BUS360

“Formation of A Private Company

In Bangladesh”

Submitted to
Mr. Iftekhar Mahfuz
Lecturer
School of Business
Independent University, Bangladesh

Prepared by
SECTION-5
Name ID
Saad Bin Saifullah 1722195
Ismat Jahan Amina 1720153
Md. Ashiqur Rahman 1631183
Tahmina Akter Moon 1722079
Sheikh Shafayet Ahmed 1620349

1
BUS360

1. Letter of Transmittal

To,
Mr. Iftekhar Mahfuz
Lecturer,
Independent University Bangladesh (IUB)
Bashundhara R/A, Dhaka
Date: 31st March 2019

Subject: Submission of report on the formation of a private limited company in Bangladesh.

Dear Sir,
With due respect, it is our pleasure and honor to be your students and have this opportunity
to report that as you have instructed and gave us the consent to work on the report on
register a private limited company in Bangladesh. This report is an essential part of our
course, and we have attempted our best to work on it precisely and earnestly with the goal
that we can make an instructive report.

We are more than willing to answer any questions regarding this report and clarify it fully to
our understanding. Thank you very much for all your support, which helped us significantly in
preparing this report.

Sincerely yours,

Saad Bin Saifullah (1722195)

Ismat Jahan Amina (1720153)
Md. Ashiqur Rahman (1631183)
Sheikh Shafayet Ahmed (1620349)
Tahmina Akter Moon (1722079)

2
BUS360

2. Acknowledgement

One of the most pleasant parts of submitting a report is the opportunity to thank those who
have contributed to it. Unfortunately, the list of expression of thanks, no matter how
extensive is always incomplete and inadequate. These acknowledgements are no exception.
Our first thank goes to the almighty God for bestowing us the patience and courage to finish
this huge task within its deadline.

Thanks, must go to the team members, whose unflagging patience and astounding capacity
for creative work, and long hours made the project both possible and successful under the
pressure of knocking deadline.

In addition, thanks to those sources who has given us important information and various
advises about our term paper.

At last, we sincerely acknowledge our debt to Mr. Iftekhar Mahfuz, our honorable faculty, for
his valuable counseling towards the improvement of the project. Without his guiding,
support and encouragement, this would not have been possible.

Thank You.

3
BUS360

Table of Contents

1. Letter of Transmittal.......................................................................................................2

2. Acknowledgement...........................................................................................................3

Table of Contents........................................................................................................................4

3. Executive Summary........................................................................................................6

4. Company Registration in Bangladesh.............................................................................7

5. Pre-registration................................................................................................................8

5.1. Key Facts About Company Formation..................................................................8

Company Name...............................................................................................................8

Directors..........................................................................................................................8

Shareholders....................................................................................................................8

Authorized Capital..........................................................................................................8

Paid-up Capital................................................................................................................8

Registered Address..........................................................................................................9

Memorandum and Article of Association.......................................................................9

5.2. Consideration for Foreigners.................................................................................9

5.3. Documents Required...........................................................................................10

6. Registration Procedures................................................................................................11

6.1. Name Clearance...................................................................................................11

6.2. Documentation.....................................................................................................12

6.3. Banking Formalities............................................................................................13

4
BUS360

6.4. Registration..........................................................................................................13

6.5. Post-Registration Formalities..............................................................................13

Documents issued by RJSC:.........................................................................................13

Applying for trade license, Tax Identification Number and other licenses...................14

6.6. Return Filing........................................................................................................14

6.7. Issuance of Certified Copy..................................................................................14

6.8. Winding Up.........................................................................................................15

6.9. Struck Off............................................................................................................17

6.10. Fees..................................................................................................................17

7. Advantages and Disadvantages.....................................................................................19

7.1. Advantages..........................................................................................................19

7.2. Disadvantages......................................................................................................19

8. Conclusion.....................................................................................................................20

9. References.....................................................................................................................21

