Starting a Business in Bangladesh: Procedures, Time & Costs

Bangladesh positioned 122 among 183 countries in the ranking of 'Ease of the Doing Business' by the World Bank. Bangladesh dropped from 118 in 2011 to 122 in the year 2012, which means the coming days are becoming business unfriendly. The economic growth of a country is largely indebted to business. A business-friendly environment is critical for motivating the growth of small and medium size enterprises. Unfortunately, our authority is paying very little heed to the issue.

Here is a list below -a detailed summary of the bureaucratic and legal hurdles a startup entrepreneur must overcome in order to incorporate and register a new firm means starting a business in Bangladesh, along with their associated time and set-up costs in Bangladesh. It examines the procedures, time, and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income (GNI).

These are only explicit issues. There are many implicit issues too. Corruption, red tape problem, uncooperative behavior of bureaucrats are some to mention. Ok, let's move forward. Hope this article will help Startup Entrepreneurs greatly.

Step 01: On-line verification of the uniqueness of the proposed company name with the Registrar of Joint Stock Companies and Firms.

The proposed name needs to be sent online and a clearance certificate is provided via e-mail by the Deputy Registrar (Name Clearance), RJSC. A printout of the name clearance certificate is to be submitted to the RJSC along with the other documents and forms required for the incorporation of the company.

Time Duration: 1 day

Estimated Associated costs: BDT 100

Step 02: Pay adhesive stamp fees at a designated bank.

Until recently, special adhesive stamps of value was affixed to the memorandum of association regardless of the company’s authorized capital. Provision of Pay order in lieu of stamp was passed on 20 January 2010 (SRO # 21-Law) under The Stamp Duty (Additional Modes of Payment Act 1974). Applicants do not need any-more to buy physical special adhesive stamps. Payment can be made to the designated bank accounts of the Treasury. Previously all the fees were supposed to be deposited only in selected branches of Sonali Bank. RJSC has now allowed one of the leading private sector banks with extensive national coverage —the BRAC Bank---to collect fees.

For an authorized capital of between BDT 100,000 to BDT 1,000,000 the adhesive stamps of total value BDT 2000 is required - BDT 500 is required for the memorandum of association and BDT 1500 for the articles of association.

Time Duration: 1 day

Estimated Associated Costs: BDT 2000

Step 03: File documents with the Registrar of Joint Stock Companies and Firms for registration.

For filing the memorandum and articles of association, the company pays fees based on the company’s authorized capital. For a company with a capital of BDT 318320, the cost is BDT 4125 (BDT 2925 registration fees + 1200 registration filing fees). The fees are paid at the designated banks.

The following documents to be submitted to the registrar:

(a) name clearance certificate;
(b) memorandum of association;
(c) articles of association
(d) forms I, VI, IX, X, and XII;
(e) proof of payment (i.e. receipt from the designated bank) for Treasury Stamps;
(f) encashment certificate (for nonresident subscribers); and
(g) tax identification number (for resident subscribers).

Time Duration: 1 day

Estimated Associated Costs: BDT 2925 registration fees + 1200 registration filing fees

Step 04: Make a company seal

Time Duration: 1 day

Estimated Associated Costs: BDT 40-50

Step 05: Register with the tax authority:

To commence business, every company must register itself with the appropriate taxation authority (Deputy Commission of Taxes of Company Circle, Zonal Taxation Department) under the National Board of Revenue (NBR) and procure a tax identification number for the new company.

Time Duration: 9 days

Estimated Associated Costs: No charge

Step 06: Register for VAT

For VAT purposes, companies may be registered separately with the Customs, Excise, and VAT Commission (under the NBR). The various VATs incurred while operating the business will be regulated by the area NBR Customs Department and VAT and Excise Department.

Time Duration: 5 days, simultaneously with step 5

Associated Costs: No charge

Step 07: Obtain a trade license

Companies may obtain a trade license from the City Corporation. The trade license application must be accompanied by the following documents:

1) a certified copy of the company’s articles and memorandum of association,
2) a copy of the certificate of incorporation,
3) the company’s statement of bank solvency,
4) the company’s tax identification number certificate,
5) a copy of the rent agreement for the company’s office,
6) three photographs (copies) and 7) particulars of the person in charge of the main corporate functions.

Time Duration: 6 days

Associated Costs: BDT 5000

*Source: Doing Business project, World Bank, Doing Business in Bangladesh. The information last updated in June 2011.