Simple steps to Company Registration in Bangladesh
Because of government participation, incorporating a firm in Bangladesh has been easier throughout the years. Foreign Investors (“Promoters”) who want to invest in Bangladesh have several alternatives for incorporating their business. The formation of a limited company is regarded as the best option for long-term business.
How to Register/Incorporate a Business in Bangladesh
This article is intended to guide and assist Promoters by providing a simple step-by-step guideline on how to incorporate a company in Bangladesh. Please keep in mind that the registration process can be conducted remotely through the lawyers, and no investor is necessary to travel to Bangladesh.
The regulatory body is:
The company is incorporated under the Companies Act of 1994. The Registrar of Joint Stock corporations and Firms (RJSC), which enables the formation of corporations and firms, is the regulatory agency for establishing a company. The authority is also in charge of keeping track of any ownership-related matters as stipulated by Bangladeshi legislation.
Promoters should keep in mind that, with the exception of a few very exceptional situations, Bangladesh enables the registration of a company with 100% foreign shareholders and no requirement for a local joint venture.
Getting a Name Clearance:
To begin, the promoters must decide on a name for the company and file for name clearance in the RJSC system. The promoter will obtain a Computer Generated Receipt upon application. Investors must pay the relevant fees to RJSC for name clearance, and upon verification, RJSC issues a name clearance certificate to prospective promoters. These name approval documents serve as the foundation for all subsequent company registration operations.
It should be mentioned that the promoters can remotely incorporate a company in Bangladesh through their authorized Bangladeshi lawyers/agents.
Working on the Memorandum and Articles of Association:
It is critical to design a robust and consolidated corporate constitution document. The Company’s Memorandum should state the principal business objectives, the amount of paid-up capital and permitted capital, and a list of shareholders and their individual shareholdings.
It should be mentioned that in Bangladesh, a One Person Company (OPC) is not permitted, and a minimum of two (2) shareholders are necessary to establish a private limited company. A public limited company, on the other hand, requires a total of seven (7) stockholders. Recently, the government has also permitted the formation of a one-person corporation, which you may read about in our article.
The Company’s Articles of Association should cover the list and number of directors, the power of the board, the power of the Managing Director, the meeting process, quorum, notice method, auditor appointment, and so on. The minimal number of directors for a private limited company is two (2) and three (3) for a public limited corporation.
Directors must own at least one share (qualifying share) in the company; however, this condition is waived for Directors who are nominees of corporate entity shareholders. Independent Directors can also be appointed.
Creating a Temporary Bank Account:
After obtaining name permission, the new company must open a temporary bank account. A copy of the Draft Memorandum and Articles of Association, as well as the name clearance documents, must be provided to the appropriate Banks. Remotely opening a bank account is possible.
Money Transfer to a Bank Account:
Foreign investors must deposit the requisite paid-up capital in the company’s bank account. The remitted amount will be held by the bank. Please keep in mind that there are no legal minimum capital requirements for forming a corporation; nonetheless, the minimum need for obtaining some benefits, such as hiring foreign staff, is USD 100,000. An Encashment Certificate must be received from the corresponding bank upon remittance of the paid-up capital.
If all stockholders are Bangladeshi nationals, this condition does not apply.
Digital Document Submission:
Following receipt of the encashment certificate, the Promoters must submit a digital copy of the Memorandum and Articles, as well as the Directors Consent Forms, to the RJSC computer. After submitting the documents to the RJSC server, an Electronic Payment Slip will be printed, and equal funds must be submitted to RJSC’s authorized bank accounts.
Physical Document Submission:
Following payment of fees to the designated bank account for governmental fees and charges as specified in the Electronic Payment Slip, a nonjudicial stamp must be affixed to the Memorandum and Articles of Association and submitted to RJSC along with the Directors Consent Form (Form IX), List of Consenting Directors (Firm X), List of Directors and Managing Agents (Form XII); original copy of the Encashment Certificate and Name Clearance Document and paym
Obtaining the Certificate of Incorporation and Other Documents:
The Company will get the Incorporation Certificate, Digital Certified Copy of the Memorandum & Articles of Association, and List of Directors (Form XII) within 3-4 working days of filing. Once the company obtains the Certificates, a copy must be provided to the bank in order for the temporary account to be converted to a normal account.
Obtain a Tax Identification Number (TIN):
Before beginning business operations, every company must register for taxes with the National Board of Revenue (NBR) and obtain a tax identification number from the appropriate taxation authority (Deputy Commission of Taxes of Company Circle, Zonal Taxation Department). Obtaining a Tax Identification Number is completely free and is done electronically via the NBR computer.
Obtaining a Business License:
In Bangladesh, businesses must obtain a trade license from the local government. In the instance of Dhaka, for example, a trade license must be obtained from the City Corporation. The proposed company must file its application in person at the nearest city corporation office. A trade license costs roughly USD 200 and can be renewed on a yearly basis. Three to four business days is a normal time span.
How to Get a VAT Registration Certificate:
Companies must register for VAT with the Customs, Excise, and VAT Commission, which is part of the National Board of Revenue. The VAT of the company is governed by the Customs, VAT, and Excise Department of the region in which it works. Obtaining VAT registration usually takes about 5-7 working days.
Creating an account with the Bangladesh Investment Development Authority:
Bangladesh Investment Development Authority (BIDA) is in charge of facilitating international investments in the country. BIDA’s responsibilities include issuing work permits for foreign employees and visas for foreign investors, processing loans from foreign sources, approving remittance of royalties and technical fees, assisting in the acquisition of industrial plots, facilitating utility connections, approving foreign loans, suppliers credit, and assisting and advising on a variety of investment-related issues. Foreign investors with industrial projects are strongly urged to register with BIDA immediately after forming their limited company. Commercial or trading companies, on the other hand, are exempt from BIDA registration. The average time to receive registration is 7-10 working days.
Please contact us if you have any questions or would need a fee quote.
Important Reminders to Foreign Investors:
- The costs of Company Registration are mostly determined by the Company’s permitted capital.
- Shelf firms are not permitted and must have a physical presence in Bangladesh.
- Bangladesh Forex Regulations provide the full repatriation of profits and investments.
- Foreign nationals may be employed at a 20:1 (local: ex-pat) ratio, subject to getting the necessary work visa.
- Except in a few restricted regions, 100% FDI investment is permitted.
- Directors might be either international or domestic nationals.
The typical corporate income tax rate ranges from 22.5% to 45%, depending on the sector and nature of the company. However, the tax exemption is accessible for specific sectors and localities for 5-7 years.
Additionally, there are financial incentives for investment in Special Economic Zones.
Please visit our other article for a one-person firm property appraisal. Please contact us at info@trfirm.com or +8801799570005.
Tahmidur Rahman Remura Wahid, a law chamber in Bangladesh, assists clients in arranging and or structuring loan transactions, project finance, trade finance, construction finance, mergers and acquisitions of corporate entities, resolving transactional disputes, conducting due diligence on mortgaged properties, and so on.
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