How to set up a Private Limited Company in Bangladesh
A new era of corporate culture means that setting up a company for carrying out a business is the best way forward in opposed to proprietorship or partnership format. In this excerpt let's shed some light into the procedure and documentations required for setting up a company. In Bangladesh perspective, a private limited company would be the best choice for carrying out a business as it provides a number of facilities including tax benefits, legal and easy pathway to raise capital, continuity of a business despite absence of its founder, ease of transfer of shares/ownership, limited liability for shareholders, availing certain business discounts which otherwise would not be available to a single consumer/businessman, branding of the business name due to availability of patented name facility, ease of carrying out international transactions etc.
A private limited company in Bangladesh is a separate legal entity and shareholders are not liable for the company's debts beyond the amount of share capital they have contributed. According to the Companies Act 1994(the governing act for registration and management of companies in Bangladesh), any two person (foreign or local) above the age of 18 with sound mind and who are not disqualified under any Bangladeshi law can register a company in Bangladesh. A minimum of two members and a maximum of 50 members can set up a private limited company.
There are three distinct steps involved in the Bangladeshi company setup procedure: a) Name Clearance; b) Bank account opening and bringing in the paid up capital; and finally c) Company Registration. All these steps have to be taken in accord with Companies Act 1994 and the concerned governing body for registration of a company is the Registrar of Joint Stock Companies and Firms (RJSC).
Name Clearance: This is a simple procedure where you can obtain a certificate from RJSC by applying online in RJSC website and spending 600 BDT whereby you are ensured that no second company exists with an identical name which you have chosen for your company. Registration procedure of company must be done within 30 days of obtaining of 'Name Clearance Certificate'.
Bank Set-up: Opening a bank account in the name of the proposed Company and obtaining Bank Solvency Certificate(as and when needed).
Documents needed for Company Registration: Documents Constituting a Registration Application for a PRIVATE Company (Companies Act, 1994)
1. Memorandum & Articles of Association, original + 2 copies (Format of government prescribed Memorandum of Association[MoA] can be found in Schedule VI of Companies Act 1994 and for Articles of Association[AoA] Schedule I of the Act should be referred to.)
2. Filled in Form I: Declaration on Registration of Company.
3. Filled in Form VI: Notice of Situation of Registered Office.
4. Filled in Form IX: Consent of Director to act .
5. Filled in Form X: List of Persons Consenting to be Directors.
6. Filled in Form XII: Particulars of the Directors, Manager and Managing Agents.
7. Evidence of Name Clearance.
8. Shareholders Particulars (National ID/Passport details)
9. Directors Particulars (including Tax Identification Number)
10. Special Adhesive Stamps and Treasury Challan from Bangladesh Bank to Treasury (photocopy) of Collecting the Stamps.
Registration: After receiving all the above documents if the Registrar of RJSC is satisfied he will sign and attest the documents and issue an (i)Certificate of Incorporation which brings the company into existence; ii) MoA and AoA, and iii) Form XII.
Post-Registration Formalities: After registration and obtaining Certificate of Incorporation from RJSC a private limited company can commence its business immediately. However, you would also need to apply for Trade License and Tax Identification Number. Depending on your company's business activities, you may need to obtain more business licenses as and when needed.
Costs of Company Registration: Costs of registration of a private limited company can start from 5000BDT and can reach up to 27,000BDT (of company capital consisting of up to 50 lac BDT). However, this cost consists of only government prescribed stamps and fees and does not cover legal fees and other incidental and technical costs.
The above series of steps outline the procedure for setting up a private limited company in Bangladesh. Comparing to the public limited company, the private limited company is much more preferable to other formats of business for seasoned businessman or entrepreneurs alike. Anyone interested in setting up a private limited company can follow the above steps; however, he always has the options to consult a corporate lawyer for a professional advice as per his needs and requirements.
Barrister Nasreen Sultana Mily is an advocate, Supreme Court of Bangaldehs. She also teaches Company Law at State University of Bangladesh.