5
BUS360

3. Executive Summary

Company is registered under the Companies Act 1994. The Regulatory body for incorporating
a company is the Registrar of Joint Stock Companies and Firms (RJSC) which facilitates
formation of companies and firms. The body is also responsible for keeping track of all
ownership related issues as prescribed by the laws in Bangladesh. Bangladesh is considered a
key investment destination due to its geo location, cheap labor and competitive production
costs. Incorporating a business in Bangladesh has been simplified over the years due to
interventions by the Government.  Foreign Investors (“Promoters”) intending to invest in
Bangladesh has multiple options to incorporate their business in Bangladesh. Out of these
options, registering a limited company is considered as most suitable for long term
operation.
This report is designed to guide and assist the Promoters by providing an easy step by step
guideline on incorporation of a Company in Bangladesh. Promoters should keep in mind that
except some very exceptional cases, Bangladesh allows incorporation of company with 100%
foreign shareholding and no local joint venture is required. The promoters should fix a
desired name for the Company and apply for name clearance in the RJSC server. Upon
application, the promoter will receive a Computer-Generated Receipt. Investors are required
to make payment of the requisite fees to RJSC for name clearance and upon verification;
RJSC provides a name clearance certificate to the prospective promoters. This name
clearance documents serve as the base for all further processes for company registration. It
is to be noted that the promoters can remotely incorporate a company in Bangladesh
through their authorized lawyers/agents in Bangladesh. Companies must obtain a trade
license from the local governmental authorities in Bangladesh. For example, in case of
Dhaka, a trade license must be obtained from respective City Corporation. The cost of
obtaining a trade license is approximately USD 100 and it can be renewed on yearly basis.
Typical time frame is three-four working days. It is of vital importance to draft a solid and
consolidated constitution document of the company.
The Memorandum of the Company should state the primary business objectives, the amount
of paid up capital & authorized capital and state the list of the shareholders along with their
respective shareholdings.  It is to be noted here Bangladesh does not allow One Person
Company (OPC) and minimum two (2) shareholders are required to set up a private limited
company. However, in case of public limited company, the total number of shareholders
required is seven (7).
A private limited company in Bangladesh is a separate legal entity and shareholders are not
liable for the company debts beyond the amount of share. By registration a company gets
legal identity, that’s why the company get all the legal benefits. So, registration is must
necessary for a company

6
BUS360

4. Introduction

A new era of corporate culture means that setting up a company for carrying out a business
is the best way forward in opposed to proprietorship or partnership format. In this excerpt
let's shed some light into the procedure and documentations required for setting up a
company. In Bangladesh perspective, a private limited company would be the best choice for
carrying out a business as it provides a number of facilities including tax benefits, legal and
easy pathway to raise capital, continuity of a business despite absence of its founder, ease of
transfer of shares/ownership, limited liability for shareholders, availing certain business
discounts which otherwise would not be available to a single consumer/businessman,
branding of the business name due to availability of patented name facility, ease of carrying
out international transactions etc. A private limited company in Bangladesh is a separate
legal entity and shareholders are not liable for the company's debts beyond the amount of
share capital they have contributed.

Company Incorporation in Bangladesh could be a troublesome process if the right and

applicable procedure is not known to one. There are several acts and provisions attached
with the procedure of company incorporation in Bangladesh. Followings shall give an
understanding of what is the procedure and what may be required to have a company
incorporated in Bangladesh. As per the Companies Act 1994, there are mainly three types of
companies; Company limited by shares, Company limited by guarantee and Company with
unlimited liability. The most common form of company incorporation in Bangladesh is a
company limited by shares. In order to incorporate a Company in Bangladesh Companies Act
1994 does not provide the step by step procedure on how to set up a company as it is mainly
dealt by the Registrar of Joint Stock Companies and Firms (RJSC), the Company House of
Bangladesh.

