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What are Memorandum and Articles of Associations of a company?

 

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The Memorandum of Association(MoA) and Articles of Association (AoA) together form the constitutive documents in company formation. Therefore, anyone proposing to form a company should file these two documents with the Registrar of Joint Stock Companies and Firms (RJSC). 

Memorandum of Association: The Memorandum of Association lays down the objectives of the company, i.e. the businesses which the company proposes to carry out. Note that in Bangladesh, the template for MOA is already set by RJSC and a company can include 7(seven) object clauses each containing 1000 (One Thousand) characters. It is important to bear in mind that once an MOA has been registered with the RJSC, it can be altered only with the permission of the High Court. Therefore, be careful with what you include or don’t include in the MOA. 

Articles of Association: Articles of Association of a company contain the regulations for company operation. By law, the company is required to have directors, hold general meetings of shareholders, have to follow specific procedures for issuance of new shares or transfer of shares etc. The AOA of a company includes provisions regulating the meetings (notice period for meetings, quorum necessary for each meeting), procedure for transferring shares (e.g. may include provisions for mandatory offering of shares to the existing shareholders before transfer of shares), allotment of new shares, power of board of directors and shareholders etc. Articles of Association is a technical document and in preparing the same, it is advisable to consult a lawyer or at the least have a good understanding of the company law provisions.

 

 

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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 www.roc.gov.bd ? 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 www.roc.gov.bd .

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 “www.roc.gov.bd” 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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A question that often bugs a startup founder in the initial days of his business is this:

Which form should I go for in going forward with my business?

Needless to say it is an extremely pertinent question and the founder ought to know the types of different business structures before reaching a conclusive answer to that question. We list below the main features of the forms of businesses which can be set up in Bangladesh:

Sole Proprietorship: As the name indicates, when a business is owned and operated by a single individual, it will be deemed to be a sole proprietorship firm. In terms of formalities and compliance requirements, it imposes the minimum obligations. A sole proprietorship can be set up  merely by obtaining a trade license from the local City Corporation or Paurashava. However, this form of business entity will not cater for businesses having two or more owners. It is important to note that the owner of business will be personally liable for all the liabilities and obligations of the business, including the tax and debt.

Partnership: A partnership can be formed by two or more persons by executing a Deed of Partnership. It is advisable to register the partnership with the Registrar and Joint Stock Companies and Firms (RJSC). Each partner will be personally liable for the actions/liabilities (whether undertaken/incurred by himself or other partner(s)) of the partnership . If a partnership is formed, it is strongly recommended to specify in the Deed of Partnership the future of partnership in the event of death of  a partner (unless so specified, the partnership will dissolve upon death of a partner).

Company: A company is a separate legal entity established by way of registration with Registrar and Joint Stock Companies and Firms (RJSC). At least two shareholders are necessary for setting up a private company. For a public company, the minimum number of shareholders is seven. In a company, the liabilities and obligations of the company remain separate from its owners (unless personal guarantees are taken from the shareholders). This means that the personal assets of the shareholders shall remain beyond the reach of the creditors regardless of the amounts of liabilities of the company.  The paperwork involved in forming a company includes Memorandum and Articles of Association, Form IX (Consent of Director) (as prescribed by RJSC, signed by the proposed directors), Subscription Page (signed by the proposed shareholders) etc. A company is legally required to hold at least 1 (one) Annual General Meeting and 4 (Four) Board Meetings. Besides, each year it will be required to submit Annual Returns with RJSC. It is noteworthy to mention that if the startup is planning to raise funds in the near future, it is advisable to form a company as it is unlikely that any venture capital firm will invest in a sole proprietorship or partnership.

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