This guide provides you an overview of the various types of business entities in Bangladesh and the differences among them. Each of these is subject to different regulatory and tax regimes reflecting their organization and ownership.
Please note that we do not include nonprofit entity in this guide.
AVAILABLE OPTIONS FOR BANGLADESHI CITIZEN:
A sole proprietorship is the simplest type of business form in Bangladesh. From a legal perspective, sole proprietorship is not a separately incorporated entity and therefore the owner and the business are one and the same. The owner personally owns all assets and liabilities of the business. There is no protection of personal assets from business risks and liabilities. As the sole proprietor of a business, you have unlimited liability, meaning that if your business can’t pay all its liabilities, the creditors to whom your business owes money can come after your personal assets. Many entrepreneurs are usually unaware of this enormous financial risk. If the business is sued or can’t pay its bills, the owner is personally responsible for the business’s liabilities.
Further details about sole proprietorship can be found at proprietorship
Under the Bangladeshi law, a partnership must consist of minimum two and maximum 20 partners. An agreement for the partnership is required for obtaining a trade license and opening of a bank account. The agreement is not required to be registered with the Registrar of Joint Stock Companies and Firms (RJSC). The liability of a partnership is borne by the partners.
The concept of Limited Partnership or Limited Liability Partnership does not exist in Bangladesh.
Further details about sole proprietorship can be found at partnership
In Bangladesh companies are either – i) limited by shares; or ii) limited guarantee. Though it is technically possible to register an unlimited company, those companies are rare.
A limited liability company is a company limited by shares i.e. its liabilities are limited to the amount of share capital. A limited liability company is a business entity registered under the Bangladeshi laws and a separate legal entity from its members. In a limited liability company, the liabilities of the owners are limited to the assets in the company and their personal assets are protected from business liabilities.
A Bangladeshi Limited Liability Company can be – i) a private limited company; or ii) a public limited company.
PRIVATE LIMITED COMPANY
A private limited company is a limited liability company in which the shares are held by less than 50 persons and are not available to general public. Most privately incorporated businesses in Bangladesh are registered as private limited companies. The shareholders of a private limited company can either be individuals or corporate entities or both.
A private limited company is the most advanced, flexible, and scalable type of business incorporation in Bangladesh. It’s also the most preferred type of Bangladesh business entity for serious entrepreneurs (as opposed to sole proprietorship or limited liability partnership). For more detailed information about private limited companies, refer to company registration in Bangladesh guide.
WHY ENTREPRENEURS PREFER PRIVATE LIMITED COMPANY:
- Separate Legal Entity: A private limited company has its own legal identity, separate from its shareholders and its directors. It can acquire assets, go into debt, enter into contracts, sue or be sued in its own name.
- Limited Liability: The liability of the shareholders to contribute to the debts of the company is limited to the amount that they each agreed to contribute as capital to the company.
- Perpetual Succession: The Company’s existence does not depend on the continued membership of any of its shareholders. Ease of transfer of shares or changes in shareholders ensures that company continues to exist even in the event of death, resignation, or insolvency of shareholders or directors.
- Ease of raising capital: You can raise capital for expansion or other purposes by bringing in new shareholders or issuing more shares to existing shareholders. Investors are more likely to purchase shares in a company where there usually is a separation between personal and business assets. Also, most banks prefer to lend money to limited companies.
- Credible Image: As an incorporated business entity, it commands a better image than a sole proprietorship or a partnership firm, and investors will be more willing to become part of the company as it demonstrates a vision to grow and expand. As a private limited company, your business will be taken more seriously by your potential clients, suppliers, bankers, and other professionals you will be dealing with.
- Easier transfer of Ownership: Ownership of a company may be transferred, either wholly or partially, without disrupting operations or the need for complex legal documentation. This can be done through the selling of all or part of its total shares, or through the issue of new shares to additional investors.
PUBLIC LIMITED COMPANY
A public limited company is a limited liability company that may offer its shares to general public. A public limited company must have at least 7 shareholders and is subject to significantly more stringent rules and regulations since they have the power to raise funds from the public. Usually a public limited company is listed on a stock exchange.
AVAILABLE OPTIONS FOR FOREIGN INVESTORS
Foreign investors wishing to setup a presence in Bangladesh, have the choice of setting up a subsidiary, a branch office or a representative office in Bangladesh.
