisfied out of the Guarantee.

 

The right to arrest a sister ship:

 

The admiralty jurisdiction of the High Court Division may be invoked by an action in rem not only against the offending ship in question but also against a “sistership’, i.e., a ship in the same beneficial ownership as the ship in regard to which the claim arose. Section 4 (4) of the Admiralty Act, 2000 specifically provides: 

In the case of any such claim as is mentioned in clauses (d) to (g) of sub-section 2 of section 3 of the Act, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court Division as the Court of Admiralty may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against-

(a) that ship, if at the time when action is brought it is beneficially owned as respects all the shares therein by that person; or

(b) any other ship which, at the time when action is brought, is beneficially owned as aforesiad.

However, before the enactment of the Act of 2000 the High Court Division in exercising admiralty jurisdiction decided against proceeding in rem where the sister ship of the same owner was not concerned with the cause of action. In Kings Shipping Trading Co. vs. Ms. L.S. Lines & Other of the High Court Division observed:

“Admiralty Court in Bangladesh has been exercising the same jurisdiction as was conferred upon the High Court of Admiralty in England under the provision of Colonial Court of Admiralty Act 1890 and Colonial Courts of Admiralty (India) Act 1891. The High Court Division of the Supreme Court of Bangladesh never exercised Admiralty jurisdiction on the basis of practices of the English Court of Admiralty.

The principles of Administration of Justice Act 1956 extending Admiralty jurisdiction in England cannot be followed in Bangladesh, as the said Act is not applicable in Bangladesh. This Court exercising admiralty jurisdiction has no power to arrest any property or ship of the defendant other than the one which was concerned in the cause of action. The suit in rem is not maintainable, but in personam is maintainable.

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“In appropriate cases the Admiralty Court may consider to reduce the quantum of security to be furnished by way of Bank Guarantee for the release of the vessel. Hearing of such application for reduction of security amount may take some time. Normally, written objections are taken up for hearing by the Court in due course and, unless there appears to be a very strong case in favour of the defendants and for release of the vessel, the Court would order that the objections be taken up at the time of the final hearing.”

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FAQ

Why should you a arrest a Ship in Bangladesh?

Bangladesh is one of the most favorable arrest jurisdictions for the following reasons: a) Bangladesh is not a signatory to any arrest convention; b) ship can be arrested in an action in rem; c) vessel can be arrested in an action in personam; d) ship can be arrested for security; e) ship can be attached even after loss of navigability; f) ship can be arrested for maritime lien as well as maritime claim; g) arrest lies for as many as nineteen claims; and The High Court Division of Bangladesh's Supreme Court exercises Admiralty Jurisdiction in accordance with the Admiralty Court Act of 2000 and the Admiralty Rules of 1912. Admiralty Rules provide that in suits in rem a warrant for the arrest of property may be issued at the instance of either the plaintiff or the defendant at any time after the suit has been commenced, but no warrant of arrest shall be issued until an affidavit by the party or his agent has been filed, and the following provisions have been complied with:- a) The affidavit shall state the name and description of the party at whose instance the warrant is to be issued, the
b) In a case involving the distribution of salvage, the affidavit must include the amount of salvage money awarded or agreed to be accepted, as well as the name, address, and description of the party holding the funds.

How to file an application for ship arrest in Bangladesh?

To file an application for ship arrest, the plaintiff/claimant must file a lawsuit and pay a court fee of Tk 1,000,000.00. In an action for wages, a court fee of Tk 100.00 must be paid. The complaint and accompanying documents must be filed with the section/office of the Court, and the application for arrest of the ship must be filed with the Court.

Typically, the application appears on the court's Daily Cause List the following business day. Nonetheless, if the Court is convinced of the matter's urgency, it prepares a supplemental cause list and hears the case on the same day. If a prima facie case is established in support of the claim, the court will admit the case and issue summons.

The application for arrest is then heard, and if the court is initially convinced of the application's merit, it issues an order for the arrest of the ship as security for the claim amount.
A ship arrest application is heard ex parte unless the defendants have filed a caveat. The Marshal of the Court serves the defendants with the arrest of ship order upon receipt of the claimant's fee and charge.
Similarly, the Admiralty Court has the authority to seize cargo on board or any property belonging to any party.

How an order for a ship arrest works?

The order for arrest may be vacated by the same court upon an application filed by the defendant on the grounds that the ship was wrongfully arrested, and the defendants may also file an application for a reduction in the amount of security, but hearings for such applications take one to two weeks.

When the ship is in a hurry, this type of application is typically not recommended. A ship is released from arrest upon depositing the claim amount with the court or providing a local bank guarantee. In Bangladesh, P & I Club's LOU is not recognized.

After the ship is released in exchange for a bank guarantee, the defendants may move for a reduction in the bank guarantee, and if granted, a revised bank guarantee will be provided. The Marshal also serves the release order upon receipt of the Marshal's fee.
If the ship has not been released by the defendants, the plaintiff may request the sale of the ship pendente lite.

The court then sells the ship at auction and holds the proceeds, which are paid to the plaintiff if he wins the case. If there are multiple claimants and the proceeds are insufficient to cover their claims, the Court applies the English Law of Priorities.

Which International Convention applies to arrest of ships in Bangladesh?

Both the International Convention relating to Arrest of Seagoing Ship 1952 and the International Convention of the Arrest of Ships 1999 have not been ratified yet by Bangladesh.

Is there any other way to arrest a ship in Bangladesh?

A ship could also be seized in execution of a decree issued by the High Court Division or a judgment issued by a foreign court against the ship's owner. Additionally, a ship can be attached prior to judgment in a suit in personam. A ship can be attached to a suit in rem if it is beached for scrap prior to the institution of the suit.

The Bangladesh Merchant Shipping Ordinance (MSO) of 1983 permits the Principal Officer of the Mercantile Marine Department to seize an unseaworthy vessel. Under the MSO, the High Court Division can detain a foreign ship for damage caused in any part of the world to the Government of Bangladesh or any Bangladeshi citizen or company, and the Principal Officer or Collector of Customs can detain a ship before an application to the High Court Division has been made.

In accordance with the Regulations for Working of Chittagong Port (Cargo and Container) 2001, the Chittagong Port Authority may detain a vessel until security has been provided for the amount of damage caused and the cost of removing the blockage of the navigational channel, or until the full amount has been paid.

Is saisie conservatoire or an freezing order applicable in Bangladesh Admiralty law?

Other than the arrest of a ship in an Admiralty proceeding or an execution proceeding to enforce a decree, there is no separate freezing order. The court may, however, grant an application for an injunction prohibiting a party from scrapping or removing a vessel.

For which types of claims can you arrest a ship?

In an action in rem, a ship could be arrested for any of the following claims:
(a) any claim to the possession or ownership of a ship or to the ownership of any share therein or for recovery of documents of title and ownership of a ship, including registration certificate, log book and such certificates as may be necessary for the operation or navigation of the ship; (b) any question arising between co-owners of a ship as to possession, employment or income of that ship; and (c) any claim in respect of a mortgage or charge on a ship or any share therein.
(d) any claim pertaining to towage of a ship or aircraft; (e) any claim pertaining to pilotage of a ship or aircraft; (f) any claim pertaining to goods or materials supplied to a ship for her operation or maintenance; and (g) any claim pertaining to construction, repair, or equipment of a ship or dock charges or dues.
(h) any claim for wages by a master or member of a ship's crew, or any claim for money or property recoverable as wages of a master or member of a ship's crew under the Merchant Shipping Ordinance, 1983, or in court; charterer or agent of the ship;
(i) any claim for forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, or for the restoration of a ship or any such goods after seizure, or for droits of admiralty together with any other jurisdiction to grant reliefs as are provided under the provisions of this title.

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Author’s Bio
About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
Work highlights

Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

Email: [email protected]

Address: 2 Turner Street, Canning Town, E16 1FH, United Kingdom

Gender: Female

Job Title: Barrister and Senior Associate

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বাংলাদেশে জমি রেজিস্ট্রেশন আইন এবং কিভাবে জমি রেজিস্ট্রেশন করবেন 2022 এ | Effective way of Registering Land

বাংলাদেশে জমি রেজিস্ট্রেশন আইন এবং কিভাবে জমি রেজিস্ট্রেশন করবেন ২০২২ এতাহমিদুর রহমান, Director and Senior Associate বাংলাদেশে অনেক মানুষই ভূমি আইন সম্পর্কে খুব বেশি জানেন না। ফলে তারা জমি নিয়ে নানা ধরনের প্রতারণা ও হয়রানির শিকার হন। জমি রেজিস্ট্রেশন করা খুবই জরুরি।...

Wildlife laws in Bangladesh

Wildlife laws in Bangladesh

Wildlife laws in Bangladesh – Everything you need to know in 2022

Barrister Tahmidur Rahman Lawfirm

Barrister Tahmidur Rahman
Director, Tahmidur Rahman Remura Law Firm in Bangladesh

24 Jan 2022

This article will explain in details about Wildlife laws in Bangladesh and how you can deal with any breach of violation of wildlife laws in Bangladesh and whats steps can you take.