When considering the registration of a new company or relocation of your existing company
to Bangladesh, note that most Bangladeshi companies are registered as private limited
liability companies (commonly known as private limited companies). A private limited
company in Bangladesh is a separate legal entity and shareholders are not liable for the
company’s debts beyond the amount of share capital they have contributed. A minimum of
two members and a maximum of 50 members can set up a private limited company.
According to the Companies Act 1994, any person (foreign or local) above the age of 18 can
register a company in Bangladesh.

7
BUS360

5. Pre-registration

5.1. Key Facts About Company Formation

Company Name

The name must be approved (cleared) before incorporation of the company in Bangladesh.

Directors

Minimum two directors are mandatory. Directors can be either local or foreign. Directors
must be at least 18 years of age and must not be bankrupt or convicted for any malpractice
in the past. The law requires that a director must own qualification shares stated in the
Articles of Association. A shareholder which is not a natural person (i.e. a company) can
select nominee director.

Shareholders

A private limited company in Bangladesh can have a minimum of 2 and maximum of 50

shareholders. A director and shareholder can be the same or a different person. The
shareholder can be a person or another legal entity such as another company. 100% local or
foreign shareholding is allowed in most sectors. New shares can be issued, or existing shares
can be transferred to another person any time after the Bangladeshi company has gone
through the incorporation process.

Authorized Capital

You must state the authorized capital in the Memorandum of Association and Articles of
Association. It is the maximum amount of share capital that the company is authorized to
issue (allocate) to shareholders. Part of the authorized capital can remain unissued. There is
no minimum or maximum limit for authorized capital in Bangladesh.

Paid-up Capital

Minimum paid-up capital for registration of a Bangladeshi company is Taka 1. Paid-up capital
(also known as share capital) can be increased any time after the incorporation of the
company.

8
BUS360

Registered Address

In order to register a company in Bangladesh, you must provide a local address as the
registered address of the company. The registered address must be a physical address (can
be either a residential or commercial address) and cannot be a P.O. Box.

Memorandum and Article of Association

The company to be incorporated must prepare a memorandum of association and articles of

association. To register a company manually, one must go to RJSC office and fill the
application form. One can also register through website of the office of the Registrar of Joint
Stock Companies and Firms (RJSC).

5.2. Consideration for Foreigners

Foreigners wishing to open a Bangladesh company, must take into consideration the
following points:

 You must open a bank account in the name of the proposed company with the name
clearance obtained from the Registrar of Joint Stock Companies and Firms (RJSC) i.e.
the registrar of companies and bring in the initial paid up capital. This is a mandatory
for company incorporation in Bangladesh.

 All company incorporation formalities can be handled without you having to visit
Bangladesh. The only exception may be opening a bank account, depending upon the
bank you choose.

 All the director and shareholders can be foreigner.

 There is no requirement for you to obtain any special Bangladesh visa if you merely
want to incorporate a private limited company but have no plans to relocate to
Bangladesh. You are free to operate your company from overseas as well as free to
visit Bangladesh on a business visa whenever required to attend to company matters
on a short-term basis.

 If you plan to relocate to Bangladesh to operate your company, you are required to
obtain a work permit.

9
BUS360

5.3. Documents Required

For the purpose of company incorporation in Bangladesh, the following information is

required by the company registrar:

 Company Name. A name clearance must be obtained.

 Memorandum of Association and Articles of Association. RJSC requires that the
object clause in the MoA to be within 400 words and 7 clauses.
 Shareholders (National ID if the shareholder is a Bangladeshi)
 Directors (including Tax Identification Number)
 Registered Address
 Singed Form IX and Subscriber Page. Scanned copy in pdf will be required.
 For foreigners: Copy of passport of shareholder and director.

10
BUS360

6. Registration Procedures

Promoters of a new entity apply for and RJSC issues a certificate of incorporation for a new
entity upon satisfaction that the application conforms to the provisions of the applicable act
and that requisite fees are paid.