A subsidiary company
is a limited liability company incorporated in Bangladesh with the parent company as its shareholder. For most foreign businesses, a subsidiary company is the most preferred choice of registration in Bangladesh.
A branch office
is a setup in Bangladesh as an extension of its parent company and not as a separately incorporated entity. The liabilities of a branch office extend to its parent company.
A representative office
is registered in Bangladesh as a temporary arrangement for conducting marketing research activities. A representative office does not have any legal status and cannot be engaged in any profit yielding activities.
This guide provides information on registration of a sole proprietorship in Bangladesh. To learn about various types of business entities in Bangladesh, refer to start a business in Bangladesh.
Sole proprietorship is the simplest form of business structure in Bangladesh. However, it is suitable only for very small single-owner type business that does not carry any risks. Unlike a private limited liability company, a sole proprietorship does not provide limited liability protection and your personal assets are not protected from business risks.
SOLE-PROPRIETORSHIP – KEY FACTS
CONSIDERATIONS FOR FOREIGNERS
- A sole proprietorship in Bangladesh does not constitute a separate legal entity therefore it is not distinct from the owner/ proprietor. The business owner is personally accountable for all liabilities incurred during the course of the business.
- Any Bangladeshi citizen of at least 18 years of age is eligible for a sole proprietorship.
- A local commercial address must be provided as the business address for the sole proprietorship.
- Profits of the sole proprietorship are treated as income of the individual who owns the entity, thus it is subjected to a tax rate as that of personal income.
- As a Bangladesh sole proprietorship is not a legal entity, it cannot register another business firm.
- Sole proprietorships do not need to audit their accounts as any profits will be taxed as personal taxes.
- Trade Licenseis the basic requirement for proprietorship.
- Trade License needs to be renewed annually.
Practically, a sole proprietorship is not an option for foreigners. Foreign business professionals should incorporate a private limited company instead. For further details about private limited companies, refer to company registration in Bangladesh guide.
DOCUMENTS REQUIRED AND REGISTRATION PROCEDURE
In order to register a sole proprietorship business in Bangladesh, the following documents/information are required:
SOLE PROPRIETORSHIP ADVANTAGES
- Proposed business name in Bangla
- Description of principal activities
- Local business address for the proposed business in any commercial area.
- Lease/Rent Agreement or title deed for the office address.
- Copy of National ID for the owner.
SOLE PROPRIETORSHIP DISADVANTAGES
- Ease of setting up: It is the easiest and least expensive business structure to set up.
- Owner Control: As a sole proprietor you are in complete control of all the business affairs including decision making.
- No profit sharing: You accrue all income generated by the business.
- Ease of termination: Terminating a sole proprietorship is easier, less time consuming and less expensive than other business entities.
- Least compliance requirements: You are free of the obligation of filing returns annually and only need to renew your membership every year.
- No separate legal entity: You are inseparable from your business. This makes you financially and legally responsible for all debts and legal actions against the business.
- Unlimited liability: Creditors may sue you for debts incurred and can also obtain a court order to claim against your personal assets, including your property.
- No corporate tax benefits or incentives: Taxes are determined at your personal income tax rate and you do not enjoy special tax benefits that are available to a private limited company.
- Limited capital: Capital is limited to your personal finances and the profits generated by the business. Thus, business expansion is limited and difficult.
- No perpetual succession: The business lives and dies with you as you and the business are one and the same thing. However, after the death of the owner of proprietorship, the successor may continue the business in the same name.
- Low public perception: This entity is the least preferred for serious businesses as nobody would be willing to lend you large sums of money. It is also difficult to attract high-caliber employees, or senior level executives who usually look for a more advanced form of business structure such as a private limited company.
- Sale/transfer of all or part of the business: You can transfer the business only by the sale of business assets.
A partnership is a type of business structure where two or more partners start an entity to do business. For a partnership to exist, there must always be two or more partners.
A Partnership is defined by the Partnership Act, 1932
, (the “Partnership Act”) as ‘the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all’. This definition gives three minimum requirements to constitute a partnership:
- there must be an agreement entered into orally or in writing by the persons who desire to form a partnership,
- the object of the agreement must be to share the profits of business intended to be carried on by the partnership, and
- the business must be carried on by all the partners or by any of them acting for all of them. The term ‘person’ is not defined by the Partnership Act.
