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Starting A Business Entity In Bangladesh

Starting A Business In Bangladesh
Photo Credit: Sandeep MM


Starting A Business Entity In Bangladesh

Businesses in Bangladesh are booming right now. The country has experienced a steady GDP growth in recent years. Both The Government and The Non Profit Organizations have taken many initiatives to promote entrepreneurship in this country. So If you are an entrepreneur and starting a business in Bangladesh, the following information can help you through.

There are four ways you can operate a businesses in Bangladesh

Proprietorship (Applicable for individual person)
Partnership Company (Applicable for multiple owners)
Private Limited Company (Applicable for multiple owners but limited to 50)
Public Limited Company (Applicable when you are looking to enlist in the stock market)
Company registration process may vary slightly if you are registering any of the following types of business.
Foreign Companies (Applicable where owned 100% by foreign nationals)
Joint Venture Company (Applicable where Bangladeshi citizens partner with foreign nationals)
Trade Organization (Applicable when you want to register a specific association for an industry type)
Society (Applicable for clubs, non profits etc.)

However, in this article we will be covering the proprietorship, partnership and private limited company formations which will be the case for most startups.

Proprietorship: Proprietorship is the simplest form of business structure in Bangladesh. As long as you are 18 years old and a Bangladeshi citizen, you are allowed to be a sole proprietor of a business in Bangladesh. In order to get started first thing you need is a trade license from the local authority.

Trade License: A business trade license is issued by the city corporation if your business location is in big cities, otherwise it will be issued by the local union parishad. Following are the requirements to obtain a trade license as a proprietor.

Your business name both in English and Bengali
Business Category or the type of business (The government fee will be based on the business type you select)
Business address of the business in any commercial area. (It must have a commercial holding number)
Rent/Agreement deed of the office address to be used for the business
Copy of the national ID of the owner
Passport size pictures

Trade licenses are valid from 1st of July to 30th of June of a year and needs to be renewed every year. The government fees  for trade license varies based on the business category you have selected. For most businesses the average cost of obtaining a trade license is around 10,000 -15,000 BDT and takes about a week to get.

Company Seal: A Company seal will be required with your name and proprietor written on the seal with a gap in between to put your signature. A company seal would cost you approximately 1,00 BDT for a rubber seal and an automatic seal would be around 5,00 BDT.

Tax Identification Number / TIN Certificate: Personal TIN certificate is used to operate a proprietorship businesses since it’s owned by just one person. If you don’t already have a TIN certificate, it can easily be obtained from NBR for free of charge. Make sure to have a mobile phone, as verification’s are done via SMS.

VAT Registration: Most businesses operating in Bangladesh are required register their business for VAT. VAT in Bangladesh is calculated based on business yearly turnover. As of now any businesses that have a turn over of less or equal to 30 Lacs, do not require to pay any VAT. Anything above 30 Lacs to 80 Lacs would be required to pay 3% of the yearly turn over. If your business turn over is above 80 Lacs, you will be required to pay 15% VAT on your yearly turnover.

VAT registration is completely free of charge but the process of obtaining a BIN (Business Identification Number) in order to pay VAT widely varies based on the type of business you are in. For most proprietorship businesses it would be pretty simple and will not take more then a week.

Partnership Company: If you are starting a business in Bangladesh and have more then one owners, still undecided on the paid up capital required for the business to grow, it is best to form a partnership company where the partnership agreement is registered through RJSC. In order to form a partnership company, it is best to seek legal help from a corporate lawyer who will draft the partnership agreement based on your partnership arrangements. Following are the requirements to form a partnership company.

Your company name (Must obtain a name clearance certificate from RJSC which takes about a day and can be done online for 1,000 BDT)
Prepare the deed of partnership (Corporate lawyers may charge you around 5,000 – 10,000 BDT to prepare the draft)
Register your deed of partnership with RJSC and obtain certificate of registration. The government fees related to your partnership deed can be found here.

It may take about 6-8 days to complete the registration. Once you have the RJSC registration certificate for your partnership company, you can then obtain other necessary documents your business may require to operate such as trade license, VAT registration etc. You can also later upgrade your company to a limited company if you wish to do so.

Private Limited Company: Most medium size companies in Bangladesh are registered as private limited company. Private limited company requires a minimum of two shareholders and as much as 50. There can be company directors from share holders or appointed, who will be actively involved in the business and shareholders who will not be involved in the business operation but entitled to receive profit from their investment in the business. Followings are the procedure to register a private limited company in Bangladesh

Your company name (Must obtain a name clearance certificate from RJSC which takes about a day and can be done online for 1,000 BDT)
Prepare a memorandum of association and articles of association. In most cases a corporate lawyer would draft your MOA and AOA and can charge you around 5,000-10,000 BDT. The business objective clause of the MoA has to be within 400 words and not more than 7 clauses.
Particulars of the shareholders (NID)
Particulars of the directors (Including personal TIN)
Form IX and subscribers page duly signed.

The government fees of registering a private limited company depends on the paid up capital of the business and can be calculated here. The whole process may take from 6 to 8 days. Once the company is registered, you will receive a certificate of incorporation, certified copy of MOA & AOA and Form XII which lists the directors of the company. You will then be able to obtain other necessary business documents such as trade licenses, VAT registration etc.

Public Limited Company: Public limited companies follow through the same procedure as private limited company, however in order to enlist your company in the stock market to offer IPO, your paid up capital must be above 15 Corer in BDT. SEC in Bangladesh is the governing body authorizes and monitors all the company that wants to go public. You will also be required to find an Investment Bank that you will work as a bond and underwrite your company shares.

Above are the basics of getting you started and form a company. Depending on the type of business you are in, you may require additional documents such as:

If you are into export/ import business you would require either ERC (Export Registration Certificate) or IRC (Import Registration Certificate)
Factories/Hotels/Restaurants businesses will require a fire safety clearance certificate.
Factories will require environmental clearance certificate.
Factories will be required to enlist with BOI (Board of Investment) and acquire memberships of business associations such as chamber of commerce. This is must if you are looking for project loan from Bank to setup your factory.

Kepler Staff of Publishers and Correspondents. Kepler is the leading online information and entertainment site in Bangladesh. We focus into the most important stories that are shaping our country. We add critical perspectives to these stories through rigorous reporting, detailed analysis and expert commentary by our in house correspondents.

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