The steps for the registration or formation of a Private Company limited by shares in
Bangladesh are detailed below:

6.1. Name Clearance

It is an online process where the applicant must make an application for name clearance. A
nominal amount must be deposited into the bank prescribed by the RJSC website. The name
clearance is valid for 180 days and it is recommended that the company incorporation in
Bangladesh is formed within this time, otherwise a new name clearance will have to be
conducted.
After made the application for name clearance, will receive a bank payment slip and will have
to pay 600TK/= to the designated bank. After making the payment will have to log into
account on RJSC website and then will get the name clearance.
Need to read this guide prepared by RJSC for name clearance.

Terms and conditions are given bellow:

1. The same name is not applicable for company/formation in Bangladesh (which is
certified by RJSC).
2. Doesn`t infringe with any trademarks.
3. Is not obscene or vulgar.
4. Is not already reserved.
5. Name could not be similar with International Company, organization, social and
cultural organization.
6. Name cannot be permissible any existing company, business body, social, cultural,
entertainment and sporting organizations name.
7. Company’s name will not be similar Govt. organization or company.
8. Nationally fame person`s name or famous families name need to permission from
person and take permission to Government.
9. If interested to take freedom fighter related name for company must be essential
approval of freedom fighter Ministry of Bangladesh.
10. Companies name could not be similar of Government development program or
development organization.
11. No name will be applicable of political party’s slogan, name and program which are
existing.
12. Slang word will not be granted.
13. Cannot select any name which is broken social, region and national harmony.

11
BUS360

14. Earlier established (at least 10 years old) social organization name to attend
personally with organizing committee resolution for registration of social organization
name.
15. Only name clearance is not final settlement of company registration/formation first
stapes.

An approved name will be reserved for 6 months from the date of clearance. Can be extend
the name by filling an extension request just before the expiry date. If get name clearance
from RJSC of submitting company`s name and make memorandum of association & article of
association memorandum of association describes of all kinds of business & activities which
will be operate by the company and mentioned of shares distribution of every director &
shareholders. All share holder, director, managing director, chairman signed it for their
proposed share.

6.2. Documentation

The following documents would be required to be submitted to RJSC for their verification:

 Memorandum and Articles of Association of the company;

 Promoters' resolution to open a Company in Bangladesh; 
 Obtaining and executing the following forms for registering the company with RJSC:
 Filled in Form I: Declaration on registration of Company;
 Filled in Form VI: Notice of situation of registered office;
 Filled in Form IX: Consent of director to act; 
 Filled in Form X: List of
persons consenting to be
directors;
 Filled in Form XII: Of the
directors, manager and
managing agents

12
BUS360

6.3. Banking Formalities

 Promoter shall open a temporary bank account in the name of the proposed
company with any scheduled bank with the condition that the account shall be
regularized once the company is duly registered with RJSC.
 Capital contribution into the bank account.  
 Obtain encashment certificate from the bank which states that the amount required
for capital contribution has been duly remitted in the temporary bank account of the
proposed company. 

6.4. Registration

The last step is to submit all the required information in the RJSC’s website. Also, you will be
required to upload Form IX and Subscriber Page. After you finish all the process, you will
receive a bank payment slip for paying the registration fees along with stamp duty.
After making the payment in the bank, you are done. Now you will have to follow up with the
RJSC for obtaining the incorporation certificate. RJSC officials will check the documents and
information. If they are satisfied, they will issue the digitally signed i) Certificate of
Incorporation; ii) MoA and AoA; and iii) Form XII. These documents will be mailed to your
email address associated with your RJSC account.

There are cases when the incorporation procedure can get delayed if the shareholders or
directors are of certain nationalities, although this happens in rare cases only. In such cases,
the authorities might ask for additional information.

