A Simple Guideline For Company Formation in Bangladesh
There are various alternative options to start a business in Bangladesh, but the two most common and useful ones are either opening a branch office (for only foreign companies) or creating a private limited company (for both domestic and foreign businesses). The procedure for establishing a private limited company formation is outlined below.
A Private Limited Company
A private company is one whose articles of association restrict the transfer of shares, cap the number of members at fifty, and forbid inviting the public to subscribe for the company’s shares or debentures, according to section 2(q) of the Companies Act of 1994.
The Companies Act of 1994 lists the following characteristics of a Private Limited Company:
- It limits the shares’ transfer rights.
- There must be at least two members (two)
- The maximum number of members, excluding those who work for the company, is 50 (fifty).
- There must be two directors at a minimum.
- It forbids inviting the public to subscribe for the Company’s shares or debentures.
- It is not required to satisfy the requirements of a statutory meeting or report.
- A Private Company may start doing business as soon as it registers with the RJSC, subject to securing other licenses listed below in the post-registration portion of this Report.
How May a Private Limited Business be Incorporated in Bangladesh?
Bangladeshi Private Limited Company Incorporation
The Companies Act of 1994, which deals with the legislative requirements of Company formation, does not outline a step-by-step process for creating a company. The RJSC, the relevant body, handles it. On its official website, it offers thorough instructions on how to set up a company, from name clearance through incorporation.
Private Limited Company Formation in Bangladesh
The following stages are listed in detail for registering a private company limited by shares in Bangladesh:-
Step 1: For the formation of a private limited company in Bangladesh, obtain a name clarification letter.
Application for name clearance to RJSC together with the following supporting documents
- Application Form
- Proposed Name
Step 2: Private Limited Company Business Incorporation
- Drafting the necessary paperwork
- A decision by the directors to launch a new company in Bangladesh
- Obtaining and completing the forms below to register the company with RJSC
- Declaration of Company Registration
Step 3: Incorporation of a Private Limited Company in Bangladesh
- Directors are required to open a temporary bank account in the name of the prospective business with any listed bank, with the understanding that the account would be regularized after the company has been officially registered with Company House.
- A bank’s encashment certificate attesting to the appropriate transfer of the required capital contribution amount to the temporary bank account of the proposed organization.
5 Advantages of Private Limited Company
- If it originates from a tax-exempt sector of the economy.
- Able to employ foreign workers
- Foreign technical workers may be exempt from taxes for the first three years, depending on the type of company.
- Access to banking and financial services is made simpler
- Only the paid-up portion of the shareholder’s capital contribution is subject to liability.
Corporate Tax Rate in Bangladesh:
Publicly traded businesses (listed companies on stock market) | 25% |
Non-publicly traded businesses (private firms with a share capital)) | 30% |
Other than merchant banks, publicly listed banks, Insurance companies, and financial institutions | 37.5% |
Privately held banks, insurance companies, and financial organizations | 40% |
Publicly traded operators of mobile networks | 40% |
Mobile network operators that are not publicly traded | 45% |
producers of cigarettes that are traded publicly | 45% |
producers of cigarettes not traded publicly | 45% |
CTA: In Bangladesh, one-person company registration has been formally introduced.
There are also several tax exemption options for corporations, depending on the industry and location.