LexisNexis Company Law Guide 2018-2019 - The second annual complimentary guide to understanding Company Law practices around the world with an ...
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The second annual complimentary guide to understanding Company Law practices around the world with an Asia-Pacific focus LexisNexis ® Company Law Guide 2018–2019
LexisNexis
®
Company Law Guide
2018–2019
Contents Jurisdictional Q&As Bangladesh – The Legal Circle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Brazil – Campos Mello Advogados . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Cyprus – Harris Kyriakides LLC 35 India – Singhania & Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Mauritius – Benoit Chambers 57 Pakistan – Irfan & Irfan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Ukraine – Redcliffe Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 United Arab Emirates – BSA Ahmed Bin Hezeem & Associates . . . . . . . . . 91 Contents 5
Jurisdictional Q&As
Jurisdiction: Bangladesh
Firm: The Legal Circle
Authors: Masud Khan, N.M. Eftakharul
Alam Bhuiya, Ahnaf Chowdhury,
Jarif Ahmed and Nauriin Ahmed
1. What is the general situation for the Board of Investment, which facilitates
foreign companies in your jurisdiction? foreign investment by advising foreign
investors and assisting them with utilities,
In evaluating the general situation for foreign land acquisition, etc.;
companies and investors in Bangladesh, it is
b. BB, Bangladesh’s central bank, which regu-
appropriate to review:
lates the outward repatriation of capital and
a. the key laws and regulations and the gov- capital gains; and
ernment agencies and regulators that play
c. the Registrar of Joint Stock Companies and
a key role in the regulatory framework that
Firms (‘RJSC’), which registers both foreign
governs foreign companies and investors;
companies establishing a place of business
and
in Bangladesh and foreign-owned locally
b. the various legal forms or options available incorporated companies.
to foreign companies and investors under
The general situation of foreign companies
such regulatory framework, and the relative
and investors in Bangladesh concerning the
advantages and disadvantages of each of
challenges faced by them and/or the advantages
such legal forms or options.
provided to them in Bangladesh is determined
The key laws and regulations that govern foreign by the legal form in which a foreign company or
companies and investors are: investor chooses to establish a place of business
a. the Foreign Exchange Regulations Act in Bangladesh:
1947, as amended by the Foreign Exchange a. foreign companies incorporated outside of
Regulation (Amendment) Act 2015 (‘FERA’), Bangladesh registering (a) with BIDA as a
and the regulations promulgated thereunder Liaison Office or Branch Office, with a noti-
by the Bangladesh Bank (‘BB’), the central fication to BB within 30 days of the BIDA
bank of Bangladesh, which regulations are notification, plus (ii) with RJSC as a foreign
compiled by the BB in the Guidelines for company under the CA 1994 ss 378 and 379:
Foreign Exchange Transactions Volume 1 & in addition to not having a separate legal
Volume 2 (2009), and updated by BB’s circu- personality, such foreign companies face a
lars issued from time to time (collectively, number of challenges:
the ‘FX Guidelines’); and
i. such registration is for a specific period
b. the Companies Act 1994 of Bangladesh (Act and must be renewed upon expiry; and
No. XVIII of 1994) (‘CA 1994’).
ii. their activities are strictly restricted.
The key Bangladeshi government agencies or Specifically, if a foreign company
regulatory bodies that impact or regulate foreign registers itself with BIDA as a Liaison
companies and investors are: Office, it may engage only in market-
a. the Bangladesh Investment Development ing and other non-revenue generating
Authority (‘BIDA’), formerly known as activities, which are to be funded only
Jurisdictional Q&A – Bangladesh 9
by inward remittances sent in by the shareholder. Except where a foreign-owned to a non-resident, then under a general 2. What are the key laws and regulations
foreign office (i.e. a Liaison Office is a company needs to register with BIDA for exemption specified in Chapter 14 of the FX that govern company law in your
cost centre prohibited from engaging work permits for foreign employees (in Guidelines, such sale may be consummated jurisdiction?
in any commercial or other revenue which event, the minimum foreign invest- without BB’s prior approval.
generating activities). If registered as ment into the share capital of such company The primary statute that governs companies
Regarding the registration requirements under
a Branch Office, a foreign company is required to be at least US$ 50,000), foreign in Bangladesh is the CA 1994. It consists
the CA 1994, a foreign-owned company is
may engage solely in the activities investment into such companies is not of 404 sections divided into 11 parts which
registered with the RJSC in substantially the
necessary to execute its work under a subject to a minimum amount. cover, among others, a company’s constitution
same manner as a wholly Bangladeshi-owned
project agreement or other contract as and incorporation, share capital, registra-
Regarding outward remittances of foreign company. The incorporation procedure com-
specified in the application with BIDA. tion, liability of directors, management and
investment by foreign-owned companies to mences by obtaining ‘Name Clearance’ from the
If so specified in its application to administration (including all procedures for
their foreign shareholders, under the FERA s RJSC for the name of the proposed company.
