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Independent University Bangladesh

Steps in the formation and register a private company

Course Title: Business law

Course Code: Bus 360
Sec- 06
Submitted to

Mr Iftekhar Mahfuz
Members of “Team Royals”

Asif Al Akram 1811219

Md Akib Nurayen Fahad 1921772
Maria Maheed 1921761
Ibnul Alam Ratul 1921505
Sabrina Akter 1910535
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Letter of Transmittal
4th December ,2021

Mr.Iftekhar Mahfuz
Course instructor, Bus360

School of Business
Independent University
Dhaka

Subject: Submission of assignment on Steps in the formation and register a private company
Dear Sir,

This is to inform that we have completed the assignment that had been given to us for the course
Bus 360.

In drafting this report, we have followed the instructions that you have given us in the class, and
we have also applied relevant information that we have learnt through our course. We have
discussed about RJSC, company structures, steps and the valuable registration process. The
contents provided in this report are all our own, though some information and references have
been taken from various sources to facilitate our report.
Therefore, we will be glad to clarify any discrepancy that may arise, and we hope that this
request will merit your approval.
Finally, we would like to express our gratitude for your supportive thoughts and kind
consideration in and outside of the class.
Sincerely,

Team Royals
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Contents
Letter of Transmittal ................................................................................................................................... 2
Acknowledgement ........................................................................................................................................ 5
Executive Summary .................................................................................................................................... 6
Company Introduction ................................................................................................................................ 7
Types of Company ....................................................................................................................................... 7
Company Limited by Shares .................................................................................................................. 7
Company Limited by Guarantee ............................................................................................................ 8
Unlimited Companies .............................................................................................................................. 8
Private company Situation in Bangladesh ................................................................................................. 8
Essential features a private company have ............................................................................................... 9
Number of Members................................................................................................................................ 9
Limited Liability ...................................................................................................................................... 9
Minimum paid up Capital..................................................................................................................... 10
Restriction on shares transferability .................................................................................................... 10
Private Limited ...................................................................................................................................... 10
Perpetual Succession ............................................................................................................................. 10
Minimum Subscription ......................................................................................................................... 10
Separate legal entity .............................................................................................................................. 11
What is RJSC? ........................................................................................................................................... 11
Registration of a Private Company .......................................................................................................... 12
Documents required to fulfill the registration application .................................................................... 12
Memorandum and Articles of association ........................................................................................... 12
Legal name of the company .............................................................................................................. 13
Physical address of the company ...................................................................................................... 13
Objective of the company .................................................................................................................. 13
Liability of Shareholders ................................................................................................................... 13
Association and formation of a company ........................................................................................ 14
Declaration of Registered company under section 25. ....................................................................... 14
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Notice of situation of Registered Office and of any change therein according to section 77. ......... 14
Section 92 Consent to director to act ................................................................................................... 15
List of Persons Consenting to be Directors [Section 92] .................................................................... 15
Treasury Challan from Bangladesh bank ........................................................................................... 15
Fees Concerning the Registration: ........................................................................................................... 16
Fees Regarding The Stamps ..................................................................................................................... 16
Conclusion .................................................................................................................................................. 17
Reference .................................................................................................................................................... 18
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Acknowledgement
We would like to thank you for giving us this subject to prepare the report. This task has been
given us the opportunity to explore one of the most important aspects of the service. The report
contains a comprehensive study based on the service. It was an intense pleasure for us to have
such type of opportunity to work on this topic. We have endeavored our best to come out with a
good one and if we do any mistake (involuntary), then please try to see it in the eyes of forgiven.
Finally, we would like to thank you for the valuable guidance & supportive in preparing this
report. We will be grateful for any clarification when required. We will be highly obliged if you
are kind enough to approve this report and provide your valuable judgment on it.
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Executive Summary
Bangladesh has the potential power to become a developed country with the reputation of some
industry growth. Bangladesh has taken preparation to advance to the next level of development.
The economy of Bangladesh is currently dependent on the industries. Many entrepreneurs are coming are
coming up new generative ideas to explore themselves. For establishing a new compnay it has to go with
some required procedures according to the constitution of Bangladesh and to complete the process RJSC
is playing a vital role and it is the only medium by which a private limited company will complete the
register process. In this paper the details of the process was focused and described with all valuable
documents.
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Company Introduction
A limited public company should be separated from the private company. The company refers to
that voluntary human organization that was established to achieve the same goals. It is a separate
legal entity. One should not confuse the company with its members as both are separate persons
in the eyes of the law. A Private Company is a Company which, in accordance with its Corporate
Documents, limits the right to transfer of shares, limits the number of members to 50 and
prohibits the public invitation to register Company shares or liabilities. Private Limited Company
refers to a company that is not listed on the stock exchange and whose shares are privately
owned by the affected members. Private company minimum members are 2 maximums are 200.
The private company minimum need 2 directors Shares of private companies are not freely
transferable, as there are limits to the Articles of Association. The company can share shares,
without getting a small subscription. The Appointment of Director can be appointed by a single
resolution. Directors do not need to submit their consent in order to act as a director. Directors do
not have to resign in turn. Directors can be permanent.

