Legal Issues
Only applies in Bangladesh
Licences & Registrations
Three types of registration:
Sole Proprietorship
Business registration of one person. With co-founders, this is not the type of registration. unlimited liability
Partnership
Can be two or more people. Comes with a risk of unlimited liability.
Private Limited Company
The preferred mode of registration. Investors prefers company. It's transparent. Investors feel key asset of the company are housed in the company & they get access to balance, sheets & accounts. They know there'll be statutory audit done.
RJSC → Registrar of Joint Stock Companies & Firms
Documents need to understand if the company has formed or not
Certificate of Incorporation (RJSC) ⇒ Basically company ID card → company is now a legal entity. Contains → 1. Name of the company 2. When & 3. Where it was registered
Memorandum of Association (MOA) ⇒ Contains object clause → what sort of business the company is going to undertake. Need court permission to change.
Articles of Association (AOA) ⇒ Contains info of how you would want to operate your company → Board of directors, power of boards, vote in board meetings etc.
Certified copy of Form XII ⇒ Contains the list of directors of company
These documents contains the key info of a company.
Company's Act → Some legal obligations a company has to maintain to operate
At least 4 board meeting must be held in a year
1 board meeting per quarter
1 AGM → Audit report, AGM filing has to made to RJSC
After company incorporated → RJSC issue some docs & Company has to get some mandatory licences ( Trade Licence, TIN Certificate, VAT Registration)
Depending on what sort of business, some specific certificates may need. e.g., Bond Licence, Fire licence etc.
Registration Process
Sole Proprietorship ⇒ Issue trade licence from City Corporation under your address.
Partnership ⇒ Registration authority RJSC. Registration from divisional office under your entity address. Partnership deed in 2000 TK stamp (non judicial stamp). Don't get confused with 300 TK stamp ( which is contract).
Company ⇒ Min 2 directors/shareholders. 1. Name Clearance (from RJSC, valid 1 month)
Online → Government fees (Authorized capital)
Offline → Submission to concern officer. Show some forms ( most important form |x → consent to the director & signature page → shareholders)
Board & Shareholders
A company acts through two bodies of person → shareholders (owners of shares) & directors(company manager).
General meetings → meetings of shareholders
Board meetings → meetings of directors
Terminology
Burn rate ⇒ Taka spent per month of a startup before making any revenue.
Runway ⇒ Company capacity to sustain burn rate (months).
Angel Investor ⇒ First round of investor after bootstrapping.
Unicorn startup ⇒ valuation at the startup is over 1 Billion dollar.
Last updated