For the future leaders

Incorporating a company

incorporation-of-company-aoa-moa-formats-new-comapnies-act-2013Forming a company may sound daunting, but did you know, you can form a company in Bangladesh essentially online on the website of Registrar of Joint Stock Companies and Firms (RJSC) at ? The certified Memorandum of Association as well as Articles of Association plus the Certificate of Incorporation will be delivered straight to your email. So there is no reason to feel taken aback by the “vast amount work” involved in the formation. Below are the procedures that may enable you to DIY the whole process (assuming you already have an Articles of Association and Memorandum of Association prepared):

  1. Obtain a Name Clearance Certificate for Company


Required Documents
No document is required
Process Steps
Step 1 Applicant fills – in the online application
Step 2 Opening an E-account on Registrar of Joint Stock Companies and Firms  website
Step 3 Preliminary name search on RJSC website
Step 4 Make a payment of fees to BRAC Bank
Step 5 Submit the money receipt
Step 6 Obtains the Name Clearance Certificate
Official time limit Approximate processing time for issuing the Certificate
4 hours 1 working days
Fee Schedule
BDT 600.00

Upon obtaining Name Clearance Certificate, proceed to register the company.

2. Registration of (Private and Public) Company

Required Documents Remarks
1. Name Clearance Certificate Issued by RJSC
2. Filled-in-Form-I: Declaration on registration of company Required for public/ private company
3. Filled-in-form –VI: Notice of situation of registered office Required for public/ private company
4. Filled-in-form-IX: Consent of Directors to act Required for public/ private company
5. Filled-in-form-X: List of persons consenting to be directors Required for public/ private company
6. Filled-in-form-XI: Agreement to take qualification shares in proposed company Required only for Public limited company
7. Filled-in-form-XII: particulars of the Directors, Managers and Managing Agents and of any therein Required for public/ private company
8. Article of Association & Memorandum of Association A copy of the original for each document
9. TIN Certificates of the proposed Directors A copy of the original
10. Treasury Challan Original

All the forms listed above are available in blank on the RJSC website .

Process Steps
Step 1 Applicant prepares Memorandum of Association (MOA) and Articles of Associations (AOA) as appropriate to the entity type
Step 2 Applicant visits “” in order to apply for company registration
Step 3 Applicant selects entity type in the website Form
Step 4 Applicant feels – in the name clearance submission number and letter number
Step 5 Applicant feels – in (as well as, scans and uploads) the prescribed forms (e.g., Form# I, VI, IX, X, XI, XII, XVI)
Step 6 Applicant attaches the MOA and AOA
Step 7 Applicant submits the registration application through completing the web Forms
Step 8 Applicant receives the payment/ deposit slips for payment of the registration fee from designated bank once application is submitted
Step 9 Applicant makes photocopies of the payment/deposit slips as well as prints out copies of all applications filled-in documents uploaded online, and submits them at the dealing officer’s counter at RJSC office
Step 10 Applicant gets a receipt of the certificate of incorporation from the dealing officer after the Deputy Registrar have checked and signed the application.
Official time limit Approximate processing time for the registration
1 Working Day 3 working days


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FAQs in Taxation in Bangladesh: Part-1


  1. I have just started a business, should I get a Tax Identification Number (TIN)?

When you hop on the entrepreneurship journey, presumably you dream of becoming “big” one day. Trust me, you can NEVER be big if you’re callous about regulatory requirements. So, we advise that you SHOULD get a TIN. The question is “when”?

If you want to operate through a company, you should get a TIN before the formation of the company; the company should also get a separate TIN.

On the other hand, as a proprietorship firm/unregistered business, you can practically operate without a TIN for as long as you want, but it will only take you so far.

To give you an idea of the obstacles you may face without a TIN if you are operating through a trade license only, you cannot:

  • renew your trade license;
  • take a loan of more than Tk.500,000 from banks/financial institutions;
  • open letter of credit for the purpose of import;
  • apply for gas/electricity connection for the commercial purpose;
  • get equity funding.

So in short, when you omit to get a TIN, you are not only evading VAT and tax, chances are, your exposure in terms of funding, sponsorship, profit-sharing are also much more limited.

