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FORMS OF BUSINESS ENTERPRISE

1. SOLE PROPRIETORSHIP
Definition
In the sole proprietorship, known alternatively as sole trader ship, the proprietor is to take all risks.
Some of the favorable characteristics of a sole proprietorship business are the ease of initiation, low
cost of commencement, freedom in keeping liability to certain limits, right to control, ease of
winding up, minimum legal restrictions, liberty in making quick decisions and the like. The sole
trader bears unlimited liability.
A sole trader-ship business has no legal identity other than that of its owner. Most sole proprietors
conduct small businesses such as retail shops that sell stationary, groceries, cloth, medicines,
handicrafts, books, confectioneries, spare parts, and tyre/tube, wholesale stores. Many operate
amusement business, and service marketing such as hotels, restaurants, guesthouses or tailoring,
hair dressing, road, and water transportation. Sole trader-ships in Bangladesh are usually classified
as small, medium and large depending on the size of capital employed.
Principle Legislation
All the laws related to an individual are applicable to a sole proprietorship.
General Requirements to Start a Sole Proprietorship Business:
Trade License from City Corporation/Municipality/Union Council (Local Government
Bodies);
Taxpayers Identification Number (TIN)
VAT Registration (in the cases where applicable)
IRC (in the case of business related to import)
ERC (in the case of business related to export)
License/Permission from the authorities according to the nature of business/profession
Bank Account
Membership of Trade Body
As per publication of Board of Investment (BOI), local investor you may setup a business under
several organizational structures such as single proprietorship, partnership and limited company. In
the case of a foreign investor, one may establish its business only under limited company.
2. PARTNERSHIP FIRM
Description
Partnership Business a form of business organization created through voluntary agreements of
minimum two and maximum 20 persons (the maximum is 10 in the case of banking business), with
the intention of making and sharing profits among themselves. A partnership can arise only as a
result of an agreement or contract, expressed or implied, between the partners. In Bangladesh, a
partnership firm is to be formed under the provisions of the Partnership Act 1932. By definition, a
partnership is illegal if it consists of more than 20 persons in case of a general business and more
than 10 persons in case of business in banking. A non-profit making association is not a partnership
in law of Bangladesh. In general, institutions or associations cannot be a member of a partnership.
The Partnership Act 1932 does not require a partnership deed or agreement to be registered. The
registration of such firm is optional. But if registered, a partnership firm can enjoy some legal rights
and facilities. A partnership deed includes the name of the firm, nature of business, the capital and
property of the firm, the capital of individual partners, term of partnership, provision for salaries,
and drawings on account of profit, rate of interest (if any) on partners' capital, advances and
drawings, rights and duties of individual partners, provision for accounts and audit, division of
profits and losses (capital and revenue), powers of admission and expulsion of a partner,
termination of agreement by insolvency, death, etc., valuation of goodwill and share of assets on sale
or death, and an arbitration clause.
If a partnership business is not registered, a partner of the firm can not bring a suit to enforce a
right arising from a contract or conferred by the Partnership Act against the firm or his co-partners.
Also, an unregistered firm can not file a suit, or take other legal proceedings, to enforce a right from
a contract, or to claim a set-off in any suit filed against it. However, the non-registration of a firm
does not affect the right of an unregistered firm to bring a suit to enforce a right arising otherwise
than out of a contract and the power of an official assignee or receiver to realize the property of an
insolvent partner.
Principle Legislation
The Partnership Act, 1932;
General Requirements to Start a Partnership Business:
The Partnership Deed;
Minutes of Partners Meeting;
Trade License from City Corporation/Municipality/Union Council (Local Government
Bodies);
Taxpayers Identification Number (TIN)
VAT Registration (in the cases where applicable)
IRC (in the case of business related to import)
ERC (in the case of business related to export)
License/Permission from the authorities according to the nature of business/profession
Bank Account
Membership of Trade Body
As per publication of Board of Investment (BOI), local investor you may setup a business under
several organizational structures such as single proprietorship, partnership and limited company. In
the case of a foreign investor, one may establish its business only under limited company.
3. LIMITED PARTNERSHIP FIRM
In Bangladesh, Limited Partnership Firm in Bangladesh is not realistically available.
