What is a Company:
A company is a body corporate that is created by law and run by its shareholders. According to the Companies Act, 1994 – a company means a company formed and registered under this Act or an existing company.
Types of Company:
Companies are of the following types:
1. Certified Company;
2. Statutory Company;
3. Registered Company;
4. Limited Liability Company;
5. Limited Liability Company by Promised Value;
6. Limited Liability Company by Share Price;
7. Private Limited Company;
8. Public Limited Company;
9. Government Public Limited Company;
10. Private Public Limited Company;
11. Holding Company;
12. Subsidiary Company;
13. Unlimited Liability Company;
14. Unregistered Company;
15. Non-commercial company.
Registration Limited Company in Bangladesh:
Limited company means company limited by shares, liabilty and guarantee. In Bangladesh the word “limited” is used with both the public and private company. For example- Dutch Bangla Bank Limited, Bangladesh Development Bank Ltd. etc.
List of some Limited Companies in Bangladesh:
Airtel (Bangladesh), Teletalk, Grameenphone, Robi, Banglalink, Citycell (currently closed), Meghna Group of Industries, Pran-RFL Group, Bashundhara Group, Akiz Group, Ispahani Group, Beximco Group, Navana Group, Square Group, Transcom Group, Bengal Group, Jamuna Group, Bashundhara Group, Nasir Group, Karnaphuli Group, Square Electronics, Dutch Bangla Bank ltd. etc.
Requirements for a Limited Company:
Followings are the requirements for limited company-
The authorized capital of a registered company is the limit of the maximum amount of capital of the company which can be distributed among each of the partners. The amounts of this capital must be clearly mentioned in the Memorandum of Association and Articles of Association. These documents must be properly prepared before registration.
At the time of company registration, the paid-up capital or capital of a company should be minimum 1 taka. After registration, any amount within the allowed limit can be used as the capital of the company.
The number of directors of a limited company should be at least two (resident or non-resident) and the designation and number of shares of the directors should be clearly mentioned in the articles of association of the company. It should be noted that any minor (below18 years) or insolvent or person involved in financial criminal activity will be considered ineligible for becoming directors.
The number of shareholders in a private limited company will be minimum 2 to maximum 50. In case of public limited company the number of shareholders will be minimum 7 to unlimited.
For the registration of a limited company there must provide a relevant address (commercial or residential) which will be considered as the registered address of the company.
Registration Process of Limited Company:
The registration processes of a limited company are as follows:
First Step – Clearance of Name:
The first step in the company registration process is to obtain a clearance for the company name from the Registrar of Joint Stock Companies and Firms. All you need to do to collect a clearance of name is as follows:
(1) First of all you should login to the website of Directorate of Joint Venture Companies and Firms.
(2) Now create a user ID
(3) Now apply for a Name clearance.
For this Name Clearance application you will be provided a payment slip from the website with which you have to deposit tk. 1150/- (Eleven Hundred and Fifty Taka) along with government fee VAT for Company Name Clearance to the designated bank.
After 2-3 hours or in some cases 1 day after paying the government fee deposit, log in to the website again with your user ID. Now see that you have received your company name clearance. Download it and keep it with you and complete the next process/steps.
Note that this clearance will be valid for 30 days after approval of company name clearance. In special cases, the period of this clearance can be extended from 60 days to 90 days.
Second Step – Preparation of required documents
Documents required for a Private Company as per the Company Act, 1994 are as follows-
1) Name clearance
2) Original copy of Memorandum of Association and Articles of Association (with two additional copies)
3) Form Filling: Declaration of Company Registration
4) Form filling- Notice of location of registered office or change thereof
5) Form Filling – Director Consent Letter
6) Form filling – list of persons who wish to be directors
7) Form Filling – Details of Directors, Managers and Managing Agents and any changes thereto.
Documents required for a Public Company as per the Company Act, 1994 are as follows-
1) Name clearance
2) Original copy of Memorandum of Association and Articles of Association (with two additional copies)
3) Form filling: Declaration of company registration.
4) Form filling- Notice of location of registered office or its change.
5) Form filling – Director’s consent letter.
6) Form filling – List of persons who wish to be directors.
7) Form filling – Details of Directors, Managers and Managing Agents and any changes thereto.
8) Declaration before the commencement of business in case of company filing statement instead of form filling-statement.
9) Form filling (if applicable) – Agreement letter for acceptance of qualification shares of the proposed company.
Documents required for a Foreign Company are as follows-
1) Form filling- Charter or Articles of Association or Memorandum and Articles of the Company or any document constituting or defining the Constitution of the Company;
2) Filling up the form – Address of registered or head office of the company,
3) Form filling – list of directors and managers;
4) Form filled-up return of person responsible for accepting services;
5) Form filling – location of principal place of business in Bangladesh or any change therein;
6) Dollar encashment certificate from any scheduled bank;
7) Permission letter from Bangladesh Investment Board.