Major Wildlife laws in Bangladesh

After regaining independence, Bangladesh tackled various development difficulties, including protecting its wildlife and preventing illegal trade in endangered species. The President of Bangladesh issued Presidential Order No. 23 of 1973, known as the Bangladesh Wild Life (Preservation) Order, in 1973.

In 2012, parliament passed another Act called The Wildlife (Preservation and Security) Act, 2012 to adapt new legal requirements for coping with shifting scenarios. The latter nullified the former.

Key provisions of the Act: The government can now convene a “Wild life Advisory Board” made up of specialists thanks to the 2012 Act.

The Board will periodically conduct an evaluation of the current state of biodiversity, wildlife, and forest resources, and issue guidance for their future growth and management. However, a Chief Warden, an Additional Chief Warden, and a Warden have been tasked with overseeing their growth and management as a whole.

 

Wildlife Laws In Bangladesh_Best Law Firm In Bangladesh Tahmidur Rahman_Top Law Firm In Bangladesh

Duties of Chief Conservator of Forest, Conservator of Forest and Divisional Forest Officers in Wildlife laws in Bangladesh

By virtue of their positions, the Chief Conservator of Forest, the Conservator of Forest, and the Divisional Forest Officers will serve in the roles of Chief Warden, Additional Chief Warden, and Warden, respectively. The Act requires all private citizens to register their possession of endangered species, protected plant species, and wildlife products within Section 11. According to Article 12, it is illegal to deal in such wildlife or wildlife products without first registering as a dealer. Any disobedience will result in legal consequences.

 

Section 39 of the Act for wildlife laws in Bangladesh provides for a maximum sentence of one year in jail, which may be increased to two years for further offenses. In order to ensure the continued health and viability of wildlife and flora, the government can designate any land as a wildlife refuge, community conservation area, safari park, eco park, botanical garden, wildlife reproduction center, landscape zone, buffer zone, or core zone under the authority granted by the Act.  

Any person who violates sanctuary rules as per wildlife laws in Bangladesh is subject to a maximum of 2 years in prison, with the maximum sentence increasing to 5 years for subsequent offenses. The Act also allows for the establishment of wildlife rescue facilities, which provide medical care, food, housing, and safety for animals that have been injured, captured, or abandoned. The Act provides for the establishment of a unit composed of members of law enforcement agencies to combat wildlife crime and to enforce the provisions of international conventions, protocols, treaties, etc.

Bangladesh is home to many threatened species, including tigers and elephants. The illegal slaughter of these two species is now punishable by up to 7 years in jail under the Act, and up to 12 years in the event of a second conviction. In addition to jail time, a criminal may be required to pay a hefty fine. Trading of tiger or elephant parts has a minimum sentence of 3 years in jail, with the potential for an additional 2 years if the offender is caught again within 5 years.

As per wildlife laws in Bangladesh the act also makes it illegal to kill or trade protected species such as leopards, crocodiles, and migratory birds. These crimes carry a sentence of one to five years in jail. It is also a crime under the Act to aid in the commission of any of the aforementioned crimes.

Wildlife Laws In Bangladesh_Best Law Firm In Bangladesh Tahmidur Rahman_Top Law Firm In Bd

“Big 5” laws of International wild life laws

Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES) 1973, Convention on the Conservation of Migratory Species of Wild Animals 1979, Biodiversity Convention 1992, Ramsar Convention 1971, and World Heritage Convention 1972 are just a few of the wildlife conservation treaties that make up international wildlife law, also known as the “Big 5.” Non-binding instruments, such as Conference of the Parties (COP) decisions and various action plans, typically accompany and inform these.

Role of Bangladesh in wildlife laws

It’s important to note that Bangladesh has ratified, acceded to, or otherwise accepted all of these international treaties and conventions. Further, its wilderness areas are home to a great range of animal species, making it one of the world’s mega biodiverse states. The State should attempt to maintain and improve the environment and to preserve and safeguard the natural resources, bio-diversity, wetlands, forests, and wild life for the current and future citizens, as stated in Article 18A of the Constitution of Bangladesh.

The government of Bangladesh issued the Wildlife (Preservation) Order in 1973, which later became the Bangladesh Wildlife (Preservation) Act in 1973. Following this, in 2012, the National Parliament approved another Act, the Animals (Preservation and Security) Act, 2012, which replaced the former legislation in order to ensure the protection of forests, wildlife, and biodiversity.

As of right now, this law is the highest authority in Bangladesh on matters pertaining to the preservation of natural resources.

Despite the fact that all laws are often founded on the decisions made at the national level, States are also bound by the requirements of international treaties to which they are party and should thus base their laws on these treaties. State governments are responsible for making, enforcing, and enforcing wildlife trafficking laws across borders. Bangladesh is in a similar situation, with a major proportion of its wildlife in peril despite the fact that few regions are protected by law.

Partnership Business In Bangladesh

 Bangladesh’s court’s jurisdiction in Wildlife laws in Bangladesh

Courts with jurisdiction over the offenses covered by this Act include the First Class Judicial Magistrate or the Metropolitan Magistrate and the Court of Sessions. Judges can fine offenders any sum allowed by the law. The Court of Sessions has jurisdiction over cases involving the unlawful killing of tigers and elephants.

The poaching of endangered species like the tiger and elephant is now a cognizable and non-bailable offense. All other Act violations are not cognizable and bailable.
No court will have jurisdiction over a violation of the Act unless a formal complaint has been filed by either an authorized authority or a victim.

Awareness among the general public is crucial in the fight against wildlife crime, which must be complemented by legal restrictions against the trafficking of endangered species. The risk of losing a species of animal or plant, and the long-term consequences for ecological balance, are not well understood by the general public. This is why those who commit crimes against animals are always given a way out.

Partnership Business In Bangladesh_Best Law Firm In Bangladesh_Barrister Tahmidur Rahman

If you want to open a liaison office in Bangladesh or about branch formation click here!

  • Step by Step Process of forming a liaison office in Bangladesh

“Tahmidur Rahman – The Law Firm in Bangladesh is considered as one of the leading corporate firms in Dhaka, Bangladesh”

BDLaw Firms Bangladesh

“Courts with jurisdiction over the offenses covered by this Act include the First Class Judicial Magistrate or the Metropolitan Magistrate and the Court of Sessions. “

Barrister Tahmidur Rahman

Are you planning to take actions in regards to Wildlife laws in Bangladesh?

Company formation and registration at Tahmidur Rahman Remura: TLS: The Law Firm in Bangladesh:

The legal team of Tahmidur Rahman, The Law Firm in Bangladesh Remura: TLS, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related to Wildlifes laws and preservation . For queries or legal assistance, please reach us at:

E-mail: [email protected]
Phone: +8801847220062

Address: House 410, Road 29, Mohakhali DOHS

 

FAQ

How much money is required for company registration in Bangladesh?

The governmental fees for registering a company are determined by the amount of authorized capital. Government fees for the issuance of an Incorporation Certificate shall be BDT 1000.

How long does it take to register a company in Bangladesh?

Once the aforementioned formalities have been completed, RJSC will usually issue the certificate of incorporation (Company registration certificate) within 6-8 working days.

It usually takes 2-3 weeks from the date of submission of all documents to RJSC to register a company.

What is BIDA?

Bangladesh Investment Development Authority (BIDA) is in charge of facilitating foreign investments in the country.

BIDA's responsibilities include issuing work permits for foreign employees, visas for foreign investors, processing loans from foreign sources, approving remittance of royalties and technical fees, assisting in the acquisition of industrial plots, facilitating utility connections, approving foreign loans, suppliers credit, and providing assistance and advice on a variety of investment-related issues.

Foreign investors with industrial projects are strongly advised to register with BIDA after forming their limited company. However, there is no requirement for a commercial or trading company to register with BIDA. The average time frame for obtaining registration is 7-10 working days.

What documents are needed to set up a private limited company in Bangladesh?

1. Memorandum of Association
2. Article of Association
3. Certificate of Incorporation
4. Trade License
5. TIN
6. VAT Registration Certificate
7. Name Clearance
8. Environmental Clearance Certificate
9. Fire Certificate

What is the minimum capital required for a private limited company in Bangladesh?

In Bangladesh, there is no minimum or maximum authorised capital for a local company.

However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50,000/- must be invested in the Company.

Can a single person start a company in Bangladesh?

 Bangladesh does not allow a single person to open a private limited company or One Person Company (OPC).

A private limited company must have at least two shareholders. In the case of a public limited company, however, the total number of shareholders required is seven.

Can a private limited company have one director in Bangladesh?

A private limited company must have at least two directors. Local or foreign nationals may serve as directors.

Directors must be at least 18 years old and have never been bankrupt or convicted of a crime. A director is required by law to own the qualification shares specified in the Articles of Association.

What is the difference between authorised capital and paid-up capital?

- Authorised capital: The amount of authorised capital must be specified in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that a company may allocate to shareholders.  

In Bangladesh, there is no minimum or maximum authorised capital for a local company. However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50000/- must be invested in the Company.

-Paid-Up Capital : The minimum paid-up capital for registering a Bangladeshi company is Taka 1 (for local companies) and USD 50000 (for foreign companies).

