Navigating the Path to a Public Limited Company in Bangladesh

A Comprehensive GuideThe formation of a Public Limited Company (PLC) in Bangladesh is a structured process involving several key steps, regulatory approvals, and legal documentation. It requires adherence to the Companies Act 1994 and regulations set forth by the Registrar of Joint Stock Companies and Firms (RJSC) and the Bangladesh Securities and Exchange Commission (BSEC), particularly if the company intends to offer shares to the public.Here’s a detailed breakdown of the procedures:Phase 1: Pre-Incorporation Steps

Minimum Requirements:
Shareholders: A minimum of seven shareholders are required. There is no maximum limit on the number of shareholders for a PLC. Shareholders can be individuals or corporate bodies, local or foreign.
Directors: A minimum of three directors must be appointed. Directors must be individuals, at least 18 years old, not bankrupt, and without any past convictions for malpractice. They must also obtain a Tax Identification Number (TIN) from the National Board of Revenue (NBR). Directors need to hold a certain number of qualification shares as specified in the Articles of Association.
Registered Address: A physical registered office address within Bangladesh is mandatory.
Name Clearance:
The first official step is to obtain name clearance for the proposed company from the RJSC.
An application is submitted online via the RJSC website (www.roc.gov.bd) after creating an account.
The proposed name must be unique and not closely resemble any existing company names or be undesirable in the opinion of the RJSC.
A fee is payable for the name clearance, which, once approved, is typically reserved for a specific period (e.g., 180 days), during which the company registration process must proceed.
Preparation of Foundational Documents:
Memorandum of Association (MoA): This crucial document outlines the company’s objectives, its authorized share capital, the names of the subscribers (initial shareholders), and the number of shares each subscriber agrees to take. The object clause in the MoA should be clearly defined.
Articles of Association (AoA): The AoA contains the internal rules and regulations for the management of the company. This includes procedures for share allotment and transfer, conduct of board and general meetings, powers and duties of directors, dividend policy, and winding up procedures.
These documents must be drafted in compliance with the Companies Act 1994 and meticulously reviewed.
Phase 2: Incorporation with RJSC
Opening a Temporary Bank Account and Capital Deposit (if applicable at this stage):
While the major capital raising for a PLC intending a public offer happens after BSEC approval, initial subscribers may need to deposit their share subscription money into a temporary bank account opened in the proposed company’s name.
For local companies, the minimum paid-up capital requirement at incorporation can be nominal (e.g., Taka 1). However, practical capital requirements, especially if foreign investment is involved or for specific business types, can be higher. Foreign investors are generally required to remit their portion of the paid-up capital, for which an encashment certificate from the bank is necessary.
Submission of Incorporation Documents to RJSC:
The following documents, along with prescribed forms and fees, are submitted to the RJSC, typically through their online portal, followed by submission of physical copies:
- Approved Name Clearance Certificate.
- Printed and signed copies of the Memorandum of Association (MoA) and Articles of Association (AoA), duly stamped.
- Particulars of the directors, manager, and managing agents (including their TIN certificates).
- Written consent from individuals agreeing to act as directors (Form IX).
- List of persons consenting to be directors (Form X).
- Declaration of compliance with the requirements of the Companies Act (Form I).
- Notice of the situation of the registered office (Form VI).
- Particulars of the subscribers (shareholders), including names, addresses, parents’ names, and passport copies (for foreign nationals) or National ID (for Bangladeshi nationals).
- Evidence of payment of registration fees.
- For foreign directors/shareholders, copies of their passports.
Issuance of Certificate of Incorporation:
Once the RJSC is satisfied that all documents are in order and comply with legal requirements, it will issue the Certificate of Incorporation. This certificate signifies the company’s legal existence as a corporate body.
Phase 3: Capital Issue and Public Offering (If Applicable)
Obtaining Consent from Bangladesh Securities and Exchange Commission (BSEC):
If the PLC intends to raise capital by issuing shares to the public, it must obtain consent from the BSEC.