BIDA, a foreign company may fund administering matters of the board of directors
5(1) and Chapter 10(31)(a) of the FX Guidelines, The procedure is complete upon the issuance
its Branch Office from local revenues and shareholders), and winding-up.
foreign-owned companies may remit via their of a Certificate of Incorporation by the RJSC.
earned from its specified contract and, AD bank dividends to their foreign shareholders The incorporation procedure for foreign-owned The CA 1994 also contains 12 schedules of re-
with prior approval of BIDA and BB, by applying to their AD bank in the prescribed companies does not involve anything signif- gulations and forms which include, among
repatriate Branch Office profits to the form. Such outward remittance payments of icantly different from that of locally owned others, templates of memorandum and articles
foreign office. dividends may be made freely without any prior companies, except for the requirement under of association, requirements of annual financial
b. foreign companies or investors register- approval of BB. Chapter 9, paragraph 2(b) of the FX Guidelines statements etc. The CA 1994 Schedule I sets
ing with the RJSC a locally incorporated that foreign exchange brought into an AD bank out regulations that apply to the management
Regarding an exit by a foreign investor by
foreign wholly-owned or partially owned/ must be first encashed in a proposed com- of a company limited by shares which can be
disposal of shares in a foreign-owned company,
joint venture company limited by shares pany account prior to the issuance of shares. adopted by a company in its articles of associ-
under the FERA s 13(1)(d) and Chapter 9, par-
(a ‘foreign-owned company’) under the Accordingly, unlike a wholly Bangladeshi ation, including some mandatory regulations
agraph 3(B) of FX Guidelines (as amended by
CA 1994 ss 5 and 6. If such foreign owned owned company, a foreign-owned company which cannot be excluded by the articles of
BB Circular 32 of 31 August 2014):
company is set up as an industrial venture, must open a proposed company bank account association.
a. if the shares are in a public limited company
it may register with BIDA to take advantage in Bangladesh under the proposed company’s The Companies Rules 2009 (No. 7309G) (‘CR
listed on either the Dhaka Stock Exchange
of BIDA’s foreign investment advisory and name by submitting the Name Clearance 2009’) is also an integral piece of legislation
(‘DSE’) or the Chittagong Stock Exchange
facilitation services. Certificate obtained from the RJSC to the bank. that governs company law in Bangladesh.
(‘CSE’), the capital and capital gains from
Regarding inward remittances of foreign Prior to filing incorporation documents with The CR 2009 contains Forms relevant to
the disposal of shares may be remitted
exchange by foreign investors, under the FERA the RJSC, the foreign investor/shareholder must: different aspects and stages in the running of
outward to the foreign investor freely and
s 13(1)(s) and Chapter 9, paragraph 1 of the a. remit the applicable share capital amount in a company and in company law proceedings,
without any prior approval of BB, subject
FX Guidelines, foreign investors are free foreign exchange into such account; and which include, among others, petition for
to the remitted amount not exceeding the
to invest in a foreign-owned company in reduction of capital, notice to creditors, affidavit
market price of such shares; b. thereafter obtain from the AD bank an
Bangladesh, provided that such investments by sureties, notice of dividend, and notice of
b. if the shares are unlisted shares of a public encashment certificate evidencing the
are brought in and recorded in an Authorised appointment of liquidator.
limited company or are in a private limited conversion of such share capital funds in
Dealer (‘AD’) bank. No permission of BB is foreign exchange into Bangladesh Taka. At The Securities and Exchange Ordinance, 1969,
company, and are sold to a resident of
needed to set up such companies if the foreign incorporation, the encashment certificate the Securities and Exchange Rules 1987 and the
Bangladesh, then prior approval of BB is
investors use their own funds. If funding of such must be filed with the RJSC along with Securities and Exchange Commission Act 1993
required for the outward remittance of the
foreign-owned companies is by foreign loans, the new company’s memorandum and (‘SECA 1993’) are of particular importance to
capital and capital gains, subject to such
as per Chapter 15 of the FX Guidelines, such articles of association and other prescribed issuers of securities that are listed on either of
remittance amount being equal to or less
foreign loans must be: RJSC forms. the two stock exchanges of Bangladesh: the DSE
than the ‘fair market value’ of the shares
a. registered with, and the interest payments and the CSE. These laws regulate the activities of
as certified by a licensed merchant bank or
thereunder approved by BIDA; and issuers and set out the penalties for violations.
chartered accountant (whose certificate is
b. funded from institutional lenders, except for to be submitted with the application made The Bangladesh Securities and Exchange
loans with a term of 12 months or less, which to BB for such prior approval). If the shares Commission (‘BSEC’), which regulates capital
may be provided by the foreign investor/ in such foreign-owned company are sold markets in Bangladesh, also issues various rules,
10 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Bangladesh 11
orders, notifications and directives from time to foreign-owned companies registering with (where the foreign shareholder is a corporate 6. What are the main post-registration
time which have the effect of law and regulate BIDA as industrial ventures, Bangladesh is in shareholder) are also required by the RJSC to reporting requirements for companies
the activities of companies. the process of passing legislation to set up a complete the incorporation. in your jurisdiction?