Infographics
How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Bangladesh
Video Tutorial
Author’s Bio
About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
Work highlights

Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

Email: [email protected]

Address: 2 Turner Street, Canning Town, E16 1FH, United Kingdom

Gender: Female

Job Title: Barrister and Senior Associate

Have a Different Question?

Email us anytime : [email protected]

Or call — +8801847220062

Wildlife Laws In Bangladesh

Wildlife laws in Bangladesh

Wildlife laws in Bangladesh - Everything you need to know in 2022Barrister Tahmidur RahmanDirector, Tahmidur Rahman Remura Law Firm in Bangladesh24 Jan 2022This article will explain in details about Wildlife laws in Bangladesh and how you can deal with any...

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What to do when someone or a neighbour builds property on my land | Land Trespassing in Bangladesh

Land Trespassing in Bangladesh & what to do when someone or a neighbour builds property on my land  Barrister Tahmidur Rahman Senior Associate, The Law Firm in Bangladesh24 Jan 2022 What to do in case somebody illegally encroaches upon property?In this article we...

বাংলাদেশে জমি রেজিস্ট্রেশন আইন এবং কিভাবে জমি রেজিস্ট্রেশন করবেন 2022 এ | Effective way of Registering Land

বাংলাদেশে জমি রেজিস্ট্রেশন আইন এবং কিভাবে জমি রেজিস্ট্রেশন করবেন ২০২২ এতাহমিদুর রহমান, Director and Senior Associate বাংলাদেশে অনেক মানুষই ভূমি আইন সম্পর্কে খুব বেশি জানেন না। ফলে তারা জমি নিয়ে নানা ধরনের প্রতারণা ও হয়রানির শিকার হন। জমি রেজিস্ট্রেশন করা খুবই জরুরি।...

Holding and Subsidiary Companies in Bangladesh in 2023 – Everything you need to know

Holding and Subsidiary Companies in Bangladesh in 2023 – Everything you need to know

Holding and Subsidiary Companies in Bangladesh – Everything you need to know in 2023

Barrister Tahmidur Rahman
Director, The Law Firm in Bangladesh

24 Jan 2022

This article will explain in details about Holding and Subsidiary Companies in Bangladesh and how can you start your business in Bangladesh.

 

Types of Companies in Bangladesh

There are six ways of doing business in Bangladesh:

In general, these are the six types of business entities can be found in Bangladesh. 

In simplest way: How you can incorporate Holding and Subsidiary Companies in Bangladesh

Holding and Subsidiary Companies in Bangladesh

When a company has control over another company and it holds the majority of the shares of another company, it is known as a holding company. And the company which is controlled by the first mentioned the company is known as a subsidiary company. Under the provision of Companies Act, 1994,

“a company shall be deemed to be the holding company of another if and only if that other is its subsidiary.”

So, the following characteristics of a holding company may be found-

  • It has the controlling power over another company;
  • It holds more than 50% shares of that other company;
  • It has more than 50% voting power;
  • The holding company is directly of indirectly empowered to
  • appoint directors of that other company.

Subsidiary company:

On satisfying any or more of the following conditions, a company shall be deemed to be a subsidiary company:

(1) Controlling the composition of board of directors:

If the composition of board of directors of a company is controlled byanother company, then the company whose board of directors is controlledshall be deemed to be a subsidiary company. [sec. 2 (2) (a)]

The composition of board of directors is said to be controlled when any director of the subsidiary company is removed or appointed by the parent company without the consent of any other person of the said subsidiary Company.

Holding And Subsidiary Companies In Bangladesh_Best Law Firm In Bangladesh

(2) Controlling voting securities:

A company shall be a subsidiary of another company if more than 50% of the voting securities are directly or in directly controlled, held or owned or managed in any other ways by another (holding) company.

(3) Subsidiary of another subsidiary company:

A company shall also be deemed to be a subsidiary of another company if it is a subsidiary of any company which is that other company’s subsidiary.

For Example: Company B is a subsidiary of company A, and company C is a subsidiary of company B. So, company C is a subsidiary of company ‘A’ also. If company ‘D’ is a subsidiary, then ‘D’ will be regarded as subsidiary of company ‘B’ also, and consequently of company ‘A’ also.

Other Companies alongside Holding and Subsidiary Companies in Bangladesh in Bangladesh:

(a) Existing Company:

Existing company indicates the company formed and registered at or before the commencement of the Companies Act, 1994. Before passing this Act, the companies were regulated under the Companies Act, 1913 .

However, under the provision of present Companies Act, 1994 “Existing Company” means a company formed and registered under any law relating to companies in force at any time before the commencement of this Act, and is in operation after commencement of this Act. 

(b) Foreign Company:

Generally, a foreign company is a company which is incorporated outside Bangladesh. But under section 378, a foreign company may include company incorporated outside Bangladesh, but has an established place of business in Bangladesh.

Holding And Subsidiary Companies In Bangladesh_Best Law Firm In Bd

Setting up a Subsidiary Company in Bangladesh

 

In the event that you go it alone and establish a Bangladesh subsidiary, you’ll need to think carefully about the best organizational structure and geographical location for your business. Private Limited Company is the most common business structure because it shields the parent company from legal responsibility for the actions of its subsidiaries.

Once a building type has been selected, a site must be selected. Countries, states, or even counties can have their own sets of rules and norms by which they conduct business. Consider these criteria as you make your final decision on a suitable location for your company.

The following are the stages of establishing a Holding and Subsidiary Companies in Bangladesh:

  • The Registrar of Joint Stock Companies and Firms website allows you to check your name and print a clearance certificate.
  • Getting Your Company’s Articles of Incorporation and Memorandum of Incorporation
  • To obtain encashment certificates and finalize your registration, you must first open a bank account in Bangladesh.
  • Since the banking system in Bangladesh wasn’t built to handle international business transactions, companies there often face difficulties when trying to do business there. Acquiring encashment certificates is a necessary step in the registration process because they serve as evidence that foreign currency was converted to Bangladeshi Taka. In a stroke of good fortune for expanding businesses, Bangladesh is currently modernizing its banking systems.
Partnership Business In Bangladesh_Best Law Firm In Bangladesh_Barrister Tahmidur Rahman

If you want to open a liaison office in Bangladesh or about branch formation click here!

  • Step by Step Process of forming a liaison office in Bangladesh

“Tahmidur Rahman – The Law Firm in Bangladesh is considered as one of the leading corporate firms in Dhaka, Bangladesh”

BDLaw Firms Bangladesh

What are some alternative ways to set up a company in Bangladesh?

Branch Office:

A branch  is not a separate incorporated entity, but rather an extension of its parent company. In other words, the parent company is liable for the liabilities of its branches. 

With Bangladesh Investment Development Authority’s (BIDA) approval, a branch can engage in commercial activities. The Exchange Control Guidelines, on the other hand, strictly monitor its operation.
In Bangladesh, the average time to open a branch officis 45- 60 days.

Liason Office:

A liaison, also known as a representative office, is subject to BIDA approval  similarly as a branch.

It must have an overseas parent company, and its activities are limited because it only serves as a communication or coordination instrument for Bangladesh’s business resources.

Also, keep in mind that a liaison office in Bangladesh cannot earn any local income. Through remittance, the parent company bears all of its expenses and operational cost. It also adheres to the general business registration procedure in Bangladesh.

 

Foreign Investment In Bangladedsh

“To start a private limited company in Bangladesh, you will need to open a temporary bank account in the proposed company name with any scheduled bank in Bangladesh.

 This stage is solely applicable if the proposed company has foreign shareholding.”

 -Meheruba Mahbub

Are you planning to register a private limited company in Bangladesh?

Company formation and registration at Tahmidur Rahman Remura: TLS: The Law Firm in Bangladesh:

The legal team of Tahmidur Rahman, The Law Firm in Bangladesh Remura: TLS, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company in Bangladesh . For queries or legal assistance, please reach us at:

E-mail: [email protected]
Phone: +8801847220062

Address: House 410, Road 29, Mohakhali DOHS

 

FAQ

How much money is required for company registration in Bangladesh?

The governmental fees for registering a company are determined by the amount of authorized capital. Government fees for the issuance of an Incorporation Certificate shall be BDT 1000.

How long does it take to register a company in Bangladesh?

Once the aforementioned formalities have been completed, RJSC will usually issue the certificate of incorporation (Company registration certificate) within 6-8 working days.

It usually takes 2-3 weeks from the date of submission of all documents to RJSC to register a company.

What is BIDA?

Bangladesh Investment Development Authority (BIDA) is in charge of facilitating foreign investments in the country.

BIDA's responsibilities include issuing work permits for foreign employees, visas for foreign investors, processing loans from foreign sources, approving remittance of royalties and technical fees, assisting in the acquisition of industrial plots, facilitating utility connections, approving foreign loans, suppliers credit, and providing assistance and advice on a variety of investment-related issues.

Foreign investors with industrial projects are strongly advised to register with BIDA after forming their limited company. However, there is no requirement for a commercial or trading company to register with BIDA. The average time frame for obtaining registration is 7-10 working days.

