Company Incorporation by Bangladeshi Nationals
Available Options For Bangladeshi Nationals
Sole Proprietorship
Patnership
Company by Limited Share/ Guarantee/ with Unlimited Liability
Scope of -
Sole Proprietorship
In Bangladesh, sole proprietorship is the most common form of business since it is very easy procedure and less expensive to start a sole proprietorship business. The owner can increase or decrease its investment without going through any complex legal procedure. However, a creditor can bring lawsuits directly against the business owner if any financial trouble arises. If the creditor is successful, no matter whether there is any asset in the business, the proprietor will have to pay the business debts with his own asset.
Partnership
Partnership Business is a form of business entity created through voluntary agreements of minimum two and maximum 20 persons, with the intention of making and sharing profits among themselves. Persons who have entered into partnership with one another through an agreement are called individually “Partners” and collectively “a Firm” and the business is carried on the “Firm Name”. A partnership business needs to get a trade license from the concerned city corporation or union porishod, but it is not mandatory to be registered with the Company House, RJSC. However, an unregistered firm cannot file a suit (against the firm or any partner thereof) for the purpose of enforcing a right arising from a contract.
There is nothing like Limited Partnership or Limited Liability Partnership in Bangladesh.
Company Incorporation in Bangladesh
A Company, in its ordinary and non-technical sense, means a body of individuals associated for a common objective, which may be a business for profit or some charitable purpose. It is a separate legal entity as an artificial person, registered under the Companies Act 1994. Though not a human being, a company can act like an individual i.e. it can purchase and sell goods, hold property, sue others or get sued . Once the proposed name of the company is allocated, the promoters have to submit the Memorandum and Articles of Association which should be drafted by an experienced lawyer. A member of the company may die, may become an insolvent, he may withdraw from the company or transfer his shares to any other person, yet the life of the company does not come to an end.
In Bangladesh, as per the Companies Act 1994, a company can be formed in three ways i.e. (1) Company limited by shares, (2) Company limited by guarantee and (3) Company with unlimited liability.
Company Limited by Shares
In this case, companies have share-capital, and each share has a fixed nominal value which the shareholder pays at a time or by installments. The members are excluded from paying more than the fixed value of the share whatever may be the liabilities of the company. This is how shareholders' personal assets are secured in the event of the company's insolvency, but their investment may be lost as per their shares’ proportion in the company.
Companies Limited by shares are of two types, (1) Private Limited Companies and (2) Public Limited Companies.
Private Limited Company
The vast majority of companies in Bangladesh are private limited companies. As per the laws of Bangladesh, the shares are held by less than 50 persons and the company is prohibited to go to public to subscribe for any shares or debentures of the company. Besides, if a member wishes to leave the company by selling their shares or a member has died, the directors have a say in who replaces them if there is any pre-emption clause in the articles. In Bangladesh, both the individuals or corporate entities are allowed to be the shareholders of a private limited company.
A private limited company is the most forward-thinking business incorporation in Bangladesh facilitating investment, minimizing risk and providing a modern corporate organizational structure. Limited liability is also said to increase the entrepreneurial spirit of the directors, encouraging them to take risks in the knowledge the shareholders will not lose their house or cars if the business venture fails. In essence, a private limited company is the best solution for an entrepreneur to carry on his venture with confidence & corporate vibe because of its separate legal entity, limited liability, continuous succession, owning property, capacity to sue or to be sued, tax benefits, convenient raising capital, credible corporate image and an accessible process of transferring of ownership.
Incorporation Procedure of Private Limited Company:
The First step is to obtain a name clearance certificate from the Company House, RJSC, for the proposed company. Then he promoter will have to submit all the required documents i.e. Memorandum of Association (MoA), Article of Association (AoA), Directors’ details etc. to RJSC and in return RJSC will give a payment slip for paying the registration fees along with stamp duty. If the payment is successful & the RJSC is satisfied, they will issue the Certificate of Incorporation, Certified copy of MoA & AoA and Directors’ documents.
Afterward, the company needs to obtain Trade License, Tax Identification Number (TIN) Certificate and VAT registration number and other licenses depending upon the business nature of the company.
It is pertinent to note that a company must conduct an Annual General Meeting in each calendar year and it have to submit all the documents to the RJSC along with the annual audit return. Besides, a company will have to inform RJSC if there is any change regarding board of directors, shareholding structure or any other changes it wishes relating to AoA & MoM.
Public Limited Company
A Public Limited Company can secure investment from the general public and can advertise the fact that they are offering shares to the public. In Bangladesh, a public limited company is listed on concerned Stock Exchange. Company shares are easily tradable to almost anyone. Public companies which are officially listed are subjected to extra disclosure rules broadcasted by the Securities & Exchange Commission. (SEC) for the protection of investors.
The government usually push big companies to go to stock market; however, there is no mandatory requirements for the group of companies yet to go to stock market.
Company Limited by Guarantee
Companies in which each member guarantees to contribute to the assets of the company, a sum not exceeding a specified amount, in case the company is wound up during his membership or within a year after conclusion of this membership. There is no liability to pay anything more than the value of the share (where there is a share) and the guarantee. Members are excluded from paying more than the value of the share and the guarantee they promised.
Company With Unlimited Liability
In an unlimited company, the liabilities of the members are not limited as in the partnership firms. It is a forgotten law and there are few, if not none, unlimited liability company. Unlimited liability companies can only be formed as a public limited company. The members of this type of company are not immune from personal liability of different acts.
Limited companies are of two types viz., (1) Private Limited Companies and (2) Public Limited Companies.
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Address
Premier FM Heights, 1st floor, House # 88, Road # 10/1
Block- D, Niketon, Dhaka-1212, Bangladesh
Telephone: +8802.9853440, 9857879
Hotline: +8801819212002
info@alaminrahman.com
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