RJSC Company Incorporation Guide for Foreign Investors in Bangladesh

Establishing a commercial presence in Bangladesh as a foreign investor, multinational enterprise, or international non-governmental organization requires meticulous adherence to statutory protocols administered by the Registrar of Joint Stock Companies and Firms (RJSC). As governed by the Companies Act 1994, corporate formation is not merely an administrative filing exercise; it is a binding legal process demanding absolute precision in nomenclature approval, constitutional drafting, and statutory form certifications. Navigating these regulatory waters without specialized legal counsel can expose foreign entities to severe compliance risks, delayed capital repatriation approvals, and potential rejection by regulatory bodies.

At LegalBD, our corporate practice, spearheaded by Supreme Court Advocate Barrister Liton Asaduzzaman Sarkar, routinely assists global corporations through every phase of market entry. Whether you are establishing a wholly-owned subsidiary, a joint venture, or a branch office, understanding the statutory mechanics of the Companies Act 1994 is paramount. For personalized assistance, you may review our comprehensive corporate legal services or explore our tailored advisory plans designed specifically for foreign direct investment (FDI).

1. Statutory Framework and Preliminary Considerations for Foreign Investors

Foreign direct investment in Bangladesh is primarily regulated by the Companies Act 1994, alongside the Foreign Private Investment (Promotion and Protection) Act 1980, and guidelines issued by the Bangladesh Investment Development Authority (BIDA). Under Section 3 of the Companies Act 1994, a company may be formed as a private limited company, a public limited company, or an unlimited company. For foreign investors, a private limited company is overwhelmingly the preferred vehicle due to its operational flexibility and limited liability protection.

Before initiating filings with the RJSC, foreign investors must secure necessary clearances from sector-specific regulators if applicable (e.g., BIDA registration, Bangladesh Bank approvals for inward remittance of foreign equity, and trade licenses from local municipal authorities). However, the foundational corporate journey inside the RJSC ecosystem strictly begins with securing a legally compliant company name.

2. Phase I: RJSC Name Clearance and Nomenclature Rules

Under Section 11 of the Companies Act 1994, no company shall be registered by a name identical to that by which a company in existence is already registered, or so nearly resembling that name as to be calculated to deceive. The RJSC maintains strict scrutiny over proposed corporate titles to prevent consumer confusion, trademark infringement, and unfair competition.

The name clearance application is submitted online via the RJSC portal. Foreign investors must propose at least two or three alternative names in order of preference. Crucially, the chosen name must clearly reflect the nature of the business and must end with the words "Limited" (for private limited companies) in compliance with Section 27 of the Act. Furthermore, certain words such as "National", "Government", "State", "International", or "Bangladesh" require special clearance or prior permission from relevant government ministries before the RJSC will approve them.

Once approved, an RJSC Name Clearance Certificate remains valid for a strictly limited window, typically 60 days. Within this timeframe, the promoters must complete the drafting of foundational documents and submit the incorporation application. Failure to do so renders the name clearance void, requiring a fresh application and fee payment.

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3. Phase II: Drafting the Memorandum of Association (MoA)

The Memorandum of Association (MoA) serves as the constitution of the company in its relation with the outside world, defining its scope of operations and fundamental objectives. Under Section 18 of the Companies Act 1994, the MoA of every company limited by shares must contain specific mandatory clauses:

• The Name Clause (Section 18(1)(a)): States the exact approved corporate name with "Limited" as the final word.
• The Situation Clause (Section 18(1)(b)): Specifies the division and district in Bangladesh where the registered office of the company is to be situated.
• The Objects Clause (Section 18(1)(c)): Enumerates the primary objects for which the company is established, as well as incidental or ancillary objects. For foreign investors, drafting this clause requires extreme precision to ensure that future business diversification, import-export activities, and industrial undertakings fall squarely within the stated objectives, thereby avoiding ultra vires actions.
• The Liability Clause (Section 18(1)(d)): Declares that the liability of the members is limited.
• The Capital Clause (Section 18(1)(e)): Details the authorized share capital of the company, divided into shares of fixed amounts, along with the breakdown of shares subscribed by each founding shareholder.

For foreign investors, the MoA must also accommodate provisions regarding foreign equity ownership percentages, currency denominations (typically Bangladeshi Taka, though foreign currency subscriptions must reconcile with Bangladesh Bank reporting requirements), and shareholder exit mechanisms. Every subscriber to the MoA must sign the document in the presence of at least one witness who must attest the signature with full name, address, and occupation.