6.5. Post-Registration Formalities

Documents issued by RJSC:

 Certificate of Incorporation: RJSC will issue a Certificate of Incorporation of the

company. The certificate will have the registration number, name of the company and
the date of incorporation.
 Form XII: Form XII contains the list of directors of the incorporated company.
 Certified copies of MoA and AoA
Some of the other items you will almost certainly need upon registration of your Bangladeshi
company include:
 Share certificates for each of the shareholders.
 Register for shareholders, shares, directors etc.
 Company seal for the company
 A rubber stamp for the company

13
BUS360

Applying for trade license, Tax Identification Number and other licenses

After the incorporation, you should buy a commercial space or rent some space in any
commercial area.
Then you need to apply for Trade License and Tax Identification Number. Depending on your
company’s business activities, you may need to obtain more business licenses

6.6. Return Filing

Registered entities are under an obligation to file returns in prescribed forms and schedules,
and the RJSC upon satisfaction approves and preserves such records. There are two types of
returns: 
a) Annual Return: Every year the company must submit the following documents to the RJSC-
 Schedule X: It is an annual summary of share capital and list of shareholders; S.36;
 Balance Sheet within 30 days from the date of Annual General Meeting (AGM);
 Profit and Loss Account within 30 days from the date of AGM;
 Form 23B: It is a letter of approval by the auditor to be submitted within 30 days since
the date of appointment. 
b) Return for any change in entity: In case of any change made in the company, a relevant
return in prescribed form must be filed with the RJSC. 

6.7. Issuance of Certified Copy

A. RJSC is the sole authority that keeps records of all registered entities (companies,
trade organizations, societies and partnership firms).
B. Anyone can apply for certified copy of any of such records of an entity
C. However, the profit & loss account of a company is not open to all. Only authorized
personnel of the respective company can apply for it.
D. On receipt of an application and requisite fee, RJSC issues certified copy of the
records applied for.

PRIVATE COMPANY (Companies Act, 1994)    

 
a.    Identified by unique nature
i. Articles of Association or part thereof
ii. Memorandum of Association or part thereof
iii. Certificate of incorporation
iv. Declaration on registration of company
v. List of persons consenting to be directors (1st Directors)
    

14
BUS360

b.    Identified by the applicable year

i. Annual summary of share capital and list of shareholders, Directors
ii. Balance Sheet
iii. Profit & Loss Account (only to the authorized person of the respective company)
iv. Notice by Auditor
       
c.    Identified by the effective date
i. Notice of consolidation, division, subdivision or conversion into stock of shares
ii. Notice of increase of share capital
iii. Notice of situation of registered office and of any change therein
iv. Special Resolution/Extraordinary Resolution
v. Consent of director to act
vi. Of the Directors, Manager and Managing Agents and of any change therein
vii. Return of allotment
viii. Of mortgage or charges
ix. Of modification of mortgage or charge
x. Memorandum of satisfaction of mortgage charge
xi. Instrument of Transfer of Share
xii. Alteration of Memorandum of Association
xiii. Alteration of Articles of Association
xiv. Name change
xv. Conversion of private company into public company
xvi. Certificate of Registration of mortgage or charge
xvii. Certificate of Registration of modification of mortgage or charge
xviii. Certificate of Registration of satisfaction of mortgage or charge
xix. Struck off certificate
xx. Wound up certificate

6.8. Winding Up
 
1. Mode of Winding Up

The Winding up of a company may be either

i. By the court; or
ii. Voluntary   

  Sub-Divisions of Voluntary Winding Up

i. Members Voluntary Winding Up: wherein a declaration of solvency to pay debts is

made
ii. Creditors Voluntary Winding Up: wherein a declaration of solvency is not made
iii. Subject to supervision of court: wherein a company has resolved to wind up
voluntarily and the court makes an order on consideration of a petition by the
member (s) or the creditor (s) that the Voluntary Winding up shall continue but
subject to supervision of the court.

