Setting Up A Legal Entity In Bangladesh

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2023-01-18 18:44
Description : How To Incorporate A Private Limited Company in Bangladesh

Incorporation is, by definition, legal entity setup that makes a business distinct from their owners. The corporate veil is a legal difference that protects a corporation's owners and stockholders from responsibility. Because corporations are considered separate legal entities, they have many of the similar rights and obligations as individuals, including:

Having to pay taxes

Having a piece of real estate

Suit is being filed.

Being named in a lawsuit

Borrowing money

Did you know? According to SBA estimates, over 627,000 new companies open each year.

Business entity setup is the most common type of business structure since they are recognized as legal business entities in most nations. They are commonly identified by their company names, which include a corporate identifier such as "incorporated" or "limited."

Overview Of Entity Setup In Bangladesh

To set up legal entity, there are some regulations that are needed to be followed such as the entity type, maximum owners, and minimum number of creditors in Bangladesh. They are given below:

Entity Type
Maximum Foreign Ownership Allowed
Minimum Paid-up Capital
Minimum Number Of Shareholders
Private Limited Company
Public Limited Company
Subsidiary Company
No Capital
No Shareholders
Representative Office
No Capital
No Shareholders

3 Reasons Why You Need To Setup Legal Entity

Apart from tax concerns, the realization that the owner is not legally accountable for the business's activities is the most typical justification for incurring the cost of setting up a legal entity. However, let's look at three more reasons why a corporation is a desirable vehicle for conducting business.

Unlimited Life:

Once business entity setup is done, unlike that of a proprietorship or a partnership, the corporation’s life is not based on the life of a single individual or individuals. It can go on eternally until it achieves its goal, merges with another company, or declares bankruptcy. A legal entity setup could continue on indefinitely until otherwise stated.

Transferable Share:

It's always comforting to know that your entity setup and business ownership interest can be easily sold, transferred, or passed down to another family member. The process of selling your shares in sole proprietorships can be time-consuming and expensive.

Ability to Raise Investment Capital:

Because of the restricted liability and easy transferability of shares, it is usually considerably effective to recruit new investors by setting up a legal entity. Stocks can be directly transferred to new investors.
A Step By Step Guideline For Outsourcing Entity Setup Services

Name Clearance: To begin legal entity setup, you must obtain clearance from The Registrar of Joint Stock Companies and Firms for your company's name (RJSC).

Drafting Required Documents: Second, you must write the Articles of Association (AoA) and the Memorandum of Association (MoA). You must prepare it along with other forms as business entity setup standards for RSJC compliance while drafting them.

Bank Account Opening: Third, if you plan to hire foreign personnel, you need to open a bank account in the planned company's name and make an inward transaction of at least US$ 50,000.

Submission Of documents To RSJC: You must submit all relevant documentation to the RJSC and pay the registration fees in this step of legal entity setup.

Post-Registration Compliance: To set up legal entity, You must also complete the following licenses and registrations:

Tax Identification Number

Tax Identification Number

Certificates of VAT Registration

Certificates of VAT Registration

Fun Fact: A single person can form a One Person Company (OPC) as a Private Limited Company and own all of the company's shares.


Incorporation is the process by which a company is formally constituted and brought into existence by setting up a legal entity.

Incorporation entails drafting a declaration as the articles of incorporation and listing all of the company's shareholders that’s why it is also known as business entity setup.

Limited liability means that the resources and cash flows of the corporate entity are kept distinct from those of the owners and shareholders once you set up legal entity

Ending Words

Our entity setup services effectively construct a protective bubble of restricted liability surrounding a company's shareholders and directors, sometimes referred to as a corporate veil. As a result, once setting up a legal entity is complete, we enable the incorporated business to take the risks that allow it to expand without subjecting the shareholders, owners, and directors to personal financial obligation beyond their initial commitments. So, contact us today for your company incorporation needs!

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