Comprehensive Guide to Private Limited Company Formation in Bangladesh
A Private Limited Company is the most widely adopted business structure in Bangladesh, governed by the Companies Act, 1994. It is a separate legal entity from its shareholders, meaning the owners' personal assets are protected from business liabilities. For both local entrepreneurs and foreign investors, registering with the **RJSC (Registrar of Joint Stock Companies and Firms)** is the mandatory first step.
Key Benefits
- Limited Liability: Shareholders are only liable up to the unpaid value of their shares.
- Funding Access: Easier to raise capital through equity or bank loans compared to proprietorships.
- Credibility: Increases trust with international suppliers and corporate clients.
- Tax Advantages: Lower corporate tax rates (27.5%) compared to other entities in certain brackets.
Basic Requirements
- Directors: Minimum 2, Maximum 50. Must be 18+ years old.
- Shareholders: Minimum 2, Maximum 50.
- Address: A registered commercial address in Bangladesh.
- Name: Must be unique and approved by RJSC.
Detailed Registration Process
Step 1: Name Clearance
The journey begins with selecting a unique name. You must apply for name clearance on the RJSC website. Once approved, the name is reserved for 30 days. Ensure the name does not infringe on existing trademarks.
Step 2: Drafting MoA and AoA
The Memorandum of Association (MoA) outlines the company's objectives, while the Articles of Association (AoA) define internal rules. These must be drafted carefully to allow future business expansion.
Step 3: Opening Bank Account & Capital
Open a temporary bank account in the company's name. Shareholders must deposit their paid-up capital share. For local companies, a simple bank certificate suffices; foreign investors need an Encashment Certificate.
Step 4: Submission & Incorporation
Upload Form IX (Consent of Director), Form XII (Particulars of Directors), and the signed MoA/AoA to RJSC. Pay the government fees (registration + stamp duty). Upon verification, RJSC issues the Certificate of Incorporation.
Post-Incorporation Compliance
Obtaining the incorporation certificate is just the beginning. To operate legally, you must acquire:
- Trade License: From the local City Corporation or Union Parishad.
- Business TIN: Tax Identification Number from NBR.
- BIN (VAT) Certificate: Mandatory for most businesses.
- Import/Export License (IRC/ERC): Only if you plan to trade internationally.