What documents are needed to set up a private limited company in Bangladesh?

1. Memorandum of Association
2. Article of Association
3. Certificate of Incorporation
4. Trade License
5. TIN
6. VAT Registration Certificate
7. Name Clearance
8. Environmental Clearance Certificate
9. Fire Certificate

What is the minimum capital required for a private limited company in Bangladesh?

In Bangladesh, there is no minimum or maximum authorised capital for a local company.

However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50,000/- must be invested in the Company.

Can a single person start a company in Bangladesh?

 Bangladesh does not allow a single person to open a private limited company or One Person Company (OPC).

A private limited company must have at least two shareholders. In the case of a public limited company, however, the total number of shareholders required is seven.

Can a private limited company have one director in Bangladesh?

A private limited company must have at least two directors. Local or foreign nationals may serve as directors.

Directors must be at least 18 years old and have never been bankrupt or convicted of a crime. A director is required by law to own the qualification shares specified in the Articles of Association.

What is the difference between authorised capital and paid-up capital?

- Authorised capital: The amount of authorised capital must be specified in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that a company may allocate to shareholders.  

In Bangladesh, there is no minimum or maximum authorised capital for a local company. However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50000/- must be invested in the Company.

-Paid-Up Capital : The minimum paid-up capital for registering a Bangladeshi company is Taka 1 (for local companies) and USD 50000 (for foreign companies).

Infographics
How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Bangladesh
Video Tutorial
Author’s Bio
About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
Work highlights

Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

Email: [email protected]

Address: 2 Turner Street, Canning Town, E16 1FH, United Kingdom

Gender: Female

Job Title: Barrister and Senior Associate

Have a Different Question?

Email us anytime : [email protected]

Or call — +8801847220062

Wildlife Laws In Bangladesh

Wildlife laws in Bangladesh

Wildlife laws in Bangladesh - Everything you need to know in 2022Barrister Tahmidur RahmanDirector, Tahmidur Rahman Remura Law Firm in Bangladesh24 Jan 2022This article will explain in details about Wildlife laws in Bangladesh and how you can deal with any...

Company Share In Bangladesh- Everything You Need To Know In 2023

Company Share in Bangladesh- Everything you need to know in 2023

TR Law Firm in BangladeshCompany Share in Bangladesh24 Jan 2022This article will explain in details about company shares in Bangladesh, Share capital, Share issued in discount and everything you need to know about shares of a comapny in Bangladesh.Shares of...

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Admiralty Law in Bangladesh and Ship Arrest in Bangladesh in 202324 Jan 2022Barrister Tahmidur RahmanDirector, The Law Firm in BangladeshThis article will explain in details about admirlty law in Bangladesh and ship arrest procedure with details.Nature of...

Wildlife laws in Bangladesh

Wildlife laws in Bangladesh - Everything you need to know in 2022Barrister Tahmidur RahmanDirector, Tahmidur Rahman Remura Law Firm in Bangladesh24 Jan 2022This article will explain in details about Wildlife laws in Bangladesh and how you can deal with any...

Holding and Subsidiary Companies in Bangladesh in 2023 – Everything you need to know

Holding and Subsidiary Companies in Bangladesh - Everything you need to know in 2023Barrister Tahmidur RahmanDirector, The Law Firm in Bangladesh24 Jan 2022This article will explain in details about Holding and Subsidiary Companies in Bangladesh and how can...

Partnership Business in Bangladesh | Fastest and Effective Process of starting your business

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Partnership Business in Bangladesh | Fastest and Effective Process of starting your business

Partnership Business in Bangladesh | Fastest and Effective Process of starting your business

Partnership business in Bangladesh in 2023- Everything you need to know

Barrister Tahmidur Rahman
Director, The Law Firm in Bangladesh

24 Jan 2022

This article will explain in details about Partnership Business in Bangladesh and how can you start your business in Bangladesh.

 

Types of Companies in Bangladesh

There are six ways of doing business in Bangladesh:

In general, these five types of business entities can be found in Bangladesh. Around 65 percent of businesses are run on a sole proprietorship basis. 

In simplest way: How you can incorporate a Partnership in Bangladesh

PARTNERSHIP BUSINESS IN BANGLADESH

A partnership is a type of business structure where two or more partners start an entity to do business. For a partnership to exist, there must always be two or more partners.

A Partnership is defined by the Partnership Act, 1932, (the “Partnership Act”) as ‘the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all’. This definition gives three minimum requirements to constitute a partnership:

The individuals who wish to form a partnership must enter into a verbal or written agreement.

The purpose of the agreement must be to divide the profits from the business that will be conducted by the partnership, and

The business must be operated by all of the partners or by one of them acting on their behalf.

The Partnership Act does not define the term “person.”

There are no penalties for failing to register your partnership, so registration is not required. However, it is recommended as the following rights are denied to unregistered businesses:

The Partnership Act prohibits a partner from bringing a lawsuit against the firm or other partners to enforce any contractual or statutory right.

A contractual right cannot be enforced in court by or on behalf of your company against a third party.

In addition, neither the firm nor any of its partners may assert a set-off (i.e., the mutual adjustment of debts owed by disputing parties to one another) or other proceedings in a dispute with a third party.

PARTNERSHIP BUSINESS IN BANGLADESH QUICK FACTS

In Bangladesh, a registered partnership is the only way to establish a separate legal identity (i.e. separate from its owners) for liability purposes.

All partners of a partnership are jointly and severally liable for the partnership’s liability.

In Bangladesh, the concept of Limited Liability Partnership does not exist.

TAXATION in Partnership Business in Bangladesh: 

Tax-wise, partnership business in Bangladesh are not taxed at the entity level; rather, profits are treated as part of each partner’s personal income and taxed at rates applicable to personal income.

MEMBERS & MANAGEMENT in Partnership Business in Bangladesh:

There must be at least two and no more than twenty partners in partnership business in Bangladesh.

The partners can be individuals or corporations.

In Bangladesh, unlike private or public limited companies, partnerships do not have directors, shareholders, or secretaries; instead, the partners own and operate the business.

PARTNERSHIP DOCUMENTS REQUIRED:

For a partnership to be registered in Bangladesh, the following information/documents are required:

  • Proposed business name;
  • Contract of partnership duly notarized;
  • Form I;
  • Details about the partners;
  • Addresses of the partners’ homes;
  • Details of the partnership’s registered address; and
  • Percentage of each partner’s share of the profit.

 

PARTNERSHIP REGISTRATION PROCEDURE in Bangladesh:

The Registrar of Joint Stock Companies and Firms of Bangladesh (“RJSC”) can register a partnership.

 

The registration process for a partnership business in Bangladesh consists of two steps: name reservation and entity registration. Typically, registration of a partnership can be completed within one or two days.

 

STEP 1- CHOOSING THE PARTNERSHIP NAME:

The partners may choose any name for their partnership business in Bangladesh , subject to the following restrictions:

The names must not be too similar to or identical with the name of an existing business engaged in a similar line of work. The reason for this rule is that a company’s reputation or goodwill may be damaged if a new company adopts an allied name.

The name cannot contain certain words that express or imply the sanction, approval, or sponsorship of the government.

After selecting a name, you must submit an application for name clearance via the RJSC website.

STEP 2 – PREPARE A PARTNERSHIP DEED:

You must create a partnership agreement for your partnership business in Bangladesh. Typically, a partnership agreement will include the following clauses:

  • Name and address of the company, as well as the names of all partners;
  • Nature of the enterprise to be conducted;
  • Date of Business Commencement;
  • Whether the duration of the partnership is fixed or indefinite;
  • Contribution of capital by each partner;
  • ratio of profit-sharing among partners;
  • Rules for retirement, death, and admission of a partner; and
  • The aforementioned are the minimum requirements for all partnership agreements. Additionally, the parties may include any additional clauses.

The Partnership Deed must be printed on stamp paper in accordance with the Stamp Act, and all partners must sign it. It should then be notarized.

STEP 3- REGISTER PARTNERSHIP DEED WITH RJSC:

The partnership deed and its completion Form I must be submitted to RJSC. These documents will be reviewed by RJSC representatives. When officials are satisfied with the points stated in the partnership agreement, he shall record an entry of the statement in the Register of Firms and issue a Certificate of Registration.

There are numerous types of businesses in Bangladesh. One is a Partnership Firm, while the others are Sole Proprietorship and Limited Liability Company. The Partnership Act of 1932 governs the formation of a Partnership Firm. In Bangladesh, only RJSC (The Registrar of Joint Stock Companies and Firms) has the authority to register Partnership Firms. For Partnership Registration in Bangladesh, the steps outlined at the end of this article must be followed.

 

Proprietorship Business In Bangladesh_Best Law Firm In Dhaka

Liability of a Proprietorship Business in Bangladesh:

A sole proprietorship is not a separate legal entity. The owner is responsible for all business outcomes.

Taxation in Proprietorship Business in Bangladesh:

The proprietor will be required to pay the tax on his personal income from the business.

Maintenance & Operation in Proprietorship Business in Bangladesh:

  • The running expenses of a proprietorship are quite cheap.
  • Annual preparation of a profit & loss statement and audit report is not necessary.
  • The only individual who makes business decisions is the owner.

