Sunday, March 8, 2020

Business Entities of Bangladesh

Any foreign company or individual wanting to do business in Bangladesh will need to decide under which form they want to operate. The various business entities available in Bangladesh are described below. It is important to note that those that do not create a legal entity in Bangladesh in order to carry business in the country might still be subject to certain limitations and obligations under state law. Companies wanting to provide goods or services in Bangladesh need to carefully assess whether their activities establish a presence in Bangladesh which might make them liable to pay taxes in the country and oblige them to make public filings.

As per the relevant publications of the Board of Investment (BOI), local investors may setup a business under several organisational structures such as sole proprietorship, partnership and limited company. In the case of a foreign investor, only a limited company may be established.

Companies limited by shares 

Business in Bangladesh may be led by an organisation framed and incorporated locally or by an organisation incorporated abroad, however enrolled in Bangladesh. The incorporation or enrolment is carried out by the Registrar of Joint Stock Companies and Firms (RJSC) under the provisions of the Companies Act 1994. The following corporate forms are available:

Company Limited by Shares 
– Private Limited Company
– Public Limited Company

Company Limited by Guarantees

Unlimited Company

Private Limited Company::

The main characteristics of a Private Limited Company are:

• Restricts the rights to transfer the shares

• Limits the number of its members to minimum two and maximum 50 excluding the persons employed in the company

• Prohibits any invitation to the public to subscribe for the shares or debentures of the company and
is entitled to commence business from the date of its incorporation.

Public Limited Company:

A Private Limited Company may be converted into a Public Limited Company or a company can be incorporated as Public Limited Company.

Public limited company can be of two types:

 i) listed and

ii) unlisted The main characteristics of a Public Limited Company are:

• May issue invitation to the members of the public to subscribe the shares and debentures of the company through a prospectus which complies with the requirements of the Companies Act, 1994, Has a minimum of seven members with no maximum limit

• Has at least three directors

• Shall not commence any business until obtaining the Certificate of Commencement of Business

For listed public limited companies (which are listed with BSEC for trading shares in public), in addition to the above, they must also comply with the requirements of the Securities and Exchange Ordinance 1969 and the Securities and Exchange Commission Act 1993.

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