Joint Venture Company Registration

In areas where there are restrictions on the participation of foreign investors, foreign investors cannot carry out operations in the form of branches because in these cases, the joint venture partners (investors) domestic and foreign) establish joint venture companies and manage the company according to regulations. with the subject clauses of the memorandum of association maintaining the rate fixed by the government for equity participation in a particular sector. In Bangladesh, 100% foreign investment is allowed unless the sector falls under reserved sectors, namely arms and ammunition, afforestation, nuclear power generation and security printing.Another point to note: according to Bangladeshi law, foreign shareholders cannot hold more than 40% of the shares if the company intends to provide freight transport services.A freight forwarding license can only be granted by establishing a joint venture logistics company if the company has  40% foreign ownership and no more than 60% local ownership.One or more foreign investors can establish a joint venture in Bangladesh in cooperation with  one or more Bangladeshi investors.

How to Incorporate a Joint Venture Company in Bangladesh?

The procedures for incorporating a Joint Venture (JV) in Bangladesh are similar to incorporate a general Private Limited Company.
 
Outline | Incorporation of Joint Venture in Bangladesh
 
The Companies Act 1994 does not provide the step by step procedure on how to set up a Company rather deals with the statutory requirements of Company incorporation. It is dealt by the RJSC, the appropriate body; which provides the detailed guideline on its official website regarding the procedure of setting up a Company from name clearance to incorporation.   
 

Step by Step Procedure as in regards to Incorporation of a Joint Venture Company in Bangladesh

 

STEP 1: OBTAIN NAME CLEARANCE LETTER
 
Application for name clearance to RJSC along with the following information:
a)     Application Form;
b)    Proposed Name 
 
STEP 2: DOCUMENTATION
 
a)     Drafting of MoA and AoA and other necessary documents,
 
b)    Promoters’ resolution to open a Company in Bangladesh;
 
c)     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: Particulars of the directors, manager and managing agents. 
STEP 3: PROCEDURES RELATED TO BANK ACCOUNTS

A. The promoters shall open a temporary bank account in the name of the proposed company with any scheduled bank subject to the condition that such account will be regularized once the company is duly registered with Company House

B. Capital contributed to bank account.

C. Bank payment certificate proves that the amount required for capital contribution has been duly paid into the temporary bank account of the proposed company. 
 
STEP 4: SUBMIT APPLICATION TO RJSC
 
Application to RJSC with documents to be made as stated above.
Deadline: After completing the above procedures, RJSC usually provides the company establishment certificate (Company Registration Certificate) within 6 to 8 working days.
Post-registration compliance for Private Limited Companies by shares
 
(a) Trade License
Companies must obtain a business license from the relevant local government[1].
The proposed company must submit an application for registration to the nearest local authority, accompanied by relevant documents and appropriate fees.
 
(b) Tax Identification Number (“TIN”)
Businesses must obtain a TIN from the National Board of Revenue (NBR), the competent authority in this regard.
 
(c) VAT registration certificate
Newly established companies must also have a VAT registration certificate.
In this regard, a request must be sent to the NBR.
 
(d) Fire Prevention Certificate
Fire Prevention Certificate issued by Bangladesh Fire Prevention and Civil Defense Authority.
 
(e) Environmental Clearance Certificate
A company, if involved in an industrial project, must obtain an Environmental Clearance Certificate from the Ministry of Environment by filling in the prescribed form.
 
Special cases (Investment in kind, etc.)
 
The concept of ‘investment in kind’ is not detailed under Companies Act 1994. However, in practice, significant investment is made by investing in machineries and other equipment in a Company by a shareholder or a proposed shareholder in a Company incorporated in Bangladesh. Although CA 1994 does not govern the procedure, the following steps are followed while carrying out such investment in kind:
 
  • The concerned company has to be duly registered with RJSC,
  • The concerned investors have to fill up the relevant Form(s),
  • The concerned investors are required to have a vendors’ agreement between them,
  • The filled up Form(s) and the vendors’ agreement have to be filed with RJSC.
  • The RJSC will then record the investment and monitor whether the proper procedure has been duly followed.
However, a JV agreement is required to complete such incorporation. A JV agreement can be executed by the mutual understanding between the parties. The JV agreement needs to be affixed with the relevant stamp duties so that it carries more value/credibility in the eyes of laws. If the JV agreement is executed in Bangladesh by both the parties then the JV agreement shall be printed on non-judicial stamp paper at first and then signed by both the parties. If the foreign counterpart executes the JV agreement from outside Bangladesh then JV agreement needs to be duly consularized and attested by the concerned Bangladeshi Embassy and foreign ministry in Bangladesh and then affixed with the stamp duty.
 
How much time is required for incorporation?
 
Once the aforementioned formalities are complied with, RJSC generally provides with the certificate of incorporation (Company registration certificate) within 6-8 working days. It usually takes 2-3 weeks to register a Company from the date of submitting all the documents to RJSC.
 
Once the name clearance is obtained, the clearance remains valid for 6 months. Generally 3 working days are required to obtain a name clearance. After obtaining the Name Clearance certificate a bank account need to be opened where the initial paid up capital need to be transferred from the shareholders’ account. If there is any foreign investment then the amount for paid up capital need to be remitted through the newly opened bank account following proper procedure.
 
Fees are required for incorporation of Joint Venture in Bangladesh?
 
The governmental fees of the Company registration depend on the amount of Authorised Capital. For issuance of Incorporation Certificate governmental fees shall be BDT 1000.