Additional necessary approvals and documents for Proprietorship Business in Bangladesh:

After obtaining a Trade License for a sole proprietorship, a Taxpayer Identification Number (TIN) certificate is required to create a bank account (business account) in order to conduct commercial transactions.

Currently, most businesses incorporate VAT (Value Added Tax). To deduct VAT, a VAT Registration Certificate must be collected. To operate a business and deduct AIT (Advance Income Tax) at the source, a TIN is required.

If a proprietor desires to engage in international or multinational company, he or she must possess an Export Registration Certificate or an Import Registration Certificate. Bangladesh is now one of the world’s largest exporters of ready-made clothes, jute, frozen foods, leather goods, and potatoes.

In Bangladesh, a significant number of proprietorships, partnerships, and limited liability companies are interested in engaging in international commerce or export and import operations. In Bangladesh, when two or more entrepreneurs wish to start a firm, they must either form a Limited Company or a Partnership Firm.

Partnership Business In Bangladesh
Proprietorship Business In Bangladesh_Top Law Firm In Dhaka_Tahmidur Rahman Remura

When two or more people with a similar mindset or similar professional backgrounds start a business and create a voluntary agreement with the intention of making and sharing profits, this is referred to as a Partnership Business. Minimum of two and maximum of twenty individuals can form a business partnership.

In order to open a bank account for a partnership business, registration with the RJSC is now required. For this reason, many unregistered Partnership Business proprietors will register their Partnership Business with RJSC. To obtain legal privileges, however, Partnership Business Registration with RJSC is required.

The partnership agreement is commonly referred to as the partnership deed. Typically, the following provisions are included in a Partnership Deed:

  • Partner’s Name, Current Address, and Permanent Address.
  • Firm’s name as a partnership
  • Business Description Business Address
  • Duration of the Relationship
  • Profit participation for each Partner
  • Capital contributions made by each partner
  • Conditions of Retiring
  • Mode of Administration
  • Interest on Lending
  • Breakup of a Partnership

Steps in Bangladesh Partnership Registration:

 

A partnership can be registered either at the time of formation or later. An application must be submitted to the RJSC with the following information:

  • Initial Clearance Declaration of Partnership Firm
  • Date of Incorporation of the Partnership
  • Duration of the Business Partnership
  • Principal place of business with Complete Address Date of
  • Partnership Formation
  • Partners’ Particulars
  • Business Information The application must be submitted on the prescribed Form- I.

We recommend that you immediately register your existing Partnership Firm to avoid unforeseen circumstances. Also, if you establish a new partnership in Bangladesh, you must register with the RJSC. Please review the specifics of additional RJSC.

Benefits of Partnership Business in Bangladesh:

Due to the nature of business start-up capital funds provided by the partners, the greater the number of partners, the more capital they can invest in their business, allowing for greater adaptability and advancement potential.

Generally speaking, a partnership is simpler to register, operate, and manage. Partnerships are subject to less stringent rules and regulations than corporations. As long as all partners are in agreement, they are free to run their business as they see fit.

Every business partner contributes new ideas and abilities. It is easier to make a decision to solve a problem when there are more minds to consider it. Each partner can share in the business’s duties and responsibilities.

After completing Partnership Registration in Bangladesh, the following documents are required to commence business operations:

Certificate of Trade License for your newly registered Partnership.
Certificate of VAT Registration for a Bank Account
Import Registration Certificate (In case of Import Business)
Certificate of Registration for Export (In case of Export Business)

Partnership Business In Bangladesh_Best Law Firm In Bangladesh_Barrister Tahmidur Rahman

If you want to open a liaison office in Bangladesh or about branch formation click here!

  • Step by Step Process of forming a liaison office in Bangladesh

“Tahmidur Rahman – The Law Firm in Bangladesh is considered as one of the leading corporate firms in Dhaka, Bangladesh”

BDLaw Firms Bangladesh

What are some alternative ways to set up a company in Bangladesh?

Branch Office:

A branch  is not a separate incorporated entity, but rather an extension of its parent company. In other words, the parent company is liable for the liabilities of its branches. 

With Bangladesh Investment Development Authority’s (BIDA) approval, a branch can engage in commercial activities. The Exchange Control Guidelines, on the other hand, strictly monitor its operation.
In Bangladesh, the average time to open a branch officis 45- 60 days.

Liason Office:

A liaison, also known as a representative office, is subject to BIDA approval  similarly as a branch.

It must have an overseas parent company, and its activities are limited because it only serves as a communication or coordination instrument for Bangladesh’s business resources.

Also, keep in mind that a liaison office in Bangladesh cannot earn any local income. Through remittance, the parent company bears all of its expenses and operational cost. It also adheres to the general business registration procedure in Bangladesh.

 

How To Register A Private Limited Company In Bangladesh Infographics Remura: Tls: Tls Mahbub

“To start a private limited company in Bangladesh, you will need to open a temporary bank account in the proposed company name with any scheduled bank in Bangladesh.

 This stage is solely applicable if the proposed company has foreign shareholding.”

 -Meheruba Mahbub

Are you planning to register a private limited company in Bangladesh?

Company formation and registration at Tahmidur Rahman Remura: TLS: The Law Firm in Bangladesh:

The legal team of Tahmidur Rahman, The Law Firm in Bangladesh Remura: TLS, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company in Bangladesh . For queries or legal assistance, please reach us at:

E-mail: [email protected]
Phone: +8801847220062

Address: House 410, Road 29, Mohakhali DOHS

 

FAQ

How much money is required for company registration in Bangladesh?

The governmental fees for registering a company are determined by the amount of authorized capital. Government fees for the issuance of an Incorporation Certificate shall be BDT 1000.

How long does it take to register a company in Bangladesh?

Once the aforementioned formalities have been completed, RJSC will usually issue the certificate of incorporation (Company registration certificate) within 6-8 working days.

It usually takes 2-3 weeks from the date of submission of all documents to RJSC to register a company.

What is BIDA?

Bangladesh Investment Development Authority (BIDA) is in charge of facilitating foreign investments in the country.

BIDA's responsibilities include issuing work permits for foreign employees, visas for foreign investors, processing loans from foreign sources, approving remittance of royalties and technical fees, assisting in the acquisition of industrial plots, facilitating utility connections, approving foreign loans, suppliers credit, and providing assistance and advice on a variety of investment-related issues.

Foreign investors with industrial projects are strongly advised to register with BIDA after forming their limited company. However, there is no requirement for a commercial or trading company to register with BIDA. The average time frame for obtaining registration is 7-10 working days.

What documents are needed to set up a private limited company in Bangladesh?

1. Memorandum of Association
2. Article of Association
3. Certificate of Incorporation
4. Trade License
5. TIN
6. VAT Registration Certificate
7. Name Clearance
8. Environmental Clearance Certificate
9. Fire Certificate

What is the minimum capital required for a private limited company in Bangladesh?

In Bangladesh, there is no minimum or maximum authorised capital for a local company.

However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50,000/- must be invested in the Company.

Can a single person start a company in Bangladesh?

 Bangladesh does not allow a single person to open a private limited company or One Person Company (OPC).

A private limited company must have at least two shareholders. In the case of a public limited company, however, the total number of shareholders required is seven.

Can a private limited company have one director in Bangladesh?

A private limited company must have at least two directors. Local or foreign nationals may serve as directors.

Directors must be at least 18 years old and have never been bankrupt or convicted of a crime. A director is required by law to own the qualification shares specified in the Articles of Association.

What is the difference between authorised capital and paid-up capital?

- Authorised capital: The amount of authorised capital must be specified in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that a company may allocate to shareholders.  

In Bangladesh, there is no minimum or maximum authorised capital for a local company. However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50000/- must be invested in the Company.

-Paid-Up Capital : The minimum paid-up capital for registering a Bangladeshi company is Taka 1 (for local companies) and USD 50000 (for foreign companies).

Infographics
How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Bangladesh
Video Tutorial
Author’s Bio
About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
Work highlights

Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

Email: [email protected]

Address: 2 Turner Street, Canning Town, E16 1FH, United Kingdom

Gender: Female

Job Title: Barrister and Senior Associate

Have a Different Question?

Email us anytime : [email protected]

Or call — +8801847220062

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Proprietorship Business in Bangladesh

Proprietorship Business in Bangladesh

Proprietorship business in Bangladesh in 2023- Everything you need to know

Barrister Remura Mahbub
Director, The Law Firm in Bangladesh

24 Jan 2022

This article will explain in details about Proprietorship Business in Bangladesh and how can you start your business in Bangladesh.

 

Types of Companies in Bangladesh

There are five ways of doing business in Bangladesh:

In general, these five types of business entities can be found in Bangladesh. Around 65 percent of businesses are run on a sole proprietorship basis. A proprietorship business can be started by a single entrepreneur. Small and medium-sized businesses typically opt for sole proprietorship.

    In simplest way: How you can incorporate a Proprietorship in Bangladesh

    In short for you: The following steps outline how to start a sole proprietorship business:

    1. First, you have to select a name for Your Business in Bangladesh
    2. You have to rent a commercial space to begin your business.
    3. Fill out an application for a trade license from your local city corporation/union, etc.
    4. Apply for and obtain a business license
    5. Complete an application for an e-tin certificate
    6. Open a bank account in the company’s name.