Third step – Opening a new bank account
A bank account should be opened in the name of the proposed company under any listed bank in Bangladesh. If there is a foreigner as a shareholder, the amount equal to the shares held by him should be deposited in the bank. Given this, the bank will issue a currency monetization certificate which will be required at the time of registration.
Fourth Step – Successfully submission of documents
At this stage of the registration process, you have to go to the RJSC (Registrar of Joint Stock Companies) website and submit the necessary documents. Apart from obtaining company name clearance, other necessary documents are also required:
(a) Ensure that the Memorandum Articles of Association and other documents are prepared by the prescribed format mentioned on the RJSC website.
(b) Apply for registration online (on the RJSC website) within 30 days after receipt of name clearance.
(c) Pay the prescribed registration fee to the bank (a deposit receipt will be issued in this case from the website)
How to apply for company registration;
Visit this link Office of the Registrar of Joint Stock Companies and Firms
Select the “Type” of Company you will be registering
Select the ‘Type’ of the company to be registered. Enter Name Clearance Submission No. and Name Clearance Letter No. in the space provided and click on the “Continue” section. Then fill out the form that will appear.
Provide the necessary information regarding the Memorandum and Articles of Association in the prescribed format. Confirm all the details submitted Click on the “Submit” part.
After receiving the deposit receipt from the website, your job is to pay the fee to the bank accordingly. Once the fee is paid your company will be officially registered.
It doesn’t end there though, you will need to follow up with the RJSC as once satisfied with the application, they will send you digitally signed copies of your.
Later you need to keep in touch with RJSC regularly as they will provide you with digitally signed copies of the below-mentioned documents once they are satisfied with the registration process.
Certificate of Incorporation, Memorandum, and Articles of Association
Form XII (12), if the registration process is a bit slow through the email provided, then the RJSC officials may ask you for some additional information which you have to provide by visiting the RJSC.
Fifth Step – Trade License Fee of Limited Company
This step is not an integral part of the registration process but includes formalities that may need to be completed after company registration is complete.
Sixth Step – Post-Registration Process
This step is not exactly a fundamental part of the registration process, but it includes several formalities that should be undertaken once you have completed your company registration.
As a Limited Company (private and public), you will need to obtain.
Trade license from concerned city corporation by submitting necessary documents along with the application.
Tax Identification Number (TIN) obtained through an application on the National Board of Revenue website.
Mosak Registration Certificate obtained in the online application process.
Fire certificate obtained from Bangladesh Fire Service and Civil Defense Authority.
Environmental Clearance Certificate obtained from the Department of Environment (if any industrial project is involved).
Cost of Forming/ Setting up Limited Company
The limited company registration fee depends on the authorized capital. The authorized capital is generally 10 lakhs, 20 lakhs, 30 lakhs, 40 lakhs or more. The cost of forming a limited company depends on this authorized capital. For details, you can contact with us through mobile and email.
Designations for the Post of Limited Company
2. Managing Director (MD)
3. Chief Executive Officer
4. Deputy Managing Director
5. Executive Director
6. Finance Director
7. Marketing Director
Advantages & Disadvantages of Limited Company
Advantages and benefits of Limited Company / Company Organization are described below:
(1) Limited liability: The liability of share holders in company business is limited by the value of the shares. Because of this people invest in this organization without any hesitation.
(2) More capital: Such organizations can raise sufficient capital by selling shares and debentures to the public, which is not possible for other organizations.
(3) Perpetual existence: The law has given perpetual existence to the artificial personality company. Hence it does not dissolve on account of death or bankruptcy of any member.
(4) Independent entity: By virtue of artificial personality, this organization can enter into contracts or transactions with third parties using its own name and seal.
(5) Transferability of shares: Shares in public limited companies can be purchased by anyone at any time and share holders can transfer shares to others at any time if they wish.
(6) Advantage of large scale business: The organization has large scale business advantage as it is formed with more capital; For example, buying and selling more products at the same time, producing more products at lower cost, employing skilled employees, in various fields
Achieving frugality etc. enjoys benefits.
(7) Types of Shares: As the shares of the company organization are of different types, the people can buy the shares as per their choice.
(8) Efficient Management: The efficient management and governance of the organization is vested in the Board of Directors. Moreover, more qualified managers can be appointed in this case in order to have financial consistency. As a result the management and operation of the company is highly efficient.
(9) Attractive Investment Sector: Due to perpetual existence, limited liability, legal regulation, opportunity to purchase shares at low price, easy transfer of shares etc. it is considered as very attractive investment sector by all types of investors.
(10) Access to credit: Due to independent entity, perpetual existence, public trust etc. such business can easily raise credit from various sources.
Disadvantages of Limited Company / Company Organization are described below:
(1) Complex Structure: A company is a legal entity. Its formation is quite time consuming, formal and expensive. Because of this, many people are discouraged from forming such businesses.
