Detailed Guide to Company Registration in Bangladesh: How to Register a Private Limited Company

Bangladesh’s competitive business environment and low labor costs make it an attractive destination for foreign companies looking to expand. The country’s favorable geographical location, abundant natural resources, and welcoming attitude towards foreign investment across various industries further enhance its appeal. This blog delves into the legal aspects and procedures involved in registering a company in Bangladesh, providing a comprehensive guide to navigating the process.

 

Step-by-Step Procedure for Private Limited Company Registration in Bangladesh

Bangladesh has emerged as a desirable destination for foreign companies due to its strategic advantages. One of the initial steps to establish a business here is company registration, which, while elaborate and complex, is essential. This blog describes the registration process in detail, along with its benefits and requirements.

 

What is a Private Limited Company?

A private limited company is a privately held corporation owned by private investors. This type of company offers limited partnership liability, allowing private entities to invest in long-term strategies while maintaining the confidentiality of their financial data and share values. It provides operational freedom and flexibility, and a foreign company can fully own a private limited company in Bangladesh.

 

Benefits of a Private Limited Company

A private limited company in Bangladesh offers several advantages:

  • Distinct Legal Standing: It is recognized as a separate legal entity.
  • Perpetual Succession: The company continues to exist regardless of changes in ownership.
  • Minimal Barriers to Entry and Exit: The process of starting and closing a business is straightforward.
  • Ideal for New Businesses: This structure is well-suited for startups and new ventures.
  • Attractiveness to Foreign Investors: It appeals to foreign direct investment due to its structured framework.
  • Limited Liability: Shareholders’ liability is limited to their capital investment.
  • Low Paid-Up Capital Threshold: The required initial investment is minimal.
  • Ease of Share Transfer: Shares can be easily acquired or transferred among members.

 

Requirements for a Private Limited Company

To register a private limited company in Bangladesh, several requirements must be met:

  • Name Clearance: The company must first obtain name clearance from the RJSC.
  • Directors: A minimum of two and a maximum of fifty directors are required. Directors can be of foreign or Bangladeshi origin, must be at least 18 years old, of sound mind, and free from malpractice convictions or bankruptcy. Directors must hold qualifying shares as specified in the AOA. Nominee directors can be appointed by corporate shareholders.
  • Shareholders: The company must have at least two and no more than fifty shareholders, who can be individuals or corporate entities. 100% foreign shareholding is allowed.
  • Share Capital: Each shareholder must invest a minimum of BDT 1. The permitted capital, as specified in the MOA and AOA, is the maximum share capital the company can distribute.
  • Registered Address: The company must have a registered address in Bangladesh.
  • Annual Compliance: The company must submit audited accounts, annual returns, and tax returns annually.

 

Liabilities of a Private Limited Company

A private limited company in Bangladesh has specific liabilities:

  • Annual General Meeting: The company must hold an annual general meeting.
  • Statutory Auditor: The company must appoint a statutory auditor.
  • Financial Reporting: All board meeting reports and financial statements must be presented.
  • Income Tax Returns: The company must file annual income tax returns.

 

Required Documents for Setting Up a Private Limited Company

For Non-Operating Bank Account in Bangladesh:

  • Name approval certificate from RJSC.
  • MOA and AOA of the proposed company.
  • Board Resolution or Promoters’ Meeting Minutes.
  • NID or Passport copies of all shareholders.
  • Three copies of photographs of all shareholders and directors.
  • Completed and signed Bank Account Application Form.

Additional Documents for Corporate Shareholders:

  • Share tree analysis for corporate shareholders.
  • Passports and photographs of all nominee directors and shareholders of the parent company.
  • Incorporation certificate, MOA, AOA, and the previous year’s audit report of corporate shareholders (translated into English and notarized).

For Company Registration:

  • Copy of the MOA and AOA of the proposed company.
  • Signed Subscriber Page.
  • Signed Form-VI (declaration of registered address).
  • Signed Form-IX (consent of the directors).

 

Comprehensive Process for Setting Up a Private Limited Company Including Foreign Investors

Name Approval

The first step in establishing a private limited company in Bangladesh is choosing a company name. The applicant must apply for name clearance through the RJSC web portal, pay the necessary fees, and receive the name clearance certificate, which is valid for 30 days.

Drafting Required Documentation

The necessary documents include:

  • Drafting of Memorandum of Articles and Articles of Association and other required documents,
  • Directors’ resolution to open a new Company in Bangladesh;
  • Obtaining and filling up the following forms for registration of the Company to RJSC:
  • Form I: Declaration on registration of Company;
  • Form VI: Notice of situation of registered office;
  • Form IX: Consent of director to act;
  • Form X: List of persons consenting to be directors;
  • Form XII: Particulars of the directors, manager and managing agents.
  • Board Resolution or Promoters’ Meeting Minutes.