4. BRANCHE/LIASION/REPRESENTATIVE OF FOREIGN COMPANIES
Description
A company expands its business by opening up its branch offices in various parts of the domestic
country as well as in other countries. A branch office refers to an establishment which carries on
substantially the same business and activity as is carried out by its Head Office. Branch offices help
in expanding the size of the market for a company's product by attracting more customers;
widening the scope of its trading and manufacturing activities as well as bringing more
opportunities and opening unexplored avenues for it. Thus, these offices help to fuel the growth of
the company and enhance its profitability on a sustained basis.
The activities of Branch/Liaison/Representative office of a foreign entity shall remain confined to
those as set forth in the permission of BOI. The said offices shall strictly follow the foreign exchange
regulations of the government of Bangladesh. Generally, no outward remittance of any kind from
Bangladesh sources by the said offices is allowed except the cases permitted by the foreign
exchange regulations. The Branch/Liaison/Representative office of a foreign entity shall have to be
submitted income tax return to the competent income tax authority of Bangladesh. Security
clearance is required to be obtained from Ministry of Home, government of Bangladesh. Such offices
shall have to bring inward remittance at least USD 50,000 within 2 (tow) months from the date of
the issue permission letter as establishment cost and 6 months operational expenses.
Principal Legislation
The Investment Board Act, 1989;
Rues & Regulations of Board of Investment (BOI);
The Companies Act, 1994;
The Foreign Exchange Regulation Act, 1947
General Requirements to Open Branch/Liaison/Representative Office of Foreign Companies:
Foreign companies not registered in Bangladesh can set up a place of business in Bangladesh in the
form of a Branch Office or a Liaison Office. An investor can close a Branch Office/Liaison Office/
Representative Office in Bangladesh by an application with audit report, updated tax payment
certificate, NOC from Bangladesh Bank etc. and required formalities with RJSC shall have to be
performed. An investor can change the address of a Branch Office/Liaison Office/Representative
Office in Bangladesh by an application with certified copy of rent deed and board resolution
supported by a treasury chalan of specific amount. For to waiver the condition of BOI Branch
Office/Liaison Office/Representative Office the company have to apply for the specific condition to
waive in BOI.
Board of Investment (BOI)
Permission will be required from the BOI in order to open up a Branch Office and shall submit
application in the prescribed form along with the following documents:
Prescribed Application From, duly filled in, signed and stamped;
Memorandum of Association (MOA) and Articles of Association (AOA) of the Principal
Company;
Certificate of Incorporation;
Name and Nationalities of the Directors/Promoters of the Principal Company;
Board Resolution to open a Branch/Liaison/Representative Office in Bangladesh;
Audited Accounts of the last financial year;
Proposed organogram of the office;
List of activities of the proposed office
All papers/documents must be attested by the Bangladesh Embassy/High Commission of the
country of origin. Embassy/High Commission of the applicant's country of origin or Apex Chamber
of Commerce of the country of origin.
Bangladesh Bank (BB)
Afterwards, permission is sought from Bangladesh Bank for opening branch/liaison Office in
Bangladesh by foreign entities including airlines, companies, firms under Section 18B of the Foreign
Exchange Regulation Act, 1947.
Registrar of Joint Stock Companies (RJSC)
Foreign Combines which establishes a place of business in Bangladesh shall, within one month of
the establishment of the place of business, deliver to the Registrar of RJSC for registration--
(a) a certified copy of the charter or statues or memorandum and articles of the company or other
instrument constitution or defining the constitution of the company; and if the instrument is not
written in Beguile or English Language, a certified Penalty or English translation thereof;
(b) the full address of the registered or principal office of the company;
(c) a list of the directors and secretary, if any, of the company;
(d) the name and address or the names and addresses of one or more persons resident in
Bangladesh, authorized to accept on behalf of the company service of p[process and any notice or
other document required to be served on the company;
(e) the full address of the office of the company in Bangladesh which to be deemed its principal
place of business in Bangladesh.

5. LIMITED COMPANIES
Description
Limited company is a company in which the liability of the members or subscribers of the company
is limited to what they have invested or guaranteed to the company. Limited companies may be
limited by shares or by guarantee. And the former of these, a limited company limited by shares,
may be further divided into public companies and private companies.
Business in Bangladesh may be carried on by a company formed and incorporated locally or by a
company incorporated abroad but registered in Bangladesh. The incorporation or registration is
done by the Registrar of Joint Stock Companies and Firms under the provisions of the Company's
Act 1994.