Types of Company
Private companies can be called corporations, limited companies, limited credit companies,
unlimited companies, or other names, depending on how they are organized and constructed.
There are three types of private company we know-

Company Limited by Shares

The members' liability is determined by the Memorandum of the Association to a fixed
amount of his or her share or much remains unpaid.
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Company Limited by Guarantee

In a limited private company - limited by guarantee, members' debt is limited to the
amount of debt each member incurred in the Organization's Memorandum. Therefore,
members of a Private Limited Company - Guaranteed Limit may not be liable for an
amount exceeding the amount of the guarantee taken by the member in the Memorandum
of the Association.

Unlimited Companies
Limited companies are those types of companies that have no limit on the debt of its
members. The debt of each member extends to the total amount of the debt and debts of
the company. Therefore, unlimited corporate debtors have the power to enforce the debt
and corporate liability to shareholders, if they are closed.

Although there are many types of limited liability companies, the majority of Private Companies
Invested for business purposes are Private Limited Company - Stock Limited. This type of
business provides maximum protection for its members and is widely accepted. Limited private
companies are owned by one or more shareholders. These shareholders are usually supportive
family members. Profit is allocated only to shareholders. They find this to be a profit. Unlimited
debt can be a huge detriment to sole sellers and partnerships. Limited private companies have
limited liability, which means that the investor only loses the first stake if the company breaks in.
A limited private company is different from the people who own it. Its costs are different from
their finances. Because limited companies have their own legal ownership, their owners have no
personal liability for firm debts.

Private company Situation in Bangladesh

After Bangladesh's independence in 1971, the private sector grew from a very insecure
foundation. The country gradually began to focus on establishing new industrial capacity and
mending its economy, aided by significant amounts of foreign aid and a rising middle class.
Since 1975, the government has been increasing the range of private sector involvement in the
economy, a continuing trend today. Many state-owned firms have been privatized since then,
with more on the way. From 1990 to 1993, economic reforms aimed at promoting private
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enterprise and investment, denationalizing governmental enterprises, restoring financial restraint,

and liberalizing the import regime were intensified. During this time, the government also
worked with the International Monetary Fund to establish an Enhanced Structural Adjustment
Facility (ESAF) to promote private sector investment. Despite several pro-market measures,
including as tax reform and enabling more foreign direct investment in the gas and electricity
sectors, progress was slow due to insufficient policy enforcement, bureaucracy, and
infrastructural assistance. Economic development has been hindered further by a completely
dysfunctional banking system, which has hampered state-owned banks' access to funding,
despite the fact that they control around three-quarters of deposits and loans and hold a
considerable amount of classified debt.

Bangladesh's private sector is important to the country's long-term development. The business
environment must be improved, as well as access to finance, particularly in rural and isolated
areas, and infrastructure limitations must be addressed. But Bangladesh must establish a more
stable, efficient, and inclusive financial industry that provides competitively priced financing and
can support the private sector's short-term, long-term, and equity capital needs. Small and
medium-sized businesses, which employ 20% of the adult population, require simpler financing.