An application must be made to the BSEC as per the Securities and Exchange Commission (Issue of Capital) Rules, 2001 (and subsequent amendments). This application includes details like company name, address, incorporation date, authorized and paid-up capital, amount of capital to be issued, face value of shares, and the period within which capital will be issued.
Certified copies of the MoA, AoA, and other relevant documents must accompany the application.
Preparation and Approval of Prospectus:
A prospectus, which is an invitation to the public to subscribe to the shares or debentures of the company, must be prepared.
The prospectus must contain all material information about the company, its financials, objectives, risks, and details of the proposed issue, as stipulated by the Companies Act and BSEC regulations.
The draft prospectus must be submitted to the BSEC for vetting and approval.
Filing Prospectus with RJSC:
Once approved by the BSEC, the prospectus must be signed by all directors (or their duly authorized agents) and filed with the RJSC before it is issued to the public.
The prospectus must generally be issued within 90 days of its registration with the RJSC.
Public Offering and Subscription:
After BSEC consent and RJSC filing, the company can proceed with the Initial Public Offering (IPO).
This involves publishing the prospectus (e.g., on websites of the issuer, issue manager, stock exchanges, and BSEC), opening the subscription list for a specified period, and appointing bankers to the issue.
Underwriting agreements are typically established to ensure full subscription of the shares.
Phase 4: Post-Incorporation and Post-Public Offer Formalities
Obtaining Other Licenses and Registrations:
Trade License: A trade license must be obtained from the relevant local government authority (City Corporation, Municipality, or Union Parishad) where the registered office is located.
Tax Identification Number (TIN): The company itself must obtain a TIN from the National Board of Revenue (NBR).
VAT Registration (Business Identification Number – BIN): Registration for Value Added Tax (VAT) is mandatory for most businesses.
Other specific licenses: Depending on the nature of the business, other licenses or permits may be required (e.g., factory license, environmental clearance, import/export registration certificate).
Statutory Meeting:
A public limited company is required to hold a statutory meeting of its members within a period of not less than one month nor more than six months from the date at which the company is entitled to commence business (for PLCs issuing a prospectus, this is generally after obtaining the certificate of incorporation and necessary approvals for capital raising).
A statutory report, certified by at least three directors (including the managing director, if any), must be sent to every member at least 21 days before the meeting. This report is also filed with the RJSC.
(Note: The Companies (Amendment) Act, 2020 has made some changes. While traditionally significant, clarification on the current applicability or modified requirements for the statutory meeting post this amendment should be confirmed with a legal professional, as the focus has heavily shifted towards Annual General Meetings.)
Annual General Meeting (AGM):
The first AGM must be held within 18 months from the date of incorporation.
Subsequent AGMs must be held once every calendar year, with not more than 15 months elapsing between two AGMs.
Audited financial statements are presented to the shareholders for approval at the AGM.
Issuance of Share Certificates:
Share certificates must be issued to the shareholders within a specified period after allotment, as per the Companies Act and Articles of Association.
Ongoing Compliances:
RJSC Filings: Regular filings with the RJSC are required, including annual returns, changes in directorship or registered office, and resolutions for certain corporate actions.
BSEC Compliances: For listed PLCs (those whose shares are traded on a stock exchange), ongoing compliance with BSEC regulations is mandatory. This includes disclosures, corporate governance guidelines, and reporting requirements.
Tax Compliances: Regular filing of tax returns and payment of corporate income tax.
Maintenance of Statutory Books and Records: Companies must maintain proper books of accounts, minutes of meetings (board and general), register of members, etc.
Key Considerations for Public Limited Companies:
Higher Compliance Burden: PLCs face more stringent regulatory compliance and disclosure requirements compared to private limited companies, especially if they are listed on a stock exchange.
Public Scrutiny: As they can raise funds from the public, PLCs are subject to greater public scrutiny.
Role of Professionals: Engaging legal professionals, chartered accountants, and company secretaries is highly advisable throughout the formation process and for ongoing compliance. Issue managers and underwriters play a crucial role in public offerings.
The formation of a public limited company in Bangladesh is a meticulous process that demands careful planning and adherence to a multitude of legal and regulatory frameworks. Seeking professional guidance is essential to navigate these complexities successfully.