Want to get your firm registered? Soon it will take a few clicks

Opening a company may be possible in a week as the Registrar of Joint Stock Companies and Firms (RJSC) has initiated an online registration process to improve the ease of doing business.

The company registration authority is set to introduce the online approval process in July, allowing intending entrepreneurs to accomplish all the official formalities – from filing applications to submitting all necessary papers – online.

Once the automation project is implemented, it will not take more than a week to complete the approval process if appropriate documents are submitted online, RJSC Registrar Mizanur Rahman (additional secretary) told The Business Standard.

Bangladesh ranked 168 among 190 economies in ease of doing business, according to the latest World Bank annual ratings of 2020.

The index was based on 10 factors: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

In starting business, Bangladesh ranked 131 among 190 countries.

Bangladesh Investment Development Authority (Bida) Executive Chairman Lokman Hossain Miah identified a longer time to start a business in Bangladesh as one of the key reasons why Bangladesh gets much less foreign direct investment (FDI) than its potential.

"Vietnam provides all services in 35 days while it takes 49 days in Indonesia and 60 days in India. But it takes about six months in Bangladesh," he said, venting his anguish at a business audience in February last year.

Apart from a longer period, entrepreneurs often incur expenses beyond the specified registration fees and encounter various forms of harassment during the approval process, stakeholders said.

The World Bank said corruption, lack of transparency, and snail pace of file approval is preventing Bangladesh from achieving a better score in the ease of doing business index.

To simplify the process and reduce time and hassles for business registrations, the RJSC, which operates under the Ministry of Commerce, has launched an initiative to transition all applications for the registration of public and private companies, one-person companies (OPCs), and partnership firms to online processing starting next July.

RJSC officials say once implemented, entrepreneurs will have the convenience of managing tasks such as registration renewal, updating ownership details, and filing income tax returns online from the comfort of their homes, whether they are in the country or abroad.

"The automation project, funded by the USAID, has been underway for two years and is nearing completion. A pilot programme is set to commence shortly, with the inauguration by the commerce minister. The official launch of the pilot programme, spanning two to four months, is scheduled for July," said Mizanur Rahman.

How the online process will work

After a company is approved, a certified copy of its approval will automatically go to the applicant's email, an RJSC official said. Also, all the information related to the approval of this company by the affiliated offices of the government including the Bangladesh Bank, the National Board of Revenue, and the company will be sent from the RJSC.

The official said the RJSC will have a database to which all information including company capital, income tax return will be added. If anybody applies for a loan in the name of a company, a bank or financial institution can obtain all the information about that company from the RJSC. A digital process will be activated for this.

Company registration situation in recent times

Officials say the number of new companies registering has decreased significantly in recent years due to Covid-19, the Russia-Ukraine war and the political instability in the country. As the number of company registrations decreased, the amount of investment also decreased significantly.

In FY 2023-24, till December, only 4,516 new companies registered, following 8,161 in FY 2022-23, and 13,218 in FY 2021-22.

According to RJSC data, there are currently a total of 288,000 registered firms across the country.

Encouraging entrepreneurs to make new investments, the RJSC has already implemented an initiative exempting small investors from paying registration fees for investments in public or private companies up to Tk10 lakh.

Besides, previously, directors or shareholders had to physically visit the RJSC office to sign various documents for new company registration. However, the RJSC recently revised the rules to permit online signatures through electronic devices.

Furthermore, the RJSC has also facilitated the application process for new company approvals via the One Stop Service Centre of the Bangladesh Investment Development Authority (Bida).

Previously, after registering a company, individuals had to visit the RJSC office repeatedly to obtain the company's main certificate. However, authorities have now introduced an online system for issuing these certificates promptly, for a nominal fee.

RJSC took its first digital registration initiative in 2011, initially focusing solely on obtaining clearance for company names. Subsequently, additional processes were introduced online, although their effectiveness was limited.

RJSC Registrar Mizanur Rahman told TBS that although certain processes are already intended to be conducted online, complete implementation is hindered by the lack of awareness among many entrepreneurs.

Stakeholders say as opening new companies requires a significant amount of time, there is a tendency among entrepreneurs to acquire existing companies to facilitate business operations more easily.

Md Azimul Islam, managing director of Alif Group, who acquired C&A Textile, said, "After acquiring the company, we were able to start the business in a very short time, whereas starting a new business would have taken at least three years."

Al Mamun Mridha, secretary-general of the Bangladesh-China Chamber of Commerce and Industry, said the trend of launching new companies is slowing down due to ongoing economic crisis and political unrest in Bangladesh and global geopolitical instability.

"The trend of launching new companies has declined due to these reasons. The initiatives of RJSC will encourage entrepreneurs to make new investments," he said.

Barrister Tanjib-ul-Alam, a company law expert, told TBS that in developed countries, it is common to complete all procedures for opening a company from home. "However, despite Bangladesh's longstanding intention to simplify the process, it has not materialised, largely due to the hindrance caused by officials and employees at RJSC," he said.

The RJSC is the sole authority, which facilitates formation of companies and keeps track of all ownership related issues as prescribed by the laws in Bangladesh.

Currently, for registering a name for private and public companies, a fee of Tk500 is required, while for partnership businesses, the fee is also Tk500, and for societies, it is Tk2,000. Additionally, for each proposed name registration for a professional organisation, Tk500 must be deposited.

Furthermore, a fee of Tk20,000 is applicable for capital investments up to Tk40 lakh.