Formation of a Company: Step-by-Step Procedure Under Bangladesh Law

Forming a company in Bangladesh involves several legal and procedural steps that are governed by the Companies Act, 1994. This guide provides a step-by-step outline of the process to help entrepreneurs and business professionals navigate the requirements effectively.

1. Determine the Type of Company

The first step in forming a company is deciding the type of company you wish to establish. The options include:

• Private Limited Company: Limited by shares and restricts the transfer of shares.
• Public Limited Company: Can offer shares to the public and must meet additional compliance requirements.
• Single-Person Company: A private company with only one shareholder (recently introduced in Bangladesh).

Choose the type based on your business needs, capital structure, and operational flexibility.

2. Select a Suitable Name

Your company name must be unique and comply with the guidelines provided by the Registrar of Joint Stock Companies and Firms (RJSC). Ensure the name:

• Is not identical to or closely resembles any existing company name.
• Does not contain prohibited terms or phrases.
• Reflects the nature of the business.

How to Check Name Availability:

• Visit the RJSC online portal.
• Use the name search feature to check for availability.
• Reserve the name by paying the prescribed fee.

3. Draft the Memorandum and Articles of Association

The Memorandum of Association (MOA) outlines the company’s objectives, while the Articles of Association (AOA) specifies the internal rules and regulations.

Key details to include in the MOA:

• Name of the company.
• Registered office address.
• Objectives of the company.
• Liability of members.

The AOA should detail:

• Shareholding structure.
• Roles and responsibilities of directors.
• Procedures for meetings and decision-making.

4. Appoint Directors and Shareholders

A private limited company in Bangladesh requires:

• A minimum of two directors.
• A minimum of two shareholders.

Directors must:

• Be individuals (not entities).
• Be at least 18 years old.
• Not have a criminal record or bankruptcy declaration.

5. Obtain the Digital Signature Certificate (DSC)

Directors and authorized personnel need a Digital Signature Certificate to file documents electronically with the RJSC.

How to Obtain a DSC:

• Apply to a certified authority in Bangladesh.
• Submit required identification documents and pay the fee.
• Receive the DSC for secure online transactions.

6. File Incorporation Documents with RJSC

Prepare the following documents for submission to RJSC:

• Name Clearance Certificate: Proof of reserved company name.
• MOA and AOA: Signed by all shareholders and directors.
• Directors’ Details: Including names, addresses, and national IDs or passports.
• Shareholders’ Details: Including share allocation.
• Registered Office Address: Proof of the physical address in Bangladesh.
• Application Form: Completed Form I (incorporation application).

Submit these documents online through the RJSC portal and pay the applicable registration fees.

7. Obtain the Certificate of Incorporation

Upon successful submission and verification, the RJSC will issue the Certificate of Incorporation. This document confirms the legal existence of the company and includes its unique registration number.

8. Register for Tax Identification

After incorporation, register the company for a Taxpayer Identification Number (TIN) through the National Board of Revenue (NBR) portal.

Steps:

• Complete the online TIN application.
• Provide the incorporation certificate, business address, and director details.
• Receive the TIN for tax compliance.

9. Open a Corporate Bank Account

Open a bank account in the company’s name. Most banks require the following documents:

• Certificate of Incorporation.
• MOA and AOA.
• TIN certificate.
• Board resolution authorizing the account opening.

10. Obtain Business Licenses and Permits

Depending on the business nature, additional licenses may be required, such as:

• Trade License: Issued by the local municipality or city corporation.
• VAT Registration: Register with the NBR for Value Added Tax compliance.

11. Commence Business Operations

With all legal and regulatory requirements fulfilled, the company can officially start operations. Maintain proper accounting records, comply with tax obligations, and adhere to the laws governing your business activities.

Final Thoughts

Setting up a company in Bangladesh is a systematic process requiring compliance with legal, tax, and administrative procedures. By following the steps outlined above, you can establish a solid foundation for your business. For complex matters or additional guidance, consider consulting with a legal professional or company formation expert.

© Bibhuti B Sarker, Advocate, Supreme Court of Bangladesh.