It is not compulsory to register your partnership firm as there are no penalties for non-registration. However, it is advisable since the following rights are denied to an unregistered firm:
- A partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act
- A right arising from a contract cannot be enforced in any Court by or on behalf of your firm against any third party
- Further, the firm or any of its partners cannot claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party.
PARTNERSHIP – QUICK FACTS
- A partnership is considered as a separate legal identity (i.e. separate from its owners) in Bangladesh only if the partnership is registered.
- All the partners of a partnership are liable severally and jointly for the liability of the partnership.
- The concept of Limited Liability Partnership does not exist in Bangladesh.
From a tax perspective, partnerships in Bangladesh are not taxed at the entity level and profits are treated as part of each partners’ personal income and are taxed at personal income tax rates.
MEMBERS & MANAGEMENT
- There must be a minimum of 2 partners and maximum of 20 partners.
- The partners can be natural persons or companies.
- Unlike private or public limited companies, a partnership in Bangladesh does not have directors, shareholder or secretary, instead the partners own and run the business.
PARTNERSHIP – DOCUMENTS REQUIRED
In order to register a partnership in Bangladesh, the following information/documents are needed:
- Proposed partnership name;
- Partnership agreement duly notarized;
- Form I;
- Particulars of the partners;
- Residential address of the partners;
- Details of the registered address for the partnership; and
- Percentage of the share of profit of each partner.
PARTNERSHIP – REGISTRATION PROCEDURE
A partnership may be registered with Registrar of Joint Stock Companies and Firm of Bangladesh
The partnership registration process consists of two steps: a) name reservation; and b) registration of the entity. Under normal circumstances, a partnership registration can be completed within one/two days.
STEP 1- CHOOSING THE PARTNERSHIP NAME
The partners are free to choose any name as they desire for their partnership firm subject to the following rules:-
- The names must not be too identical or similar to the name of another existing firm doing similar business so as to lead to confusion. The reason for this rule being that the reputation or goodwill of a firm may be injured, if a new firm could adopt an allied name.
- The name must not contain certain words expressing or implying the sanction, approval or patronage of Govt.
Once you select a name, you should apply for name clearance using the website of RJSC.
STEP 2 – PREPARE A PARTNERSHIP DEED
You should prepare a partnership deed. Usually, a partnership deed contains the following clauses:
- Name and Address of the firm as well as all the partners;
- Nature of business to be carried on;
- Date of Commencement of business;
- Duration of Partnership (whether for a fixed period/indefinite time);
- Capital contribution by each partner;
- Profit sharing ratio among the partners;
- Rules to be followed in case of retirement, death and admission of a partner; and
- The above are the minimum essentials which are required in all partnership deeds. The partners may also mention any additional clauses.
The Partnership Deed should be on a stamp paper in accordance with the Stamp Act and should be signed by all partners. Then it should be notarized.
STEP 3- REGISTER PARTNERSHIP DEED WITH RJSC
The partnership deed and filled up Form I should be filed with RJSC. These documents will be reviewed by the officials of the RJSC. When the officials are satisfied with the points stated in the partnership deed, he shall record an entry of the statement in a register called the Register of Firms and issue a Certificate of Registration.
This guide will provide you a detailed overview of company registration requirements, procedure, and timeline for registering a private limited company in Bangladesh. Like most other jurisdictions, Bangladesh has a set of initial and ongoing regulatory compliance requirements for starting and operating a company.
When considering the registration of a new company or relocation of your existing company to Bangladesh, note that most Bangladeshi companies are registered as private limited liability companies (commonly known as private limited companies). A private limited company in Bangladesh is a separate legal entity and shareholders are not liable for the company’s debts beyond the amount of share capital they have contributed. According to the Companies Act 1994, any person (foreign or local) above the age of 18 can register a company in Bangladesh.
PRE-REGISTRATION – WHAT YOU NEED TO KNOW
KEY FACTS ABOUT COMPANY FORMATION
The name must be approved (cleared) before incorporation of the company in Bangladesh.
Minimum two directors are mandatory. Directors can be either local or foreign. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractice in the past. The law requires that a director must own qualification shares stated in the Articles of Association. A shareholder which is not a natural person (i.e. a company) can select nominee director.
A private limited company in Bangladesh can have a minimum of 2 and maximum of 50 shareholders. A director and shareholder can be the same or a different person. The shareholder can be a person or another legal entity such as another company or trust. 100% local or foreign shareholding is allowed. New shares can be issued or existing shares can be transferred to another person anytime after the Bangladeshi company has gone through the incorporation process.
