How to set up a private limited company in Bangladesh
This article will provide guidance on how to set up a private limited company in Bangladesh. There are various ways to start a business in Bangladesh and one of the most preferred option and useful mode is to incorporate a private limited company. Therefore, this article will focus on the procedure of registering a private limited company in Bangladesh. In addition, the legal compliances such as Tax compliance of a private limited company in Bangladesh after incorporation will also be reflected in this article.
- Ways of doing business in Bangladesh
There are five ways of doing business in Bangladesh. They are as follows:
- Private Limited Company
- Public Limited company
- Branch office
- Liaison Office
- Why private limited company is the popular way of doing business
It is comparatively easier and less costly compared to public limited companies. In addition, private limited company is a full-fledged way to generate income compared to branch office and liaison office. Furthermore, proprietorship will not create a legal entity that a private limited company does create.
- Steps to form a private limited company in Bangladesh
- Name clearance
To form a private limited company, the first step is to choose a name for the company which should be unique. After choosing the name, one needs to apply for name clearance in order to get the name approval certificate from Registrar of Joint Stock Companies and Firms (RJSC). It usually takes 1 to 2 days to get the certificate. Currently, the government fee for name clearance is 230 BDT or 3 USD. It should be noted that there are some differences in terms of forming a limited company in Bangladesh between Bangladeshi nationals and foreign nationals / entity.
- Drafting Memorandum of Association
Memorandum of Association (MOA) of a limited company basically includes the objectives of a company. One can add as many objectives as one wants. However, it needs to be kept in mind that in order to start business of banking, finances, school, hospital, prior approval from the concerned authority is required. In addition to the objectives of a company, a MOA also includes the authorized capital of the company.
- Drafting Article of Association
Article of Association (AOA) is the constitution of the company. An AOA contains all the rules of how a limited company will run and who will be the Managing director, Chairman and Director of the company. In addition, an AOA also includes how the company bank account will be operated, how the decision will be made among the shareholders and what will be the minimum quorum for making a decision.
- Bank account opening (for foreign nationals / entities)
At what stage one can open a bank account, will defer between foreign national / entity and Bangladeshi nationals. In case of foreign nationals/entity, after getting the name clearance certificate, the signatory of the bank account will go to the bank and deliver the following documents in order to open a provisional bank account in the name of the company.
The documents that need to be submitted are:
- Photocopy of name clearance certificate
- Draft AOA and MOA
- Photocopy of passport (application for foreign nationals)
After receiving the above mentioned documents, the bank will open a provisional account in the name of the company.
- Share money deposit (for foreign nationals/ entities)
After opening the provisional bank account, share money deposit will be sent from the country of the foreign shareholder to the provisional account. The money is required to be sent from the personal or entity account of the shareholder. After receiving the payment the bank in Bangladesh will issue an encashment certificate.
- Registration to RJSC
After receiving the encashment certificate, few documents needs to be submitted to the RJSC namely AOA, MOA, encashment certificate along with all other necessary information. After receiving all the necessary documents and information, RJSC will generate an invoice to be paid to the recognized bank.
- Required documents and information for company formation
The documents and information required for company formation are as follows:
- Particulars of Directors i.e. name, parents name, passport number, email ID, mobile number
- Name of Managing Director
- Name of Chairman
- NID (if Bangladeshi national)
- TIN (if Bangladeshi national)
- Limit of paid up capital
- Limit of authorized capital
- Photo of all shareholders (1 copy)
- Address of company
- Signatories of the bank account
- Government cost
Government cost for registration depends upon the authorized capital of the company. For instance, if the authorized capital is 50lakh, the government fee will be BDT 13570 or USD 160 along with 15% VAT.
- Incorporation certificate
After receiving all the above mentioned documents, RJSC will verify all the information given in the AOA and MOA and will also verify the encashment certificate with the bank. After being satisfied with all the information, the RJSC will issue incorporation certificate in the name of the company.
- Steps to be taken post registration
After receiving the incorporation certificate, an application needs to be made to the National Board of Revenue (NRB) for tax identification number. Upon receiving the application, a tax certificate will be issued under the name of the company.
- Trade license
In order to get trade license an application need to be made to the concerned city corporation. Along with the application, the following information needs to be submitted:
- Photocopy of AOA and MOA
- Photo of Managing Director or Chairman
- TIN of the company
- Rental agreement
- Nature of business
It usually takes 3 to 4 working days to get a trade license. in order to know more about how to get trade license in Bangladesh please click here.
- Bank account opening (for Bangladeshi nationals / entities)
In order to open a bank account under the name of the company, a Bangladeshi national need to submit the incorporation certificate, AOA, MOA, TIN and Board resolution to the bank. Thereafter, a bank account will be opened under the name of the company and the company can start transaction with the bank.
- Return Filling:
Every limited company is required to file documents related to management or operation of the entity to the RJSC in prescribed forms and schedules. This is called Return Filing. There are two types of return filing namely Annual Return Filing and Returns Filing for any change in an entity.
- Procedure for return filing
- Returns need to be submitted by entities for filing at RJSC
- Filing fee need to be paid by the entity to RJSC counter and if applicable need to pay the late filing fee as well.
- If the submission is incorrect or incomplete, RJSC will notify the remedial measures to the entity
- Types of Annual Returns to be submitted
- Annual summary of share capital, list of shareholders and Directors (required to be filled within 21days of AGM)
- Balance Sheet (required to be filled within 30days of AGM)
- Profit and Loss Account (required to be filled within 30days of AGM)
- Form 23B Notice by Auditor (required to be filled within 30days of receiving appointment information from the company)
- Types of Returns for change to be submitted
- Notice for division, sub-division, consolidation or conversation into stock of shares to be filled in Form III within 15days of consolidation and division etc
- Notice of increased share capital / member to be filled in Form IV within 15days of increase of share capital or member
- Notice of any change in the Registered Office to be filled in Form VI within 28days of change
- Special Resolution or Extraordinary Resolution to be filled in Form VIII within 15days of the meeting
- Director’s consent to act to be filled in Form IX within 30days of appointment
- Particulars of the Directors, Manager and Managing Agents and of any change therein to be filled in Fomr XII within 14days of appointment or any change
- Return of allotment to be filled in Form XV within 60days of allotment
- Particulars of mortgages or charges to be filled in Form XVIII within 21 days of creation of mortgages
- Instrument of transfer of shares to be filled in Form 117
- Value Added Tax (VAT) Certificate
In order to carry out normal business operations in Bangladesh after formation of a private limited company, it is essential that the company has a unique Business Identification Number (BIN). Normal business operation includes import and export, carrying out banking activities, participation in tender etc. Therefore, to get a Business Identification Number, companies are required to have a VAT registration certificate. VAT is regulated by the Customs, VAT and Excise Department of the National Board of Revenue (NBR). Applying for VAT registration is free
- Required documents
- TIN Certificate
- Trade License
- Import / export Registration certificate
- Passport sized photos
- Deed of Agreement
- Bank solvency certificate
- BOI registration
- Memorandum and Articles of Association
Every private limited company need to pay the VAT with 15th (fifteen) of every consecutive month.
Legal Advice regarding setting up a private limited company in Bangladesh by CLP:
The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly experienced at assisting clients through the entire process and legal provisions relating to setting up a private limited company in Bangladesh .
For any queries or legal assistance, please reach us at: E-mail: [email protected]
. Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.