An Overview of Companies: Definition, Types, Benefits, and Registration Process in Bangladesh

🧾 1. Definition of Company (as per Companies Act, 1994)

A company is a legal entity formed and registered under the Companies Act, 1994.

• It has separate legal personality from its members.

• It can own property, sue or be sued, enter contracts, and continue to exist regardless of changes in ownership.

• A company’s liabilities are usually limited to its assets, protecting the personal property of shareholders (except in cases of fraud or special circumstances).

👉 Relevant Section: Section 2(1)(c) of the Companies Act, 1994 defines a company as a company formed and registered under this Act or any previous Act.

🏷️ 2. Types of Companies under Companies Act, 1994

(a) By Liability

1. Company Limited by Shares

   • Liability of members is limited to the unpaid amount (if any) on their shares.

   • Most common type in Bangladesh.

2. Company Limited by Guarantee

   • Members guarantee to contribute a fixed amount if the company is wound up.

   • Usually for non-profit or charitable organizations.

3. Unlimited Company

   • No limit on member liability.

   • Rare in practice.

(b) By Number of Members

1. Private Limited Company (Sections 2(1)(q), 27):

   • Minimum 2 and maximum 50 members.

   • Restricts share transfer.

   • Prohibits inviting the public to subscribe to shares.

   • No requirement to issue a prospectus.

2. Public Limited Company (Section 2(1)(r)):

   • Minimum 7 members, no maximum limit.

   • May offer shares to the public.

   • Can be listed on the stock exchange.

(c) By Ownership / Control (Practical classification)

• Government Companies – majority ownership by Government.

• Foreign Companies – incorporated abroad but have a place of business in Bangladesh.

• Associations Not for Profit – registered under Section 28.

🌟 3. Benefits of Forming a Company

1. ✅ Separate Legal Entity – the company exists independently from owners.

2. 🛡️ Limited Liability – shareholders’ personal assets are usually protected.

3. 💼 Perpetual Succession – the company continues despite changes in shareholders or directors.

4. 📈 Access to Capital – easier to raise capital by issuing shares or taking loans.

5. 🤝 Transferability of Shares – especially in public companies, shares can be transferred easily.

6. 🏦 Credibility & Trust – registered companies enjoy more legal recognition, business opportunities, and investor confidence.

📝 4. Registration Process under Companies Act, 1994

Registration is done through the Registrar of Joint Stock Companies and Firms (RJSC).

Step 1: Name Clearance

• Apply online to RJSC for name clearance.

• Valid for 180 days.

Step 2: Drafting Documents

Prepare the following:

• Memorandum of Association (MoA) – states objectives, scope, and powers.

• Articles of Association (AoA) – internal rules and management structure.

• Form I – Declaration on registration.

• Form VI – Notice of the situation of registered office.

• Form IX & X – Consent of directors and particulars.

• Twelve copies of MoA and AoA (usually 2–3 notarized).

Step 3: Payment of Fees

• Pay the registration fee and stamp duty as per the authorized capital of the company.

Step 4: Submission to RJSC

Submit all required documents to RJSC office (physically or online).
RJSC verifies the documents.

Step 5: Certificate of Incorporation

Once satisfied, RJSC issues a Certificate of Incorporation — the company legally comes into existence from this date.

👉 For a public company, additional steps like obtaining a Certificate of Commencement of Business are required after incorporation.

📌 Relevant Authority:

Registrar of Joint Stock Companies and Firms (RJSC)
👉 Website: https://www.roc.gov.bd