You must state the authorized capital in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that the company is authorized to issue (allocate) to shareholders. Part of the authorized capital can remain unissued. There is no minimum or maximum limit for authorized capital in Bangladesh.
Minimum paid-up capital for registration of a Bangladeshi company is Taka 1. Paid-up capital (also known as share capital) can be increased anytime after the incorporation of the company.
. In order to register a company in Bangladesh, you must provide a local address as the registered address of the company. The registered address must be a physical address (can be either a residential or commercial address) and cannot be a P.O. Box.
Memorandum and Articles of Association.
The company to be incorporated must prepare a memorandum of association (MoA) and articles of association (AoA).
CONSIDERATIONS FOR FOREIGNERS
Foreigners wishing to open a Bangladesh company, must take into consideration the following points:
- You must open a bank account in the name of the proposed company with the name clearance obtained from the Registrar of Joint Stock Companies and Firms (RJSC)e. the registrar of companies and bring in the initial paid up capital. This is a mandatory for company incorporation in Bangladesh.
- All company incorporation formalities can be handled without you having to visit Bangladesh. The only exception may be opening a bank account, depending upon the bank you choose.
- All the director and shareholders can be foreigner.
- There is no requirement for you to obtain any special Bangladesh visa if you merely want to incorporate a private limited company but have no plans to relocate to Bangladesh. You are free to operate your company from overseas as well as free to visit Bangladesh on a business visa whenever required to attend to company matters on a short-term basis.
- If you plan to relocate to Bangladesh to operate your company, you are required to obtain a work permit.
For the purpose of company incorporation in Bangladesh, the following information is required by the company registrar:
- Company Name. A name clearance must be obtained.
- Memorandum of Association and Articles of Association.RJSC requires that the object clause in the MoA to be within 400 words and 7 clauses.
- Shareholders Particulars(National ID if the shareholder is a Bangladeshi)
- Directors Particulars(including Tax Identification Number)
- Registered Address
- Singed Form IX and Subscriber Page. Scanned copy in pdf will be required.
- For foreigners:Copy of passport of shareholder and director.
There are three distinct steps involved in the Bangladeshi company setup procedure: a) Name Clearance; ii) Bank account opening and bringing in the paid up capital; and finally b) Company Registration. Step ii is only applicable if there is any foreign shareholder in the proposed company.
STEP 1: NAME CLEARANCE
To set up a Bangladesh company, your first step would be to obtain a name clearance for the proposed company name. You will have to visit www.roc.gov.bd
and create a username first. Then you will be able to apply for name clearance. After you made the application for name clearance, you will receive a bank payment slip and you will have to pay Taka 600 to the designated bank. After making the payment, you will have to log in to your account on the RJSC website and then you will get the name clearance..
To improve your chances of quick name approval, make sure the name:
- is not identical or too similar to any existing local company names
- does not infringe with any trademarks
- is not obscene or vulgar
- is not already reserved
An approved name will be reserved for 6 months from the date of clearance. You can extend the name by filing an extension request just before the expiry date.
STEP 2: BANK ACCOUNT OPENING AND BRINGING IN THE PAID UP CAPITAL
This step is only applicable if the proposed company has foreign shareholding.
Next, you will have to open a bank account in the proposed company name with any scheduled bank in Bangladesh. After opening the account, you will have to remit money equal to the shares to be owned by the foreign shareholder from outside Bangladesh in the account. The Bank will issue an Encashment Certificate which will be required by RJSC for incorporation.
STEP 3: REGISTER COMPANY
The last step is to submit all the required information in the RJSC’s website. Also you will be required to upload Form IX and Subscriber Page. After you finish all the process, you will receive a bank payment slip for paying the registration fees along with stamp duty.
After making the payment in the bank, you are done. Now you will have to follow up with the RJSC for obtaining the incorporation certificate. RJSC officials will check the documents and information. If they are satisfied, they will issue the digitally signed i) Certificate of Incorporation; ii) MoA and AoA; and iii) Form XII. These documents will be mailed to your email address associated with your RJSC account.
There are cases when the incorporation procedure can get delayed if the shareholders or directors are of certain nationalities, although this happens in rare cases only. In such cases, the authorities might ask for additional information.