Other laws and regulations that impact company one-stop service centre at BIDA, under which The fees for the incorporation of a company are
BIDA would assist with the incorporation of The main post-registration reporting require-
law, specifically in regards to the personal liabil- calculated (in part) on the basis of its authorised
foreign-owned companies by ensuring the ments for companies in Bangladesh are listed
ity of a company’s directors, are the Bankruptcy share capital. For example, a company with an
completion of registration with RJSC within below. The documents are filed with the RJSC
Act of 1997, the Money Laundering Prevention authorised share capital of Taka 50 million
48 hours of filing. in its prescribed forms and/or in the forms set
Act 2009 and Negotiable Instruments Act 1881. would incur the following charges:
out in the CA 1994 or CR 2009, as applicable:
5. What are the main registration a. registration fee: Taka 76,250;
3. What are the most common types a. Form VII (Statutory Report): within a period
of companies in your jurisdiction? requirements for companies in your b. registration filing fee: Taka 2,400; of not less than one month and not more
jurisdiction? What are the fees? c. stamp fee for the memorandum and articles than six months from the date at which the
Private companies limited by shares (‘private of association: Taka 9,150; company is entitled to commence business,
limited companies’) and public companies lim- The registration of companies commences
d. fee for certified copies of the memoran- every company limited by shares and every
ited by shares (‘public limited companies’) are with the application for Name Clearance to
dum of association, Form XII and Digital company limited by guarantee and having
the most common types of companies formed in the RJSC and obtaining a Name Clearance
Certificate of Incorporation: Taka 2,220. a share capital must hold a general meeting
Bangladesh. The CA 1994 s 2(q) defines a private Certificate from the RJSC. After obtaining a
of the members of the company, which is
company as one which by its articles restricts the Name Clearance Certificate, a company with The registration costs are subject to change, and
defined as a statutory meeting under the
right to transfer its shares, if any, prohibits any a proposed foreign shareholder must open a it is very likely that additional administrative
CA 1994. The board of directors is required
invitation to the public to subscribe for its shares bank account in the name of the proposed entity costs may have to be incurred to complete the
to prepare a report which is referred to as a
or debenture, if any, and limits the number of its and remit the initial share capital (paid-up incorporation process.
statutory report and must forward the report
members to 50 not including persons who are capital) to the said account and obtain an Other important registrations for a company to every member of the company at least 21
in its employment. The CA 1994 s 2(r) defines encashment certificate issued by the bank. include: days before the day on which the statutory
a public company as a company which is not a The following documents have to be submitted a. value added tax (‘VAT’) registration under meeting is to be held;
private company. In addition, an association not to the RJSC to process the incorporation of the the VAT Act 1991; b. Form VIII (Special Resolution/Extraor-
for profit under the CA 1994 s 28 and a com- entity:
b. depending on the location of the office or dinary Resolution): a copy of every special
pany limited by guarantee under the CA 1994 a. memorandum and articles of association place of business, a trade licence from the and extraordinary resolution must be
s 29 may be formed to engage in not-for-profit
b. encashment certificate (for foreign-owned local government authority (union parishad/ printed or typewritten and duly certified
activities.
companies); pourashava/city corporation office) for the under the signature of an officer of the
4. How long does it take to set up c. Name Clearance Certificate; company’s specific type of trade or business; company and filed with the RJSC within 15
a company in your jurisdiction? c. depending on the nature and size of the days from its passing;
d. Tax Identification Number (TIN) Certificate;
business and its premises, building fire c. Schedule X (Annual Summary of Share
Provided that the memorandum and articles e. Treasury Challan;
licences, specific clearances from relevant Capital and List of Shareholders, Annual
of association have been drafted beforehand f. Form I (Declaration on registration of ministries of the government and/or licences Summary of Directors): under the CA
and are ready for filing with the RJSC and an company); which involve the handling of particular 1994 s 36(1), a company must file with the
encashment certificate has been received from g. Form VI (Notice of situation of registered substances and commodities etc. RJSC an annual summary of share capital
the AD bank in the name of the proposed com- office and of any change therein); and list of shareholders within 18 months
The fees for these registrations vary depending
pany (where it is a fully or partly foreign-owned of its incorporation and annually thereaf-
h. Form IX (Consent of directors to act); on the location of the office or place of business
company), usually it takes approximately 10–15 ter. A private company must submit with
i. Form X (List of persons consenting to be as well as the company’s share capital.