On the World Economic Forum's Global Competitiveness Index, Bangladesh lags below most of
its regional counterparts and East Asian competitors (2018). The cost of logistics can range from
5% to 48% of the total cost of production. If Bangladesh wishes to boost its competitiveness and
diversify into higher-value items with more sophisticated logistical requirements, it will need
stronger infrastructure.

Essential features a private company have

Number of Members
In order to form a private corporation, company must have a minimum number of
members. In addition, the maximum number of members in a private business is limited.
A private company must have a minimum of two members to begin operations. It cannot,
however, have more than 200 members; this is the maximum number.
Limited Liability
Members of private limited firms are only liable for the business's debts. Its firms'
liability is restricted to the quantity of shares investors own. It means that if a
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corporation suffers a loss in any way, its shareholders may be required to sell their own
assets to cover the loss. Personal assets or property of members are not responsible to
cover business damages. Only the shareholder's portion of the company's assets is liable
for payment in the event of a loss.

Minimum paid up Capital

For the purpose of beginning a company, private companies require a specific amount
of minimum capital. The maximum amount of paid-up capital for these businesses is
set by the government from time to time. Bangladesh government does not specify a
minimum paid-up capital requirement. As a result, the sum of USD 1 (BDT 84) is
considered Bangladesh's minimum capital requirement.
Only remember that if anyone want to hire any foreign workers, they'll need to submit
a USD 50,000 inward payment. Until, their capital might be lower than that.

Restriction on shares transferability

Members of private limited companies are unable to openly transfer their shares. The
transferability of shares in these firms is strictly regulated. Shareholders must discuss
and get the approval of other shareholders before to transferring their shares.

Private Limited
The use of the words "Private Limited or Pvt. Ltd." in the name of a private company
is essential. This is a legal requirement for private firms to use in their name.

Perpetual Succession
Private limited corporations can exist forever. The life ocontinuation of the
organization is unaffected by the lives of its members. These businesses are both
formed and terminated by law. The business is unaffected by the death, insolvency, or
bankruptcy of any of its members. The company has an unbroken line of succession.

Minimum Subscription
It is the amount received by the corporation in exchange for 90 percent of the shares
issued over a specific time period. In the event that the firm does not get 90% of the
funds, it will be allowed to begin operation. In the case of a private limited company,
however, there is no such restriction; they can begin doing business as soon as the
company is founded.
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Separate legal entity

The formation of private companies is restricted by law. These businesses are legally
separate from their owners and stockholders. It is treated as an artificial person and it
conducts business on its own behalf. It has its own identity, seal, and is the only owner
of all property under his name.

What is RJSC?

The elaboration of the RJSC is Register of Joint stock Company and firm. It is a sole authorities
which looks on the registration process of the company. Beside this RJSC keeps the record of all
the ownership related factors according to the constitution of Bangladesh.
RJSC mainly deals with the Public/Private/Foreign Companies and organizations. RJSC usually
follows Company Act 1994 which is the amendment of Companies act 1913, Partnership act
1932 and Societies Registration Act 1860 respectively. The Head office is situated on the 6th
floor of TCB Bhaban in KawranBazar Dhaka 1215. Beside they operate through various
divisional office also which are in Chittagong, Khulna and Rajshahi. The main function is to
loom over the registration process of the company and firms by giving certificate of
incorporation.
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Registration of a Private Company

As according to the today's amendments, the Government price for Company registration is
waived off for small and different agencies having permitted capital up to fifteen Lakh.
However, the Stamp Duty is payable to the respective State wherein the registered workplace is
situated. After due verification of the utility and files provided, the involved RoC may also
furnish the Certificate of Incorporation (COI), that's a conclusive evidence of lifestyles of the
company, in which the date of Incorporation, Company Identification Number (CIN) and
Permanent Account Number (PAN) is noted with the signal and seal of the Registrar. Further,
the Director Identification Number (DIN) to the administrators is likewise allocated with the
approval of registration.

