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Forming a Private Limited Company in Bangladesh is a common choice for entrepreneurs looking to establish a legal presence in the country. Although there are a variety of ways to launch a business in Bangladesh, establishing a private limited company or opening a branch office are the most popular and practical choices, and hence the steps involved in doing so are outlined below. If you intend to form a company in Bangladesh, you should seek help from any repute law firms in Bangladesh. It is very important to hire an experience and renowned lawyer in Bangladesh, so that with time it gets easier to navigate the business in Bangladesh.
Classification of Companies by Mode of Incorporation:
In Bangladesh, on the basis of mode of incorporation, the companies are of three kinds:
- Chartered Companies:
The Companies which are incorporated under royal charter may be named as chartered companies. The East India Company and the Bank of England are two examples of this kind of company. In case of chartered companies, the power and nature of business to be dealt with are defined in the charter. These companies, however, possessed huge power. But at preset, these companies do not exist in this country.
- Statutory Companies:
Statutory Companies are the companies formed under the authority of an Act passed by the parliament. These types of company do not have any Memorandum of Association or Articles of Association. They derive their power mainly from the statute. These types of companies are formed generally to meet the social demands and not for earning profits, Bangladesh Bank, Bangladesh Airlines, BRTC, WASA etc. are some instances of this kind of institution.
- Registered or Incorporated Companies:
The companies formed and registered under the authority of the Companies Act, 1994 are named as registered companies. These type of companies have Memorandum of Association and Articles of Association. The registered companies may be of either-
- Company limited by shares; or
- Company limited by guarantee.
Classification of Companies by Liability of Members:
As said earlier that the registered companies may be of either-
- Limited by Shares; and
- Limited by Guarantee.
Apart from these companies, there is another type of company named unlimited company. A brief discussion goes here regarding the classifications-
- Companies limited by shares:
In case of companies limited by shares, there is a share capital and each share has definite nominal value which the shareholder pays at a time or by installments. Here, the members are not bound to pay more than the face value of the shares, whatever may be the liabilities of the company, Most of the companies in our country belong to this class.
- Companies limited by guarantee:
In case of these type of companies, each member promises to pay a fixed sum of money in the event of liquidation of the company. This amount is called the Guarantee. Sometimes, the members are required to buy a share of a fixed value and also give a guarantee for further sum in the event of liquidation. There is no liability to pay anything more than the value of the share (where there is a share) and the guarantee.
- Unlimited company:
A company is said to be an unlimited company when it has no limit on the liability of its members. [sec. 5 (c) of the Companies Act, 1994] In case of an unlimited company, the liability of the members constitutes to pay the Company’s debt in proportion to their respective interest in the company. Unlimited companies may not have share capital. The articles of an unlimited company define the number of members with which the company is to be registered along with the amount of share capital, if any, with which the company is to be registered. Now-a-days, such companies are rare.
Classification on the basis of number of members:
On the basis of number of members, a company may be classified either as
(i) Public Company; or (in) Private Company.
Public Limited Company:
There is no specific definition in the Companies Act, 1994 as to the definition of public limited company.
The Companies Act, 1994 Provides, “Public Company” means a company incorporated under this Act or under any law at any time in force before the commencement of this Act and which is not a private company.
Observing the definition given in our Companies Act, 1994, it is clear that a company which is not a private company is a public company. I.e.- in a public company, the characteristics of a private company shall not be present.
By explaining different provisions of the Companies Act, the following characteristics are found in a public Limited company:
- Number of members:
In a public Limited company, the number of members shall be at least 7 and there is no definite maximum number of shareholders.
- Prospectus:
By issuing prospectus, such companies may allot share & debenture and thus may raise capital.
(c) Transferability of shares:
The shares of a public limited company are easily transferable in a manner
provided by the written articles of the company. [sec. 30] gun
rini
(d) Liability:
The liability of members may be either limited by shares or limited by
guarantee.
(e)Number of directors:
In the case of a public limited company, at least three directors are required.
(f) Certificate of Commencement:
A public limited company cannot start functioning merely by obtaining a
registered certificate, rather a certificate of commencement is required to
be obtained.
(g) Statutory meeting and statutory report:
A public company must arrange a statutory meeting within 6 months of its
incorporation and must prepare a statutory report which is to be submitted
to the registrar. [sec. 83]
Private Limited Company Formation in Bangladesh:
A Detailed Guide to Forming a Private Limited Company in Bangladesh
Listed below are the stages involved in forming a Private Limited Company by Shares in Bangladesh.
–
First step: GET A name clearance from RJSC
Submit the following with your RJSC name clearance application:
Form of Application; b) Suggested Name
Second Step: Formal Record Keeping
a) Creating the necessary paperwork, including the Articles of Association and the Memorandum of Articles
b) A vote by the Board of Directors to establish a subsidiary in Bangladesh;
To register the Company with RJSC, you must (c) Obtain and complete the Following Forms.
Declaration by Company Upon Its Incorporation (Form I);
Notice of Change in Registered Office (Form VI);
Directors’ authorization to take action (Form IX);
List of individuals who agree to serve as directors (Form X);
Details about the board of directors, the general manager, and any managing agents (Form XII).
Third Step: Complete the necessary bank account paperwork.
a. Provisional Bank Account: Directors must establish a provisional bank account in the proposed Company’s name at any scheduled bank, with the understanding that the account would be regularized when the Company is properly registered with Company House;
b. Deposit the initial fund: Next, deposit of initial funds into the bank account. Money for the capital contribution has been deposited in the provisional bank account of the proposed company, as evidenced by a certificate of encashment issued by the bank.
Fourth Step:
Documentation submission to RJSC is the fourth and final step for your company formation in Bangladesh.
If you want the help of an elite corporate law firm in Dhaka to help you with your company incorporation in Bangladesh, feel free to contact Tahmidur Rahman Remura.
Email Address: [email protected]
Website: https://tahmidurrahman.com/
Phone Number: +8801847220062 & +8801779127165
