All about company registration in Bangladesh
All about company registration in Bangladesh
Entrepreneurs are not taking rest and wasting time during Covid pandemic as time and tide never stop. Taking risk is the pile of successful of a business. So, during pandemic new company registration is ongoing. There are many young investors hopped in business as startup in e-commerce, online shop, super shop, and many more trade in Bangladesh. Their key intention is to simplify purchasing of regular goods from consumers end. So, now a days online is the best platform to make an order and whereas sellers are confirming them to delivering goods at home within short period. In perspective of business culture in Bangladesh, most of the entrepreneurs like to register proprietorship and partnership business instead of LLC (limited liability company).
Sole proprietorship business
Here, one person is all-in-all in terms of taking ownership of the business as no additional partner is required. Promoters have a preference to commence proprietorship business as easier of obtaining license and less costly than LLC. The followings are necessary to comprehensive registration of proprietorship business:
- Trade License
- Income Tax Certificate
- VAT certificate
- Bank account open
- Bank solvency (for export-import business)
- Membership from chamber of commerce (for export-import business)
- Apply for ERC and IRC (for export-import business)
The process of application of trade license in Dhaka are as follows-
- Collect prescribe form from nearest city corporation office and fill up them
- Attach color photographs, rental agreement (commercial place), holding tax copy, NID, Present, Permanent, and business address
- Pay government fees in Sonali Bank. (for information fee depend on nature of business)
- Pay extra money to speed up licensing procedure
- Expected duration of issuance of trade license is 1-2 days.
The process of VAT application
- Collect a form from regional VAT office
- Attach a copy of rental agreement (Commercial building), NID, Present and Permanent address, Bank solvency, TIN and RJSC documents.
- Expected duration of registration a VAT certificate is 5-7 days.
Bank Account open
Bank account open in Dhaka and other cities of Bangladesh is easier for the local businessmen. But, opening bank account when shareholders are foreigners is complicated. The reality is that few banks and branches are cognizant of procedure of bank account open for foreign shareholding companies. Duration of opening bank account and receiving cheque book is 5-7 days. Collect bank solvency letter, as another requirement to apply for VAT certificate.
Export Import License Application
- Collect membership certificate from chamber of commerce
- Apply for export import license through online
- Visit ERC and IRC office and speak with authorized person to speed up the process.
- To receive ERC and IRC certificate requires 10-30 days.
Partnership Business Registration
Two and multiple partners make agreement for doing business jointly and apply for trade license that is unlike LLC. Busines objective clauses, financial information, responsibilities of partners, dispute resolution and many more information are written in agreement paper. In a certain time, make quarrel between partners pursuing financial interest and contributions and later, a worse result is perceptible between partners. We recommend registering LLC (limited liability company) instead of partnership firm as LLC is safe system of doing business where maximum 50 partners can be added.
Limited Liability Company (LLC)
LLC is registered by Company Act 1994 where minimum 2 partners (shareholders) and maximum 50 shareholders are required. There are some objective clauses of the business including nature of business, shareholders personal information, share capital information are written. On the other hand, responsibilities of the shareholders, directors, rules of meeting, qualification of the directors, voting rights of the directors and many more information are written as Company Act. There are 2 parts, one is called Memorandum and Article of Association (MoA) and another one is called Article of Association (AoA). All the information is submitted regarding company incorporation as guideline of RJSC and company Act 1994 and documents are certified by registrar after verifying all information by officers.
Required information and documents
As part of LLC registration, directors will share their NID/ Passport, present and permanent address, parents name, DOB, TIN, e-mail, and contact number. One board meeting will be held between shareholders where share proportion, position of the directors, signature, name of the company, objectives of the business are written in meeting minutes as a record.
Paid up and Authorized capital
There are 2 part in MoA and AoA, one is paid up capital and another one is authorized capital, all information is clearly written in certified copies by RJSC. Paid up capital is called investment capital that money must pay (deposit) to bank account of the company to purchase shares of the company as shareholders. Company itself is an institute that is operated by rules and company Act whereas shareholders are obeyed by law to follow them. Authorized capital is not investment capital that is a pre- permission taken from government to increase paid up capital up to limitation. Let, your permitted authorized capital is Taka 5000000/- (fifty lac) and now your paid-up capital is Taka 1000000/- (10 Lac). Later, you do not need pre-permission from government to increase paid up capital up to 50 Lac as that is already permitted. For information, limited liability company registration fee is imposed on authorized capital amount, not consider in amount of paid-up capital.
Any decision is made between the directors to discuss agendas in the meeting independently. At the end, a suitable decision is made unanimously that is written in meeting minutes. The directors have right to vote for their or against decision. Sometimes proxy vote is allowed by the permission of the directors. If Quorum of the meeting is failed the meeting is void as Company Act 1994.
Notice of the meeting
To hold a meeting, minimum 14 days ago a notice shall be circulated, as company Act 1994, to the directors about the date and agendas of the meeting.
AGM and EGM
Annual General Meeting (AGM) and Extra Ordinary General Meeting (EGM) are significant of a company making any valuable decision by the directors. A meeting will be held in every year where all profit and loss information, appointment of auditor, changing of directors’ information will be discussed before the directors. To know this legal information is necessary as directors before registering limited liability company in Bangladesh.
Responsibilities of the chairman and Managing Director
As Company Act, Chairman and Managing Director have individual responsibilities to perform. Directors must follow the law and do act same.
Joining and leaving a director
Any director can add and resign as Company Act 1994 and within a procedure and guideline of RJSC. And changing of the director information must take a note in AGM and EGM.
All directors must be prudent to submit annual return by the timeline and financial year in Bangladesh is 30 of June. Tax filing, audit of the company and attend in AGM in every year.
Expected fees of company / business registration in Taka
|Trade License||6000-13000 (Government fee as nature of business)|
|Income Tax (Company)||2000 (Unofficial cost)|
|Income Tax (Personal)||1000-2000 (Unofficial cost)|
|VAT||5000-12000 (Depend on area, officer, and rental agreement)|
|ERC and IRC||7000-12000 (Depend on speed money)|
|Membership of Chamber of Commerce||30000-50000 (as policy of chamber)|
|Limited Company Incorporation||15000-17000 (If authorized capital is 30 Lac)|
|Income Tax Filing||4000-8000 (Tax agent)|
|Return Submission to RJSC||4000-8000 (Per director fee is 200)|
|Financial Statement & Audit||8000-25000 (Depend on profit and supporting documents)|