working days to incorporate a company in the annual return a certificate signed by a
Bangladesh, starting from the Name Clearance directors); and
director or other officer of the company that
application to the issuance of a Certificate of j. Form XII (Particulars of Directors, Man- the company has not issued any invitation
Incorporation. agers, Managing Agents and of any change). to the public to subscribe for any shares or
There is no official method to fast-track the Additional identification documents for the debentures of the company;
incorporation of a company. However, for foreign shareholder and/or the nominee director
12 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Bangladesh 13
d. Form XLI (Notice of Alteration in the g. exploration, extraction and supply of other a. arms and ammunition and other military by them’. The limited liability of a company
Address of the Registered Principal Office mineral resources; equipment and machinery; limited by shares is further emphasised in the
of the Company): notice of any change in h. large-scale infrastructure projects (e.g. b. nuclear power; CA 1994 s 235(iv), dealing with the liability of
the registered address of a company must be flyovers, elevated expressways, monorails, contributories of past and present members on
c. security printing and minting; and
given within 21 (twenty-one) days after the economic zones, inland container depots/ the winding-up of a company: ‘in the case of
change to the RJSC; d. forestation and mechanised extraction a company limited by shares, no contribution
container freight stations);
within the boundary of a reserved forest. shall be required from any member exceeding
e. Balance sheet and profit and loss account: i. crude oil refineries (recycling/refining of
under the CA 1994 s 190, a company must the amount, if any, unpaid on the shares in
lube oil used as fuel); 8. What is the typical structure
file with the RJSC copies of its balance sheet respect to which he is liable as a present or past
j. medium and large industries using natural of directors (or family management
and profit and loss account within 30 days member’.
gas/condescend and other minerals as raw structure) and liability issues
from the date on which the balance sheet or companies in your jurisdiction?
materials; 9. What is the minimum number
and the profit and loss account are laid
k. telecommunications services (mobile/cellu- of directors and shareholders required
before its annual general meeting. Directors, other than directors nominated by
lar phone services and landlines); to set up a company in your jurisdiction?
The above is not an exhaustive list. Other corporate shareholders, must own qualifying
Are there any requirements that
reporting requirements are triggered in different l. satellite channels; shares, the number of which can be specified in
a director must be a natural person?
situations such as a transfer of shares, return of m. cargo/passenger aviation; the articles of association. Directors nominated
allotment, changes to the board of directors. by corporate shareholders are not required to As per the CA 1994 ss 2(q) and 90(1), private
n. sea-bound ship transport;
Also, public listed companies have certain own qualifying shares. Directors must execute limited companies in Bangladesh are required
o. ea-ports/deep sea-ports; a Form IX: Consent of Director (in a prescribed
additional reporting obligations due to their to have a minimum of two directors and two
corporate governance obligations imposed by p. VoIP/IP telephone; and format, as set forth in the Schedules to CA 1994). shareholders and a maximum of 50 sharehold-
the BSEC. q. industries using heavy minerals accumu- This executed Form IX must be filed with the ers. Under the CA 1994 s 90(1), public limited
lated from the beach. RJSC for the directorship to become effective. companies and private limited companies which
As per the CA 1994, it is not mandatory for a
Furthermore, a Form XII: Particulars of are subsidiaries of public limited companies are
company in Bangladesh to have a company In these sectors, the government reserves the
Directors, Managers and Managing Agents (in required to have at least three directors and a
secretary. right to fix the equity ratio for foreign investors/
a prescribed format, as set forth in the Schedules minimum of seven shareholders.
shareholders to local investors/shareholders.
7. Are there any controlling factors or to CA 1994) must be executed by the Managing
The Government has the right to expand or Section 90(3) of the CA 1994 expressly states
restrictions on foreign companies in your Director and filed with the RJSC. For subsequent
amend the list as it sees fit. Enterprises in these that a director must be a natural person.
jurisdiction? appointment of directors (post-incorporation),
controlled sectors cannot be registered with the
directors must be appointed at a general meeting 10. What are the requirements on how
BIDA without prior approval from the relevant
See question 1 in relation to foreign exchange of the shareholders, provided, however, that shares are offered in your jurisdiction?
ministries of the government.