Documents required to fulfill the registration application

Memorandum and Articles of association
The Memorandum of association is a document which is prepared for establishing and
registering a particular company. The objective is to maintain the relationship between the
shareholders with the company perspective point of view. It is open to the general public so that
all the people can have the access to it and gather the information regarding the company. It is
the a common step for both the public and the private company to ensure the registration and it is
the first demand of the Register of Joint Stock Company and Firms. In the memorandum of
association it is described the names of the company as the per the name of registration, the
number of shareholders that means presently who are holding the ownership of the company,
address of the particular company and it must be physical address so that in any case the RJSC
can contact them and lastly it holds the information regarding the distribution of the share. It is
much more vital for the public limited company as the number of shares are much more than the
private limited companies. The people wants to gather information. The memorandum of
association and articles of association acts as the leading rules for any particular institutions or
company. In other words we can say it as the constitution for both the public and private
company. The memorandum of association is not applicable in United States of America as a
genuine requite to form the company. But it is a legal documents for the European Union and
some Commonwealth Nations. The Memorandum of Association and Articles of Association are
taken into consideration as important files for a organization because it prescribes the scope of
operation of the agency and defines the how operations are carried out. When it involves this
step of registering a agency as Private Limited, underneath 3 clauses are protected in its AoA
similarly to the overall clauses.

• The quantity of participants is constrained as much as 200.

• Transferring of stocks is restricted.
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Prohibition on accepting securities from the public. Below the details parts of the memorandum
of association and articles of association are described in a brief way

Legal name of the company

The name of the company must be unique one so that it doesn’t match with an existing company
ne of the primary organization registration steps includes logging into the MCA portal and get
right of entry to the web-shape RUN (Reserve Unique Name). Here, the applicant the use of the
want to go into login credentials and observe for the proper call for registration of a organization.
In a given service, change names may be implemented in preferential order. In case, not one of
the names is accredited through the Registrar, the applicant is given some other risk to offer the
alternative names, as preferred for the business enterprise. In case, the names in re-submission
also are now no longer accepted, the applicant shall make a clean utility through price of relevant
Government Fees. The software of call reservation is accompanied through the quest of call
availability via way of means of the professionals, to test whether or not another enterprise/ LLP
is already registered with the identical call or a hallmark is registered or now no longer. Further,
the call implemented should additionally be in keeping with the provisions of call availability.
The call allocated in his software can be reserved for the involved applicant for a duration of 20
days beginning from the date of the Name Approval Letter. The applicant have to entire the
subsequent steps inside a given time to sign in a employer with the identical call. There is every
other opportunity to use for Name Registration i.e.Spice-32 Form. One can manner best one call
via the SPICe shape for call reservation. If your organization’s call is just like every other
modern-day call, it'll get rejected. You would require repeating the entire procedure.

Physical address of the company

The address of the company is one of the important factors of the memorandum of association
and articles of association because the RJSC should be aware of the physical presence of the
company. It is mainly done to handle the incoming and outgoing communication
correspondence.

Objective of the company

The memorandum of association holds the details regarding the objective of the company. The
company should have a purpose of establishment and it is the objective of their establishment.
The statement should also hold the ancillary objective upon which the main objective of the firm
will be established

Liability of Shareholders
The firms should mention regarding the liabilities of shareholder in the memorandum of
association part. By this the compnay clearly states the liabilities of the shareholders. The
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benefits that the shareholders will enjoy and how much accountability the shareholders are to the
firm.

Association and formation of a company

The required number of member needed for the formation of the association are 7 for the public
limited company and 2 for the private company.
The documents should have an original and 2 copies of the information

Declaration of Registered company under section 25.

The first and the foremost step of this procedure is to get the DIN number which will be tequired
for all the directors as proposed to the company. The minimum number of director’s required is
3. After having the DIN number the company must apply to have the name. The name must be a
unique one that means it doesn’t get match with any other company. In case of the private
company the the authority must use the word limited and in case of the bank it must use the word
bank. After the name approval the next process is to give an application to the Register of
Company according to Section 24A. There should be enough documents for getting the desired
License form the authority. The essential elements needed for the for filling the section 25 are
the photo identification of the directors and the national identity card of the the directors. The
directors should mention the address with proper proof if he fails to provide the national identity
card to the required authorities. This corporation registration step calls for one you acquire
Digital Signature Certificate that permits the utility filed with MCA signed digitally. This is
completed with the aid of using the Director and Shareholders of the proposed organization.
DSC have to be procured for the suggest administrators and the shareholders of the organization
to allow the submitting of required e-bureaucracy in the course of the registration process. To
acquire DSC, files which include passport length photograph, PAN card and cope with evidence
of the applicant is required.