Opening a Non-Operating Bank Account

A non-operating bank account must be opened with any scheduled commercial bank in Bangladesh to receive inward remittance, following the Bangladesh Foreign Exchange Regulations. The bank will issue an Encashment Certificate after receiving the remittance, which RJSC will verify before confirming the company registration.

Inward Equity Remittance

The inward equity remittance process involves:

  • Depositing the paid-up capital into the non-operating bank account.
  • Sending remittances via SWIFT.
  • Allowing 48-72 hours for the payment to arrive in Bangladesh.
  • Receiving an Encashment Certificate from the bank.
  • Stating “Equity Investment” as the SWIFT purpose.

Online Filing to RJSC Web-Portal

Upload the following documents to the RJSC web portal:

  • Memorandum of Association (MOA).
  • Articles of Association (AOA).
  • Signed Form-VI and Form-IX.
  • Signed Subscriber Page.
  • Encashment Certificate.

Upon successful submission, the registration process will be completed.

Company Registration Documents

After RJSC approves the online application, the following documents will be issued as proof of company registration:

  • Incorporation Certificate.
  • Certified Copy of the Memorandum of Association (MOA) and Articles of Association (AOA).
  • Certified Copy of Form-XII (Particulars of Directors).

Other Licenses and Registrations

Post-registration, the company must obtain additional registrations and licenses, including:

  • Trade License.
  • Tax Registration (E-TIN).
  • VAT Registration (BIN).
  • Membership from the Chamber of Commerce (for import and export businesses).
  • Import Registration Certificate (for import businesses).
  • Export Registration Certificate (for export businesses).

 

Depending on the nature of your business, you may require other licenses and registrations from relevant government authorities. After completing these steps, your private limited company will be ready to begin operations. LegalSeba.com is here to assist if you need help navigating this intricate process. We help foreign companies establish their business in Bangladesh and provide standard accounting and compliance services.

Bangladesh’s strong economic growth attracts many foreign firms looking to establish their presence. A private limited company offers several benefits, including legal standing, low capital requirements, and ease of entry and exit, making it an attractive option for foreign investment. However, foreign companies must adhere to the legal requirements for company registration to avoid any issues. This blog outlines the benefits and operations of a private limited company in Bangladesh, the statutory requirements, and the detailed registration process.

 

Special Case (Investment in kind, etc.)

The concept of ‘investment in kind’ is not detailed under Companies Act 1994. However, in practice, significant investment is made by investing in machineries and other equipment in a Company by a shareholder or a proposed shareholder in a Company incorporated in Bangladesh. Although CA 1994 does not govern the procedure, the following steps are followed while carrying out such investment in kind:

  • The concerned company has to be duly registered with RJSC,
  • The concerned investors have to fill up the relevant Form(s),
  • The concerned investors are required to have a vendors’ agreement between them,
  • The filled up Form(s) and the vendors’ agreement have to be filed with RJSC.
  • The RJSC will then record the investment and monitor whether the proper procedure has been duly followed.

 

Pros of Limited Compay

  • Tax-free if falls under tax-exempted industry
  • Eligible to hire foreign staffs
  • Foreign technical staffs are tax-free for the first 3 years depending on the business nature
  • Easier access to finance & banking facilities
  • Have the greater flexibility with a wide range of business capacity
  • Option to issue shares & offer equity to the new shareholder in several terms
  • Liability of the Shareholder limited to their paid-up capital contribution

Cons of Limited Company

  • Preparing Annual Audited Report sometimes becomes expensive for small companies
  • Additional Compliance Requirement unline proprietorship or partnership firm
  • Tax is calculated under the head of the company and there is dividend tax as well

 

Taxation for Companies

A company needs to pay corporate tax on its profit (Revenue-Expenses); if it doesn’t have the profit, it doesn’t need to pay tax. This is subjected to the followings:

i. File income tax return annually (usually on 15th January of next year following financial closing, usually (July-June)

ii. Make sure to inject paid-up capital to the company’s bank account by cheques.

iii. Make sure the debit-credit in the bank statements are adequately explained

iv. Minimum tax usually @.06% of gross revenue to be paid.

Corporate Tax Rate in Bangladesh:

Publicly traded companies (listed companies on stock market) 25%
Non-publicly traded companies (private companies limited by shares) 27.5 %
Publicly traded banks, insurance, and financial institutions other than merchant banks 37.5%
Non-publicly traded bank, insurance, and financial institutions 40%
Publicly Traded mobile network operators 40%
Non-publicly Traded mobile network operators 45%
Publicly Traded cigarette manufacturers 45%
Non-publicly Traded cigarette manufacturers 45%
One Person Company  25%

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One person company registration in Bangladesh has been officially launched in Bangladesh.

Besides, there are several tax exemption facilities for companies based on the nature of business & location.

Still, have a question? Let’s answer them all 😊

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