regulations applicable to foreign-owned casual vacancies on the board can be filled
companies. In addition to the broader restriction stated by pursuant to a meeting of the existing board Private Limited Companies
above, in some cases, sector-specific legislation of directors. The CA 1994 allows non-resident
Furthermore, the Industrial Policy 2016 lists a Shares may be offered at three different stages:
also imposes a maximum ceiling for a foreign and/or foreign individuals to be appointed as
total of 17 of industries designated as ‘controlled
stake in the licensee entities for some of these directors of private limited companies. a. at the time of incorporation: shares may be
industries’:
controlled industries. Examples include certain offered to members at incorporation pur-
a. fishing in the deep sea; Under the CA 1994, companies may be formed
services in the telecommunications sector such suant to the memorandum and articles of
with the liability of shareholders limited by
b. banks/financial institutions in the private as licences granted for International Gateway association. The shares of a private limited
shares or limited by guarantee (a limited
sector; (IGW), Interconnection Exchange (ICX) and company cannot be offered to members of
company), or with the liability of shareholders
c. insurance companies in the private sector; VoIP Service Provider (VSP). the public;
unlimited (an unlimited company). The CA
d. generation, supply and distribution of power The government of Bangladesh in the Industrial 1994 s 5(a) defines a company limited by shares b. transfer of existing shares: shares may be
in the private sector; Policy, 2016 has also listed certain sectors as as ‘a company limited by shares, that is to say, offered to new shareholders by transferring
‘reserved sectors’ where foreign investment is a company having the liability of its member one or more of the shares held by the existing
e. exploration, extraction and supply of natural
restricted for the purpose of national security limited by the memorandum to the amount, shareholders in the manner provided in the
gas/oil;
or other reasons: if any, unpaid on the shares respectively held company’s articles of association. Under the
f. exploration, extraction and supply of coal; CA 1994 per Reg 18, Sch 1, an instrument of
14 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Bangladesh 15
transfer of shares (namely, Form 117) must together for an accurate and comprehensive obligation to the shareholders, audit committee, (non-repatriable). Also, a foreign national can
be executed by both the transferor and the understanding of the labour law regime. reporting obligations of the audit committee, become a permanent resident by investing a
transferee. The transferor remains the holder An important point to note regarding the external/statutory auditors, duties of chief minimum of US$ 75,000 (non-repatriable).
of the share until the name of the transferee application of the LA 2006 and LR 2015 is that financial officer and chief executive officer and
is entered in the register of members. reporting and compliance obligation of the 14. When is a company subject to tax
the provisions of both LA 2006 and LR 2015 are
Furthermore, an affidavit must also be Guidelines. in your jurisdiction? What are the main
applicable to employees who fall within the defi-
executed by the transferor confirming the taxes that may apply to companies in
nition of a ‘worker’ as defined in the LA 2006. In addition to the above the corporate legal
said transfer and duly notarised before a your jurisdiction?
The LA 2006 s 2(65), as amended in 2013, defines framework in Bangladesh consists of various
recognised Notary Public of Bangladesh; ‘worker’ as including all employees except for statutes, namely, CA 1994, Securities and In Bangladesh, as per the ITO 1984 s 75, it is
c. return of allotment: under the CA 1994 s those engaged in a managerial, administrative Exchange Commission Ordinance, 1969, SECA mandatory for all companies incorporated in
151, where a company having a share capital [or supervisory] capacity’. The Bangladesh High 1993, Bangladesh Bank Order, 1972, Bank Bangladesh to obtain an e-TIN (Electronic Tax
makes any allotment of its shares, it is Court has defined ‘worker’ broadly by holding Companies Act 1991, Financial Institutions Identification Number) from the National Board
required to file a duly completed Form XV that a manager etc. may be deemed a non-worker Act 1993, Bankruptcy Act 1997, and the Foreign of Revenue (‘NBR’) and to file a tax return on
with the RJSC. only if he or she has the power to make hiring Exchange Regulation Act 1947, which impose the later date of six months from the end of the
and/or firing decisions over employees under his certain corporate governance obligations as accounting year or 15 July of the particular year.
Public Limited Companies
or her management. well. Corporate governance in Bangladesh is Such filing may be accompanied by an audited
Shares may be offered to members of the public mainly regulated by RJSC, BSEC and BB.
Any employee who falls outside the ambit of financial statement, computation of total
pursuant to:
the term ‘worker’ is a ‘non-worker’. The terms income with a supporting schedule and other
a. a prospectus registered with the RJSC under 13. Does establishing a company in
of employment of a non-worker are governed supporting documents. The filing date can be
the CA 1994 s 38; or your jurisdiction grant any kind of
solely by the contract of employment between extended upon application for up to two months
residency rights? Are there any conditions
b. a statement in lieu of a prospectus registered the non-worker and the employer. at first occasion and can be further extended for
that in order to receive these residency
with the RJSC under the CA 1994 s 141. In addition, the Contract Act of 1872 s 27 may another two months.
rights (if applicable) one must partner
If the public limited company is not already be referred to in that it renders void restrictive or establish a joint venture with a local The main taxes that may apply to companies
listed on a stock exchange in Bangladesh, an covenants that seek to restrain employees from (e.g. a citizen of your jurisdiction)? in Bangladesh are corporate taxes and VAT. At
application must be made to the BSEC to make seeking employment with a competing employer present, the rate of corporate tax of a non-listed
an initial public offering (IPO) of the company’s after their employment has ended with the cur- In establishing a foreign-owned company in company is 35% of a company’s total income
shares. The company would have to comply with rent employer. Bangladesh, a foreign investor is not automat- in a year. The rate of VAT usually depends on
the BSEC regulations on making an IPO and the Furthermore, companies operating in an export ically granted residency rights. However, a the respective HS Code (an internationally
applicable listing regulations of the respective processing zone are subject to the Bangladesh prospective foreign investor may obtain a mul- standardised system of names and numbers to
stock exchange. Export Processing Zones Authority Act 1980 tiple-entry three-year investor visa by applying classify traded products) of the products and/or
and the rules and regulations of the Bangladesh for such investor visa with BIDA. Such investor services provided by the company. However, the
11. What are the key laws and regulations visa allows for entry into and short-term stay most common rate of VAT in Bangladesh is 15%.
