Partnership Registration in Bangladesh in 2023 in Bangladesh
22 March 2016
Updated in 2022 August.
What is a Partnership Business in Bangladesh?
A partnership is a business structure in which two or more partners form an entity to conduct business. A partnership must always have two or more partners in order to exist.
The Partnership Act, 1932 (the “Partnership Act”) defines a partnership as “the relationship between persons who have agreed to share profits of the business carried on by all or any of them acting for all.” This definition specifies three minimum requirements for forming a partnership:
The persons desiring to form a partnership must enter into an agreement, either orally or in writing, to share the profits of the business intended to be carried on by the partnership, and the business must be carried on by all the partners or by any of them acting on their behalf. The Partnership Act does not define the term “person.”
It is not necessary to register your partnership firm because there are no penalties for failing to do so. However, it is recommended because an unregistered firm is denied the following rights:
A partner may not sue the firm or other partners in any court for the enforcement of any right arising from a contract or conferred by the Partnership Act.
A contractual right cannot be enforced in any Court by or on behalf of your firm against any third party.
Furthermore, in a dispute with a third party, the firm or any of its partners cannot claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings.
LIABILITY IN PARTNERSHIP BUSINESS
Only if the partnership is registered does it have a separate legal identity (that is, it is separate from its owners).
All partners in a partnership are jointly and severally liable for the partnership’s liabilities.
In Bangladesh, the concept of a Limited Liability Partnership does not exist.
Partnerships are not taxed at the entity level in Bangladesh, and profits are treated as part of each partner’s personal income and taxed at personal income tax rates.
MEMBERSHIP AND MANAGEMENT
A minimum of two partners and a maximum of twenty partners are required.
Partners can be individuals or businesses.
A partnership in Bangladesh, unlike a private or public limited company, does not have directors, shareholders, or a secretary; instead, the partners own and run the business.
DOCUMENTS REQUIRED FOR PARTNERSHIP
The following information/documents are required to register a partnership in Bangladesh:
- Proposed partnership name;
- Partnership agreement duly notarized;
- Form I;
- Particulars of the partners;
- Residential addresses of the partners;
- Details of the partnership’s registered address; and
- Percentage of profit share of each partner
PROCESS OF PARTNERSHIP – REGISTRATION
A partnership can be registered with the Bangladesh Registrar of Joint Stock Companies and Firms (“RJSC”).
The partnership registration process is divided into two steps: a) name reservation and b) entity registration. In most cases, a partnership registration can be completed in one or two days.
STEP 1: SELECTING A PARTNERSHIP NAME
The partners are free to choose any name they want for their partnership firm as long as they follow the following rules:
The names must not be too similar or identical to the names of other existing firms doing similar business to cause confusion. The reason for this rule is that a firm’s reputation or goodwill may be harmed if a new firm adopts an allied name.
Certain words expressing or implying government sanction, approval, or patronage are not permitted in the name.
Once you’ve decided on a name, you should apply for name clearance through the RJSC website.
STEP 2 – MAKE A PARTNERSHIP AGREEMENT
You should draft a partnership agreement. A partnership agreement typically includes the following clauses:
Name and address of the firm, as well as the names of all partners;
The nature of the business to be conducted;
Date of business establishment; Duration of partnership (whether fixed or indefinite);
Each partner contributes capital;
Profit sharing percentage among partners;
Rules to be followed in the event of a partner’s retirement, death, or admission; and
The above are the bare minimums that must be included in all partnership agreements. Any additional clauses may also be mentioned by the partners.
The Partnership Deed should be on stamp paper and signed by all partners in accordance with the Stamp Act. The document should then be notarized.
STEP 3: SIGN PARTNERSHIP AGREEMENT WITH RJSC
The partnership agreement and filled out RJSC should receive Form I. These documents will be reviewed by RJSC officials. When the officials are satisfied with the points stated in the partnership deed, he shall record the statement in the Register of Firms and issue a Certificate of Registration.
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“Drafting of the Memorandum of Articles and Articles of Association, as well as other required documents, as well as the Directors’ resolution to establish a new company in Bangladesh”
The legal team of TR, The Legal Source are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company in Bangladesh . For queries or legal assistance, please reach us at:
Address: House 410, Road 29, Mohakhali DOHS
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