Company is registered under the Companies Act 1994. The Regulatory body for incorporating a company is the Registrar of Joint Stock Companies and Firms (RJSC) which facilitates formation of companies and firms. The body is also responsible for keeping track of all ownership related issues as prescribed by the laws in Bangladesh.
Promoters should keep in mind that except for some very exceptional cases, Bangladesh allows the incorporation of a company with 100% foreign shareholding, and no local joint venture is required.
KEY FACTS ABOUT COMPANY FORMATION
Company Name. The name must be approved (cleared) before incorporation of the company in Bangladesh.
Directors. Minimum two directors are mandatory. Directors can be either local or foreign. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractice in the past. The law requires that a director must own qualification shares stated in the Articles of Association. A shareholder which is not a natural person (i.e. a company) can select nominee director.
Shareholders. A private limited company in Bangladesh can have a minimum of 2 and maximum of 50 shareholders. A director and shareholder can be the same or a different person. The shareholder can be a person or another legal entity such as another company. 100% local or foreign shareholding is allowed in most sectors. New shares can be issued or existing shares can be transferred to another person anytime after the Bangladeshi company has gone through the incorporation process.
Authorized Capital. You must state the authorized capital in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that the company is authorized to issue (allocate) to shareholders. Part of the authorized capital can remain unissued. There is no minimum or maximum limit for authorized capital in Bangladesh.
Paid-up Capital. Minimum paid-up capital for registration of a Bangladeshi company is Taka 1. Paid-up capital (also known as share capital) can be increased anytime after the incorporation of the company.
Registered Address. In order to register a company in Bangladesh, you must provide a local address as the registered address of the company. The registered address must be a physical address (can be either a residential or commercial address) and cannot be a P.O. Box.
Memorandum and Articles of Association. The company to be incorporated must prepare a memorandum of association (MoA) and articles of association (AoA).
Foreigners wishing to open a Bangladesh company, must take into consideration the following points:
- You must open a bank account in the name of the proposed company with the name clearance obtained from the Registrar of Joint Stock Companies and Firms (RJSC) i.e. the registrar of companies and bring in the initial paid up capital. This is a mandatory for company incorporation in Bangladesh.
- All company incorporation formalities can be handled without you having to visit Bangladesh. The only exception may be opening a bank account, depending upon the bank you choose.
- All the director and shareholders can be foreigner.
- There is no requirement for you to obtain any special Bangladesh visa if you merely want to incorporate a private limited company but have no plans to relocate to Bangladesh. You are free to operate your company from overseas as well as free to visit Bangladesh on a business visa whenever required to attend to company matters on a short-term basis.
- If you plan to relocate to Bangladesh to operate your company, you are required to obtain a work permit.
Important Notes for Foreign Investors:
- The Company Registration costs vary primarily dependent on the authorized capital of the Company.
- The company needs to have a place of business in Bangladesh and shelf companies are not permitted.
- Bangladesh Forex Rules allow full repatriation of profit and investment.
- Employment of foreign nationals is allowed at a 20:1 (local: ex-pat) ratio, subject to obtaining a necessary work permit.
- Except for very few limited areas, 100% FDI investment is allowed.
- Directors can be foreign or local national.
- Typical Corporate Income Tax varies between 25%-45%, depending on sector to sector and nature of the Company. However, the tax holiday is available between 5-7 years for selected sectors and areas.
- Also, there are additional financial incentives for investing in Special Economic Zones.