  1. When, as a salaried person, an individual should have a TIN?

Any individual receiving a basic salary of Tk. 1,92,000.00 or more and any person employed in management or administrative position is required by law to obtain TIN. This requirement is enforced by imposing the penalty on the company with which such individuals are employed.

So, for example, if Mr. Rahim is employed with X Limited and X Limited pays Tk.16,000.00 to Mr. Rahim each month as basic salary, totaling Tk. 1,92,000.00 during the income year, without ensuring Mr. Rahim has 12 digit TIN, during the calculation of taxable income the whole amount paid as salary will be disallowed as expenses [see below].

  1. What is the income year?

 A calendar period of 12 months from 1 July-30 June. For income tax purposes, income is calculated and tax becomes payable for this period. Income year has been unified for all entities since the implementation of the Finance Act, 2015 except banks, insurance companies and financial institutions (who can have a January-December income year).

  1. What is the last day of filing income tax return for an individual?

30 November.

  1. What is the last day of filing return for a company?

If the income year is January-December: 15 July.

If the income year is 31 July-30 June: 15 January.

  1. How is the taxable income of a company calculated?

Very broadly, company’s Taxable Income = Gross Profit-Expenses.

An example may illustrate. Suppose, over the income year, X Limited’s total sale is Tk.1,00,000 out of which it has made the gross profit of Tk.60,000. Now, this Tk.60,000 shall be subjected to a deduction of salaries, utility bills, travel expenses etc., which amounts to Tk.20,000. Consequently, the total taxable income of the company will be Tk.20,000.



A list of things the Companies should do every year to be compliant


Being an entrepreneur, over the year you had been too busy testing and refining ideas, raising funds, getting traction and as the year-end is approaching, you’re probably thinking of getting a much-deserved break. While you have a winter vacation, to ensure that everything is on track when you come back, make sure that besides doing the “business”, you have also taken care of  regulatory requirements over the year. This will enable you to avoid any future pitfalls during fund raising sessions.

So below is a go to guide you may refer to.

A. Actions to be taken:

  1. Get profit and loss account and balance sheet (i.e. financial statements) prepared and get the same audited;
  1. Hold Annual General Meeting (AGM);***
  1. Present the audited financial statements before the AGM and get them adopted by the shareholders;
  1. Appoint an auditor in AGM;
  1. If there are retirement of directors (likely in public companies), appoint directors;
  1. Get the tax returns prepared.

B. Documents to be filed with regulatory bodies

Document to be filed Contents/particulars of filing Relevant Office Timing of filing
Schedule X (Annual Return)

(It is a standard form, available on Registrar of Joint Stock Companies and Firms (RJSC) websiteকোম্পানি/বাণিজ্য-সংগঠন)

i.               Details of share capital;

ii.              Details of Shareholders;

iii.            Details of share transfer, if any;

iv.             Particulars of the directors;

v.              Particulars of auditor;

vi.             Particulars of the Managing Director

RJSC Within 21 days of holding AGM
Form XII Particulars of directors RJSC i.               Appointment of first director: within 14 days of appointment;

ii.              Change in particulars of directors (removal or appointment/re-appointment of directors): within 14 days of such change

Form 23B

(Standard form available on RJSC website)

Notify RJSC of the appointment of auditor and auditor’s consent to the appointment RJSC Advisable to submit within 21 days of AGM (along with Schedule X), though statutory requirement is 30 days.
Balance sheet and profit and loss account with audit report Self-explanatory documents RJSC Advisable to submit within 21 days of AGM (along with Schedule X), though statutory requirement is 30 days.
Tax Return

(IT Return Form for Company. It is a standard form, available on National Board of Revenue (NBR) Website

Return and Balance sheet and profit and loss account with audit report Relevant Tax Circle Within 15 January for July-June financial year;


Within 15 July for January -December financial year

***Each calendar year, every company is required to hold a general meeting (i.e. shareholders’ meeting) as its annual general meeting. There shall not be more than 15 months’ gap between the last general meeting and the present one. Besides, there shall not be more that 9 months’ gap between the financial closing and the general meeting.  However, in the case of the first annual general meeting, the company may hold it within a period of maximum 18 months from the date of its incorporation.

