The real estate sector in Bangladesh is one of the sturdier markets that has a lower tendency to take a downturn. That is to say, the factors impacting the real estate market are less volatile than other sectors. Besides, with increasing housing demand, the real estate market of Bangladesh particularly in the divisional sectors is set on a course filled with new business opportunities. More and more businesses are establishing to grab a piece of the growing market. Most of them are real estate development companies. However, setting up a real estate development company is not without its challenges and requires following multiple step-by-step procedures. In this article, we will be discussing everything you need to know about the registration process of a real estate development company, its type, and its business setup process.
Types of Real Estate Development Companies
There are multiple ways to set up a real estate development company and start a business in the sector. It can be a Sole Proprietorship, Partnership Business, or Private Limited Company. But the first two options are not available for foreign investors.
Sole Proprietorship Business: In a sole proprietorship, the owner and the business are not considered separate legal entities in Bangladesh, therefore, for any liabilities (if arise) during the course of business, the business owner will be solely liable for the consequences.
Partnership Business: Just like the sole proprietorship business, the partners and the business are not separate entities and they are personally liable for all the liabilities incurred.
Private Limited Company: Unlike sole proprietorship and partnership business, a private limited company is a separate legal entity, and shareholders or partners are not liable for the company’s liabilities.
Business Setup Process
Although there are similarities between these three types of businesses, they are mostly different in terms of business setup processes, structures, and activities. And the registration process of a real estate development company begins after setting up the business.
Sole Proprietorship Business
For any sole proprietorship business, one just needs to issue a name for the business and obtain a trade license by making an application to the respective City Corporation/local government. As an owner, you have to provide the lease/rent document of the office space of the business. But if the entity intends to operate in a commercial sector or in an industrial sector, as a sole proprietor you have to apply for a commercial trade license and an industrial trade license respectively.
Partnership Business
Now for establishing a partnership business, one is not required to register the business with RJSC but it is highly recommended, otherwise, partners will not be file cases against each other in case of fraudulent activity or legal implications.
In order to register the company under the Registrar of Joint Stock Companies and Firms of Bangladesh (RJSC), one must complete these three steps.
STEP 1 – PARTNERSHIP NAME
A Name Clearance for the proposed name of the Partnership Business must be obtained from the Registrar of Joint Stock Companies and Firms (RJSC).
STEP 2 – PARTNERSHIP DEED
The Partnership Deed should be written on a stamp paper in accordance with the Stamp Act and all partners should sign it and subsequently be notarized.
After reviewing all the documents and their authenticity, RJSC will issue a Certificate of Registration. The entire process may take two weeks or longer.
Private Limited Companies
For a private limited company, one must register the company with RJSC in order to operate in Bangladesh. Here are the steps to do that.
STEP 1 – A name clearance for the proposed name of the Company, must be obtained from RJSC.
STEP 2 – Drafting and signing the following:
->Memorandum and Articles of Association of the company;
->Filled in Form IX: Consent of director to act;
->Filled in Form XII: Particulars of the directors, manager, and managing agents.
STEP 3 – A bank account needs to be opened in the proposed company name with any scheduled bank in Bangladesh. Then the money equal to the shares to be owned by the foreign shareholders from outside of Bangladesh has to be remitted into the account. This is not required for local shareholders
STEP 4 – Collection of the encashment certificate of such foreign remittance (not required for local shareholders)
STEP 5 – The signed documents, as mentioned in step 2, shall be required to be submitted to the RJSC along with the encashment certificate and the government fees for incorporating the company.
Registration Process of A Real Estate Development Company
To conduct business across Bangladesh, every real estate development company must apply to National Housing Authority (NHA) for registration. The registration process of a real estate development company is simple. The applicant just needs to fill out the application form and submit that to the NHA. But before that, these are the required documents.
- Trade License
- TIN ( Tax Identification Number) Certificate
- VAT Registration Number
- (i) Experience in project formulation and implementation (if any);
(ii) Certificate of Qualification of Technical Persons (Certificate of Educational Qualification of Architects, Engineers and Planners and Certificate of Membership of the concerned professional body); - Certificate of Incorporation, including Memorandum of Association and Articles of Association
- Copy of registration of membership of Real Estate and Housing Association of Bangladesh (REHAB) or Land Developers Association (if any)
It may take 60 days (sixty) to verify all the documents. After the verification, if everything is alright, the concerned authority will issue a registration certificate or license for five years. And the applicant must pay a certain amount as an application fee within thirty days. The license can be renewed, canceled, or amended at any time.
The registration process of a real estate development company is twofold. First, you have to establish your company, then you have to apply for registration to NHA. A real estate development company can get going soon after getting the license.
