Start Business
Actually this guide provides you an overview of the various
types of business entities in Bangladesh and the differences among them. Each
of these is subject to different regulatory and tax regimes reflecting their
organization and ownership.
AVAILABLE OPTIONS FOR BANGLADESHI CITIZEN:
SOLE PROPRIETORSHIP
A sole
proprietorship is the simplest type of business form in Bangladesh. From a
legal perspective, sole proprietorship is not a separately incorporated
entity and therefore the owner and the business are one and the same. The owner
personally owns all assets and liabilities of the business. There is no
protection of personal assets from business risks and liabilities. As the sole
proprietor of a business, you have unlimited liability, meaning that if your
business can’t pay all its liabilities, the creditors to whom your business
owes money can come after your personal assets. Many entrepreneurs are usually
unaware of this enormous financial risk. If the business is sued or can’t pay
its bills, the owner is personally responsible for the business’s liabilities.
PARTNERSHIP
COMPANY
PRIVATE LIMITED COMPANY
WHY ENTREPRENEURS PREFER PRIVATE LIMITED COMPANY:
1.
Separate Legal
Entity: A private limited company has its own legal identity,
separate from its shareholders and its directors. It can acquire assets, go
into debt, enter into contracts, sue or be sued in its own name.
2.
Limited
Liability: The liability of the shareholders to contribute to the debts of
the company is limited to the amount that they each agreed to contribute as
capital to the company.
3.
Perpetual
Succession: The Company’s existence does not depend on the continued
membership of any of its shareholders. Ease of transfer of shares or changes in
shareholders ensures that company continues to exist even in the event of
death, resignation, or insolvency of shareholders or directors.
4.
Ease of
raising capital: You can raise capital for expansion or other purposes by
bringing in new shareholders or issuing more shares to existing shareholders.
Investors are more likely to purchase shares in a company where there usually
is a separation between personal and business assets. Also, most banks prefer
to lend money to limited companies.
5.
Credible Image: As an
incorporated business entity, it commands a better image than a sole
proprietorship or a partnership firm, and investors will be more willing to
become part of the company as it demonstrates a vision to grow and expand. As a
private limited company, your business will be taken more seriously by your
potential clients, suppliers, bankers, and other professionals you will be
dealing with.
6.
Easier
transfer of Ownership: Ownership of a company may be transferred,
either wholly or partially, without disrupting operations or the need for
complex legal documentation. This can be done through the selling of all or
part of its total shares, or through the issue of new shares to additional
investors.
PUBLIC LIMITED COMPANY
AVAILABLE OPTIONS FOR FOREIGN INVESTORS
SUBSIDIARY COMPANY
BRANCH OFFICE
REPRESENTATIVE OFFICE
Please
note that we do not include nonprofit entity in this guide.
AVAILABLE OPTIONS FOR BANGLADESHI CITIZEN:
SOLE PROPRIETORSHIP

Further
details about sole proprietorship can be found at proprietorship guide.
PARTNERSHIP
Under the
Bangladeshi law, a partnership must consist of minimum two and maximum 20
partners. An agreement for the partnership is required for obtaining a trade
license and opening of a bank account. The agreement is not required to be
registered with the Registrar of Joint Stock Companies and Firms (RJSC). The
liability of a partnership is borne by the partners.
The
concept of Limited Partnership or Limited Liability Partnership does not exist
in Bangladesh.
Further
details about sole proprietorship can be found at partnership guide.
COMPANY
In
Bangladesh companies are either – i) limited by shares; or ii) limited
guarantee. Though it is technically possible to register an unlimited company,
those companies are rare.
A limited
liability company is a company limited by shares i.e. its liabilities are
limited to the amount of share capital. A limited liability company is a
business entity registered under the Bangladeshi laws and a separate legal
entity from its members. In a limited liability company, the liabilities of the
owners are limited to the assets in the company and their personal assets are
protected from business liabilities.
A
Bangladeshi Limited Liability Company can be – i) a private limited company; or
ii) a public limited company.
PRIVATE LIMITED COMPANY
A private
limited company is a limited liability company in which the shares are held by
less than 50 persons and are not available to general public. Most privately
incorporated businesses in Bangladesh are registered as private limited companies. The
shareholders of a private limited company can either be individuals or
corporate entities or both.
A private
limited company is the most advanced, flexible, and scalable type of business
incorporation in Bangladesh. It’s also the most preferred type of Bangladesh
business entity for serious entrepreneurs (as opposed to sole proprietorship or
limited liability partnership). For more detailed information about private
limited companies, refer to company registration in Bangladesh guide.
WHY ENTREPRENEURS PREFER PRIVATE LIMITED COMPANY:
1.
Separate Legal
Entity: A private limited company has its own legal identity,
separate from its shareholders and its directors. It can acquire assets, go
into debt, enter into contracts, sue or be sued in its own name.
2.
Limited
Liability: The liability of the shareholders to contribute to the debts of
the company is limited to the amount that they each agreed to contribute as
capital to the company.
3.
Perpetual
Succession: The Company’s existence does not depend on the continued
membership of any of its shareholders. Ease of transfer of shares or changes in
shareholders ensures that company continues to exist even in the event of
death, resignation, or insolvency of shareholders or directors.
4.
Ease of
raising capital: You can raise capital for expansion or other purposes by
bringing in new shareholders or issuing more shares to existing shareholders.
Investors are more likely to purchase shares in a company where there usually
is a separation between personal and business assets. Also, most banks prefer
to lend money to limited companies.
5.
Credible Image: As an
incorporated business entity, it commands a better image than a sole
proprietorship or a partnership firm, and investors will be more willing to
become part of the company as it demonstrates a vision to grow and expand. As a
private limited company, your business will be taken more seriously by your
potential clients, suppliers, bankers, and other professionals you will be
dealing with.
6.
Easier
transfer of Ownership: Ownership of a company may be transferred,
either wholly or partially, without disrupting operations or the need for
complex legal documentation. This can be done through the selling of all or
part of its total shares, or through the issue of new shares to additional
investors.
·
PUBLIC LIMITED COMPANY
A public
limited company is a limited liability company that may offer its shares to
general public. A public limited company must have at least 7 shareholders and
is subject to significantly more stringent rules and regulations since they
have the power to raise funds from the public. Usually a public limited
company is listed on a stock exchange.
AVAILABLE OPTIONS FOR FOREIGN INVESTORS
Foreign
investors wishing to setup a presence in Bangladesh, have the choice of setting
up a subsidiary, a branch office or a representative office in Bangladesh.
SUBSIDIARY COMPANY
A subsidiary
company is a limited liability company incorporated in Bangladesh with the
parent company as its shareholder. For most foreign businesses, a subsidiary
company is the most preferred choice of registration in Bangladesh.
BRANCH OFFICE
A branch
office is a setup in Bangladesh as an extension of its parent company and
not as a separately incorporated entity. The liabilities of a branch office
extend to its parent company.
REPRESENTATIVE OFFICE
A representative
office is registered in Bangladesh as a temporary arrangement for
conducting marketing research activities. A representative office does not have
any legal status and cannot be engaged in any profit yielding activities.
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