What is a Bangladeshi Joint Venture?
In the jurisdiction of Bangladesh, it is important to recognize that a joint venture company is accorded the status of a distinct and independent legal entity. Furthermore, it is crucial to note that the process of establishing a joint venture company in Bangladesh bears resemblance to that of other nations.
Preliminarily, prior to delving into the intricacies of establishing a joint venture entity in Bangladesh, it is imperative to acquire a foundational understanding of the pertinent legal principles governing company formation within the jurisdiction of Bangladesh.
In accordance with the laws and regulations governing the establishment of companies in Bangladesh, it is permissible for any two individuals, both of whom have attained the age of 18 years, as well as any entities, whether domestic or foreign in nature, to engage in the process of registering a company within the jurisdiction of Bangladesh.
The liabilities of shareholders with respect to the debts of the company are limited to the extent of the share capital that they have contributed. The aforementioned entity shall enjoy the liberty to engage in its lawful pursuits and distribute dividends to its shareholders.
The joint venture entity situated in Bangladesh is obligated to adhere to all necessary Tax and VAT ramifications and is required to remit taxes on its earnings.
Typically, the registration process for a company, commencing from the moment of submitting all requisite documents to the esteemed Company House, entails a duration of approximately three to four weeks. The determination of government fees for the incorporation of a company is contingent upon the quantum of Authorized Capital.
In the event that the company seeks to employ any individual of foreign nationality, it is imperative that the company demonstrates a requisite investment of no less than USD 50,000. Moreover, it is imperative for the Company to diligently ascertain that the proportion between foreign nationals and local employees remains at a ratio of 1:5.
Nevertheless, it is within the purview of the Company to seek exemption from this requirement, provided that a compelling rationale is duly substantiated. The establishment of a Company is the most favorable form for an investor who intends to provide services in Bangladesh on a long-term basis.
However, it is important to note that the process of winding up a Company is inherently more intricate and time-consuming when compared to establishing a liaison/branch office. Typically, the process of winding up a Company shall span a duration of approximately 6-8 months.
Pursuant to the legal framework in Bangladesh, it is imperative to note that the laws in place ensure the provision of equitable treatment between foreign and domestic investment, thereby prohibiting any form of discriminatory practices. Furthermore, it is essential to highlight that the legislation also guarantees the unfettered repatriation of proceeds arising from the sale of shares and profits.
Step by Step Procedure as to How to Register A Joint Venture Company in Bangladesh
The subsequent elucidation delineates the sequential process involved in establishing a joint venture entity in Bangladesh, while also addressing the procedure applicable to a foreign shareholder in Bangladesh.
Step 1 | Draft and Execute A Joint Venture Agreement
The initiation of the joint venture company’s formation occurs through the execution of a joint venture agreement between the domestic and foreign investor, accompanied by the acquisition of a name clearance certificate from the Company House for the preferred name chosen by the investors.
The joint venture agreement serves as the governing document that delineates the business scopes, company name, shareholding ratio, applicable governing laws and jurisdictions, liabilities, board of directors, and other pertinent matters that the parties deem to be of utmost significance.
Once the terms and conditions of the agreement have been mutually agreed upon, it is customary for said terms and conditions to be transcribed onto a non-judicial stamp paper of the value of BDT 300. Following this, the parties involved or their duly authorized representatives shall affix their signatures thereto.
Step 2 | Obtain Name Clearance
You have the option to select a company name and ascertain independently whether said name is present within the name directory of RJSC (Registrar of Joint Stock Companies). Upon completion of the registration process on the online name clearance portal, it becomes possible for you to reserve a name and remit the corresponding fees by means of a bank challan to the specified financial institution.
Step 3 | Draft the Memorandum of Association (MOA) and Articles of Association (AOA)
In order to facilitate the drafting of a legally sound Memorandum of Association (MOA) and Articles of Association (AOA) that adhere to the laws of Bangladesh and align with the previously executed joint venture agreement in Bangladesh.
it is advisable to engage the services of a qualified attorney or a reputable law firm situated within the jurisdiction of Bangladesh. The aforementioned documents must adhere to legal requirements and accurately convey the intentions of the involved parties in a thorough manner. Consequently, it may be advisable to consider engaging the services of a reputable law firm in Bangladesh.
Step 4 | Draft and Execute Form XII, IX
The preparation of Form XII and Form IX shall be contingent upon the framework provided by the Registrar of Joint Stock Companies (RJSC), and the inclusion of pertinent information from the Memorandum of Association (MOA) and Articles of Association (AOA) shall be duly incorporated into the aforementioned forms as mandated.
Step 5 | Open the Proposed Company Bank Account (optional, only applicable in case of foreign partner)
Prior to submitting the aforementioned documents to the Registrar of Joint Stock Companies and Firms (RJSC), it is imperative for the joint venture entity to duly establish a provisional bank account in its own name at any of the authorized banking institutions in Bangladesh.
This shall be accomplished by furnishing the executed draft articles and memorandum of association, the certificate of name clearance, the completed bank application form, and any other pertinent documentation as may be mandated. Upon the establishment of the temporary bank account.
it is incumbent upon the foreign investor to duly remit the precise sum of the share capital from their foreign bank account to said temporary bank account. Upon receipt of the share capital amount by the bank, it is incumbent upon said bank to issue an encashment certificate, wherein it shall duly declare and affirm that the aforementioned share capital has been successfully transferred by the foreign investor.
The submission of the encashment certificate, in conjunction with the draft articles and memorandum of association, name clearance, duly signed forms, and the personal particulars of the shareholders and directors, is mandated to be made to the Registrar of Joint Stock Companies (RJSC).
Step 6 | File the Documents to RJSC
Upon the completion of the submission process, it is the duty of the Registrar of Joint Stock Companies (RJSC) to diligently examine and authenticate the aforementioned documents, subsequently furnishing the concerned parties with the duly certified incorporation documents pertaining to the joint venture company.
FM Associates is a top law firm in Bangladesh offering post-incorporation services.
The firm must have these after incorporation:
- Tax Identification Number (TIN) certificate
- VAT certificate from National board of Revenue
- Trade license from the relevant city corporation.
VAT and trade license require 7–14 days, whereas t Tin certificate takes 1 day.
