INVEST IN BANGLADESH
In the last one and a half decade, the economy of Bangladesh has grown at a sustained rate of over 6 per cent per annum. With a GDP of 120 billion US dollars, Bangladesh has the second largest economy in South Asia. Bangladesh now produces high-value added, technology-intensive and world class pharmaceuticals products, chinaware, furniture and, of late, ocean-going vessels along with the traditional apparel products. Bangladesh is now the second largest garments exporter in the world. Special priority has been attached to digital development and Bangladesh is fast coming up in the ICT sector as well as export of software and related services.
Any foreign company or individual wanting to do business in Bangladesh will need to decide under which form they want to operate. The various business entities available in Bangladesh are described below.
Companies Limited by Shares
Business in Bangladesh may be led by an organization framed and incorporated locally or by an organization incorporated abroad, however enrolled in Bangladesh. The incorporation or enrolment is carried out by the Registrar of Joint Stock Companies and Firms (RJSC) under the provisions of the Companies Act 1994. The following corporate forms are available:
• Company Limited by Shares
- Private Limited Company
- Public Limited Company
• Company Limited by Guarantees
• Unlimited Company
Private Limited Company
The main characteristics of a Private Limited Company are:
• Restricts the rights to transfer the shares.
• Limits the number of its members to minimum two and maximum 50 excluding the persons employed in the company.
• Prohibits any invitation to the public to subscribe for the shares or debentures of the company and
• Is entitled to commence business from the date of its incorporation.
Public Limited Company
A Public Company can be formed by at least seven persons as members and the membership is open to the public. A Private Limited Company may be converted into a Public Limited Company or a company can be incorporated as Public Limited Company.
Public limited company can be of two types:
The main characteristics of a Public Limited Company are:
• May issue invitation to the members of the public to subscribe the shares and debentures of the company through a prospectus which complies with the requirements of the Companies Act, 1994, Has a minimum of seven members with no maximum limit.
• Has at least three directors
• Shall not commence any business until obtaining the Certificate of Commencement of Business of Foreign Companies.
For foreign investors that do not wish to incorporate a company in Bangladesh, a branch, liaison or representative office may be the most suitable forms. A branch office is established to undertake the same business as its head office. The activities of a branch office must be clearly stated in its letter of endorsement. These offices can have local sources of finance and carry out business in approved foreign investment sectors.
A Partnership can be established with at least two and no more than 20 persons, with the aim of making and sharing profits among themselves. An organization can emerge as an aftereffect of an agreement or contract, communicated or inferred between the partners. In Bangladesh, a partnership firm is to be structured under the provisions of the Partnership Act 1932.
To establish a company in Bangladesh, the promoters must register with the Registrar of Joint Companies & Firms (RJSC&F).
The following documents must be registered:
• Name Clearance: this involves submitting an application to the office of RJSC&F through the website alongside the applicable fees. The name cannot match or closely resemble any other name already taken.
• Memorandum and Articles of Association: the Memorandum and Articles of Association must be prepared and submitted, alongside a scanned copy of the encashment certificate received from a local bank. A registration fee must also be paid to the designated bank
• Registration: the promoters of the new entity (having name clearance) apply for registration with necessary documents, prescribed forms & fees as appropriate to the type of entity with the office of the RJSC&F.
• Certificate of Incorporation: RJSC&F issues a Certificate of Incorporation upon satisfaction that the promoters submitted the above mentioned documents properly.
Following registration, companies must also obtain the following before commencing business:
• Trade License from City Corporation/Municipality/Union Council (Local Government Bodies)
• Taxpayer’s Identification Number (Twelve Digit TIN)
• VAT Registration (in the cases where applicable)
• Import Registration Certificate (in the case of business related to import)
• Export Registration Certificate (in the case of business related to export)
• License/Permission from the authorities according to the nature of business/profession
• Bank account
• Membership of trade body