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How to Register a Company in Bangladesh - 7 Easy Steps
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All the companies of Bangladesh are under the Companies Act 1994. According to this act, anyone above the age of 18 is eligible to incorporate a company in Bangladesh.
But how do you incorporate a company in Bangladesh? Start the process by finalizing the company name, directors, shareholders, and authorized & paid-up capitals. To register the company, get the name clearance, open a bank account, bring the paid-up capital, and submit the necessary documents to RSJC.
The process of incorporating a company needs patience, expertise, and time. Keep reading till the end to learn the requirements, procedures, fees, and timeline for registering a company.
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What are the Requirements for Company Registration?
To incorporate a limited or joint stock company in Bangladesh, you must consider some pre-registration formalities.
Consider the subsequent list of formalities before starting the company formation.
Company Name
The appropriate authority must approve the company name before you register the business.
Two Directors
To be able to incorporate a company, it must have a minimum of two directors. A director must be at least 18 years old, have no criminal record, and cannot be bankrupt.
The directors can be local or foreign. One of the directors must own the qualification shares stated in the AoA (Articles of Association).
Shareholders
The shareholder range for incorporating a company in Bangladesh is 2 to 50 shareholders.
That means a private limited company in Bangladesh should have at least two or a maximum of fifty shareholders at a time.
Fortunately, a director can also be a shareholder in the same company. And Bangladesh allows 100% of the share for foreigners.
However, the incorporation process must be completed to issue new shares or transfer an existing share to another person or company.
Authorized Capital
Though Bangladesh has no authorized capital limit, you must state the capital in the Memorandum of Association and Articles of Association.
Paid-Up Capital
For the registration of a Bangladeshi company, the paid-up capital is BDT 01. However, the paid-up capital is USD 50000 for a foreign-owned company.
Once the company is incorporated, the share capital or paid-up capital can be raised.
Office Address
Another requirement for registering a company is a permanent local address that you must use as the company’s registered address.
Remember, the office address must be a physical address. And don’t use only your P.O. Box as the address. Instead, use a residential or commercial address.
MoA & AoA
To be able to register your company in Bangladesh, you must arrange a memorandum of association and articles of association.
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Different Types of Legal Entities in Bangladesh
There are several types of legal entities in Bangladesh, and the incorporation methods vary depending on the entities.
The following is the list of various business entities in Bangladesh.
- Private Limited Company.
- Public Limited Company.
- Sole Proprietorship.
- Representative Office.
- Branch Office.
- Companies Limited by Guarantee.
You must be a Bangladeshi citizen if you’re trying to incorporate a sole proprietorship or partnership company.
Conversely, residential status is not mandatory for a limited company or branch/liaison office.
Required Documents to Register a Company in Bangladesh
Several documents on directors, shareholders, and company activities are required to open a company in Bangladesh.
Here is the list of required documents for registering a new company in Bangladesh:
- Name clearance from RJSC.
- Memorandum of Association (MoA).
- Articles of Association (AoA).
- Business activities of the company.
- Shareholder’s information.
- Director’s information.
- Registered office address.
- Passport copy of the directors and shareholders (for foreigners).
- NID of the directors and shareholders (for Bangladeshi).
- Form IX & subscriber page (PDF).
Once the required documents are ready, you can start the company registration process.
How to Register a Company in Bangladesh?
The Bangladesh government has computerized most of the processes for incorporating a company. However, there is still some physical documentation process for a few certifications.
There are three main stages of registering a company: name clearance, bank account creation, and company incorporation.
But I have broken the process into seven easy-to-follow steps for a more effortless understanding.
Perform the following steps accordingly to incorporate your company in Bangladesh.
1. Name Clearance
The first step in incorporating a company is to obtain a name clearance. To get the name clearance, you must apply to the RJSC.
Simply create a new account on the official RJSC website and fill out the name clearance form.
Once you submit the form, you will receive a bank payment slip and must pay BDT 600 to the authorized bank.
