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Before jumping onto the whole procedure of registration of an entity in Bangladesh, it would be prudent to know what kinds of entities are allowed to operate in Bangladesh under the Companies Act 1994. Under the Act the following types of companies could be registered as an entity in Bangladesh. There are a private company limited by either shares or guarantee, a public limited company, a joint venture company, liaison office or a branch office. The registration processes of these companies are more or less identical with a few trivial differences.
The Companies Act 1994 defined the private limited company by way of illustrating the features of the company that it must need to possess. Under the Act a private limited company is a type of a company which through its articles restricts itself to transfer any shares or even could invite the public to subscribe any shares or could provide any debentures. The company must have at least two members and the highest number of members could be of fifty exclusive of the people who are employed by the company. The company must have two directors at the minimum. The statutory meeting prescribed under section 83 of the Companies Act, 1994, which is obligatory for all the companies limited by shares or guarantee to hold a meeting after the first month or within a period of six months from the date of the commencement of business is not applicable to the private limited company. A private company could commence its business as soon as it has completed its registration/ incorporation process with the RJSC provided the company has applied and obtained other relevant licenses e.g., trade license, VAT registration, fire safety certificates and others from the respective departments. ABC Partners could also support you with the applications and registrations for these certificates and licenses.
Although a name clearance certificate was a prerequisite for the registration of the company, it is no more required for a private limited company. The applicant however, has to go through the ‘Single Process Registration’ (SPR) on the RJSC’s website. At first, the applicant has to create a profile by accessing the RJSC.
After opening up a profile on the website, the applicant could easily fill out the online form where he can check the availability of the name later on of the registration stage. Albeit it expedited the whole process of registration for the private companies, name clearance certificate is still a prerequisite for other kinds of entities provided they are not a branch office or a liaison office of a foreign company. The applicant also needs to fill the form out illustrating all the key information regarding the company. ABC Partners would be more than happy to support you regarding the whole registration process.
On the form the applicant has to insert a proposed name. The applicant could search the availability of the name manually by clicking the name search option or it is done automatically later on of the process. After inserting the proposed name, the applicant has to select the type of liabilities whether it is limited by shares or by guarantee from the drop-down menu. However, at the moment, the drop-down menu shows only one option, that is liability limited by shares. Subsequently, the applicant has to insert the address of the entity, email, business objective along with the business sector and the sub-sector which illustrate the type of the company and the actual service or products the applicant intends to provide in the market. The applicant has to insert the amount of authorized capital in BDT, number of shares and the worth of each share.
The applicant has to input the details pertaining to the details of the directors, that is minimum and maximum number of the directors. Statutorily, a private limited company must have at least two directors and maximum of fifty directors. Followed by the applicant has to fill out the quorum of the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM) and the quorum of the meeting of the board of directors. Quorum is the minimum number of the members required to be present at the meeting to validate the meeting. If the quorum is not formed, at any time of the meeting, the Chairman must either call the meeting off or postpone it till a quorum is formed. After filling these details out the applicant has to insert the duration of the chairman and the managing director.
Next is the total number of qualification of shares and the value of each share. Here, the applicant has to insert the total number of shares a person needs to subscribe if he wants to be a shareholder of the company and the worth of each share. The applicant must keep in mind that a minimum of 500 shares need to be subscribed by a new member if he wishes to be a shareholder of the company. The applicant afterwards has to input the details of each director, manager, managing agent and subscriber. This could be a tricky in a sense that, the details must be accurate as the RJSC verifies the national ID number and the Tax Identification Number (TIN). Subsequently, the details of the witnesses have to be inserted. It could be anyone from the company apart from the managing director. The details of the witnesses should also match the Memorandum of Association (MOA) and the Article of the Association (AOA), that is the witnesses should be the same people throughout the process. The details of the witnesses include the name of the witnesses along with their addresses, contact numbers and of course the National IDs.
Successively, the details of the person who is responsible for submitting the required documents and the application form along with the designation of the person in the company should be entered. Ideally, it should be the Managing Director who is responsible for submitting the application and other required documents. At this point of registration, the applicant must save the filled-out application form before attaching the MOA and the AOA. The applicant then needs to enter the MOA and the AOA according to the requirements prescribed online. One might wonder at this stage, what is MOA and AOA.
In order to describe it in short, MOA and the AOA serve as the constitution of the company. MOA is a legal document created during the formation of the company illustrating its (the company’s) relationship with the shareholders. It also specifies the objectives of the company. The objectives work as a boundary beyond which the company cannot operate its business activities. On the other hand, it also assists the shareholders and other creditors to know about the rights and powers of the company. The prospective shareholders could also make an informed probably the best decision whilst deciding whether to invest their hard-earned money in that company or not.
AOA, on the other hand regulates the day-to-day business of the company. It also articulates the manner in which the company issues the shares to the shareholders, pay up the dividends, audit of financial records. Since it guides the activities of the company, sometimes it is referred to as user’s manual. ABC Partners provides support regarding the MOA and the AOA starting from drafting to the final stage.
Going back to the application form, the applicant has to fill all the required fields regarding the MOA. Whilst adding the objectives, an applicant could add up to seven objectives pertaining to how the business should run and what business activities they could undertake. When all the fields are filled in, the applicant should click on the save button to save the application form. In terms of AOA, the applicant has to copy and paste all the clauses from the AOA individually.
Once all the required fields are filled out, the applicant has to upload the soft copy of the MOA and the AOA on to the RJSC website. It is advised that the applicant must double check whether all the required information have been inserted correctly. Afterwards, the applicant needs to click the ‘submit’ button. Once submitted the applicant would be prompted to pay for the application fees. There are two ways the applicant could pay the fees. One is through online via either debit or credit cards or to pay the fees in person over the counter. The online payment is the most convenient way because it would be done automatically without any delay, otherwise if the applicant prefers to pay over the counter, he/ she has to go to either Eastern Bank Ltd or One Bank Limited with the hard copies of the payment slip along with the online Chalan pages. From our experience we could say it could take two to three working days for the payment to be adjusted in the account.
Once the payment is received by the RJSC, they would provide the certified copies of the certificate of incorporation and MOA and the AOA in Portable Document Format (PDF) via the registered email provided the RJSC is content with all the information, its genuineness, and the name; that is there is no other company available in that name or similar to that name. The authenticity of the documents sent by the RJSC could be verified by scanning the Quick Response (QR) code engraved on each page of all the documents. That is the end of incorporation or registration process of a private limited company in Bangladesh.
Bank Account: If there is a foreign person included as a shareholder the process gets a little complicated. The foreign investor or the shareholder has to open up a temporary bank account where he remits his monies. The bank could be any scheduled bank of Bangladesh and the investor must remit the money from the outside of the country when the account is activated. After receiving the monies, the bank would issue an Encashment Certificate which needs to be uploaded on the RJSC website whilst uploading the MOA, the AOA and other relevant documents. By submitting all of these documents, the applicant or the new owner of the company, could apply for the other licenses and certificates for instance Trade License, Tax certificates, VAT registration certificates and many more. Please click here to follow ABC Partners quick guide on how to procure all these documents.
Unlike before, it is no more essential to submit any documents to the RJSC. RJSC itself would attach all the certified copies of the documents for example certificate of incorporation, form XII- the document containing the list and details of the directors, Memorandum of Association, Articles of Association and others with the confirmation email sent to the applicant. It is then up to the applicant to apply for the post registration relevant licenses and certificates to the relevant authorities. The relevant documents are usually a Trade license, VAT registration certificate, fire and safety licenses, environmental conservation and protection certificate and many others. Please click here to follow ABC Partners quick guide on how to procure all these documents.