How to incorporate a private limited company in Bangladesh by foreign investor

 

Bangladesh is considered a key investment destination due to its Geo location, cheap labor, abundance for raw materials and business friendly legal compliance. Incorporating a business in Bangladesh has been simplified over the years due to interventions by the Government. Foreign Investors intending to invest in Bangladesh has several options to start their business in Bangladesh. Such as they can open a liaison office, open a subsidiary company, open a branch office in Bangladesh. Among these options today we’ll focus on registration of private limited company. So, without further due, lets get the ball rolling…

Step-1 Name Clearance:

The very first stage of a company incorporation is to get a name clearance.

The main regularity authority for Company Incorporation in Bangladesh is Register of the joint stock Companies and farms shortly known as RJSC.

You need to check is your desired name available or not….

You can easily check through RJSC web portal weather there is any other company registered in Bangladesh on the same name or not.

If your desired name is available, then you can simply apply for clearance and pay the necessary fees.

It usually takes one or two working day to get the name clearance.

Step-2 Prepare your documents:

Authorized Capital:

You have to fix your Authorized Capital, all government fees regarding company registration will be determined on your authorized capital.

Paid up Capital:

You need to deposit the paid-up capital. Minimum paid-up capital for registration of a Bangladeshi company is 1 BDT. Paid-up capital can be increased any time after the incorporation of the company. However, investors should keep in mind that they need to make an inward remittance of no less than $50,000 USD if they intend to hire foreign employees.

Directors:  For a private limited company minimum two directors are mandatory. Directors can be either local or foreign. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractice in the past. The law requires that a director must own qualification shares stated in the Articles of Association.

Shareholders: A private limited company in Bangladesh can have a minimum of 2 and maximum of 50 shareholders. A director and shareholder can be the same or a different person. The shareholder can be a person or another legal entity such as another company. 100% local or foreign shareholding is allowed in most sectors. New shares can be issued or existing shares can be transferred to another person any time after the Bangladeshi company has gone through the incorporation process.

Memorandum of Association:

You have to prepare a memorandum of association for your company. Memorandum of Association is considered as the constitution of a company. MOA is the foundation on which the company is formed. It identifies the scope of its operations and determines the boundaries it cannot cross. The Memorandum of the Company should state the primary business objectives, the amount of paid-up capital & authorized capital, and state the list of the shareholders along with their respective shareholdings.

Article of Association:

Now you need to prepare an article of association for your company. Articles of association form a document that specifies the regulations for a company's operations and defines the company's purpose. The document lays out how tasks are to be accomplished within the organization, including the process for appointing directors and the handling of financial records.

Articles of association can be thought of as a user's manual for a company, defining its purpose and outlining the methodology for accomplishing necessary day-to-day tasks.

It is strongly recommended to prepare your memorandum and article of association by a Bangladeshi lawyer who is expert in company matters.

Opening Bank Account in Bangladesh:

After you have got name clearance form RSC and prepared your MOA & AOA you need to open a Bank Account in Any Schedule Bank in Bangladesh. You are required to submit a copy of your name clearance certificate, draft MOA & AOA.

Then you need to remit the desired paid-up capital to the account and after remitting the paid-up capital an Encashment Certificate needs to be obtained from the respective bank.

Step-3 Online Submission for Company Registration:

After getting the encashment certificate, the you need to upload a digital copy or scanned copy of the Memorandum & Articles, Directors Consent Forms, list of directors’ forms and some other documents to the RJSC server. Upon submission of the documents in the RJSC server, you’ll be able to download an Electronic Payment Slip for paying registration fees, you need to print it and submit it to the designated bank accounts along with required fees.

Step-4 Submission of documents to the RJSC:

This is the last stage of a company registration. In this stage you are required to submit Memorandum and Articles of Association, Directors Consent Form, List of Directors, List of Directors and Managing Agents, Original copy of the Encashment Certificate and Name Clearance Document and payment slip etc. to the RJSC office.

After scrutinizing all the documents by RJSC, the Company will receive Incorporation Certificate, Digital Certified Copy of the Memorandum & Articles of Association, within 3 to 4 working days.

Receiving these documents through email means your company has been registered successfully.

Step-5 Post-registration compliance:

You need some more documents before you start your business operation.

Getting T.I.N Number:

Your company need to be registered before the proper taxation authority for getting a Tax Identification Number. It is pretty simple and can be done online through NBR website.

Obtaining Trade License:

Companies have to obtain a trade license from the local governmental authorities in Bangladesh. It varies from area to area, such as for Dhaka City Corporation you need to apply to city corporation office on the other hand for a rural area, you need to apply to union parishad office.

VAT Registration Certificate:

For Value Added Tax purpose companies need to obtain VAT registration certificate. VAT is regulated by the Customs, VAT and Excise Department. It usually takes 6-7 working days to get VAT registration certificate.

Register with BIDA

Bangladesh Investment Development authority shortly known as BIDA, facilitate all sorts of FDI (Foreign Direct Investment) Matters in Bangladesh. BIDA is responsible for issuing work permits of foreign employees, visa for foreign investors, approval of remittance of royalties & technical fees, assisting in obtaining plots for industrial purpose, facilitating utility connections, approval of the foreign loan, and advice on various investment-related issues. It usually takes around 10 working days to get registering with BIDA.

For a sustainable business in industrial sector, incorporating a company is the best option, but there are also several alternatives such as you can open liaison office, branch office or open franchiser in Bangladesh…. In next video I’ll try to discuss about it.

The key features of doing Business in Bangladesh are except some certain sector 100% foreign ownership is allowed, Bangladesh Foreign exchange Rules allow full repatriation of profit and investment, Directors can be foreign or local national, easy taxation policy.

 

So, it’s time to wrap-up, is there any confusion put it on the comments bellow for more information visit nwww.sublimelegalbd.com and if you need any help you may reach us at contact.sublimelegal@gmail.com. Stay tuned by subscribing…  Thank you !