The pros and cons of forming a company


While treading on your road of entrepreneurship, one question you may face is whether it’s more advantageous for you to start a business as a sole trader or via a company. What follows lay down the pros and cons of forming a company, which information may help you to make your decision.

If you structure your business as a company, you’ll have the following advantages:

  1. Limited Liability: As the company is a stand-alone entity, separate from its shareholders, in case it goes into financial difficulty, the assets and personal finances of shareholders are protected beyond the value of their shareholding. This means that if a company fails to pay debts, the shareholders will only have to contribute according to the nominal value of their shareholding. It can be as small as Tk.100 (Taka One Hundred) or Tk.10 (Taka Ten).

2.   Continuity: Once formed, a company continues in perpetuity regardless of the change in shareholders, directors, management, and employees. If they leave, retire, die – the company remains in existence. A company can only be terminated by winding up, liquidation or other order of the courts or Registrar of Companies.

  1. Accessibility to funds: New investors can be brought on board by easily issuing new shares, transfer or sale of shares, all of which can be undertaken with a relative ease. Hence, obtaining funds in a company is much  easier than obtaining funds in a sole proprietorship or partnership.
  1. Taxation: Unlike the sole proprietors, during payment of taxes by a company on its profits, there is a wider range of allowances and tax-deductible expenditures that can be offset against a company’s profits.

Disadvantages of operating as a limited company:

  1. Expensive set up: More documentation and upfront costs are necessary during formation of the company;
  1. Double taxation:When distributing dividends out of profits to its owners (shareholders), companies deduct taxes at source. This is the first taxation. However, if the receiving shareholders are individuals, they must also pay taxes for this distribution on their personal returns. This is the second taxation of the same money.
  1. Stricter regulatory requirements: There are many legal regulatory provisions on how a company should be run, most deriving from the Companies Act, 1994, Securities and Exchange Ordinance, 1969, Securities and Exchange Commission Act, 1993 (and rules and regulations promulgated by Bangladesh Securities and Exchange Commission from time to time). For example, a company must have a board of directors, hold meetings at fixed intervals, and file certain records every year etc. in order to be regarded a compliant entity. If you intend to raise funds, it is always advisable to be compliant from the very beginning of your business.

Shares 101


Formation of company and raising funds often demand the basic understanding of many concepts and some terms may sound confusing. Below are a few oft-used terms pertaining to shares:

Nominal value or Face Value: The minimum amount to be paid against any shares. A share may be of Taka 100 or Taka 10 or Taka 1000 or more. For example, if the face value of share is Taka.10.00, usually (see Discount below) the minimum amount to be paid against such share will be Taka 10.00.  The lower denomination of shares permits increased liquidity of shares.

Share Premium: The additional price paid against a share over and above the face value. So, for example, when Taka 60.00 is paid against a share having a face value of Taka 10.00, the shareholder is paying Taka 50.00 in premium. The premium shall not form part of paid-up capital but under the company laws of Bangladesh, it will attract various restrictions as to its use. The premium of shares are determined by various determinants including the underlying assets of a company, value of business, scope and prospect of growth of the business etc.

Discount: When the shares are issued at a price below the nominal below, the shares will be regarded as having been issued on discount. Shares can be issued on discounts only by obtaining approval of the shareholders in a general meeting and sanction of the High Court and it is not generally advisable to opt for discounting the shares.


Obtaining a Trade License


Trade License is the basic legal documents that a business is required to possess to carry out its business.  The trade license should be renewed annually, at the end of each financial year, which is July-June. The process and required documents for obtaining a Trade License is given below:


Required Documents Remarks
1. Application Form2 Original
2. National ID Card Usually a copy of the original duly attested by a First Class gazetted officer
3. Rent receipt and Rent Agreement (if the the office is rented) or ownership proof (if the office premises is owned)
4. Holding Tax payment receipt (Optional)
5. Recent passport size photo of the entrepreneur, usually the Managing Director/Chief Executive Officer or any other director Three (3) copies, duly attested by a First Class gazetted officer
6. In case of a company, Memorandum of Association and Articles of Association A copy of the original duly attested by a First Class gazetted officer
7. In case of a company, Certificate of Incorporation A copy of the original duly attested by a First Class gazetted officer
8. If foreign directors are involved, Work Permit from Board of Investment A copy of the original duly attested by a First Class gazetted officer in case of foreign investors/ nominated employees