(2) Inefficient management: As the management of such businesses is entrusted to third parties on their salaried basis, there is a lot of lack of personal motivation among them. As a result, inefficiency often prevails.
(3) Director’s Interest Fulfillment: Directors often act in their collective self-interest as they have the highest power on behalf of the shareholders. Businesses and shareholders are affected by this.
(4) Creation of monopolies: Due to the development of such businesses in a large scale nature, the tendency of creation of monopolies is observed many times. It stops the normal development of business and society suffers.
- Nepotism: Company managers often give more importance to incompetence or nepotism than merit in the recruitment, promotion, demotion etc. of company employees.
(6) Excess of operating expenses: holding various meetings, events, maintaining documents and books, auditing accounts, issue of shares and loans etc. in this business. Various works incur substantial overheads. As a result in many cases the amount of profit decreases.
(7) Centralized power: Company organization is run on democratic principles but in practice its main power is limited in the hands of a few individuals. As a result, the interests of the common shareholders are overridden by the interests of the directors.
(8) Limited scope of work: The company cannot perform any work not mentioned in the memorandum. As a result, its scope is limited to specific areas.
(9) Delay in decision making: Due to the many formalities involved in making business decisions in this organization, delay in decision making occurs.
(10) Lack of confidentiality: According to the law, many documents and details including the company’s accounts and audit reports, annual reports, shareholders, registrar of companies are required to be made public. This reduces the confidentiality of the business.
Process of winding up a limited company:
The process by which the company winds up its operations, settles its liabilities, is called winding up or winding up of the company. Section 234(1) of the Companies Act of 1994 in Bangladesh deals with the dissolution of a company. Although it varies by state and law, the general types of dissolution are as follows:
Compulsory winding up by the court
If the company has passed its winding up decision by the court by adopting a special resolution. There are delays in filing statutory reports or holding statutory meetings. If the company does not commence business within 1 year of registration or ceases business for 1 year.
Voluntary Winding UP
Winding up by the creditors and members of the company without any intervention of the court is called voluntary winding up. Section 286 of the Companies Act, 1994 deals with the cases in which the company may be voluntarily wound up.
Members Voluntary Winding Up
Members voluntary winding up means means the winding up in which ‘a declaration of solvency’ is made and delivered to the Registrar for registration according to the provisions of the Companies Act, 1994.
Creditors Voluntary Winding Up
Creditos voluntary winding up means the winding up in which no ‘declaration of solvency is made and the company is in a position that it is unable to pay the full debts .
Winding Up Subject to the Supervision of the Court
At any time after after passing a resolution for voluntary winding up, a company may wind up subject to the supervision of the court. Section 316 of the Companies Act, 1994 deals with this matter.
One Person Company
In recent amendment, one person comapny is included in the Companies Act, 1994. Section 2 (Kha)(1) of the Companies Act, 1994 provides the provisions of one person company. According to this section an OPC (One Person Company) is a company whose only shareholder is a natural person. There is no scope of any artificial person for being the shareholder of a one person company. The minimum paid up capital for one person company is 25 lac taka and the maximum amount is 5 crore taka. For a one person company both Memorandum and Article of Association are required as per section 392A of the Companies Act, 1994. At the end of the name of a one person company OPC will be added.
Faq about limited company registration in Bangladesh:
Q: What is the process for registering a limited company in Bangladesh?
A: The registration process involves document preparation, submission to the Registrar of Joint Stock Companies and Firms, obtaining the Certificate of Incorporation, and fulfilling post-incorporation requirements.
Q: How long does it take to register a limited company in Bangladesh?
A: The registration timeline can vary, but typically it takes around 2 to 4 weeks from document submission to receiving the Certificate of Incorporation, subject to government processing times.
Q: What documents are required for limited company registration?
A: Essential documents include the Memorandum and Articles of Association, consent of directors, declaration of compliance, and the company’s registered office address.
Q: Are there any specific requirements for company directors?
A: Directors must be at least 18 years old, not bankrupt, and capable of managing the company. Foreign nationals can also serve as directors, but at least one director must be a resident of Bangladesh.
Q: What post-registration obligations does a limited company have?
A: Post-registration, companies must obtain a trade license, open a bank account, and comply with tax regulations. Annual filings, such as financial statements, are also mandatory.
Q: Can foreign nationals own a limited company in Bangladesh?
A: Yes, foreign nationals can own and operate a limited company in Bangladesh. However, specific rules and regulations regarding foreign ownership and investment must be followed.
Q: Is it necessary to have a physical office for company registration?
A: Yes, a registered office address in Bangladesh is mandatory. It serves as the official communication address, and documents related to the company’s affairs are sent to this address.
Q: What are the benefits of registering a limited company in Bangladesh?
A: Benefits include limited liability for shareholders, a separate legal entity, access to business loans, and credibility in the market. It also provides a structured framework for business operations.