DOCUMENTS ISSUED BY RJSC:
- Certificate of Incorporation: RJSC will issue a Certificate of Incorporation of the company. The certificate will have the registration number, name of the company and the date of incorporation.
- Form XII: Form XII contains the list of directors of the incorporated company.
- Certified copies of MoA and AoA
Some of the other items you will almost certainly need upon registration of your Bangladeshi company include:
- Share certificates for each of the shareholders.
- Register for shareholders, shares, directors etc.
- Company seal for the company
- A rubber stamp for the company
APPLYING FOR TRADE LICENSE, TAX IDENTIFICATION NUMBER AND OTHER LICENSES
After the incorporation, you should buy a commercial space or rent some space in any commercial area.
Then you need to apply for Trade License and Tax Identification Number. Depending on your company’s business activities, you may need to obtain more business licenses.
RETURN FILING REQUIREMENTS
Each calendar year, an Annual General Meeting must be held. The AGM must be conducted within 18 months of company incorporation, after which no more than 15 months can elapse between one AGM and the next.
In case of any change in the board of directors or in the shareholding structure or any other change, a relevant return must be filed with the RJSC within a certain period of time.
How to change name of a Company
Any company may, by special resolution and subject to the approval of the Registrar of Joint Stock Companies and Firms
, change its name. The change of name will not change any rights or obligations of the company, or render defective any legal proceedings by or against the company; and any legal proceedings that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name.
FIRST STEP: SELECTION OF A NAME
The availability of the new proposed name should be check on the website of RJSC. If the name is available, a name clearance should be obtained. Please see this guide for obtaining name clearance.
RJSC might reject the proposed name if the name falls under the following categories:
- if it is identical with or too nearly resembles, the name of an existing company;
- if it contains part or any abbreviation of the name of a government organization and any international organizations.
SECOND STEP: BOARD MEETING
A board meeting should be held to approve the proposed name. In the same meeting, the board should also call an Extra Ordinary General Meeting as the matter requires approval of the shareholders.
THIRD STEP: EXTRA ORDINARY GENERAL MEETING
In the general meeting a special resolution should be passed approving the proposed name. A copy of the resolution passed in the meeting must be filed with RJSC within 15 days of such meeting along with Form VIII.
FORTH STEP: APPLICATION TO RJSC
An application should be made to the Registrar for his/her approval to the proposed change of name. There is no prescribed form for such application, a simple application on the letterhead of the company is sufficient.
After the Registrar approve the new name, RJSC will issue a new certificate of Incorporation. However the registration number of the company will not change. The new certificate confirms the change of the name.
After RJSC issues the fresh certificate, the change should be noted in the Memorandum and Articles of Association, all documents, letterheads, seal, sign board etc. The change should be noted in the share certificate.
The company should get licenses, permits etc. amended by changing the new name for the old name therein.
How to transfer shares of a Bangladeshi company
Shares in a company registered in Bangladesh is a movable property and transferable in a manner provided in the Articles of Association of the company. Below we have described the procedure of transferring shares of a private limited company registered in Bangladesh.
- In a private limited company, the right to transfer shares may be restricted.
- There is a prescribed form for share transfer known as Form 117.
- Applicable stamp duty must be paid for transfer of shares.
FIRST STEP: CHECK FOR RESTRICTION IN THE ARTICLES AND/OR OTHER AGREEMENTS, LICENSES, PERMITS, APPROVALS.
SHARE TRANSFER RESTRICTIONS IN ARTICLES OF ASSOCIATION
The share transfer in a Private Limited Company can be restricted by the Articles of Association (AOA). Hence, the Articles of Association of the Company must be reviewed before beginning the share transfer procedure. It is common in Bangladesh that the company’s articles of association usually contain pre-agreed procedures set out that are required to be followed for any transfer of shares in the company.
Restrictions on right of the shareholders to transfer shares are usually in the form of pre-emption. Which means that if a shareholder wishes to sell some or all of his shares, such shares must first be offered to other existing members of the private limited company at a price determined by the Directors or the Auditor of the Company. In no existing shareholder is interested, then shares of the Company can be freely transferred to an outsider.
If there is any restriction or special procedures, those restriction or procedure must be followed for any share transfer.