RJSC will verify and provide a name clearance once all the procedures are completed.
Things to consider when choosing a company name to avoid the possibility of rejection.
- Not identical to any reputed local businesses.
- Ensure the name doesn’t violate any trademark.
- The name cannot be vulgar.
- Avoid names that are reserved.
Usually, this process takes 1 to 2 business days, and the name will be reserved for six months once the authority approves it.
Note: If you miss the deadline of 6 months, you can extend the reserved time by filling out another extension request form.
2. Temporary Bank Account
The next step is to open a temporary bank account for the company. The company’s foreign shareholders must submit documents like a passport to open a bank account.
Required documents for opening a temporary bank account.
- Passport of the shareholders.
- Name clearance document.
- Draft copy of Memorandum and Articles of Association.
Fortunately, a temporary bank account can be opened remotely. Once the bank account is created, shareholders must remit the share capital to the account.
3. Remit the Share Capital
After receiving the remittance, the bank will provide an Encashment Certificate that you will need to submit to RJSC during the company incorporation process.
However, if there are any local shareholders in the company, you can avoid this step.
4. Finalize Registration Forms
In this stage, you should finalize all the documents and the registration forms. Create a draft of the Memorandum of Articles (MoA), Articles of Association (AoA), and other documents.
Prepare the documentation of the director’s decision to incorporate a new company. Lastly, collect and fill out Forms I, VI, IX, X, and XII from the RSJC website.
Also, ensure to finalize the business goal, approved capital, paid-up capital, and list of shareholders.
Moreover, take the sign from all the shareholders on the registration forms before submitting the documents.
5. Documents Submission
Once the finalization of all documents is completed, submit the documents to the RSJC. You have to pay the required fees while submitting the documents.
After successfully submitting all required documents, wait a few days. The authority usually takes 3 to 4 business days to approve the company incorporation.
6. Registration for Trade License, TIN, & VAT
At this stage, apply for a trade license, tax identification number (TIN), and VAT number.
Try to apply for all these services simultaneously to shorten the company’s incorporation time.
In general, obtaining a trade license takes 14 – 21 days, and getting a TIN will take around 3-5 days. The VAT registration process can take up to 7 days.
So, you will have to wait at least three weeks to collect these licenses and numbers.
7. Open Corporate Bank Account
Once you get all the required documents, you must submit these to the bank to open a corporate bank account for the newly incorporated company.
Usually, a bank will demand the incorporation certificate, TIN, trade license, and VAT papers.
After submitting all the documents to the concerned bank, wait a few days for approval from the bank authority.
Depending on the bank schedule, it can take around 5 to 7 business days to complete the bank account creation process.
Considering all the above methods and procedures, incorporating a company in Bangladesh will take approximately 4- 6 weeks.
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What are the Post Registration Formalities?
Once the incorporation process is completed, you must take some actions to collect all the post-required licenses and certificates.
Trade License
To operate your business locally, you must obtain a trade license from the City Corporation, Zonal office, or Union Parishod.
The trade license cost highly depends on the nature and type of the business.
Depending on your company’s business, obtaining the trade license will take 3-4 days. And you’ll have to renew the license annually.
Tax Identification Number
Another crucial post-registration formality is to obtain a Tax Identification Number (TIN). You can effortlessly register for TIN at the taxation authority.
All the TIN-related services are supervised by the National Board of Revenue (NBR), and you can use the NBR server to get your TIN. Fortunately, it will cost you nothing.
VAT Registration Certificate
Using the National Board of Revenue VAT service, you can quickly collect a VAT certificate. Customs, VAT, and Excise Department of the local area regulate companies’ VAT.
So, apply for the VAT certificate and collect it ASAP. Usually, the authority takes five to seven working days to complete the process.
Fire Certificate
To ensure the office space’s security, you must collect a fire certificate from the Bangladesh Fire Service & Civil Defence.
According to the Firefighting Act of 2003, a fire license is a must-have certificate for all companies, including clothing manufacturers.