15
BUS360

2. Winding Up by the Court

The Company or any creditor or creditors or the Registrar submits petition to the court for
Winding up of the company by the court. Winding up of a company by the court is deemed
to commence at the time of presentation of the petition for the Winding Up. The
petitioner/the company files with the Registrar a copy of the Court order within thirty (30)
days of the court order. The Registrar notifies in the official gazette that such a court order
has been made. The court may, at any time after an order for Winding up, in consideration of
an application of any creditor or contributor, make an order staying the Winding up
proceedings either altogether or for limited time. The court may appoint other than the
official receiver a person or persons as official liquidator or liquidators for the purpose of
conducting the proceedings of winding up. The official liquidator files with the Registrar
audited accounts. When the affairs of the company are completely wound up the official
liquidator files with the Registrar court order of dissolution within fifteen (15) days of such an
order.

3. Voluntary Winding Up

A company may adopt resolution, special resolution or extraordinary resolution for Voluntary
Winding up.
A Voluntary Winding up is deemed to commence at the time of passing of the resolution.
The company within ten (10) days of resolution notifies in the official gazette and in
newspaper that such a resolution has been taken. Members Voluntary Winding up: In this
case, prior to passing of the resolution of Voluntary Winding up, the directors at a meeting
make a declaration of solvency that the company is capable to pay its debts within a period
not exceeding three (3) years. The declaration is filed with the Registrar.

Creditors Voluntary Winding up: In this case, a declaration to pay debts is not made.
The company shall appoint one or more liquidators. As soon as the affairs of the company
are fully wound up and final meeting held, the liquidator within one (1) week of the meeting
files with the Registrar final accounts and returns of the final meeting. The company shall be
deemed to be dissolved on expiration of three (3) months of registration of returns of the
final meeting. The dissolution period may however be extended by the court on
consideration of any petition. Winding up subject to supervision of court: At any stage of the
Voluntary Winding up process, the court may make an order, on consideration of a petition
by the member (s) or the creditor (s), that the Voluntary Winding up shall continue but
subject to supervision of the court.

16
BUS360

6.9. Struck Off

i. Where the Registrar has reasonable cause (like annual returns are not submitted for a
long period etc.) to believe that a company is not carrying on business or in
operation, sends to the company a notice (1st notice) inquiring whether the company
is carrying on business or in operation.
ii. If the Registrar does not within thirty (30) days of sending the notice receive any
answer thereto, shall within fourteen (14) days, after the expiration of the said thirty
(30) days send to the company a 2nd notice stating that if an answer is not received
to the 2nd notice within thirty (30) days from the date thereof, a notice will be
published in the official Gazette with a view to striking the name of the company off
the register.
iii. If the Registrar either receives an answer from the company to the effect that it is not
carrying on business or in operation, or does not within thirty (30) days after sending
the 2nd notice receive any answer, he may publish in the Official Gazette, and send to
the company a notice that, at the expiration of ninety (90) days from the date of that
notice, the name of the company mentioned therein will, unless cause is shown to
the contrary, be struck off the register and the company will be dissolved, and
iv. In such a case the Registrar may send a copy of the notice to the company while
sending it to the concerned authority for its publication in official Gazette.

6.10. Fees

Fees for Name Clearance: BDT 600.

Stamps and Fees for affixing on the Memorandum of Association: BDT 1000.

For affixing on the Articles of Association:

Authorized Capital (BDT) Stamp (BDT)

Up to 2,000,000 3,000

2,000,000 up to 60,000,000 8,000

More than 60,000,000 20,000

Registration fee

For filing 6 documents (5 filled in forms plus 1 memorandum & articles of association,
@ BDT 400 per document) = BDT 2,400

17
BUS360

For the authorized share capital:

Authorized Capital (BDT) ----------------------------------- Fee (BDT)

Up to 20,000 ----------------------------------------------------- 700
Additional for every 10,000
Or, part after first 20,000 up to 50,000 ----------------------- 350
Additional for every 10,000
Or, part after first 50,000 up to 10,000,000 ----------------- 100
Additional for every 10,000
Or, part after first 10,000,000 up to 50,000,000 ------------ 50
Additional for every 100,000
Or, part after first 50,000,000 --------------------------------- 100

Digital certificate fee BDT 1,000

Fees of Returns Filing

COMPANIES (Private & Public)

Returns Filing
i. For filing any document within the schedule time: BDT 500 per document.
ii. Late fee for filing any document beyond the schedule time: @ BDT 2 per day not
exceeding BDT 1,000 per document.