    That’s all you need! Once you are done with these simple formalities, you will have a legal Proprietorship business under your ownership.

    You can still stick around here for more information on this matter! We are glad you are doing so!

    Now some key facts about Sole Proprietorship

     

    • In Bangladesh, a sole proprietorship does not constitute a separate legal entity and thus is not distinct from the owner/ proprietor.
    • The owner of the business is personally liable for all liabilities incurred during the course of the business.
    • A sole proprietorship is open to any Bangladeshi citizen over the age of 18.
    • As the sole proprietorship’s business address, a local commercial address must be provided.
    • Profits from a sole proprietorship are treated as income of the individual who owns the entity, and thus are taxed at the same rate as personal income.
    • Because a sole proprietorship in Bangladesh is not a legal entity, it cannot register another business firm.
    • Sole proprietorships are exempt from auditing their accounts because any profits are taxed as personal income.
    • The most basic requirement for a proprietorship is a trade license.
      The Trade License must be renewed annually.

     

    Proprietorship Business In Bangladesh_Best Law Firm In Bangladesh_Tahmidur Rahman Best Law Firm In Dhaka

    CONSIDERATIONS FOR FOREIGNERS in regards to

    Proprietorship Business in Bangladesh:

    Practically speaking, a sole proprietorship is unavailable to foreigners. Foreign business professionals should instead create a limited liability firm. Consult the company registration in Bangladesh guide for more information on limited liability firms.

    Sole Proprietorship Business in Bangladesh

    If you are thinking of having a proprietorship business in Bangladesh, you are not the only one.

    The easiest and quickest way to start a one-owner firm is through a sole proprietorship. When you begin performing business, sole proprietorship commences.

    It does not need the filing of government or state forms and imposes little regulatory requirements, making it a perfect starting point for self-employed individuals.

    The absence of a separate legal entity distinguishes a sole proprietorship from a company, be it public or private. The owner of a sole proprietorship is therefore not free from liabilities incurred by the business.

    For instance, the debts of a sole proprietorship are also the owner’s debts. However, the gains of a sole proprietorship are also the owner’s profits, as all profits pass directly to the sole proprietor.

    Approximately 65 percent of enterprises are operated as sole proprietorships. A sole owner can establish a sole proprietorship. Small and medium-sized businesses typically operate as sole proprietorships.

    First get a trade license to start your proprietorship Business

    A Trades License must be obtained from the local authority, which could be the City Corporation Office, Municipality Office, Upozila council and Union Council, or the respective Govt. authority, if a proprietorship business is to be established.

    To receive a Trade License, one must choose a suitable name for their Proprietorship business, submit the required paperwork, and pay the applicable government fees (for the type of business) to the Trade License granting authorities.

    A Trade License is issued by the authority following a review of all applicable documentation and a mandatory field inquiry.

    Following issues are considered by the authority:

    • The proprietorship’s name – Name of the proprietor
    • Such enterprises like Export, Import, Supplier, etc.
    • Business Address
    • Address, Date of Birth, and Name of Parents
    • Owner’s Identification Cards copy
    • Photograph of the owner Registered business address VAT chalan copy of the company license Office rental deed
    • Fill up Trade license form with the Owner’s signature

     

    Proprietorship Business In Bangladesh_Best Law Firm In Dhaka

    Liability of a Proprietorship Business in Bangladesh:

    A sole proprietorship is not a separate legal entity. The owner is responsible for all business outcomes.

    Taxation in Proprietorship Business in Bangladesh:

    The proprietor will be required to pay the tax on his personal income from the business.

    Maintenance & Operation in Proprietorship Business in Bangladesh:

    • The running expenses of a proprietorship are quite cheap.
    • Annual preparation of a profit & loss statement and audit report is not necessary.
    • The only individual who makes business decisions is the owner.

    Additional necessary approvals and documents for Proprietorship Business in Bangladesh:

    After obtaining a Trade License for a sole proprietorship, a Taxpayer Identification Number (TIN) certificate is required to create a bank account (business account) in order to conduct commercial transactions.

    Currently, most businesses incorporate VAT (Value Added Tax). To deduct VAT, a VAT Registration Certificate must be collected. To operate a business and deduct AIT (Advance Income Tax) at the source, a TIN is required.

    If a proprietor desires to engage in international or multinational company, he or she must possess an Export Registration Certificate or an Import Registration Certificate. Bangladesh is now one of the world’s largest exporters of ready-made clothes, jute, frozen foods, leather goods, and potatoes.

    In Bangladesh, a significant number of proprietorships, partnerships, and limited liability companies are interested in engaging in international commerce or export and import operations. In Bangladesh, when two or more entrepreneurs wish to start a firm, they must either form a Limited Company or a Partnership Firm.

    Proprietorship Business In Bangladesh_Top Law Firm In Dhaka_Tahmidur Rahman Remura

    Proprietorship Business in Bangladesh and its benefits:

    • It is the most convenient and inexpensive business structure to establish.
    • As a sole owner, you have complete authority over all aspects of the firm, including decision-making.
    • There is no profit sharing: All income earned by the business is accounted for.
    • The termination of a single proprietorship is simpler, quicker, and less expensive than that of other company structures.
    • Least compliance requirements: You are exempt from filing annual tax returns and are simply required to renew your membership annually.

    SOLE PROPRIETORSHIP BUSINESS IN BANGLADESH’s DISADVANTAGES:

    • No independent legal entity: You cannot exist without your business. This renders you financially and legally accountable for all corporate obligations and legal proceedings.
    • Creditors may sue you for debts committed and may also get a court order to seize your personal assets, such as your property.
    • No tax benefits or incentives for corporations: Taxes are assessed based on your personal income tax rate, and you do not receive the particular tax benefits provided to a limited liability business.
    • Your personal finances and the business’s income are the only sources of capital.
    • Thus, corporate expansion is restricted and challenging.
    • There is no perpetual succession, as you and your business are one and the same. However, after the death of the proprietor, the successor is permitted to continue the firm under the same name.
    • Nobody would be prepared to lend you huge sums of money due to this entity’s poor public impression, which makes it the least desirable for serious businesses.
    • It is also challenging to attract high-caliber staff or senior-level executives, who typically want a more advanced business structure, such as a limited liability corporation.
    • Sale or transfer of all or part of a business: You can only transfer a business by selling its assets.
    How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Dhaka

    If you want to open a liaison office in Bangladesh or about branch formation click here!

    • Step by Step Process of forming a liaison office in Bangladesh

    “Tahmidur Rahman – The Law Firm in Bangladesh is considered as one of the leading corporate firms in Dhaka, Bangladesh”

    BDLaw Firms Bangladesh

    What are some alternative ways to set up a company in Bangladesh?

    Branch Office:

    A branch  is not a separate incorporated entity, but rather an extension of its parent company. In other words, the parent company is liable for the liabilities of its branches. 

    With Bangladesh Investment Development Authority’s (BIDA) approval, a branch can engage in commercial activities. The Exchange Control Guidelines, on the other hand, strictly monitor its operation.
    In Bangladesh, the average time to open a branch officis 45- 60 days.

    Liason Office:

    A liaison, also known as a representative office, is subject to BIDA approval  similarly as a branch.

    It must have an overseas parent company, and its activities are limited because it only serves as a communication or coordination instrument for Bangladesh’s business resources.

    Also, keep in mind that a liaison office in Bangladesh cannot earn any local income. Through remittance, the parent company bears all of its expenses and operational cost. It also adheres to the general business registration procedure in Bangladesh.

     

    How To Register A Private Limited Company In Bangladesh Infographics Remura: Tls: Tls Mahbub

    “To start a private limited company in Bangladesh, you will need to open a temporary bank account in the proposed company name with any scheduled bank in Bangladesh.

     This stage is solely applicable if the proposed company has foreign shareholding.”

     -Meheruba Mahbub

    Are you planning to register a private limited company in Bangladesh?

    Company formation and registration at Tahmidur Rahman Remura: TLS: The Law Firm in Bangladesh:

    The legal team of Tahmidur Rahman, The Law Firm in Bangladesh Remura: TLS The Law Firm in Bangladesh are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company in Bangladesh . For queries or legal assistance, please reach us at:

    E-mail: [email protected]
    Phone: +8801847220062

    Address: House 410, Road 29, Mohakhali DOHS

     

    FAQ

    How much money is required for company registration in Bangladesh?

    The governmental fees for registering a company are determined by the amount of authorized capital. Government fees for the issuance of an Incorporation Certificate shall be BDT 1000.

    How long does it take to register a company in Bangladesh?

    Once the aforementioned formalities have been completed, RJSC will usually issue the certificate of incorporation (Company registration certificate) within 6-8 working days.

    It usually takes 2-3 weeks from the date of submission of all documents to RJSC to register a company.

    What is BIDA?

    Bangladesh Investment Development Authority (BIDA) is in charge of facilitating foreign investments in the country.