Environment Clearance Certificate
The government of Bangladesh cares for the environment. So, a company (manufacturing and processing plants) must collect an environmental clearance certificate to operate a production facility in Bangladesh.
How Much Time Does It Take a Company to Incorporate?
Usually, the RJSC provides the certificate of incorporation in under 6-8 working days. The entire documenting process of registering a company takes 2-3 weeks in total.
In addition, acquiring the name clearance certificate takes 1 to 2 business days. And it remains valid for 30 days to 180 days.
The next step is to open a bank account for the company. Opening the bank account and transferring the initial paid-up capital can take 5-7 business days.
In short, the entire process of incorporating a company (from submitting the documents to RJSc to obtaining the license) can take 2-3 weeks altogether.
What is the cost of incorporating a company in Bangladesh?
The incorporating cost depends on several factors, such as authorized capital, company type, Articles of Association (AoA) cost, Memorandum of Association (MoA), etc.
If a private company-authorized capital is 40 lakhs, the government will charge you BDT 10000.
According to the Company Act of 1994, all the incorporated costs of a private company are listed below.
- Articles of Association cost: BDT 10000 – BDT 50000.
- Memorandum of Association cost: BDT 2000.
- Incorporation fee: BDT 1200.
- Authorized Capital cost: BDT 0 – BDT 130.
- Digital Certificate fee: BDT 0.
For a partnership firm, the procedure will cost you around BDT 5500 (incorporation fee: BDT 5000, Registration filing fee: BDT 500, and Digital Certificate fee: BDT 0).
If you’re looking for the cost of incorporating a public company, the government will charge you around BDT 14000 – BDT 54000.
You can visit the ROC (Registrar of Company) website to learn more about the registration costs of various companies.
Advantages and Disadvantages of Incorporating a Company in Bangladesh
Like any other developing country, Bangladesh offers the best opportunities for investors and has a skilled young labor force.
Consider the subsequent lists to understand the merits and demerits of opening a company in Bangladesh.
Pros of incorporating a company in Bangladesh:
- Higher tax incentives for companies in Bangladesh Economic Zones.
- Easier foreign ownership, investment, and trade.
- One of the fastest-growing economies in South Asia.
- The location is strategically placed.
- Younger and well-skilled workforce.
- Highly profitable business scopes for foreigners.
Cons of incorporating a company in Bangladesh:
- Lack of local consumer market.
- Lengthy profit repatriation.
Important things foreign investors should consider while incorporating a company in Bangladesh.
- Depending on the authorized capital, the incorporating cost will vary.
- There are no issues with the director’s nationality.
- The company must have a physical address.
- 100% FDI investment (not applicable to all areas).
- Corporate Income Tax will be around 20%- to 45%.
- The tax holiday is obtainable between 5, 7, 9, and 12 years.
- Higher incentives for special economic zones.
- The foreign employment ratio is 20:1 (local: foreigner).
- 100% repatriation of profit and investment.
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Conclusion
Incorporating a public, private, or foreign company in Bangladesh requires several documentation and procedures.
However, you can effortlessly register or incorporate your company in Bangladesh by following the above-mentioned steps or contacting a professional such as Law Advisor BD to do it on your behalf.
FAQs
The incorporation fee of a joint stock company relies on the authorized capital, MoA, AoA, and the company’s registration fee. The documents will cost around BDT 1600-1800, the authorized capital fee is BDT 2000-10000, and the Memorandum of Association fee is BDT 1000.
To incorporate an online company, start with creating a business structure, take the company name clearance, and prepare & submit documents. Then, get a trade license, register with tax authorities, submit the papers to the RSJC, and finally open a corporate bank account.
The overall cost of a limited company incorporation highly depends on the authorized capital of that company. For example, if the limited company’s authorized capital is 10 lakhs, it will cost around BDT 4000; for the authorized capital of 50 lakhs or more, it will cost around BDT 40000.