Process Steps

Step 1 Applicant collects the prescribed Application Form from City Corporation/Municipality’s relevant Zonal office
Step 2 Applicant submits filled-in Application Form to the Taxation Officer along with supporting documents
Step 3 Applicant deposits scheduled fees at the City Corporation/ Municipality/ Union Parishad
Step 4 Obtains Trade License from City Corporation/Municipality/Union Parishad office
Official Time Limit Approximate Processing Time for Issuing the License
10-15 working days Time may vary

Fee Schedule:

Application Form BDT 10.00
Licensing Fee For Limited Company, License fee is determined on the basis of paid-up capital (information can be collected from the City Corporation/Municipality/Union Parishad office)




Advantages and Disadvantages of partnership business

partnership-1A partnership is commonly formed where two or more people wish to come to together to form a business. Perhaps they have a common business idea that they wish to put to the test or have realised that their skills and talents compliment each others in such a way that they might make a good business team. Forming a partnership seems like the most logical option and, in some cases, it is. In this article, we will discuss the various advantages and disadvantages of a partnership business.


  • Capital – Due to the nature of the business, the partners will fund the business with start up capital. This means that the more partners there are, the more money they can put into the business, which will allow better flexibility and more potential for growth. It also means more potential profit, which will be shared between the partners in the proportions as agreed by them.
  • Flexibility – A partnership is generally easier to form, manage and run. They are less strictly regulated than companies, in terms of the laws governing the formation and because the partners have the only say in the way the business is run (without interference by shareholders) they are far more flexible in terms of management, as long as all the partners can agree.
  • Shared Responsibility – Partners can share the responsibility of the running of the business. This will allow them to make the most of their abilities. Rather than splitting the management and taking an equal share of each business task, they might well split the work according to their skills. So if one partner is good with figures, they might deal with the book keeping and accounts, while the other partner might have a flare for sales and therefore be the main sales person for the business.
  • Decision Making – Partners share the decision making and can help each other out when they need to. More partners means more brains that can be picked for business ideas and for the solving of problems that the business encounters.


  • Disagreements – One of the most obvious disadvantages of partnership is the danger of disagreements between the partners. Obviously people are likely to have different ideas on how the business should be run, who should be doing what and what the best interests of the business are. This can lead to disagreements and disputes which might not only harm the business, but also the relationship of those involved. This is why it is always advisable to draft and register a deed of partnership with Registrar of Joint Stock Companies and Firms during the formation period to ensure that everyone is aware of what procedures will be in place in case of disagreement and what will happen if the partnership is dissolved.
  • Agreement – Because the partnership is jointly run, it is necessary that all the partners agree with things that are being done. This means that in some circumstances there are less freedoms with regards to the management of the business. Especially compared to sole traders. However, there is still more flexibility than with limited companies where the directors must bow to the will of the members (shareholders).
  • Liability – Ordinary Partnerships are subject to unlimited liability, which means that each of the partners shares the liability and financial risks of the business including any consequence resulting from the actions of other partners, which can be off putting for some people.

Advantages and Disadvantages of sole-proprietorship business


If you are starting a business on your own, i.e. without any partners, then sole-proprietorship is the right business model for you. In this article, let’s have a look athe various advantages and disadvantages of a sole-proprietorship business.


  1. Simple Form of Organisation:

Proprietorship is the simplest form of organisation. The entrepreneur can start his/her enterprise after obtaining a simple trade license (and specific permits, if applicable to the particular business). There is no need to go through the legal formalities and compliance requirements, which is often the case for a company or a partnership business.

  1. Owner’s Freedom to Take Decisions:

The owner, i.e. the proprietor is free to make all decisions and reap all the fruits of his labour. There is no other person who can interfere or weigh him down.

  1. High Secrecy:

Secrecy is another major advantage offered by proprietorship. This is because the whole business is handled by the proprietor himself and, as such, the business secrets are known to him only. Combined to it is the fact that the proprietor is not bound to reveal or publish his accounts. In present day business atmosphere, the less a competitor knows about one’s business, better off one is. What the competitors can make is guesstimates only.