Export Processing Zones Authority.
on employment in your jurisdiction that in Bangladesh for the visa holder, but does not
companies should be aware of? Are there 12. What is the nature of the allow for such investor visa holder to work and 15. How does the competition law in your
any aspects of employment law that are corporate governance regime in effect earn a salary in Bangladesh. If a foreign investor jurisdiction regulate companies?
heavily regulated? in your jurisdiction? What agencies or wishes to reside in Bangladesh as an employee
The Competition Act 2012 (‘Comp Act’) was
government bodies regulate corporate of the investee foreign-owned company, then
The primary statute that governs employment promulgated to monitor the market and protect
governance? subject to a minimum amount of foreign capital
and labour matters in Bangladesh is the Labour the end consumers of products and services.
and number of local employees, she/he may be
Act 2006 (‘LA 2006’). The Labour Rules, 2015 The SEC by notification dated 7 August 2012 It mandates the creation of the Bangladesh
eligible for and be granted a work permit to
(‘LR 2015’) was enacted pursuant to the LA issued certain corporate governance condi- Competition Commission (‘BCC’) which is
work/reside in and earn a salary in Bangladesh.
2006 s 351. It sets out in more detail the matters tions and guidelines on public listed companies vested with the power of overseeing the market
covered in the LA 2006 and provides greater A foreign national may become citizen of and taking necessary measures against unscru-
(“Guideline”). The Guideline imposes con-
clarity and specificity on certain aspects of the Bangladesh by investing a minimum of US$ pulous business practices and organisations.
ditions regarding board size, appointment of
LA 2006. The LA 2006 and LR 2015 must be read 500,000 in Bangladesh or by transferring US$
Independent Directors, Director’s reporting
1,000,000 to any recognized financial institution
16 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Bangladesh 17
The Comp Act s 16 restricts organisations and Convention, if a copyright work is registered in as stated in the respective provisions. Moreover, 21. Are there any features regarding
groups from abusing their dominant position. one member country, it will have protection in under the ITO 1984 paragraph 33 of Part A company law in your jurisdiction
‘Dominant position’ is defined as a position of all member countries of the Berne Convention. of the Sixth Sch, as amended by Bangladesh or in Asia that you wish to highlight?
strength which is enjoyed by an organisation Income Tax Paripatra (Circular) 2015 and Fin-
in the relevant market by creating a monopoly 17. Does your jurisdiction have laws ance Act 2016, there is a tax exemption on any In Bangladesh, a minimum of two shareholders
situation. However, the Comp Act did not spec- or regulations that govern data privacy? income derived from the business of software are required to incorporate a company, whereas
ify the precise limit beyond which an act would development information technology, informa- in many countries, a single shareholder can
Bangladesh does not have any specific law that incorporate a company and is free to hold 100%
be treated as anti-competitive. Also, the Comp tion technology enabled services and nationwide
governs personal information or data privacy. of the shares of the company. Furthermore,
Act remains silent on the issues which the BCC telecommunication transmission network up to
However, the following statues may be noted in Bangladesh law does not provide for any pass-
must take into account in order to determine a 30 June 2024.
relation to their regulation of data privacy: through companies such as LLCs as is available
relevant market. Moreover, double taxation can be avoided in
a. the Information and Communication in certain jurisdictions. Finally, the following
It is to be noted that although the BCC was most cases as Bangladesh benefits from many
Technology Act 2006 provides relief against provisions of the CA 1994 may be noted:
established under the Comp Act it has not bilateral investment agreements with other
computer hacking and unauthorised access a. section 106 provides that a shareholder-di-
become effective yet, for many practical reasons, countries.
