Creating a joint venture company is a great way to a business breakthrough. The rapidly growing economy and cheap labor prices have made Bangladesh a honeypot to many. Anyone can quickly form a joint venture company in Bangladesh through RJSC registration.
The Registrar of Joint Stock Companies and Firms (RJSC) is the only authority that helps in forming a company. It has seen a massive flow of foreign investment in Bangladesh in the last few years.
In this context, many are emphasizing how to form a joint venture company in Bangladesh. Many foreign investors are already tying up with local partners to form a joint venture company in Bangladesh.
It’s a significant step taken by foreign investors. This way, foreign investors can get familiar with the business approach of the local market. Also, they can use the local resources much more effectively.
Joint Venture Company in Bangladesh
In Bangladesh, a joint venture company is considered a distinct legal entity. . Two individuals (aged above 18) or entities can register a company in Bangladesh.
Bangladesh has become one of the emerging Asian countries where some enthusiastic foreign investors are coming to invest. They are opening a 100% foreign-owned joint venture company in Bangladesh.
Both the local investors and foreign investors jointly operate the business and pay for their equity investment. However, according to Bangladesh’s law, foreign shareholders cannot hold more than 40% of shares.
Again, other shareholders are not liable for any debt beyond the amount of share they contributed. The entity is free to conduct its activities under the law and to pay extras to its shareholders.
Moreover, a joint venture company must fulfill all the necessary TAX and VAT implications.
What is a Joint Venture Agreement?
It’s an agreement between two or more organizations or people. A joint venture agreement lets them come together to build a company. It basically enacts their intention and different terms and conditions concerning the intended project.
How to Form a Joint Venture Company in Bangladesh?
Usually, it takes three to four weeks to register a company in Bangladesh. Below is the step-by-step procedure of forming a joint venture company in Bangladesh.
· Draft and implement a joint venture agreement
A joint venture agreement must be between the local and foreign investors to form a joint stock company. Then, take a name clearance certificate from the RJSC for the investor’s preferred name.
The agreement should include
- The business scopes
- Shareholding ration
- The company’s name
- Governing laws and jurisdictions
- Board of directors, etc.
Also, there must be other information that both parties think is crucial. If the terms and conditions are agreed upon, the agreements will be printed on non-judicial stamp paper worth BDT 300. Then, it will be signed by both parties.
· Get the Name Clearance
Next, check your preferred name in the name directory of RJSC. If you find the name, sign up on the online name clearance portal. Subsequently, book a name and pay the fees through the bank.
The next step is drafting the MOA (Memorandum of Association) and AOA (Articles of Association). You could have hired a lawyer to draft following the laws of Bangladesh.
These documents must be legally compliant when they reflect the intentions of the parties. Hence, it is wise to hire a lawyer in Bangladesh could be a worthwhile option.
· Preparing the Form XII and Form IX
It depends on the structure provided by RJSC. The form shall include the information that imitates the MOA and AOA as needed.
· Formalities Associated with Bank Account
The company needs to open a temporary bank account before submitting the documents to the RJSC. Here, the bank account has to be in the proposed company’s name.
Make sure to choose an authorized bank of Bangladesh. Also, submit the signed draft articles, name clearance certificate, memorandum of association, etc., with other documents.
After opening the bank account, the foreign investor needs to send a share capital amount from their foreign bank account.
Once the temporary bank receives the amount, it will issue an encashment certificate. The encashment certificate then needs to submit along with other documents.
· Verification from RJSC
Once you submit all the documents to the RJSC, they will verify the documents. Then the RJSC shall deliver the certificate incorporation documents to your joint venture company.
Post Incorporation of Company Related Services
The joint stock company requires to have the following after the formation of the company;
- TIN (Tax Identification Number) certificate – It would take 1 day to obtain a TIN certificate.
- VAT certificate (obtained from the National Board of Revenue) – It would take 14 days to get a VAT certificate.
- Trade license (obtain from the Relevant City Corporation) – It would also take 14 days to get a VAT certificate.