How Can I Start a Private Limited Company in Bangladesh?
- What Is a Private Limited Company in Bangladesh?
- Why Start a Private Limited Company in Bangladesh?
- Steps to Start a Private Limited Company in Bangladesh
- Liabilities and Compliance Requirements for Starting a Private Limited Company
- How Long Does It Take to Start a Private Limited Company?
- Disadvantages to Consider
There are various company or legal entity structures you can choose from to register a company in Bangladesh such as public limited company, private limited company, proprietorship, etc. But which one is the best for your needs and goals?
It depends on your business needs and goals. You should decide wisely and select the right business structure when planning to start a company in Bangladesh. It will determine your scope, legal responsibilities, tax obligations, etc.
All business structures have unique advantages and disadvantages. If you’re an entrepreneur or investor, you must understand these advantages and disadvantages. Then, select the most suitable structure that matches your needs and goals.
In this article, I will tell you about How can you start a private limited company in Bangladesh. It is the most popular business structure in Bangladesh.
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What Is a Private Limited Company or Limited Liability Company (LLC) in Bangladesh?
A Private Limited Company or Limited Liability Company (LLC) is a legal business entity that offers limited liability for its shareholders.
You and other shareholders are not liable for the company’s debts beyond the contributed amount. As your assets are protected and liability is limited to the amount you invest, you get higher flexibility and privacy.
An LLC allows a minimum of 2 and a maximum of 50 shareholders. It must contain at least two directors. It does not allow trading shares publicly.
Entrepreneurs prefer LLC to start a company in Bangladesh for a lot of benefits this structure offers.
Why Start a Private Limited Company in Bangladesh?
You should choose a Private Limited Company for the following advantages of features:
- A Private Limited Company offers simple and less legal requirements than a Public Limited Company. You do not need to comply with strict reporting obligations, such as holding annual general meetings, etc.
- You have full control with no external influence. You enjoy a high or full decision-making power as there are no public shares.
- You can enjoy limited liability and higher flexibility as a shareholder.
- As you can avoid excessive compliance burden, you can focus more on your business.
- If you are a startup or smaller business and you don’t need large-scale funding, LLC is a cost-effective option.
- If you want an easy operation, LLC is more flexible for you.
- A Private Limited Company is easy and less costly to set up.
How Can I Start a Private Limited Company in Bangladesh
Steps to start a private limited company in Bangladesh:
1. Name Clearance
Get a Name Clearance certificate to start a private limited company in Bangladesh. To get the certificate, apply to the RJSC. Choose a unique name for your business. Check the RJSC database to ensure your name is not already registered. If available, apply for a name clearance certificate.
2. Obtain Necessary Licenses and Certificates
To legally start operating your business in Bangladesh, apply to the relevant local authorities and obtain necessary certificates and licenses, including –
- TIN (Tax Identification Number) Certificate
- Trade License
- VAT Registration Certificate
- Fire License
- Environmental Clearance Certificate (if required)
3. Draft the Memorandum and Articles of Association
Draft the Memorandum of Association (MoA) and Articles of Association (AoA). All directors of your company must hold a meeting to adopt the MoA and AoA. Also, hire a professional business lawyer to draft MoA and AoA and follow local regulations accurately.
4. Open a Temporary Bank Account and Remit the Share Capital (if applicable)
If the suggested company is foreign or includes any foreign investors, open a temporary bank account for the company. You have to submit some required documents to the bank to open the account. Then remit the minimum required paid-up capital to this bank account.
5. Apply for Company Registration to RJSC
Submit duly filled registration forms, MoA, and AoA to the RJSC along with required documents, licenses, and certificates. Ensure all necessary details, like the registered office address and shareholder information, are accurate. Include the required signs from all the shareholders on the registration forms.
6. Pay the Required Fees
Calculate the registration fee based on the company’s authorized share capital. Pay registration fees and stamp duty fees to the RJSC-authorized counter. Let RJSC review, confirm, and approve your information, payment, and documents.
7. Completion of the Registration
If the RJSC is fully satisfied with your application, it will issue and email digitally signed Certificate of Incorporation, MoA, AoA, and Form XII. The Certificate of Incorporation means your company is a legal entity in Bangladesh. It also includes your company name, registration number, and incorporation date.
Liabilities and Compliance Requirements for Starting a Private Limited Company
To meet the liabilities and compliance requirements of your Private Limited Company, prepare files and submit the following returns in specified forms and procedures to RJSC:
- Annual Return (submit annually)
- Regular Return (for any change in your company/entity)
- Tax Return (submit annually)
RJSC will keep these returns after review and approval.
Hold general company meetings annually. Also, audit its financial activities and prepare financial audit reports with a statutory auditor.
How Long Does It Take to Start a Private Limited Company in Bangladesh?
RJSC usually takes 6-8 working days to approve and issue a Certificate of Incorporation after you submit all required documents.
The entire process (from Name Clearance to obtaining the Certificate of Incorporation) to incorporate a private limited company in Bangladesh may take 2-3 weeks.
Obtaining the necessary licenses and certificates will take a week or more if you apply for all these licenses and certificates simultaneously.
So, you may need a total of 4 weeks to start a private limited company in Bangladesh.
Disadvantages to Consider When You Choose to Start a Private Limited Company in Bangladesh
- You have a limited ability to raise funds as the company has a few shareholders, unlike a PLC.
- You can include a maximum of 50 shareholders.
- An LLC is not suitable for large-scale operations.
Conclusion
While a private limited company in Bangladesh offers a good number of benefits, it also comes with some limitations.
So, analyze precisely whether this legal structure fits your business needs, goals, resources, and growth plans before making the final decision.
If you need flexibility, privacy, and a straightforward setup, a private limited company is your best fit.
Consult with an expert business lawyer for the best advice and legal assistance.
Related Articles:
How to Register a Company in Bangladesh
How to Register a Foreign Company in Bangladesh
How to Open a Company in Bangladesh
FAQs
The minimum paid-up capital for local companies to start a private limited company in Bangladesh is BDT 1. For foreign-owned or invested private limited companies, this amount is USD 50,000.
The cost to start a private limited company in Bangladesh includes name approval fees, registration fees, legal consultation fees, etc. On average, the total cost can range from BDT 13,000 to BDT 25,000.
To start a private limited company in Bangladesh, submit the MoA, AoA, details of directors and shareholders, NID of the directors and shareholders (if Bangladeshi), Copy of passport of directors and shareholders (if foreigners), a registered office address, etc.