of data; rector may be removed only at a duly called
in respect of overseeing market practices and
implementing the provisions of the Comp Act. b. the Right to Information Act 2006 prohibits 19. What is the law on corporate extraordinary general meeting, having a
disclosure of any information which would insolvency in your jurisdiction? valid quorum and upon the affirmative vote
16. What are the main intellectual harm an individual’s privacy or personal of three-quarters of the shareholders present
property rights companies should be life; The primary statues on corporate insolvency in at such meeting. This provision does not
aware of in your jurisdiction? Bangladesh are the Bankruptcy Act 1997 and apply to nominee directors appointed by
c. the LA 2006 imposes criminal sanctions on
the CA 1994 ss 234–344. corporate shareholders, who as per a provi-
employees by way of penalty for wrongful
The main intellectual property rights com- sion that should be inserted in the articles of
disclosure of an employer’s confidential 20. Have there been any recent proposals
panies should be aware of in Bangladesh are association may be appointed and removed
information or trade secrets; for reforms or regulatory changes
trademarks, patents and copyrights. Intellectual at the sole discretion of the appointing
property such as industrial design does not d. the Constitution of Bangladesh provides that will impact company law in your
shareholder; and
play a significant part, and very few cases have protection of privacy in general terms: the jurisdiction?
right to the privacy of one’s correspondence b. section 85(1) contains provisions as to
reached the Supreme Court of Bangladesh or
and other means of communication is The CA 1994 has been considered for amend- meetings and votes which are to have effect
have been reported.
declared as a fundamental right of a citizen ment for a number of years. In this regard, the notwithstanding any provision in the
In Bangladesh, an applicant can apply for trade- Ministry of Commerce has published the draft articles of association, and section 85(2)
of Bangladesh.
mark or patent registration at the Department Companies Act 2013 for comments, but it has contains provisions which are to have effect
of Patent, Design and Trademark under the Additionally, BB issued a guideline in 2015 to
not yet been implemented and there is no con- in so far as the articles of association do not
Ministry of Industries. ensure information, communication and tech-
firmation as to when this bill will be passed as an make provision in that behalf.
nology security in the financial sector.
An application for copyright registration is to Act. We will have to wait and see what changes
be submitted at the Copyright Office under the 18. Are there any incentives to attract this Act will bring and the impact it will have
Ministry of Cultural Affairs. foreign companies to your jurisdiction? in Bangladesh.
It takes around two years to register a trademark
or a patent and around 4–6 months to register See question 1 in regards to the repatriation of
a copyright, provided that there is no objection dividends and capital/capital gains to foreign
from the registrar or any opposing party. shareholders of a foreign-owned company.
Bangladesh is a member of the international There are also tax incentives for foreign compa-
treaty, Paris Convention for the Protection nies, as provided for in the ITO 1984 ss 44–47.
of Industrial Property, along with 176 other For instance, under the ITO 1984 ss 46A, 46B
countries. Bangladesh is also a member of the and 46C, there are tax exemptions for the busi-
international treaty, Berne Convention, along ness of industrial undertaking and of physical
with 172 other countries. As per the Berne infrastructure facilities for a number of years
18 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Bangladesh 19Jurisdiction: Brazil
Firm: Campos Mello Advogados
Authors: Fabiano Gallo, Carolina
Marcondes Sant’Angelo,
Rafaella Chiachio and
Adriana Kupper Pagés
1. What is the general situation for of laws to regulate several legal fields. With
foreign companies in your jurisdiction? respect to company law, the relevant provisions
(For example, common presence, difficulty are found essentially in the following statutes
to setup, restrictive system, open and regulations:
and welcoming jurisdiction?)
2.1 Brazilian Civil Code
As one of the largest economies in the world, Implemented by Federal Law No. 10,406 of
Brazil is a well-known destination for foreign January 10, 2002, as amended (“Brazilian Civil
investors. The overall stability of the market, Code”), the Brazilian Civil Code sets out specific
combined with a growing domestic demand guidelines regarding various types of business
for infrastructure, goods and services, provide organizations, including private limited liability
foreign companies interested in doing business companies and non-profit legal entities (associa-
in Brazil with strong and diverse investment tions, foundations and cooperatives).
opportunities.
2.2 Corporations Law
Commonly referred to as an open jurisdiction,
About the Authors: Federal Law No. 6,404 of December 15, 1976, as
Brazil welcomes foreign investment. As such,
amended (“Corporations Law”), applies specif-
Masud Khan W: www.legalcirclebd.com there are no general restrictions on foreign
ically to legal entities incorporated in the form
Senior Partner, The Legal Circle A: The High Tower (9th floor) ownership, except in certain specific sectors
of stock corporations and regulates the forma-
E: masud@legalcirclebd.com 9 Mohakhali C /A, Dhaka 1212 (for further details regarding such restrictions,
tion, organization and dissolution processes
Bangladesh please refer to section 7 below).
related to such entities. The Corporations Law
T: +88 02 5881 4311 As in many other jurisdictions, foreign com-
N.M. Eftakharul Alam Bhuiya may also be applied in a subsidiary manner to
Senior Associate, The Legal Circle panies wishing to invest in Brazil may choose limited liability companies, if the shareholders
from a range of entry options the one that is so decide in the relevant articles of association.
