How to Liquidate a Company in Bangladesh

 

In Bangladesh, the winding up of a company may be either –

  1. Voluntary; or
  2. By the court; or
  3. Subject to the supervision of the court.

Voluntary winding up is usually undertaken by solvent companies, except in the case of creditor’s voluntary winding up.

Below we have described the process of voluntary winding up by passing a special resolution.

 

PROCEDURE FOR VOLUNTARY WINDING UP:

 

First Step: Preparing Documents

Declaration of Solvency

A declaration of solvency has to be prepared and signed by the directors. The declaration will contain statement of the company’s assets and liabilities as at the latest predictable date before making of the declaration. The declaration will also state that the company has no debts or that it will be able to pay its debt in full within such period not exceeding there years from the commencement of the winding up.

The declaration must be verified by an affidavit to the effect that the directors have made a full inquiry into the affairs of the company. The declaration will be signed by all the directors of the company or, in the case of a company having more than two directors, the majority of the directors.

 

Accounts & Audit

Profit and Loss Account and audited Balance Sheet will be prepared up to the latest predictable date as mentioned above and audited. Auditor’s report should be obtained.

 

Second Step: Board Meeting & Extra Ordinary General Meeting 

Board Meeting

A Board meeting will be convened pursuant to the rules of the Companies Act and Articles of the company. The majority of the directors should be present at the meeting. In the meeting, the directors will approve:

a. Audited accounts;

b. The declaration of the Directors;

The directors will also call an extraordinary general meeting to pass the special resolution to wound up the company. After the meeting, the declaration and the affidavit (prepared in the first step) should be notarized.

Filling of Declaration with RJSC

The declaration should be filed with the Registrar of Joint Stock Companies and Firms within 5 weeks from the date of the declaration.

Extra Ordinary General Meeting

The extraordinary general meeting will be held and the special resolution will be passed. The special resolution will approve the – i) winding up; ii) appointment of the liquidator and fix the liquidator’s remuneration.

Filling with RJSC

The content of the extraordinary general meeting (along with Form VIII) and the appointment of the liquidator will be filed with the RJSC.

 

Third Step: Appoint of Liquidator 

Liquidator

Immediately after the special resolution is passed, the liquidator will accept the appointment and will assume office and ensure that RJSC is notified about his/her appointment.

Within thirty days after the liquidator is appointed, the liquidator will give notice of his appointment as such to the Deputy Commissioner of Taxes having jurisdiction to assess the company.

Gazette and Newspaper Publication:

Notice of any special resolution or extraordinary resolution for winding up a company voluntarily shall be given by the company within ten days of the passing of the same by advertisement in the official Gazette, and also in 2 Bangla and 2 English newspapers twice during the process, if any circulating in the district where the registered office of the company is situated. The appointment of the liquidator should also be mentioned in the advertisement.

AGM (if required)

In the event of the winding up continuing for more than one year, the liquidator shall arrange an Annual General Meeting of the company at the end of the first year from the commencement of the winding up and of each succeeding year, or as soon thereafter as may be convenient within ninety days, of the close of the year, and shall lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the proceeding year and a statement in the prescribed form containing the prescribed particulars with respect to the position of the liquidation.

 

Fourth Step: Final Meeting & Filling with the RJSC 

Final Account

The liquidator will prepare a final account of the winding up showing how the winding up has been conducted and the assets of the company has been disposed of. Then s/he will call an extra ordinary general meeting.

Extra Ordinary General Meeting

Notice of the meeting will be given by advertisement specifying the time, place and object of the meeting not less than one month before the meeting in the official gazette and also in a newspaper circulating in the district where the registered office of the company is situated.

In the extra ordinary general meeting, a special resolution will be passed relating to the disposal of the books and papers of the company.

Filling

A return of the winding-up meeting will be filed with the Registrar of Joint Stock Companies and Firms within one week of the meeting.

After holding of the final meeting and the submission of the documents to the Registrar, the legal entity of the company will be dissolved.

 

LegalSeba.com offers comprehensive services to facilitate the remittance of residual funds to foreign shareholders following the winding up of a company in Bangladesh. This process, which involves strict compliance with regulatory requirements and guidelines set forth by Bangladesh Bank, can be complex and challenging. LegalSeba.com provides expert assistance in both court-supervised and voluntary winding-up scenarios to ensure a smooth exit strategy for businesses.

 

Court-Supervised Winding Up

In cases where a company is winding up under the supervision of the court, LegalSeba.com offers several key services:

  • Application Preparation: LegalSeba.com prepares and submits applications to the Foreign Exchange Investment Department (FEID) of Bangladesh Bank, ensuring all necessary documentation is in place.
  • Court Order Endorsement: The company assists in obtaining and endorsing the court order that specifies the distribution amount to shareholders.
  • Certification Assistance: LegalSeba.com helps secure certificates from liquidators or official receivers, confirming that all liabilities and statutory payments have been fulfilled.

 

Voluntary Winding Up

For companies opting for voluntary winding up, LegalSeba.com offers a structured approach to comply with all regulatory requirements:

  • Document Compilation: 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

 

Liaison with Authorized Dealer (ADs) Bank

LegalSeba.com also acts as a liaison with Authorized Dealers (ADs) to ensure thorough compliance verification and seamless remittance processes:

  • Compliance Verification: Ensuring that the target company complies with Paragraph-2(A)(c) & 2(B), Chapter-9, Volume-I of the Guidelines for Foreign Exchange Transactions-2018 or similar guidelines.
  • Permission Requests: Forwarding permission requests for remittance to FEID only after thorough compliance checks.

 

Timeline and Banking Practice for Closing a Company in Bangladesh

The entire process of winding up and remittance can take approximately 9-11 months. Once all required documents are submitted, the designated bank will transfer the remaining funds to the foreign investors’ bank accounts in their respective countries of residence.

Before remitting funds, Authorized Dealers (ADs) must exercise due diligence in accordance with Know Your Customer (KYC) protocols, Anti-Money Laundering (AML), and Counter Financing of Terrorism (CFT) standards. Additionally, they must ensure compliance with regulations pertaining to the payment of taxes and related obligations.

By offering these comprehensive services, LegalSeba.com ensures that the winding-up process and subsequent remittance of funds are handled efficiently, transparently, and in full compliance with Bangladeshi laws and regulations. This enables foreign shareholders to receive their residual funds smoothly and without undue delay, ensuring a secure and compliant exit from the Bangladeshi market.

 

Why Choose LegalSeba.com?

  • Expertise: Our team is well-versed in Bangladeshi corporate and foreign exchange regulations, ensuring expert guidance through every step of the winding-up process.
  • Efficiency: We streamline the process, reducing the administrative burden on your company and ensuring timely submission and approval of all necessary documents.
  • Compliance Assurance: We provide comprehensive compliance checks, ensuring that all regulatory requirements are met, minimizing the risk of delays or rejections.
  • Personalized Service: Our tailored services meet the specific needs of each client, providing dedicated support and personalized solutions.

 

Contact Us

For more information on how LegalSeba.com can assist you with your company’s exit strategy and compliance in Bangladesh, please contact us at:

Let LegalSeba.com be your trusted partner in navigating the complexities of company winding up and foreign shareholder remittance compliance in Bangladesh.