Winding up in Bangladesh: Jurisdiction and Process
In this specific scenario, it is preferred that the Company moves towards winding up in a voluntary manner, as specified in section 234(1)(ii) of the Companies Act 1994(CA).
In the process of winding up, the Company is permanently shut down with the dissolution being guided by an appointed liquidator. The RJSC, upon completion of the process, removes the name of the company from their database. The process of voluntarily winding up a company Bangladesh is as follows:
- When the period, if any, specified in the articles of incorporation for the duration of the company expires or an event occurs for which the articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution for winding up voluntarily;
- if the company resolves by special resolution that the company be wound up voluntarily;
- if the company resolves by extraordinary resolution that it cannot continue due to its liabilities;(s.286 of CA)
It should be emphasised that when the resolution for voluntary winding up is passed, the voluntary winding up process is assumed to have started.
The Process of voluntary winding up in Bangladesh:
- Pass a special resolution in the board meeting for voluntary winding up.(s.287)
- Subsequent to such board meeting, issue an affidavit stating the Company will be able to pay off its debts within a certain period not exceeding 3(three years).(s.290) The Company must declare solvency.
- Notice of the same resolution shall be issued by the Company within 10(ten) days of such resolution and as per the guidelines enshrined within s.289 of the CA 1994.
- The board within its general meeting must pass extraordinary resolution to approve the winding up and appoint a liquidator.
- Within 5 weeks of making such declaration, file the necessary documents with the RJSC.
- Appoint a liquidator and notify the RJSC about the same within 21(Twenty One) days.(s.309 and s.310)
- The liquidator shall prepare final account before winding up.
- Extra-ordinary general meeting to pass issues related to disposal of books and papers of the company.
The following documents shall be filed with the RJSC:
The company need to comply and collect the following documents from several concerned bodies before closing their operation in Bangladesh.
- Certificate of Incorporation
- Memorandum & Articles of Association
- Return of Allotment (Form-XV)
- Latest annual summary of share capital and list of shareholders/directors (Schedule-X)
- Instrument of Transfer of Shares (Form-117)
- Encashment Certificate
- Import permit and related documents for shares issued against capital machinery
- Intimation of share issuance/transfer as per relevant guidelines
- Latest audited financial statements
- Certified copies of Form VIII evidencing special resolution for voluntary liquidation
- Liquidator’s certificates confirming full payment of liabilities and compliance with the Companies Act
- Winding up documents in accordance with the Companies Act
- Certification of overdue export proceeds and unmatched bill of entry
- Tax clearance certificate from NBR
- Police Clearance Certificate (where applicable)
- CIB report from Bangladesh Bank
- Bangladesh Bank FI-1 Reporting
- List of non-resident shareholders to whom proceeds are payable
- Liquidator’s undertaking regarding ineligible remittance amounts
- Obtaining any Clearance Letter from the Bangladesh Financial Intelligence Unit
- Closing Trade License
- Closing VAT License
Estimated timeline: 4-5 months.
Estimated cost: 8-10 Thousand USD (For two companies).
Striking off in Bangladesh: Jurisdiction and Process
The strike off process is not applicable within the Bangladesh jurisdiction. A Company in Bangladesh is not legally entitled to initiate a strike off. However, it is to be noted that the RJSC may initiate the process of strike off due to “inaction” of the Company. The process for the same by RJSC is as follows:
| i. | Where the Registrar has reasonable cause (like annual returns are not submitted for a long period etc.) to believe that a company is not carrying on business or in operation, sends to the company a notice (1st notice) inquiring whether the company is carrying on business or in operation. | |
| ii. | If the Registrar does not within thirty (30) days of sending the notice receive any answer thereto, shall within fourteen (14) days, after the expiration of the said thirty (30) days send to the company a 2nd notice stating that if an answer is not received to the 2nd notice within thirty (30) days from the date thereof, a notice will be published in the official Gazette with a view to striking the name of the company off the register. | |
| iii. | If the Registrar either receives an answer from the company to the effect that it is not carrying on business or in operation, or does not within thirty (30) days after sending the 2nd notice receive any answer, he may publish in the Official Gazette, and send to the company a notice that, at the expiration of ninety (90) days from the date of that notice, the name of the company mentioned therein will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved, and | |
| iv. | In such a case the Registrar may send a copy of the notice to the company while sending it to the concerned authority for its publication in official Gazette. |
Estimated timeline: 4-5 weeks.
Estimated cost: 5-7 Thousand USD.