Closing a Company in Bangladesh: The Complete Legal Guide
Winding up, or liquidating a company, is the formal legal process of closing a business and dissolving its existence. In Bangladesh, this procedure is meticulously governed by the Companies Act, 1994. This guide provides a detailed, step-by-step breakdown of the entire process, from understanding the legal grounds to final dissolution, ensuring your business closure is fully compliant.
The Legal Framework: Companies Act, 1994
The primary legislation governing the dissolution of companies in Bangladesh is the Companies Act, 1994. The critical procedures, rules, and regulations for winding up are detailed in Part V (Sections 221 to 355) of the Act. Compliance with these sections is mandatory for a lawful company closure.
Three Paths to Company Liquidation
The Companies Act, 1994 specifies three distinct methods for winding up a company, depending on its financial status (solvency) and the specific circumstances leading to closure. Understanding these is the first step in the liquidation journey.
1. Voluntary Winding Up
This is the most common method, initiated by the company itself without direct court intervention. It can be a:
- Members' Voluntary Winding Up: For solvent companies that can pay their debts. Requires a Declaration of Solvency from directors.
- Creditors' Voluntary Winding Up: For insolvent companies. Creditors have more control over the appointment of the liquidator and the process.
2. Winding Up by the Court
This is a compulsory liquidation ordered and overseen by the High Court Division. A petition can be filed by the company, creditors, or the Registrar of Joint Stock Companies and Firms (RJSC).
Grounds for this are outlined in Section 241 of the Act, such as inability to pay debts or if the court deems it 'just and equitable'.
3. Winding Up Under Supervision
This method begins as a voluntary winding up but transitions to court oversight to protect the interests of all stakeholders, particularly creditors.
Under Section 320, the court can make this order to ensure fairness, effectively creating a hybrid process with judicial oversight.
Interactive Guide: Members' Voluntary Winding Up Process
The Members' Voluntary Winding Up is the standard procedure for solvent companies closing their operations. This interactive timeline provides a detailed, step-by-step guide through the entire legal process, with specific references to the Companies Act, 1994. Click on each step for a full explanation.
Select a Step from the Timeline
Click on a step from the interactive timeline to the left to view the detailed procedures, legal requirements, and key documents for that stage of the company liquidation process.
Understanding the Liquidator's Role
The liquidator is a crucial appointee who takes control of the company to manage its closure. Once appointed, the powers of the Board of Directors cease (Section 309). The liquidator's main responsibility is to efficiently wind up the company’s affairs, realize its assets, pay its debts, and distribute any remaining surplus to the members.
Key Powers and Duties of the Liquidator
The extensive powers of a liquidator in a voluntary winding up are specified in Section 314 of the Companies Act, 1994. These powers enable them to perform all acts necessary for winding up the company's affairs and distributing its assets, including:
- ✓Settle the official list of contributories (shareholders).
- ✓Make financial calls on shareholders for any unpaid capital.
- ✓Settle all legitimate debts and liabilities of the company.
- ✓Initiate or defend any legal proceedings on behalf of the company.
- ✓Continue business operations only if necessary for a beneficial winding up.
- ✓Sell all movable, immovable, and actionable properties of the company.
- ✓Execute deeds, receipts, and other documents using the company seal.
- ✓Appoint legal counsel or other agents to assist in their duties.
Comprehensive Document Checklist for Liquidation
Successfully closing a company requires meticulous documentation for submission to authorities like the RJSC, National Board of Revenue (NBR), and Bangladesh Bank. This checklist covers the critical paperwork for a compliant winding up and fund remittance process.
- »Certificate of Incorporation
- »Memorandum & Articles of Association
- »Return of Allotment (Form-XV)
- »Latest Annual Summary (Schedule-X)
- »Instrument of Share Transfer (Form-117)
- »Encashment Certificate for foreign investment
- »Import permit (if shares issued against machinery)
- »Intimation of share issuance/transfer
- »Latest audited financial statements
- »Form VIII (Special Resolution for liquidation)
- »Liquidator’s certificates of payments
- »All winding up documents per Companies Act
- »Certification of overdue export proceeds
- »Tax Clearance Certificate from NBR
- »Police Clearance Certificate (if applicable)
- »CIB Report from Bangladesh Bank
- »Bangladesh Bank FI-1 Reporting
- »List of non-resident shareholders
- »Liquidator’s undertaking on remittance
- »BFIU Clearance Letter
- »Closing Trade License & VAT License
Frequently Asked Questions (FAQ)
How long does it take to liquidate a company in Bangladesh? ▼
What is the difference between 'winding up' and 'striking off'? ▼
Can a foreign company's branch office be liquidated in the same way? ▼
What happens if a company is insolvent during a Members' Voluntary Winding Up? ▼
Navigate Your Company's Closure with Expert Guidance
The process of closing a company operation in Bangladesh is complex and requires strict legal compliance. LegalSeba.com provides expert, efficient, and transparent services to guide you through every step of the winding-up and fund remittance process.