Fees of Winding Up
For Private and Public Company: BDT 400.

18
BUS360

7. Advantages and Disadvantages

A private company is a firm held under private ownership. It can easily be started and
registered by combination of two members. Private companies may issue stock and have
shareholders, but their shares do not trade on public exchanges and are not issued through
an initial public offering. The stocks of a private company are owned and traded by only a
few private investors. The primary advantage of a privately traded company is that it doesn’t
need to answer to any stockholders and there’s no need for disclosures as well. The source
of funds of a private limited company is few investors or venture capitalists. A private
company can’t trade its shares among the general public.

7.1. Advantages

 One of the advantages of private limited company is that members are well known to
each other; however, control is in the hands of owners of capital.
 In the management of affairs and conduct of business is greater flexibility.
 Statuary meeting is not required as well as submitting of a statuary report.
 The number of directors in a private limited company is at least two.
 One of the advantages of private limited company is that its limited liability, due to
which every member enjoys this facility.
 A private company after receiving certificate of incorporation start business
immediately.

7.2. Disadvantages

 It can be formed by two members, but the number of member limit shall not exceed
50.
 There are restrictions on filling the prospectus of statement in lieu of prospectus with
the register.
 It can begin business after registration without requiring any certificate.
 Without any prior approval of the government, directors of a company can easily
receive loan.
 It is necessary that there should be at least two members in a meeting to make a
quorum.
 The word (Private) limited is compulsory to use as the last word of the name.
 It cannot be listed on stock exchange of the country.

19
BUS360

8. Liabilities, Share and Profit

8.1. Liabilities

1) Member of the company, past or present, shall not be liable in respect of any share to any
call or contribution exceeding in amount the difference, if any, between the amount paid, or,
as the case may be, the reduced amount, if any, which is to be deemed to have been paid, on
the share and the amount of the share as fixed by the minutes:
Provided that, if any creditor, entitled in respect of any debt or claim to object to the
reduction of share capital, is by reasons of his ignorance of the proceedings for
reduction or of their nature and effect with respect to his claim, not entered on the
list of creditors, and, after the reduction, the company is unable, within the meaning
of the provisions of this Act or with respect to winding up by the Court, to pay the
amount of his debt or claim, then–
(i) every person who was a member of the company at the date of the registration of the
order for reduction and minute, shall be liable to contribute for the payment of that debt or
claim an amount not exceeding the amount which he would have been liable to contribute if
the company had commenced to be wound up on the day before that registration; and
(ii) if the company is wound up, the Court on the application of any such creditor and proof
of his ignorance as aforesaid, may, if it thinks fit, settle accordingly a list of persons so liable
to contribute, and make and enforce calls and orders on the contributors settle on the list as
if they were ordinary contributories in a winding up.

(2) Nothing in this section shall after the rights of the contributories amount themselves.

8.2. Share

(1) A company limited by shares if so authorized by its articles may with respect to any fully
paid-up shares or to stock issue under its common seal a warrant stating that the bearer of
the warrant is entitled to the shares on stock therein specified and may provide by coupons
or otherwise for the payment of the future dividends on the shares or stock included in the
warrant in this Act termed as share-warrant.

(2) Nothing in this section shall apply to a private company.