    BIDA's responsibilities include issuing work permits for foreign employees, visas for foreign investors, processing loans from foreign sources, approving remittance of royalties and technical fees, assisting in the acquisition of industrial plots, facilitating utility connections, approving foreign loans, suppliers credit, and providing assistance and advice on a variety of investment-related issues.

    Foreign investors with industrial projects are strongly advised to register with BIDA after forming their limited company. However, there is no requirement for a commercial or trading company to register with BIDA. The average time frame for obtaining registration is 7-10 working days.

    What documents are needed to set up a private limited company in Bangladesh?

    1. Memorandum of Association
    2. Article of Association
    3. Certificate of Incorporation
    4. Trade License
    5. TIN
    6. VAT Registration Certificate
    7. Name Clearance
    8. Environmental Clearance Certificate
    9. Fire Certificate

    What is the minimum capital required for a private limited company in Bangladesh?

    In Bangladesh, there is no minimum or maximum authorised capital for a local company.

    However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50,000/- must be invested in the Company.

    Can a single person start a company in Bangladesh?

     Bangladesh does not allow a single person to open a private limited company or One Person Company (OPC).

    A private limited company must have at least two shareholders. In the case of a public limited company, however, the total number of shareholders required is seven.

    Can a private limited company have one director in Bangladesh?

    A private limited company must have at least two directors. Local or foreign nationals may serve as directors.

    Directors must be at least 18 years old and have never been bankrupt or convicted of a crime. A director is required by law to own the qualification shares specified in the Articles of Association.

    What is the difference between authorised capital and paid-up capital?

    - Authorised capital: The amount of authorised capital must be specified in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that a company may allocate to shareholders.  

    In Bangladesh, there is no minimum or maximum authorised capital for a local company. However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50000/- must be invested in the Company.

    -Paid-Up Capital : The minimum paid-up capital for registering a Bangladeshi company is Taka 1 (for local companies) and USD 50000 (for foreign companies).

    Infographics
    How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Bangladesh
    Video Tutorial
    Author’s Bio
    About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

    Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

    Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
    Work highlights

    Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

    ⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

    ⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

    ⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

    ⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

    ⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

    Email: [email protected]

    Address: 2 Turner Street, Canning Town, E16 1FH, United Kingdom

    Gender: Female

    Job Title: Barrister and Senior Associate

    Have a Different Question?

    Email us anytime : [email protected]

    Or call — +8801847220062

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    Company Share in Bangladesh- Everything you need to know in 2023

    Company Share in Bangladesh- Everything you need to know in 2023

    TR Law Firm in Bangladesh

    Company Share in Bangladesh

    Barrister Tahmidur Rahman Lawfirm

    24 Jan 2022

    This article will explain in details about company shares in Bangladesh, Share capital, Share issued in discount and everything you need to know about shares of a comapny in Bangladesh.

    Shares of Company in Bangladesh

    Before we talk about shares of a company in Bangladesh. There are five ways of doing business in Bangladesh:

     

    A company share in Bangladesh is a movable property transferable as per provisions of the articles. There is no exhaustive definition of a share in the Act.’ A share is the interest of a shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se in accordance with section.

     

    A company share in Bangladesh is a type of contractual claim against a company. It is an example of intangible property called a ‘chose in action’ or “Thing in action’. Professor R Pennington discusses the difficulty of defining shares and concludes that they are a species of intangible movable property which comprises a collection of rights and obligations relating to an interest in a company of an economic and proprietary character, but not constituting a debt.

      Legal and Equitable Actions in company share in Bangladesh

      In English law there are two kinds of chose in action; (i) legal choses in action (being claims enforceable at common law) and (ii) equitable choses in action (Being claims enforceable in equity). Because a company share in Bangladesh is a creature of statute, it is a legal rather than an equitable chose in action.  In that respect it differs from a share in a partnership, which is an equitable chose in action because, historically, the interest of a partner has been enforceable in equity and not at law.

       

      A share in a company also differs from a share in a partnership in terms of transferability of membership. In companies listed on the Stock Exchange a share can be freely sold and transferred. In unlisted companies there can be restrictions on transfer. The transferee becomes a member of the company in substitution of the transferor. A person who buys the share of a partner, however, acquires an interest but does not become a partner; the vendor becomes a trustee for him of the interest agreed to be sold.

       

      A transfer of a share as a legal chose in action differs from transfer of a debt as a legal chose in action. A creditor can transfer the legal ownership of a debt by a two sided written assignment between a transferor and transferee with written notice to the debtor, but without needing his consent. Of course, the debtor cannot transfer the liability without the consent of the creditor. 

      But to transfer the legal ownership of a company share in Bangladesh, a change in the company’s share register is needed. That means there is a three-sided novation (the substitution of a new contract in place of an old one) rather than a two-sided assignment. Hence, liability attached to a partly paid-up share can be transferred although the transferor can remain liable if the company commences to wind up within one year from the transfer.

       

      The rights making up a share are not separate pieces of property. If a company share in Bangladesh had carried only financial rights it might have been considered divisible; but a share carries rights of membership and the whole scheme of the company law does not admit of membership referable to a fraction of a share. Hence, a company cannot allot fractional shares.

       

      Nor can a shareholder divide an allotted share so as to assign only some of the set of rights, such as the right to be paid dividends. If a member wishes to dispose of only part of the benefits of a share, that can be done behind the screen of a trust.

       

      The member could create a trust of the share so that the trustee would be bound to account to one beneficiary for, say, dividends only and to account to another beneficiary for other benefits. A share as an item of property differs from physical subjects of ownership such as land in that its characteristics are fixed, not by nature, but by whatever is put into the contract between company and shareholder.

       

      In a company, the rights attached to company share in Bangladesh may be so framed that the shareholder is restricted (for example, as to transfer of the shares) and those restrictions will apply to anybody who becomes owner of the shares. In other words, in a share the restrictions can go to defining the property itself instead of being something external that is imposed in respect of a pre-existing item of property.

      Company Share In Bangladesh_ Top Law Firm In Bangladesh_Barrister Tahmidur Rahman Remura 2022

      If you want to know about Share Transfer Process in Bangladesh

      • Step by Step Process of transferring shar in Bangladesh

      Share Capital or Authorised Capital in Bangladesh

      The word “capital” used in connection with a company has several different meanings. It may mean the nominal or authorised share capital, the issued share capital, or the paid-up share capital of the company.

       

      The nominal or authorised capital is merely the amount of share capital which the company is authorised to issue. In the case of a limited company the amount of potential share capital with which it proposes to be registered, and the division thereof into shares of a fixed amount, must be set out in the memorandum of association. This as well as the paid-up amount may be increased or reduced.

       

      The amount of the company’s nominal capital depends on its business requirements, actual or potential. At the time of registration of the company the promoters will have to pay fees and stamp based on the amount of the nominal capital.

       

      The issued or allotted capital is that part of the company’s nominal capital which has been issued to the shareholders. The company is not bound to issue all its capital at once.

      Further issues of capital are made as they are needed (please find the details in section 155 of the Act).

      The paid-up capital is that part of the issued capital which has been paid-up by the shareholders. The company may, for example, have a nominal capital of Tk 500,000 divided into 500,000 shares of Tk One each, of which Tk 400,000 is issued, i.e., 400,000 of the shares have been issued and only Tk 100,000 is paid-up, i.e., the company has so far required only 25p. to be paid-up on each share. The uncalled capital is the remainder of the issued capital and can be called up at any time by the company from the shareholders in accordance with the provisions of the articles.  

      The paid-up capital of the company includes the value of the shares paid-up and any premium on such shares although the share premium will be shown as share premium account in the balance sheet.

      The Securities and Exchange Commission has to be satisfied before company share in Bangladesh can be issued at a premium as to the justification for it.

      Company Share In Bangladesh_ Best Corporate Law Firm In Bangladesh_Barrister Tahmidur Rahman Remura 2022

      Shared Issued at discount in Bangladesh

      The issued share capital of a company is the fund to which creditors of the company can look for payment of their debts, and so, to protect the creditors, shares can be treated as paid-up only to the extent of the amount actually received by the company. Section 152 and 153 of the Company Act impose restrictions on issue of shares and debentures at a commission or discount.

      A commission may be paid only if its payment and rate are approved by the articles and is mentioned in the prospectus where such a prospectus is issued and, in a statement, in lieu of prospectus where such a prospectus is not issued. 

      Shares may be issued at a discount if such issue is authorised by resolution of the company in general meeting and sanctioned by the Court.

      The resolution must specify the maximum rate of discount not exceeding ten percent at which shares are to be issued and not less than one year has elapsed since the date on which the company was entitled to commence business and the shares to be issued at discount are done so within six months after the date on which the company was entitled to commence business.

      Every prospectus and balance sheet issued after the company share  discount must contain particulars of the discount allowed on the issue of shares.

      Redeemable Preference Shares in Bangladeshi Companies (company share in Bangladesh)

      Redeemable Preference Shares can be issued if so authorised by the articles. Section 154 of the Companies Act however provides that no such share shall be redeemed except out of profits of the company which would be otherwise available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption or out of sale proceeds of any of the profits of the company.