SHARE TRANSFER RESTRICTIONS IN ANY LAWS, AGREEMENT, LICENSE, PERMIT, APPROVAL
All the license, permits, agreement etc. should be checked for any restriction imposed on the transfer of shares of the company. If there is any restriction, prior approval should be obtained.
STEP 2: NOTIFY THE COMPANY.
The shareholder planning to transfer the shares should serve notice in writing to the Board of Directors of the Company about intention to transfer share of the company. The Director may have the powers to refuse registration of transfer of shares under certain circumstances – prescribed in the Articles of Association. The Board of Directors should hold a board meeting and approve the transfer of the shares. The Director should also issue a certificate in
STEP 3: PAYMENT OF THE PRICE OF THE SHARES
Once the company provides its approval, the payment of the price of the shares should took place. If both the buyer and seller are local or foreigner, no proof of the payment is required. However, if the seller is a Bangladeshi and the buyer is a foreigner, Registrar of Joint Stock Companies and Firms (RJSC)
will require bank encashment letter for the share transfer.
STEP 4: EXECUTE THE FORM 117 AND PAYMENT OF STAMP DUTY
Once the above steps are completed, the shareholder who is transferring the shares should visit Registrar of Joint Stock Companies and Firms (RJSC) and should sign the Form 117 at the presence of the officials of the RJSC. Other required documents should also be supplied to RJSC.
Stamp duty is payable on the face value of each share.
Once the Form 117 is signed, a copy of the same should be delivered to the Company.
STEP 5: AMENDMENT OF THE REGISTRAR BOOKS AND ISSUANCE OF SHARE CERTIFICATE
Once the above steps are done, the company should update their share registrar, share transfer registrar, minutes registrar and issue a share certificate in favor of the new shareholder or amend the existing share certificate to reflect the changes.
- Form 117;
- Affidavit by the seller;
- Board Resolution by the company approving the transfer of the shares; and
- Certificate of Transfer of Shares.
Depending on the situation, other documents might be required.
Object clause amendment in the MoA
An objects clause is a provision in a company’s Memorandum of Association stating the purpose and range of activities for which the company is carried on. The purpose of the object clause is to outline and limit the activities which the company is permitted to undertake. Anything which exceeds those limits is ultra vires (beyond the legal power or authority) of the company and may be void.
Below we have describe the process of amending the object clause of a company registered in Bangladesh.
STEP 1: BOARD MEETING EXTRA ORDINARY GENERAL MEETING
A board meeting should be called and in the meeting, the directors will approve the proposed alteration and convene an extra ordinary general meeting (EGM). A 21 days’ notice should be provided for the EGM, unless the shareholders consent to a short notice.
At the EGM, a special resolution approving the alternation should be passed.
Returns of the special resolution should be filed with the RJSC
along with Form VIII.
Documents: Notice of the meeting and resolution (both for Board Meeting and EGM) and certified copies of Form VIII.
STEP 2: APPLICATION TO THE HIGH COURT DIVISION
An application should be prepared for filling with the designated Company bench of High Court Division of the Supreme Court of Bangladesh
. The application should be supported by an Affidavit. The application should contain the proposed object clause(s), justifying the desired changes sought for in object clauses. It is customary to provide a brief history of the shareholding structure of the company from the inception to the date the filling.
Documents: Application, Certificate of Incorporation and Certified copies of the MoA and AoA, Latest certified copies of Schedule X of at least two years and Form XII, Notice and Minutes of EGM, Letter of Authorization (if required).
STEP 3: ADMISSION HEARING
After filling of the application, the Bench officer will assign a matter number to the application. The matter will appear in the daily cause list of the Court and in time the matter will be heard by the Court. After hearing and upon perusal of documents, the Court may admit the matter. If admitted, the court will direct to publish a legal notice in two daily newspapers in respect of the admitted matter, and to serve a notice to the Registrar of Joint Stock Companies and Firms (RJSC).
STEP 4: PUBLICATION OF THE LEGAL NOTICE AND AFFIDAVIT OF COMPLIANCE
Pursuant to the order of the Court, legal notice should be published in the designated newspapers and copies of newspaper carrying the advertisement shall be collected.
An affidavit of compliance is required to be submitted to the court along with the copy of the legal notice published earlier on the specified newspaper in time specified by the court. Upon submission of the documents, the case would be appeared on the daily cause list of the court for hearing.
