How to Set Up a Company in Bangladesh?

Set Up a Company

Table of Contents

Starting a company in Bangladesh offers significant opportunities to local and foreign entrepreneurs. With its rapidly growing economy and business-friendly regulations, Bangladesh has become an attractive destination for investment. This guide will walk you through the step-by-step process of set up a company in Bangladesh, ensuring compliance with all legal and procedural requirements.

Choose Your Business Structure for Set Up a Company

The first step in establishing a company in Bangladesh is selecting the appropriate business structure. The type of company you choose will determine your legal obligations, taxation, and how you manage your company. The main types of business entities in Bangladesh include:

  • Sole Proprietorship: A simple structure for small businesses owned and managed by one individual.
  • Partnership: A company with two or more owners who share profits and duties.
  • Private Limited Company (Ltd.): Bangladesh’s most common business structure limits shareholders’ liability to the amount invested.
  • Public Limited Company (PLC): Typically used for larger businesses intending to raise capital through public stock offerings.
  • Branch Office: A foreign company’s extension that operates in Bangladesh.
  • Liaison Office: A non-revenue-generating foreign office used for research or communication purposes.

Most entrepreneurs opt for Private Limited Companies, as they offer a balance of control, limited liability, and tax benefits.

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Choose a Unique Company Name

Selecting a unique name for your company is a critical step. The name should not be similar to any existing company name in Bangladesh and must adhere to the Registrar of Joint Stock Companies and Firms (RJSC) guidelines. It is recommended that you check the availability of the name before proceeding with registration.

The name must also comply with the Company Act 1994, meaning it should not be misleading, identical, or too similar to any other registered company.

Appoint Directors and Shareholders

A Private Limited Company in Bangladesh must have a minimum of two directors and two shareholders. The directors can be Bangladeshi citizens or foreign nationals. They are responsible for overseeing the company’s operations and must be at least 18 years old.

Shareholders own the company and can be individuals or entities, either local or foreign. Each shareholder must purchase a minimum of one share.

Prepare the Necessary Documents to Set Up a Company

To successfully register your company with the RJSC, you will need the following documents:

  • Memorandum of Association (MOA): This document outlines the company’s objectives, business scope, and its interactions with external entities.
  • Articles of Association (AOA): This details the company’s internal management, including the responsibilities of directors, shareholders, and the management team.
  • Forms IX and X: These forms contain information about the directors and shareholders of the company.
  • Valid Identification: Copies of passports or national IDs of the directors and shareholders.
  • Registered Office Address: Every company must have a registered address within Bangladesh.

All documents must be drafted by the Company Act 1994 and submitted in English or Bengali.

Register Your Company with the RJSC for Set Up a Company

Once you have gathered all the necessary documents, you can proceed to register your company with the Registrar of Joint Stock Companies and Firms (RJSC). The process typically involves the following steps:

  1. Name clearance: Obtain approval for your company’s name from the RJSC.
  2. Submission of Documents: Submit the MOA, AOA, Forms IX and X, and other required documents online.
  3. Payment of Fees: Pay the government registration fee, which is based on the company’s authorized capital.
  4. Certificate of Incorporation: After approval, the RJSC will issue a Certificate of Incorporation, officially recognizing your company as a legal entity in Bangladesh.

Open a Corporate Bank Account

Once your company is registered, you must open a corporate bank account in the name of the company. This account will be used for managing company funds, including the share capital and operational expenses.

Foreign investors must remit their initial investment from abroad into this account if they intend to set up a Private Limited Company. Most major banks in Bangladesh offer services to foreign-owned companies and require the following documents:

  • Certificate of Incorporation
  • MOA and AOA
  • Directors’ and shareholders’ identification documents
  • Board resolution to open a bank account

 Obtain a Trade License

Before commencing any business activities, you must apply for a Trade License from the local municipal authority where your business is located. The trade license is required for both local and foreign businesses. The cost of obtaining a trade license varies depending on the nature of your business and its location.

The documents required for a Trade License include:

  • Certificate of Incorporation
  • MOA and AOA
  • Tax Identification Number (TIN)
  • Lease agreement for the business premises

Register for Tax and VAT

All companies in Bangladesh must obtain a Tax Identification Number (TIN) from the National Board of Revenue (NBR). This is required to pay corporate taxes and file tax returns. Additionally, if your company’s annual turnover exceeds BDT 3 million, you must register for Value Added Tax (VAT).

The process of obtaining a TIN and VAT registration involves:

  1. TIN Registration: Complete the application form and submit it to the NBR along with a copy of the Certificate of Incorporation and director/shareholder identification.
  2. VAT Registration: Apply for VAT at the local VAT office, submitting necessary documentation and filling out Form VAT 2.1.

Secure Additional Licenses or Permits

Depending on the industry and nature of your business, you may require additional licenses or permits to operate legally in Bangladesh. For instance:

  • Import/Export Business: You will need an Import Registration Certificate (IRC) or Export Registration Certificate (ERC).
  • Foreign Employee Hiring: Companies hiring foreign nationals must obtain a Work Permit from the Bangladesh Investment Development Authority (BIDA).

Comply with Post-Registration Formalities

After registering your company, certain post-registration formalities must be completed, including:

  • Annual Return Filing: Every year, companies must submit an annual return to the RJSC, detailing changes in shareholdings, directors, or registered office address.
  • Employee Registration: If your company has employees, you must register them with the Bangladesh Employees’ Provident Fund and ensure compliance with labor laws.

By following these steps, you can successfully establish a business in Bangladesh and begin your operations. Setting up a company in Bangladesh may require careful planning, but the growing market and government support make it a viable option for entrepreneurs.

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