      No such share shall be redeemed unless they are fully paid-up and where any such shares are redeemed otherwise, than out of the proceeds of a fresh issue, there shall out of profits which would otherwise have been available for dividend, be transferred to a reserve fund to be called the capital reserve fund.

      A sum equal to the amount applied in redeeming the shares, and the provisions of the Act relating to the reduction of the share capital of a company shall apply as if the capital redemption reserve fund were paid-up share capital of the company.  

      Where any such shares are redeemed out of the fresh issue, the premium, if any, payable on redemption must have been provided for out of the profits of the company before the shares are redeemed.

      There shall be included in every balance sheet of a company which has issued redeemable preference shares a statement specifying what part of the issued capital of the company consists of such shares and the date when the shares are liable to be redeemed and where no such date is fixed the period of notice that is to be given for redemption.

      Company Share In Bangladesh_ Best Commercial Law Firm In Bangladesh_Barrister Tahmidur Rahman Remura 2022

      If you want to open a liaison office in Bangladesh or about branch formation click here!

      • Step by Step Process of forming a liaison office in Bangladesh

      Essential Information for Foreign Investors

      Foreign investors need to keep the following things in mind when they plan to form a private limited company in Bangladesh:

      • The costs of registering a company are primarily determined by the company’s authorized capital. The average cost is between USD 1800.
      • Shelf companies are not permitted and must have a physical place of business in Bangladesh.
      • Bangladesh Forex Regulations allow for the full repatriation of profits and investments.
      • Foreign nationals may be employed at a 20:1 (local: expat) ratio, subject to obtaining the necessary work permit.
      • Except in a few restricted areas, 100 percent FDI investment is permitted.
      • Directors can be either foreign or domestic nationals.
      • The typical corporate income tax rate ranges from 25% to 45 percent, depending on the sector and nature of the company.

        However, tax exemptions are available for selected sectors and areas for 5-7 years.

      • There are also additional tax exemptions  for investing in Special Economic Zones.

       

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      Team up with the best law firm in Bangladesh to help you through the process.

      “Tahmidur Rahman – The Law Firm in Bangladesh is considered as one of the leading corporate firms in Dhaka, Bangladesh”

      BDLaw Firms Bangladesh

      What are some alternative ways to set up a company in Bangladesh?

      Branch Office:

      A branch  is not a separate incorporated entity, but rather an extension of its parent company. In other words, the parent company is liable for the liabilities of its branches. 

      With Bangladesh Investment Development Authority’s (BIDA) approval, a branch can engage in commercial activities. The Exchange Control Guidelines, on the other hand, strictly monitor its operation.
      In Bangladesh, the average time to open a branch officis 45- 60 days.

      Liason Office:

      A liaison, also known as a representative office, is subject to BIDA approval  similarly as a branch.

      It must have an overseas parent company, and its activities are limited because it only serves as a communication or coordination instrument for Bangladesh’s business resources.

      Also, keep in mind that a liaison office in Bangladesh cannot earn any local income. Through remittance, the parent company bears all of its expenses and operational cost. It also adheres to the general business registration procedure in Bangladesh.

       

      How To Register A Private Limited Company In Bangladesh Infographics Remura Mahbub

      “To start a private limited company in Bangladesh, you will need to open a temporary bank account in the proposed company name with any scheduled bank in Bangladesh.

       This stage is solely applicable if the proposed company has foreign shareholding.”

      – Barrister Remura Mahbub

      Are you planning to register a private limited company in Bangladesh?

      Company formation and registration at Tahmidur Rahman TLS:

      The legal team of Tahmidur Rahman, The Law Firm in Bangladesh TLS are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company, Branch office Registration, Share Transfer Process in Bangladesh . For queries or legal assistance, please reach us at:

      E-mail: [email protected]
      Phone: +8801847220062

      Address: House 410, Road 29, Mohakhali DOHS, Dhaka 1212

       

      FAQ

      What is the basic of issuing Shares of a company in Bangladesh?

      The procedure through which companies distribute additional shares to shareholders is known as an issue of shares. There are two types of shareholders: individuals and corporations. When issuing shares, the corporation complies with the regulations set forth under the Companies Act of 1994.

      What are the nature and classes of shares in Bangladesh?

      One of the components into which a company's capital is divided is a share. Therefore, if a firm has BDT 5 lakh in total capital and divides that capital into 5000 units of BDT 100 each, each unit of BDT 100 is equivalent to one share of the company.

      As a result, ownership of the company is based on shares. A shareholder is a person who owns such shares and is hence a member of the business.

      The fundamental information about shares and share capital, such as the kinds of shares that must be mandated, will now be found in the articles of association. According to the Companies Act of 1994, a corporation may only issue two different kinds of shares. They differ in nature and in their rights and responsibilities. 

      What is the preference share of a company?

      A share that has two exclusive preferential rights over the other form of shares, namely equity shares, is referred to as a preference share. These two preference share specific requirements are

      a preferred position in relation to a company's declared dividends. They may get such dividends at a predetermined rate based on the nominal value of the shares they own. Preference shareholders receive the dividend before equity stockholders as a result.
      preferential treatment when it comes to capital repayment in the event of a corporate liquidation. This indicates that preference shareholders receive their payouts before equity shareholders do.
      Preference shares are comparable to equity shares aside from these two rights. Preference share holders have the opportunity to vote on any issues that directly affect their rights or duties.

      Actually, there are numerous forms of preference shares. They may be exchangeable or not. They can either participate (share in additional income after a dividend is paid out) or not. Additionally, they could be non-cumulative or cumulative (demand arrears will accumulate).

      What is the Equity Share of a company in Bangladesh?

      A share that isn't a preference share is an equity share. Shares without any preferential rights are therefore considered equity shares. They are only given equity, or ownership, in the business.

      Dividends paid to equity stockholders are not set in stone. Depending on the company's financial performance, the Board of Directors makes the decision. Additionally, the stockholders forfeit the dividend for that year if it cannot be declared; the dividend does not accumulate in such cases.

      Additionally, equity shareholders have proportional voting rights based on the company's paid-up capital. In essence, it is a system of "one share, one vote." A business cannot publish non-voting

      What is the procedure of Issuing Shares in Bangladesh?

      1] Issue of Prospectus
      The prospectus is released first, then the shares. The prospectus functions as a kind of solicitation to the general public to subscribe for company shares. A prospectus includes all of the company's information, including its financial breakdown, profit and loss accounts from the prior year, and balance sheets.

      Additionally, it describes how the funds raised will be used. A corporation must publish a prospectus or a document in its place when soliciting deposits from the general public.

      2) Receiving Applications
      Prospective investors may now submit applications for shares after the prospectus is released. The prospectus specifies the schedule bank where the required application funds must be deposited along with the completed application. The duration of the application period is 120 days at most. If the required minimum subscription amount is not met in these 120 days, the share issuance will be canceled. Within 130 days of the prospectus's release, the application funds must be returned to the investors.

      3] Share Allocation
      The shares may be distributed after the required minimum subscription amount has been met. Shares are typically oversubscribed, hence the allocation is made on a pro rata basis. Those whose shares have been allocated get Letters of Allotment in the mail. As a result, a legal contract is formed between the applicant and the business, who is now a shareholder.

      Letters of regret are provided to the applicants in the event that their application was refused. Following the allotment, the firm is free to pay the share capital in full or in installments as it pleases.

      What is a minimum subscription of share in Bangladesh?

      When the shares are made available to the general public as part of the share issuance, this is the minimum amount that must be raised. The Board of Directors typically determines this minimum subscription, however it cannot be less than 90% of the issued capital. As a result, for the offer to be considered successful, at least 90% of the issued capital must be subscribed for. In this scenario, the application money that has already been received must be refunded within the established time frame.

      What are the shares Issued at Par - Share Capital Account?

      Share allocation is not assured by applying for shares. A few applications will be turned down. In this case, we do not credit the share capital account when the application money is received. We create a new account—a sharing application account—for convenience's sake.

      According to the Companies Act, the funds obtained from the application must be placed in the bank account at a Schedule Bank. This account has been set up specifically to handle the application fee. The following is the journal record for this transaction in the business's books:

      What are the Shares issued at premium?

      We refer to shares issued at a premium as when the corporation chooses to issue shares at a price greater than the nominal value or face value. It is a fairly typical practice, particularly when the business has a solid track record, strong financial results, and a solid reputation. Let's say a share has a face value of BDT. 100 and is issued by the corporation at BDT. 110. It is said that the share was issued at a 10% premium. The premium will be shown in a separate account called the Securities Premium Account rather than becoming a part of the Share Capital account. The corporation can now call up this premium amount whenever it wants, i.e. with any call. The premium is often collected using allocation or application money, and rarely with call money. The Securities Premium Account has been credited with the premium sum that we previously specified. On the liabilities side of the balance sheet, under the heading Reserves and Surplus, is where you'll find this account.

      Infographics
      How To Form A Private Limited Company In Bangladesh_Best Corporate Law Firm In Bangladesh
      Video Tutorial
      Author’s Bio
      About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

      Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

      Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
      Work highlights

      Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

      ⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

      ⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

      ⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

      ⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

      ⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

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