Companies could be classified in following categories:
a. Company Limited by Shares
i. Public Limited Company and
ii. Private Limited Company
b. Company Limited by Guarantees;
c. Unlimited Company
Private Limited Company:
Restricts the rights to transfer the shares;
Limits the number of its members to minimum 2 and maximum 50 excluding the persons
employed
in the company;
Prohibits any invitation to the public to subscribe for the shares or debentures of the
company and
Entitles to commence business from the date of its incorporation.
Public Limited Company:
May issue invitation to the members of the public to subscribe the shares and debentures of
the company through a prospectus which complies with the requirements of the Companies'
Act 1994, the Securities and Exchange Ordinance, 1969 and the Securities and Exchange
Commission Act, 1993 as amended from time to time.
Has minimum 7 members but there is no maximum limit.
Has at least 3 Directors.
May a private company converted into a public company.
Unlimited Company:
An unlimited company refers to a company having no limit on the liability of its members.
Principal Legislation
The Companies Act, 994;
The Securities and Exchange Ordinance, 1969;
The Foreign Exchange Regulation Act, 1947;
General Requirements to Set Up a Company:
Registrar of Joint Stock of Companies and Firms (RJSC)
To register a company with the Register of Joint Stock Companies and Firms, promoters have to
undertake activities in following steps:
Selection of the Company Name:
The name should not be identical with or closely resemble to the name of an existing company.
An application in plain paper along with nominal required fees is be submitted to the RJSRF for
verification and clearance of the proposed name.
Memorandum of Association (MOA):
MOA states the name of the company, whether it is public or private limited and the location of the
registered office at the company. The MOA should clearly spell out the main objectives, the
authorized capital, the divisions of this capital into shares of fixed amount and liability of its
members.
Articles of Association (AOA):
The AOA are the regulations governing the internal management of the affairs of the company and
the conduct of its business. These articles are subordinate to and controlled by MOA.
Registration Application:
Prescribed Application Form for registration has to be filled in, signed and submitted to the
Registrar of the Joint Stock Companies and Firms.
Chief Inspector of Factories and Establishment
Any manufacturing company employing 10 (ten) or more workers is required to be registered
under the Labour Act, 2006 with the office of the Chief Inspector of Factories and Establishment.
The act is primarily to regulate working conditions and to ensure safety in the factory.
Registration with Board of Investment
Application Form
Trade License
Limited Company :
Certificate of Incorporation
Memorandum and Articles of Association
Name and address of other shareholder/director(s) of the project
Additional documents for projects in certain sectors
Copy of rental agreement or lease deed for premises or land purchase document
TIN Certificate
Registration Fee (Bank Draft)

6. TRUSTS
Description
A Trust is an obligation annexed to the ownership of property, and arising out of a confidence
reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another,
or of another and the owner The person who reposes or declares the confidence is called the
Author of the Trust. The person who accepts the confidence is called the Trustee. The person for
whose benefit the confidence is accepted is called the Beneficiary. The subject-matter of the trust
is called Trustproperty or Trust-money. The Beneficial interest or Interest of the beneficiary
is his right against the trustee as owner of the trust-property; and the instrument, if any, by which
the trust is declared is called the instrument of trust.
A breach of any duty imposed on a trustee, as such, by any law for the time being in force, is called a
Breach of trust
And in the Trust Act, 1882, unless there be something repugnant in the subject or context,
Registered means registered under the law for the registration of documents for the time being in
force. The main instrument of any public charitable trust is the trust deed, wherein the aims and
objects and mode of management (of the trust) should be enshrined. The salient features of Trust
are as follows:
In every trust deed, the minimum and maximum number of trustees has to be specified.
The trust deed should clearly spell out the aims and objects of the trust, how the trust
should be managed, how other trustees may be appointed or removed, etc.
The trust deed should be signed by both the settlor/s and trustee/s in the presence of two
witnesses.
The trust deed should be executed on non-judicial stamp paper, the value of which would
depend on the valuation of the trust property.
Principal Legislation
The Trust Act, 1882;
The Societies Registration Act, 1860;
The Companies Act, 1994;
The Registration Act, 1908;
General Requirements to Set Up a Trust:
The application for registration should be made to the official having jurisdiction over the region
in which the trust is sought to be registered.
