A non-profit company is a legal entity registered with the RJSC that is formed for the purpose of running non-profit organizations i.e. a non-profit company is a legal entity established to pursue social, charitable, educational, or other public benefit purposes rather than generating profit for shareholders. Instead of distributing profits to owners, any surplus funds are reinvested into the organization’s mission.

This regulatory framework has significantly shaped how non-profit organizations operate and engage in the country, making it essential to understand its implications for both current operations and future development initiatives. 

Types of Non-Profit Organizations in Bangladesh

There are three major types of non-profit organization structures in Bangladesh, along with several other options for registering a non-profit or a social business:

1. NGO or NGO Registration – Registered under the NGO Affairs Bureau
2. Foundation, Society, and Association,  – under the Societies Registration Act
3. Non-Profit Company – Registered under the Companies Act, 1994
4. Trusts – Registered under the Trusts Act, 1882
5. Voluntary Social Welfare Organization – under the Department of Social Welfare 
6. Waqf – Registered under Waqf laws
7. Cooperative Society – Registered under the Cooperative Societies Act

Find the right business structure in Bangladesh: from sole proprietorship to limited company, with our registration guide.

However, in this article, we will focus on non-profit companies, specifically companies limited by guarantee under Section 28 of the Companies Act, 1994.

Key Features of Non-Profit Companies in Bangladesh

• Capital Structure: Operates mainly through donations, grants, subscriptions, and service fees.
• Shares: A company limited by guarantee does not issue shares to its members.
• Management: Governed by a Board of Directors elected by members, responsible for policy decisions and day-to-day operations.
• Restrictions: Members cannot divide profits – profits cannot be shared among members but must be reinvested to further the organization’s objectives..
• Annual Compliance: Required to file annual returns and audited financial statements with the Registrar of Joint Stock Companies and Firms (RJSC) to maintain transparency.
• Taxation: May receive special tax treatment or exemptions. Registering as a non-profit organization under the NGO Affairs Bureau will provide further benefits.
• Winding Up: Upon dissolution, any surplus assets must be transferred to another organization with similar objectives and cannot be distributed among members.
• Name Requirements: The company name must include “Limited” or “Ltd.” as the last word.

Step by Step Registration Procedure for Non-Profit Organizations

The registration procedure is mentioned under the Companies Act, 1994. A more favorable registration process is provided under the Registrar of Joint Stock Companies and Firms (RJSC), featuring an optimized application system.

Step 1: Get Name Clearance 

Get name clearance from RJSC as the first step of the registration/application process with the RJSC. A unique name that is not already in use is the prerequisite for a name clearance. With the application, you must submit the approved name clearance as well.

Step 2: Prepare the Memorandum and Articles of Association

The company should specify its key business objectives, the amount of capital, and the list of shareholders along with their respective shareholding in the Memorandum of Association. The Articles of Association should include the list and strength of the directors, the powers of the board, the powers of the Managing Director, the procedure for meetings, the process for sending notices, the appointment of auditors, etc. You should prepare all necessary credentials well in advance before initiating the company registration process.

Step 3: Application with the Required Documents

Submit the Memorandum of Association, Articles of Association, clearance letter, list of members, office address of the Company, details of the Executive Committee (such as NID, contact details, and TIN), and the Company’s rules, regulations, and objectives along with other documents. Also, it is required to upload Form IX and Subscriber Page. 

Step 4: Pay Government Fees

After you complete the entire procedure, you will obtain a payment slip from the bank in order to pay the registration costs and stamp duty. Now you have to make the payment of government fees + VAT if applicable.

Step 6: Security Scrutiny by Law Enforcement Agencies 

You have to go through a security scrutiny by law enforcement agencies. They will check all the credentials along with the permanent and present addresses, criminal records of officials, previous charitable activities of the organization, and the office address.

Step 7: Inspection and Review by Authorized Bodies 

Authorized bodies may conduct a detailed inspection, monitoring, review, and evaluation to verify the provided information and ensure regulatory compliance. After the review, if the authorities are satisfied, the non-profit organization will be issued a registration certificate, as a  formal acknowledgment of its registration. 

Post Registration Formalities

After registration, you also need to do some formalities including- Certificate of Registration issued by RJSC, share certificates for each shareholder, maintain proper financial records, file annual returns, apply for trade License, TIN number and other licenses. 

FAQ on Section 28 Non-Profit Company in Bangladesh

1. What are the different types of non-profit organizations that can be registered in Bangladesh? 

Non-Profit Companies are registered under the Companies Act 1994, while the Societies, Foundations, Charitable Trusts, and Non-Government Organizations (NGOs) are registered under different laws. However, they all serve the same purpose.

2. What is the minimum number of people required to form a non-profit? 

This varies by type of the organization, for example, Societies require minimum 7 members, Companies Limited by Guarantee require minimum 2 members and Trusts can be formed even by a single trustee.

3. What are laws that should be complied with before establishing non-profits?

• Societies under the Societies Registration Act 1860
• Companies Limited by Guarantee under Companies Act 1994
• Trusts under the Trust Act 1882
• Foundations under the Societies Registration Act 1860
• NGOs under the Foreign Donations (Voluntary Activities) Regulation Act 2016

4. Are nonprofits exempt from tax in Bangladesh?

Non-profits must meet certain criteria of carrying out charitable or public benefit activities and using funds exclusively for charitable purposes, and then apply to the National Board of Revenue (NBR) to obtain the exemption

5. Can nonprofits make income? 

The non-profit organizations may make income provided that such income is used for charitable purposes as per objectives of these organizations.

6. Can a non-profit accept foreign donations? 

The organization may accept foreign donations by complying with Foreign Donations Act regulations and registering and obtaining prior approval from NGO Affairs Bureau.

7. What happens if a non-profit wants to dissolve? 

Before dissolution, all of the liabilities should be settled, the assets should be distributed to similar organizations and finally approval from relevant authority

8. Are any activities restricted for non-profits?

Some of the restricted activities may include- political campaigning, promotion of religious conversion or discrimination, implementing projects without proper approvals, operating beyond registered objectives and making commercial business operations.

✅ LegalBD is happy to draft your registration documents, manage your registration, and provide ongoing maintenance for your Co-operative Societies. Contact us for more details.