Limited Company in Bangladesh: Types and Legal Features

A limited company in Bangladesh is the most widely used vehicle for serious business: banks lend to it, large buyers prefer contracting with it, and foreign investors usually invest through it. Its defining feature is limited liability, meaning shareholders do not normally risk their personal assets beyond the capital they agreed to contribute.

This page explains the legal form itself: the types of limited company, the rules on shareholders and directors, what limited liability does and does not protect, and how a limited company compares with a sole proprietorship or partnership. It is for entrepreneurs and investors choosing a structure. For the filing procedure, see our company incorporation page.

Types of limited company in Bangladesh

The Companies Act 1994 provides several forms. The choice affects how many owners you can have, how you raise capital and how much disclosure is required.

• Private limited company: 2 to 50 shareholders, at least 2 directors, restrictions on share transfer and no public offer of shares; the default choice for SMEs and foreign subsidiaries
• Public limited company: at least 7 shareholders and 3 directors, may invite the public to subscribe and may list on a stock exchange subject to BSEC rules
• One Person Company (OPC): introduced by the Companies (Amendment) Act 2020, with a single natural person shareholder and a nominee named in case of death or incapacity
• Company limited by guarantee: members guarantee a fixed amount on winding up; typically used for non-profit purposes such as associations and foundations

What limited liability protects, and what it does not

Limited liability separates the company's debts from the owners' personal assets. If the company fails, creditors claim against company assets, not against a shareholder's house or savings, once the shareholder has paid for their shares in full.

The protection has limits. Banks usually ask directors for personal guarantees on loans, and a guarantee creates personal liability. Directors can be personally exposed for fraud, misapplication of funds, and certain tax and VAT defaults where the law holds principal officers responsible. Courts can also look behind the company where it is used as a sham.

Shareholders, directors and capital

Shareholders own the company; directors manage it. In small companies the same people often hold both roles, but the legal capacities are different and decisions should be taken in the right forum.

Authorised capital is the maximum the company may issue under its MoA, while paid-up capital is what shareholders have actually paid. Foreign shareholders may hold shares in most sectors, and their capital should come through banking channels with an encashment certificate so it can be repatriated later.

• Directors of a private company need not be shareholders unless the Articles require qualification shares
• A company can be a shareholder through an authorised representative
• Share transfers are made with a transfer deed and recorded in the register of members
• Changes in directors are reported to RJSC on Form XII

Limited company compared with other structures

A sole proprietorship is simplest to start with only a trade licence, TIN and BIN, but the owner is personally liable for everything and the business ends with the owner. A partnership under the Partnership Act 1932 allows several owners but partners are jointly liable. A limited company costs more to set up and maintain, with annual audit, AGM and RJSC returns, but offers limited liability, continuity, easier transfer of ownership and greater credibility with banks, buyers and government.

Ongoing obligations of a limited company

Limited liability comes with transparency. Every limited company must keep statutory registers, hold an AGM each year, have its accounts audited by a chartered accountant, file an annual return with RJSC, file income tax and withholding returns with NBR and, if registered, monthly VAT returns. Corporate income tax applies at rates set by the current Finance Act, and dividends paid to shareholders are subject to tax deduction at source.

How the process works

1. Choose the typeDecide between private limited, public limited, OPC or guarantee company based on owners, funding plans and purpose.
2. Plan ownership and capitalFix shareholders, percentages, directors, authorised and paid-up capital and any foreign investment route.
3. Clear the nameReserve a name ending in Limited (or the required suffix for OPC) with RJSC.
4. Draft MoA and AoAPrepare constitutional documents with share transfer, board and dispute provisions suited to your owners.
5. Register with RJSCFile the forms, pay fees and stamp duty, and obtain the Certificate of Incorporation.
6. Complete registrationsOpen a bank account and obtain e-TIN, trade licence and BIN before trading.

Typical timeline: Forming a private limited company commonly takes two to six weeks from decision to trade-ready status, depending on document readiness, foreign signatures and authorities' processing.

How Tax & VAT Associates helps

• Advice on the right limited company type for your plans
• Shareholding and board structure design, including for foreign investors
• Shareholders' agreement and Articles drafting to prevent disputes
• RJSC incorporation and post-incorporation registrations
• Conversion from proprietorship or partnership to a limited company
• Ongoing annual compliance and tax support

Frequently asked questions

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Last reviewed: 6 October 2026. Bangladesh tax and regulatory rules change with each Finance Act, SRO and authority circular. This page is general guidance; confirm current requirements for your case before filing.