Entity Formation

How to Incorporate an Entity in Bangladesh

There are several structures through which an investor can incorporate an entity in Bangladesh. The specific mode of incorporation depends on the client’s needs and the type of business engaged. Our legal consulting firm is one of the prominent service providers in Bangladesh regarding incorporation with the RJSC (Company House) and the Bangladesh Investment Development Authority (BIDA). Along with our sister concerns, we provide 360-degree end-to-end professional services.

Types of Entities

The formation of a permanent establishment (PE) in Bangladesh generally takes the following forms:

Private Limited Company

One of the most preferred options for starting a business in Bangladesh is incorporating a Private Limited Company. Although there are other options, such as registering a branch office, the procedure for registering a Private Limited Company is outlined below.

Before proceeding, it's worth mentioning the option of registering a liaison office with BIDA. However, a liaison office cannot conduct business transactions; it can only maintain communication between the parent company and potential vendors or clients. Therefore, liaison offices are not a viable option unless the parent company’s intention is merely to maintain a degree of liaison in Bangladesh.

What is a Private Limited Company?

According to Section 2(q) of the Companies Act 1994, a Private Company is one that restricts the transfer of shares, limits the number of members to fifty, and prohibits public invitations to subscribe to its shares or debentures.

Characteristics of a Private Limited Company

The Companies Act 1994 outlines the following characteristics of a Private Limited Company:

• It restricts the rights to transfer shares [s. 2(q)].
• The minimum number of members is 2 (two) [s. 5].
• The maximum number of members is 50 (fifty), excluding employees of the company [s. 2(q)].
• It must have at least two directors [s. 90 (2)].
• It prohibits any public invitation to subscribe for shares or debentures [s. 2(q)].
• It is not required to fulfill the statutory meeting or statutory report obligations [s.83(12)].
• Subject to obtaining other necessary licenses, a Private Company can commence business as soon as it is registered with the RJSC.