STEP 5: HEARING AND DONATION
Upon hearing, if the court thinks proper, the court may pass final order. It is customary for the court to require some donation to some charitable organization. The court may fix the donation amount and the charitable organization. After making the payment to the charitable organization and submitting compliance in this regard before the court, the final order will be supplied to the petitioner.
STEP 6: SUBMISSION WITH THE RJSC.
The final order of the court is required to be submitted with the RJSC and RJSC will issue the amended MoA and AoA.
Winding up of a company in Bangladesh
In Bangladesh, the winding up of a company may be either –
- Voluntary; or
- By the court; or
- Subject to the supervision of the court.
Voluntary winding up is usually undertaken by solvent companies, except in the case of creditor’s voluntary winding up.
Below we have described the process of voluntary winding up by passing a special resolution.
PROCEDURE FOR VOLUNTARY WINDING UP:
FIRST STEP: PREPARING DOCUMENTS:
DECLARATION OF SOLVENCY
A declaration of solvency has to be prepared and signed by the directors. The declaration will contain statement of the company’s assets and liabilities as at the latest predictable date before making of the declaration. The declaration will also state that the company has no debts or that it will be able to pay its debt in full within such period not exceeding there years from the commencement of the winding up.
The declaration must be verified by an affidavit to the effect that the directors have made a full inquiry into the affairs of the company. The declaration will be signed by all the directors of the company or, in the case of a company having more than two directors, the majority of the directors.
ACCOUNTS AND AUDIT
Profit and Loss Account and audited Balance Sheet will be prepared up to the latest predictable date as mentioned above and audited. Auditor’s report should be obtained.
SECOND STEP: BOARD MEETING AND EXTRA ORDINARY GENERAL MEETING
A Board meeting will be convened pursuant to the rules of Companies Act and Articles of the company. Majority of the directors should be present at the meeting. In the meeting, the directors will approve:
- Audited accounts;
- The declaration of the Directors;
The directors will also call an extra ordinary general meeting for passing the special resolution to wound up the company. After the meeting, the declaration and the affidavit (prepared in the first step) should be notarized.
FILLING OF THE DECLARATION WITH THE RJSC
The declaration should be filed with the Registrar of Joint Stock Companies and Firms within 5 weeks from the date of the declaration.
EXTRAORDINARY GENERAL MEETING
The extraordinary general meeting will be held and the special resolution will be passed. The special resolution will approve the – i) winding up; ii) appointment of the liquidator and fix the liquidator’s remuneration.
FILLING WITH RJSC
The content of the extraordinary general meeting (along with Form VIII) and the appointment of the liquidator will be filed with the RJSC.
THIRD STEP: APPOINTMENT OF LIQUIDATOR
Immediately after the special resolution is passed, the liquidator will accept the appointment and will assume office and ensure that RJSC is notified about his/her appointment.
Within thirty days after liquidator is appointed, the liquidator will give notice of his appointment as such to the Deputy Commissioner of Taxes having jurisdiction to assess the company.
Notice of any special resolution or extraordinary resolution for winding up a company voluntarily shall be given by the company within ten days of the passing of the same by advertisement in the official Gazette, and also in a newspaper, if any circulating in the district where the registered office of the company is situate. The appointment of the liquidator should also be mentioned in the advertisement.
AGM (IF REQUIRED)
In the event of the winding up continuing for more than one year, the liquidator shall arrange an Annual General Meeting of the company at the end of the first year from the commencement of the winding up and of each succeeding year, or as soon thereafter as may be convenient within ninety days, of the close of the year, and shall lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the proceeding year and a statement in the prescribed form containing the prescribed particulars with respect to the position of the liquidation.
FORTH STEP: FINAL MEETING AND FILLING WITH THE RJSC
The liquidator will prepare a final account of the winding up showing how the winding up has been conducted and the assets of the company has been disposed of. Then s/he will call an extra ordinary general meeting.
EXTRA ORDINARY GENERAL MEETING
Notice of the meeting will be given by advertisement specifying the time, place and object of the meeting not less than one month before the meeting in the official gazette and also in a newspaper circulating in the district where the registered office of the company is situated.
In the extra ordinary general meeting, a special resolution will be passed relating to the disposal of the books and papers of the company.
A return of the winding up meeting will be filed with the Registrar of Joint Stock Companies and Firms within one week of the meeting.
After holding of the final meeting and the submission of the documents to the Registrar, the legal entity of the company will be dissolved.
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