After providing details (in the form) regarding designation by which the public trust shall be
known, names of trustees, mode of succession, etc., the applicant has to affix a court fee stamp
of specified amount, depending on the value of the trust property.
The application form should be signed by the applicant before the regional officer or
superintendent of the regional office of the charity commissioner or a notary. The application
form should be submitted, together with a copy of the trust deed.
Two other documents which should be submitted at the time of making an application for
registration are affidavit and consent letter.

7. JOINT VENTURES
Description
Joint venture (JV) is a business agreement in which parties agrees to develop, for a finite time, a new
entity and new assets by contributing equity. They exercise control over the enterprise and
consequently share revenues, expenses and assets. There are other types of companies such as JV
limited by guarantee, joint ventures limited by guarantee with partners holding shares.
Principal Legislation
The Companies Act, 1994;
The Investment Board Act, 1989;
The Foreign Investment Promotion and Protection Act, 1980
General Requirements to Set Up a Joint Venture:
Joint venture agreement
Application Form
Trade License
Limited Company
Certificate of Incorporation
Memorandum and Articles of Association
Name and address of other shareholder/director(s) of the project
Additional documents for projects in certain sectors
Copy of rental agreement or lease deed for premises or land purchase document
TIN Certificate
Registration Fee (Bank Draft)
Availability of land for the industrial uses
The land use for the industries can be as under:
a) Export processing zones (EPZ): The land in the EPZ enclaves is allotted by the EPZ authority.
b) Private lands: The private lands can be scouted by the investors itself. A foreign company can
own land in its name.
c) Govt. owned land: The investor can seek for Govt. owned land (khas land). He can mention for
certain land in a district (regional centre) and can sought support of BOI. BOI can request the
respective Deputy Commissioner (DC), who is the administrative head of the district, for providing
that land.
100% Foreign Investment in a Business
100% foreign equity may be allowed in all areas of investment under Companies Act 1994.
However, Private investment (local as well as foreign) is restricted in four sectors on strategic
grounds as mentioned in the Industrial Policy-2010.
BOI approval/registration for commercial enterprises
For commercial enterprises BOI approval/registration is not needed. They must register under
concern law and proper authority.
STEPS TO START A JOINT VENTURE IN BANGLADESH
Joint Venture Agreement between the parties
Company Formation or Establishing Place of Business Opening
Liaison/Branch/Representative
Office;
Securing Trade License;
Plant Setup;
Registering with BOI;
Joint Venture and 100% Foreign Investment proposal in the Private Sector;
Self-financed local investment proposals including industries sanctioned/financed by
financial
institutions or commercial banks;
Permission for setting up joint venture industrial units with public sector corporations;
Obtaining Industrial Plot;
Registration/Approval for Foreign Loan, Suppliers Credit, PAYE Scheme etc.;
Obtaining Utility Connection Import of Spare Parts and Raw & Packaging Materials;
Obtaining Work Permit;
Registration with Factories Act;
Registration with Environmental Legislation;
Remittance of Royalty, Technical Know-How and Technical Assistance Fees;
Commercial Operation
8. CO-OPERATIVES
Description
Co-operative is a business organization owned and operated by a group of individuals for their
mutual benefit. A cooperative can also be defined as "an autonomous association of persons united
voluntarily to meet their common economic, social, and cultural needs and aspirations through
jointly owned and democratically controlled enterprise". A cooperative may also be defined as a
business owned and controlled equally by the people who use its services or by the people who
work there. Various aspects regarding cooperative enterprise are the focus of study in the field of
cooperative economics.
To uplift the status of the poor people living in the rural areas, the government of Bangladesh set up
the Rural Development and Cooperative Division ( RDCD ) under the Ministry of Local Government,
Rural Development and Cooperatives. This Division is responsible for policy formulation, planning,
monitoring and administration of rural development and cooperative initiatives of the country.
Principal Legislation
The Cooperative Societies Act, 2001;
The Cooperative Societies Rules, 2004
General Requirements to Set Up a Society:
Bye-laws and Deed of Cooperative Society
Application in the prescribed form to the Registrar of Co-operative Societies
The registration of a cooperative society is subject to satisfaction of the Registrar of the
Cooperative Societies (RCS);
For banking and unlimited liability cooperatives some financial conditions have been
imposed;