Bangladesh has a transition economy that is developing extremely quickly due to its geographical placement in South Asia. It is important to go through the right procedures of entity registration to allow them to operate and function legally. This blog explains the entire procedure of business registration in Bangladesh, from choosing the type of business to the last step which is acquiring the required licenses.
1. Choose the Type of Business Entity
The first step to establish a business is the selection of the most appropriate legal form. The most common forms of business organizations in Bangladesh are:
- Sole Proprietorship: Owned and operated by an individual. It is the simplest form of business but lacks liability protection.
- Partnership: A firm with two or more owners, profit and liability sharing.
- Private Limited Company: A distinct legal entity from its proprietors, providing the shield of limited liability. The most popular mode of business for new businesses in Bangladesh.
- Public Limited Company: A company whose shares are freely transferable, suitable for big businesses.
For most small and medium-sized enterprises, a Private Limited Company is recommended due to its liability shield and simplicity in administration.
2. Name Reservation
Once the business structure is chosen, the second step is to choose a distinctive name for the business. The business name must be distinctive and not clash with previously used names.
- Check Availability: Go to the Registrar of Joint Stock Companies and Firms (RJSC) website to check if your desired business name is available.
- Application to be submitted:Submit application for name reservation through the RJSC portal.
Tip: Prepare a list of alternate names in the event your chosen name is taken.
3. Prepare the Necessary Documents
Once the name is reserved, the next step is to prepare the necessary documents for the registration process. Common documents required include:
- Memorandum of Association (MOA): This is the document that defines the company’s general purpose and extent of operations. It defines what the company is authorized to do, its objectives, and its powers. Essentially, it establishes the company’s general framework.
- Articles of Association (AOA): This is the document that defines the internal rules and regulations that govern the company’s operations. It deals with procedures for meetings, decision-making, and directors’ duties, and gives a framework for internal management.
- Form IX (Declaration of Compliance): This is an official declaration to the effect that the company is in compliance with the provisions of the Companies Act. It maintains that the obligatory statutory requirements are being met.
- Form XII (Consent of First Directors): This form declares the official consent of the first directors to assume their duties and responsibilities in the company.
- Identification Documents: Copies of passport or National Identity Card (NID) for all directors and shareholders to confirm identity.
- Passport-Sized Photographs: Recent photographs of the directors are needed for official records.
- Proof of Business Address: Documentation such as a utility bill or rental agreement is necessary to confirm the company’s official business location.
Tip: Ensure that the MOA and AOA are drafted with the assistance of a legal professional to ensure compliance with Bangladeshi laws.
4. Register with the Registrar of Joint Stock Companies and Firms (RJSC)
The next step involves officially registering the business with the RJSC, either online or through physical submission of documents.
- Form Completion: Accurate completion of required forms is necessary. This includes the Memorandum of Association (MOA), Articles of Association (AOA), Form IX (Declaration of Compliance), and Form XII (Consent of First Directors). These documents provide the RJSC with the foundational information regarding the company’s structure and operational parameters.
- Registration Fee Payment: A registration fee is mandated for the process. Verification of the current fee schedule with the RJSC is essential.
- Form Submission and Verification: Following form completion and fee payment, the submitted documents are presented to the RJSC. This submission can occur via online platforms or through physical delivery.
The RJSC then conducts a verification process to ensure the submitted documents adhere to legal standards.
Certificate of Incorporation Issuance: Upon successful verification and approval, the RJSC issues a Certificate of Incorporation. This certificate serves as the official confirmation of the business’s legal registration. This document signifies the completion of the registration procedure.
5. Apply for a Trade License(T.L)
A Trade License from the local City Corporation or Pourashava (municipality) is required for legal operation. The process involves:
- Document Submission: The Certificate of Incorporation, National Identity Document (NID) of the business owner(s), utility bills, and a rent agreement (if applicable) must be submitted. These documents verify the company’s legal status and operational address.
- Fee Payment:A Trade License fee is payable. The fee amount is determined by the business type and size.
Note: The trade license must be renewed annually to avoid penalties.
6. Register for VAT (Value Added Tax)
Businesses with an annual turnover exceeding BDT 3 million must register for VAT with the National Board of Revenue (NBR).
- Submit Documents: Required documents include the Certificate of Incorporation, Trade License, and bank account details.
- Complete VAT Registration Form: This is available on the NBR website.
- Obtain VAT Registration Number (BIN): Once registered, a VAT Registration Number (BIN) will be assigned to the business.
Tip: Even if turnover does not meet the threshold, voluntary VAT registration is available for businesses wishing to claim VAT refunds.
7. Obtain a Electronic Tax Identification Number (E-TIN)
A Tax Identification Number (E-TIN) is mandatory for all businesses operating in Bangladesh. The TIN is essential for tax filing, opening business bank accounts, and issuing invoices.
- Visit the NBR Website: Complete the E-TIN application form and submit necessary documents, such as the company’s Certificate of Incorporation, Trade License, and NID of directors.
- Receive E-TIN Certificate: Once processed, the E-TIN certificate will be issued.
8. Open a Business Bank Account
A business bank account is essential for managing company finances, making payments, and receiving customer payments. To open an account, provide the following documents to the bank:
- Certificate of Incorporation
- Trade License
- E-TIN Certificate
- Memorandum and Articles of Association
- Shareholders Agreement (if applicable)
9. Register with Other Relevant Authorities (if Applicable)
Certain industries may require additional registrations and licenses. Examples include:
- Export/Import Business: Businesses engaged in export or import must register with the Export Promotion Bureau (EPB) and the Bangladesh Customs Department.
- Environmental License: Manufacturing or environmentally impactful businesses may need approval from the Department of Environment (DoE).
10. Comply with Labor Laws
Businesses that plan to hire employees must comply with Bangladesh’s labor laws, including:
- Social Security Registration: Employers must register employees for Provident Fund (PF) and Gratuity Fund.
- Labor Contracts: Draft employment contracts that comply with the relevant labor regulations.
Conclusion
Business registration in Bangladesh is a step-by-step process, but with the right guidance and preparation, it can be straightforward. By following these steps, business owners can legally establish and operate their businesses in the country. Staying up to date with changes in business regulations is important for maintaining continuous compliance. For further assistance, a legal or business advisor should be consulted.
“Dr. Gazi & Associates” specialize in providing expert guidance to help individuals grow their entrepreneurship and business ventures.