A share warrant shall entitle the bearer thereof to the shares or stock therein specified and
the shares or stock may be transferred by delivery of the warrant. The bearer of a share
warrant shall subject to the articles of the company, be entitled, on surrendering it for
cancellation, to have his name entered as a member in the register of members; and the
company shall be responsible for any loss incurred by any person by reason of the company
entering in its register the name of a bearer of a share- warrant in respect of the share of

20
BUS360

stock therein specified without the warrant being surrendered and cancelled. The bearer of a
share warrant may, if the articles of the company so provide be deemed to be a member of
the company within the meaning of this Act either to the full extent or for any purpose
defined in the articles except that he shall not be qualified in respect of the shares or stock
specified in the warrant for being a director or manager of the company in cases where such
a qualification is required by the articles.

(1) On the issue of share-warrant, the company shall strike out of its register of members the
name of the member then entered therein as holding the shares or stock specified in the
warrant, as if he had ceased to be a member and shall enter in the Register the following
namely: -
(i) The fact of the issue of the warrant.
(ii) A statement of the shares or stock included in the warrant, distinguishing each
share by its number.
(iii) The date of issue of the warrant.

(2) If a company makes default in complying with the requirements of this section it shall be
liable to a fine not exceeding two hundred takas for every day during which the default
continues and every officer of the company who knowingly and willfully continues or permits
the default shall also be liable to a like penalty.

Until the warrant is surrendered, the above shall be deemed to be the required by this Act to
be entered in the register of members; and on the surrender the date of the surrender shall
be entered as if it were the date at which a person ceased to be a member.

8.3. Profit

The profit made by a company limited by shares can only be legally removed from the
business by its owners if they follow certain procedures. This is because, unlike sole trader
businesses, limited companies are separate legal entities. All profit belongs to the business
until it is distributed to directors and shareholders as remuneration via the appropriate legal
channels.
You can extract all business profits as a director’s salary, but it is more tax-efficient to take a
smaller salary and make up the rest of your income as shareholder dividends. The best way
to do this is to take a salary up to your Personal Allowance, which is tax-free. This will also
ensure you preserve your right to a state pension and benefits.

You can issue dividends to yourself on a pro-rata basis, in relation to the percentage of
company shares you own, whether that’s 100%, 75%, 50%, or any other amount. This can be

21
BUS360

done as often or infrequently as necessary, if the company has enough retained post-tax
profit after all bills, costs and expenses have been subtracted from the turnover.
If there is no profit left in your business bank account after allowing for these liabilities, you
cannot issue dividends. If you do, the dividend will be deemed illegal and you could face
severe consequences from HMRC. Salaries, however, can continue to be paid even if your
company is making a loss, because this kind of payment is viewed as an expense.

22
BUS360

9. Conclusion

Excessive paperwork, long waits and several visits to the Registrar's office was the norm in
registering a business in Bangladesh. But now not anymore- The RJSC work is part of a larger
effort to simplify business regulations in Bangladesh, it is also reduced time and reduce the
cost of doing business. The company restricts the transfer of shares and prohibits invitation
to the public for the subscription of shares and debentures. For that it uses the term ‘private
limited’ at the end of its name. A private company can easily be started and registered by
combination of two members. But every step of forming and registering a private company is
very important.

Private limited companies and public limited companies have a share capital divided into
private limited company shares and public limited company shares, and the shareholders are
not personally liable forth obligations of the companies – the companies are liable for the
performance of their obligations with all their assets. Limited companies are established by
concluding notarized certified foundation agreements and adopting articles of association.
Private limited companies may also be established with an expedited procedure. In such
cases all the necessary documents are presented to the Commercial Register electronically
and authenticated with digital signatures. Even though the number of shareholders is
unlimited by law in both cases, the private limited company is suited for a more closed circle
of contributors.

23
BUS360

10. References

[ CITATION htt1bus1 \l 1033 ]

[ CITATION htt1bus2 \l 1033 ]

[ CITATION htt1bus3 \l 1033 ]

[ CITATION htt1bus4 \l 1033 ]

[ CITATION htt1bus5 \l 1033 ]

24