Establishing a Trade Organization in Bangladesh

A Comprehensive Guide

Starting a trade organization in Bangladesh involves navigating a structured regulatory framework aimed at ensuring transparency, accountability, and effective representation of industries, commerce, and trade. Governed by the Companies Act 1994, the establishment process is essential for businesses looking to contribute to the country's economic growth. This guide provides a step-by-step approach to setting up a trade organization in Bangladesh.

Key Requirements for Establishing a Trade Organization

Licensing from the Government: No trade organization can operate without obtaining a government license. The license is granted based on the organization’s type, purpose, and scope, with restrictions to prevent duplication in a specific trade or region.

Types of Trade Organizations

• Federations: Representing trade organizations across Bangladesh.
• Chambers of Commerce and Industry: Representing businesses within districts or metropolitan areas.
• Trade Associations: Focused on specific industries, trades, or services.
• Women’s Chambers of Commerce and Industry: Supporting women entrepreneurs.
• Foreign Investors Chambers: Representing foreign business interests.
• Joint Chambers of Commerce: Facilitating bilateral trade relations.

Conditions for Licensing

• One organization per area or purpose.
• Promoters must publish notices in newspapers, obtain name clearance from the Director General of Trade Organizations, and secure approval from relevant chambers or federations.

Memorandum and Articles of Association

The organization’s objectives, operational guidelines, and compliance requirements must be clearly outlined in these documents. They should include conditions and restrictions imposed by the Government.

Step-by-Step Procedure for Establishing a Trade Organization in Bangladesh

Step 1: Name Clearance
Obtain name clearance from the Director General of Trade Organizations. Ensure the proposed name is unique and complies with government guidelines.

Step 2: Public Notices
Publish notices in national and regional newspapers about the formation of the trade organization. For larger organizations like federations, notices should appear in at least two national dailies.

Step 3: Licensing Application
Submit an application with the following documents:

• Name clearance documents
• Published newspaper notices
• Memorandum and Articles of Association
• Other necessary declarations and supporting documents.

Step 4: Government Review and Opinion
For certain trade organizations, seek an opinion from the Federation of Chambers of Commerce and Industry or the relevant district chamber. If no opinion is provided within 60 days, the application proceeds without it.

Step 5: Grant of License
If all requirements are met, the Government grants the license, which includes specific terms and conditions that must be incorporated into the organization’s governing documents.

Step 6: Registration as a Limited Liability Company
Register the organization as a limited liability company with the RJSC, ensuring the name does not include “Limited.”

Step 7: Affiliation with Chambers or Federations
Within 60 days of obtaining the license, apply for affiliation with relevant chambers or federations. This ensures alignment with broader trade objectives.

Post-Licensing Compliance

Once established, trade organizations must comply with specific operational guidelines set by the government. These guidelines include submitting regular reports and maintaining transparency in their activities.

Exemptions

In special cases, the Government may exempt certain provisions under specific circumstances, as detailed in the Government Gazette.

Prohibition on Registration Without Licensing

Registration with the RJSC is not allowed unless the organization has a valid government license.

Annual Return Submission and Statutory Reporting for Trade Organizations

Trade organizations must adhere to regulations established by the Registrar of Joint Stock Companies and Firms (RJSC). This includes submitting annual returns and reporting any significant changes in the organization.

Annual Return Submission

• Form IX: Consent of Director to Act (Deadline: Within 30 days of appointment)
• Form XII: Particulars of Directors, Manager, and Managing Agents (Deadline: Within 14 days of any change in position)
• Balance Sheet: (Deadline: Within 30 days of the Annual General Meeting)
• Income and Expenditure Account: (Deadline: Same as the balance sheet submission deadline)

Statutory Reporting for Organizational Changes

• Form VI: Notice of Situation of Registered Office or Change Thereof (Deadline: Within 28 days of the change)
• Form IX: Consent of Director to Act (Deadline: Within 30 days of appointment)
• Form XII: Particulars of Directors, Manager, and Managing Agents (Deadline: Within 14 days of any appointment or change)
• Form XVIII: Particulars of Mortgages or Charges (Deadline: Within 21 days of creation)
• Form XIX: Modification of Mortgages or Charges (Deadline: Within 21 days of modification)
• Form XXVIII: Satisfaction of Mortgage or Charge (Deadline: Within 21 days of satisfaction)

Compliance Importance

Legal Penalties: Non-compliance with the annual return submission or statutory reporting can lead to penalties, suspension of operations, or legal disputes.

Corporate Transparency: Proper filings ensure the organization maintains its credibility and aligns with regulatory standards.

Stakeholder Trust: Accurate and timely filings foster trust with stakeholders, including investors, partners, and regulators.