4. Phase III: Drafting the Articles of Association (AoA)

While the MoA defines the external boundaries of the company, the Articles of Association (AoA) govern the internal management, administrative procedures, and the relationship between the company and its shareholders. Governed by Sections 20 through 22 of the Companies Act 1994, the AoA prescribes rules concerning share transfers, board meetings, voting rights, dividend distribution, and the appointment and remuneration of directors.

Foreign investors must pay meticulous attention to the drafting of the AoA to safeguard their investments, particularly in joint venture scenarios involving local partners. Critical clauses to embed within the AoA for foreign-owned entities include:

• Board Composition and Quorum: Ensuring that foreign parent entities retain adequate representation on the Board of Directors and that quorum requirements prevent unilateral decision-making by local directors.
• Share Transfer Restrictions: Implementing Right of First Refusal (ROFR), tag-along, and drag-along rights to govern the transfer of shares to third parties.
• Reserved Matters: Designating specific corporate decisions—such as capital restructuring, borrowing above a certain threshold, amendment of bylaws, or winding up—that require supermajority or unanimous board/shareholder approval.
• Deadlock Resolution Mechanisms: Establishing clear legal pathways to resolve management deadlocks between foreign and local shareholders without immediately resorting to protracted litigation.

The AoA must be printed, consecutively numbered, signed by each subscriber to the MoA, and duly stamped in accordance with the Stamp Act 1899.

5. Phase IV: Statutory Form Certifications and Filings

Once the MoA and AoA are finalized and stamped, the incorporation packet requires the execution and certification of several mandatory statutory forms prescribed under the Companies Act 1994 and the Companies (Registration) Rules.

Declaration of Compliance (Form VI under Section 24(2))

Section 24(2) of the Companies Act 1994 mandates that an application for incorporation must be accompanied by a statutory declaration by an Advocate of the Supreme Court of Bangladesh, or by a person named in the articles as a director, manager, or secretary of the company, confirming that all requirements of the Act in respect of registration have been duly complied with. In practice, foreign investors rely extensively on Supreme Court Advocates to execute this certification, verifying that the constitutional documents conform fully to Bangladeshi law.

Notice of Situation of Registered Office (Form IX under Section 57)

Every company must have a registered office in Bangladesh to which all communications and notices may be addressed. Under Section 57, Form IX must be filed with the RJSC within 28 days of the incorporation of the company, notifying the registrar of the exact physical location. Foreign investors must provide a valid commercial lease agreement and utility bill for the registered office address during this filing.

Particulars of Directors, Manager, and Managing Agents (Form XII under Section 92)

Section 92 requires the company to file a return containing particulars of its directors, managers, and secretaries, along with their written consent to act in such capacities. For foreign directors, this step requires submission of notarized and apostilled/consularized copies of passports, overseas residential addresses, and, where applicable, Bangladeshi Tax Identification Numbers (TIN) if the foreign director intends to draw remuneration from the local entity.

6. Special Considerations for Foreign Promoters and Corporate Subscribers

When the subscriber to a Bangladeshi company is a foreign corporate entity rather than an individual, additional legal layers apply. The foreign corporate parent must provide:

• A certified copy of its Certificate of Incorporation, Memorandum, and Articles of Association from its home jurisdiction.
• A formal Board Resolution passed by the foreign parent company authorizing the investment in Bangladesh and designating a representative to execute incorporation documents.
• Proper consularization, legalization, or apostille of all foreign-sourced corporate documents through the Bangladesh Embassy or High Commission in the home country.

Furthermore, inward remittance of share capital must comply with the Foreign Exchange Regulation Act 1947 and guidelines issued by Bangladesh Bank. Capital must be remitted through banking channels from the foreign shareholder's account abroad into an interim or operational bank account in Bangladesh.

7. Conclusion and Professional Legal Support

The incorporation of a company under the Companies Act 1994 through the RJSC is a sophisticated legal procedure that sets the foundational compliance baseline for any foreign enterprise operating in Bangladesh. Errors in name clearance, poorly drafted constitutional documents, or defective statutory form certifications can lead to protracted delays, regulatory penalties, or rejection of the incorporation application.

Barrister Liton Asaduzzaman Sarkar, Advocate of the Supreme Court of Bangladesh, brings over 16 years of specialized expertise in corporate law, foreign direct investment, and regulatory compliance to assist international businesses. To secure your corporate footprint in Bangladesh with absolute legal certainty, connect with our team through our secure contact portal.