Notice of situation of Registered Office and of any change therein according to

section 77.
The notice of situation of registered office and of any change is mainly an application to the
register of joint stock company and firm. The filling charge is 20 taka only. In the application it
is mentioned that where the registered company’s office is located and on where it is shifted. In
this application the date and registration number should be attached properly and the application
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must be from the directors, manager or secretory and. The notice must be filed within 28 days of
incorporation with the change otherwise the notice will be granted by the authority.

Section 92 Consent to director to act

The consent of directors have the name of the company where the name of the company must be
detailed. The required list of the directors of the company is to mentioned. The form have 3 parts
where the name of the directors the address and description is to mentioned. The form must be
attached.

List of Persons Consenting to be Directors [Section 92]

The willing company must get an detailed information regarding their directors. The list should
have the details regarding the names of directors and their accountability to the company. The
directors cannot be a minor and he should not be unsound mind. He must be a citizen of the
country and should have a court order against him from the court..

Treasury Challan from Bangladesh bank

The authority must file a treasury Challan from the Bangladesh Bank. Where it will be stated that
the company has paid all the functional payment to the authority and no due is present to forward
the proceedings. By this the receipt the authority will able to understand that the all the
payments concerning the procedures are just finished and the it is ready to move for next
operation .
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Fees Concerning the Registration:

Stamps
1. For memorandum of association affixing : Five hundred TK
2.For Article of association affixing :
For authorized capital Stamps(BDT Up
to Ten lakhs Two thousands Ten
lakhs to thirty hundred lakhs four thousands Three
Crores Ten thousands
Registration fee
1.For filling six Documents (Per Document fee Two hundred TK) : One thousand Two
hundred TK

Fees Regarding The Stamps

i. For Memorandum of Association: Twenty TK.

ii. For Article of Association: Twenty TK.
iii. For others Document: Twenty TK.
b. Court Fee: Per application and company: Twenty TK
C. Fees:
1. For Record Inspection: Hundred TK.
2. Certificate of incorporation copy: Hundred TK.
3. For Certificate of commencement of business copy: Hundred TK.
4. The copy of the documents for each hundred words or parts: Five TK per subject to a
minimum of Hundreds TK.
5. Document comparison for 100 words or parts: Five TK per subject to a minimum of
hundred TK per document.
Society
a. Identified by the applicable year
for document inspection: One TK Fifty paisa
For copying the Annual list of managing body: Twenty TK
b. Identified by the applicable date
For copying the address : Twenty TK
For copy of name change : Twenty TK
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For copy: BDT fifty paisa for single word or part thereof
partnership Firm:
a. Marked by the effective date
1. For document inspection: One TK Fifty Paisa.
2.For copy: BDT Fifty paisa for each hundred words or part thereof.

Conclusion
Private companies are currently playing a vital role in the economy of our country. The
entrepreneurs are coming up with their innovative ideas and flourishing their ideas through a
private company. Company registration process are important so that the private company can
able to flourish the business according to the constitution of Bangladesh. So they can do the
business and side by side the government can generate tax benefit from and able to contribute
those to enhance the life style of the people. The research shows a detailed information regarding
how the company is going to complete the process of registration process according to rules set
by the government of Bangladesh. The details ensures the pricing policy to complete the
procedure. Private companies are enrolling quite significantly in Bangladesh and it is
contributing in the economy.
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Reference
https://smallbusiness.chron.com. (2019, February 04). Definition of Memorandum of
Association. Retrieved from https://smallbusiness.chron.com/definition-memorandum-
association-17475.html
Prajapati, C. and Prajapati, C., 2021. Private Company Registration Process – Simplified Guide.
[online] LegalWiz.in. Available at: <https://www.legalwiz.in/blog/company-registration-process-
simplified> [Accessed 30 November 2021].

Financetoday.net. (n.d.). RJSC seeks info on default loan status from BB . Retrieved from
https://www.thefinancetoday.net/article/bank/1783/RJSC-seeks-info-on-default-loan-status-
from-BB