  1. Tax Advantage:

As compared to other forms of ownership, the proprietorship form of ownership enjoys certain tax advantages. For example, a proprietor’s income is taxed only once while corporate income is, at occasions taxed twice, say, double taxation.

  1. Easy Dissolution:

In proprietorship business, the entrepreneur is all in all. As there are no co-owners or partners, therefore, there is no scope for the difference of opinion in the case the proprietor/entrepreneur-wants to dissolve the business. It is due to the easy formation and dissolution, proprietorship is often used to test the business ideas.


  1. Limited Resources:

A proprietor has limited resources at his/her command. The proprietor mainly relies on his/her funds and savings and, to a limited extent, borrowings from relatives and friends. Moreover, other funding options, such as venture capital are virtually unavailable to a sole proprietorship.  Thus, the scope for raising funds is highly limited in proprietorship.

  1. Limited Ability:

Proprietorship is characterised as one-man show. One man may be expert in one or two areas, but not in all areas like production, finance, marketing, personnel, etc. Then, due to the lack of adequate and relevant knowledge, the decisions taken by him be imbalanced.

  1. Unlimited Liability:

Proprietorship is characterised by unlimited liability also. It means that in case of loss, the private property of the proprietor will also be used to clear the business obligations. Hence, it is challenging and high risk for sole proprietors to venture into high risk projects.


Key differences between public and private limited company

apples_or_oranges_1When, as a founder you plan to form a company, you often face this question: Do you want your company to be private or public and then you hit Google with no conclusive answer. Well, look no further, here we lay down the differences to help you decide for yourself

Characteristics Private Public
Minimum number of shareholders 2 (Two) 7 (Seven)
Share transfer restrictions Yes; any shareholder willing to transfer their shares has to offer them to the existing shareholders first; only if the existing shareholders refuse, they can transfer the shares to a third party. No share transfer restrictions is applicable;
Maximum number of shareholders 50 Unlimited
Minimum number of directors 2 (Two) 3 (Three)
Listing with stock exchanges for public trading of shares Cannot list (has to convert itself to public limited company first) Can list
Permission from Bangladesh Securities and Exchange Commission Will be necessary if the paid-up capital exceeds Tk.10,00,00,000 (Taka Ten Crore) Will be required if the paid up capital exceed Tk.1,00,00,000 (Taka One Crore)
Certificate of commencement from Registrar of Joint Stock Companies and Firms (RJSC) Not required It is advisable to obtain certificate of commencement of business from the RJSC before commencing business

During the formation stage, incorporating a public limited company is only advisable if the capital base is going to be large (at least more than a few crore) at the very beginning (which is unlikely for a startup). Otherwise, forming a private company is the best option for any startup as it would allow them to have the advantages of company (separate identity from the founders) while limiting the formalities requirements at a minimum.

What are the differences between shareholders and directors?

steering-committee-800x240In the simplest form, the shareholders are the “owners” of the company while the directors are the “operators” of the company. While it may look like there is a stark distinction between “shareholders” and “directors” and they need to be two separate individuals, in most companies they are the same persons. In Bangladesh, it is usual to include a provision for “qualification” shares in the Articles of Association and in order to be a director, one needs to hold at least the qualification shares in the company. However, while all the directors are also likely to be shareholders of the company (in most scenarios), not all the shareholders are directors of the company.  So, for example, if A,B, and C together form a company whereby C remains abroad most of the time, only A and B may choose to be directors. In such case, the company will have 3 shareholders and 2 directors only.

The directors constitute the Board of Directors of the company and the meeting between them is called “Board meeting”. In order to be compliant under the Bangladeshi law, there has to be at least 4(Four) Board Meetings in a year.

On the other hand, the meetings between the shareholders are called the “General Meeting”. Note that, law mandates that each year there has to be one “Annual General Meeting”. Any meeting of shareholder other than the Annual General Meeting is known as “Extra Ordinary General Meeting”.

At the operational stage, by law there are a number of decisions which have to be taken by the shareholders i.e. in a general meeting and except these matters, the Board of Directors is entitled to take decisions on all other issues.

Practically, it is the Managing Director who has the power to manage the day to day functions of the company and he acts by means of a delegation of power from the board of directors. In matters where the Managing Director is not empowered, the Board must meet to make a decision on it.

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