FORMATION OF A LEGAL ENTITY AND ITS COMPLIANCE REQUIREMENTS (OVERVIEW) A.K.M. FAZLUL HAQUE PARTNER HUSSAIN FARHAD & CO. Date: 22-11-2014 1
SUBJECT MATTER TO BE COVERED 1. Company formation. 2. Legal and statutory formalities of an entity registered with the Registrar of Joint Stock Companies and Firms (RJSC). 3. Compliance with other legal and statutory requirement. 2
1. FORMATION OF A LEGAL ENTITY WITH THE RJSC Types of entities • Private limited company (Companies Act 1994). • Public limited company (Companies Act 1994). • Partnership Firms (Partnership Act 1932). • Societies Registration (Societies Registration Act 1860). • Trade Organization (Trade Organization Ordinance 1961). 3
Steps for formation of a private limited company • Online application for name clearance certificate on prescribed form. • Obtain name clearance certificate. • Open a non operating bank account (for having foreign investments). • Draft Memorandum and Articles of Association. • Prepare Joint Venture agreement for a Joint Venture company. • Signature to shareholders subscription sheet. 4
• Signature to form I, IV, IX, X, XII • Obtain Dollar encashment certificate(for having foreign investments). • Father’s, Mother’s name, occupation and address of all promoters. • Copy of passport/National ID card of all promoters. • Attach adhesive stamp and pay Registration fees. • File to RJSC. 5
• Proper follow up. • Obtain certificate of incorporation. • Obtain certified copy of Memorandum and Articles of Association. 6
STEPS AFTER INCORPORATION OF PRIVATE LTD. CO. A meeting of the board of directors shall be called within thirty days from the date of incorporation to appoint the first auditors. -- Section 210 (6). Intimation thereof shall be given within seven days from the date of the meeting to the auditors. --Section 210 (1). The auditor shall give notice to the Registrar within thirty days from the date of receipt of such intimation from the company to the effect that they have accepted the appointment. --Section 210(2) (Form – 23B). 7
First annual general meeting of the shareholders shall be held within eighteen months from the date of incorporation. The audited accounts of the company shall be presented for approval in this meeting – Section 81 (1). Share certificates shall be prepared and a common seal shall be approved. In case of transfer of shares these will be necessary. 8
2. LEGAL AND STATUTORY FORMALITIES OF PRIVATE LTD. CO. REGISTERED WITH RJSC. Routine formalities o The meeting of the board of directors shall be held at least once in every three months. Proceedings shall be preserved in the minutes book. – Section 96. o No director shall absent himself without leave of absence, from three consecutive meetings of the directors or from all meetings of the directors for a continuous period of three months, which ever is the longer. – Section 108. 9
o Annual general meeting shall be held in every calendar year. The gap between the two AGM shall not exceed fifteen months. However the AGM shall be held within nine months from year end of the company (for publicly traded company it is six months) -- Section 81 (1). o After every AGM, annual return shall be filed with the Registrar within twenty one days from the date of AGM. This return shall be accompanied by a copy of audited accounts signed by two directors (for public limited company it is three Directors). --Section 36(3) (Schedule X). 10
OCCASIONAL FORMALITIES If any fresh allotment is made return of allotment shall be filed within sixty days from the date of allotment. Otherwise allotment shall be void. -- Section 151 (1) (Form XV). If any new director is appointed particulars of directors and consent to act as director of the new director shall be filed within fourteen days from the date of such appointment . --Section 115 (2) (Form XII). 11
If the registered office is changed a notice shall be given to the Registrar within twenty eight days from the date of such change. (Form VI). If any asset of the company is mortgaged, a memorandum of such mortgage shall be submitted to the Registrar. Any modification or change shall also be notified . – Section 167 (3) and 391 12
REGISTERS, BOOKS TO BE MAINTAINED Resolution book for Board Meetings and Annual General Meetings. Share Register. Register for transfer of shares. 13
3. COMPLIANCE WITH OTHER LEGAL AND STATUTORY REQUIREMENTS: We would like to bring to your notice the following matters: The company has to obtain Trade License from any City Corporation/Union Parishads. This is the primary license of any business entity (trading & non trading). Trade License requires to be renewed every financial year. The company shall have to obtain TIN certificate as early as possible. Every company shall have to file a return of its income accompanied by a statement of account audited by a Chartered Accountant. 14
Every company shall have to file withholding tax return quarterly by 15th day of October, January, April and July of the financial year. U/S 75A of ITO 1984. Every company shall have to furnish a statement regarding payment of salary to its employee before the 1st day of September each year. U/S 108 ITO 1984. The company may obtain a VAT registration certificate. Monthly VAT return requires to be submitted on or before 15 th day of the following months. 15
The company may obtain BOI permission. For any foreign investment BOI registration is mandatory. During dividend remittance to foreign shareholders BOI clearance is necessary. Moreover BOI will issue work permit to the foreign expats. The company may have to obtain the Import Registration Certificate (IRC). There are two types of IRC i.e. commercial and industrial. The company may have to obtain the Export Registration Certificate (ERC). There are two types of ERC are commercial and industrial. The company may need to obtain membership of DCCI/any other Association. 16
Thank You!! 17
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