E: eftakhar@legalcirclebd.com
most suitable to the intended business model
(which should be assessed on a case-by-case 2.3 Specific Regulations
Ahnaf Chowdhury basis). Although indirect entry options are 1. Rules Enacted by Brazilian Securities and
Associate, The Legal Circle available (e.g. execution of agreements with sales Exchange Commission (“CVM”)
E: ahnaf@legalcirclebd.com agents and distributors), foreign investors usu- Publicly-held corporations are also subject to
ally prefer to establish a direct and permanent specific regulations issued by the CVM.
Jarif Ahmed presence by means of a subsidiary.
2. Rules Enacted by the Brazilian Stock
Associate, The Legal Circle
2. What are the key laws and Exchange (BM&F Bovespa)
E: jarif@legalcirclebd.com
regulations that govern company law The BM&F Bovespa has created differentiated
in your jurisdiction? listing segments, with rules setting out cor-
Nauriin Ahmed porate governance practices and transparency
Associate, The Legal Circle The Brazilian system is based on the civil law requirements in addition to those already
E: nauriin@legalcirclebd.com tradition and, as such, relies on codified sets
20 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Brazil 21established under Brazilian corporate legis- 3.2 Sociedade Anonima Considering that the EIRELI was only recently e. For both Limitada and S.A.: registration of
lation. The adherence to the listing segments Corporations are governed by the Corporations introduced in the Brazilian legal framework, the foreign shareholder(s) and the Brazilian
better advertises the company’s efforts to Law, which provides a more sophisticated legal its structure is not consolidated in practice company with the Brazilian Central Bank,
improve its relationship with its investors and regime for corporate activities, management and is still being verified and tested by registry so as to enable the inflow and outflow of
increases the potential for asset value appreci- and shareholders’ relations, corporate govern- authorities and courts. For this reason, we will funds among such persons (such as equity
ation. This adherence is voluntary and must be ance structures, decision-making processes, focus on the following sections on the analysis contributions and payment of profits and
approved by the BM&F Bovespa. transparency and disclosure obligations, and of Limitada and S.A. dividends);
conflict resolution procedures. This corporate f. Only for S.A.: publication of the Brazilian
3. What are the most common types 4. How long does it take to set up
entity is more appropriate for a co-owned equity company incorporation acts in the press and
of companies in your jurisdiction? a company in your jurisdiction?
structure, such as joint ventures, as well as for registration of a copy of such publication
(For example, it could be as fast as X
Brazilian law provides for several corporate the participation of various kinds of stakehold- with the Board of Trade;
amount of time, average setup time
forms, of which the most important and widely ers, such as financing entities or holders of debt g. Only for S.A.: opening of the Brazilian
and then as slow as Y amount of time
used are: instruments. company’s shares and corporate books, as
based on your experience – are there
a. limited liability companies (“Limitada” or A corporation can be held either publicly or any mechanisms to fast track setup?) required by the Corporations Law;
“Ltda.”); and privately. As a general rule, a publicly held h. For both Limitada and S.A.: indication to the
corporation has its securities traded on the The process for setting up a company in Brazil Brazilian Federal Revenue of the Brazilian
b. stock corporations (“Sociedade Anonima”
stock exchange and/or on the over-the-counter involves the following main steps: company’s and shareholders’ ultimate ben-
or “S.A.”).
market. A publicly-held corporation, as well as a. For both Limitada and S.A.: granting of eficiaries, defined as the individual(s) who
Corporations and limited liability companies each public placement of securities made by it, powers-of-attorney for representation of ultimately hold(s) a significant control or
afford equal protection to their equity holders by must be registered with the CVM. the foreign shareholder(s) in Brazil (under influence over the entity(ies); and
limiting their liability to the capital stock they
3.3 Other corporate forms Brazilian law all foreign investors (entities i. For both Limitada and S.A.: Brazilian enti-
subscribed. Therefore, corporations and limited
or individuals) must indicate an individual ties must also obtain additional enrolments
liability companies always entail limited liability In addition to corporations and limited liability
resident in Brazil as their representative for with tax, social security and regulatory
as a general rule. companies, another type of limited liability
both corporate and tax purposes); provide a authorities at federal, state, and municipal
company named “EIRELI” was recently regu-
3.1 Limitada copy of shareholder(s)’ articles of incorpo- levels (for further details, please refer to
lated by the Brazilian Civil Code and is worth
Limited liability companies are governed by ration or equivalent instrument (statement/ section 5 below).
mentioning. Please refer to item 3.3.1 below.
the Brazilian Civil Code. In case of omissions affidavit), as well as a copy of the passport
Other company forms have not been accepted The Brazilian company is considered legally
and depending on the language of the com- of shareholder(s)’ legal representative. As
in practice, especially because most of them existing upon completion of item (d) above,
pany’s articles of association, the rules under a general rule, such documents must go
provide for unlimited shareholder liability. which usually takes between 30 to 90 days,
the Brazilian Civil Code relating to limited through applicable notarization and apos-
depending on the efficiency of the foreign share-
liability companies may be supplemented by 3.3.1 EIRELI tille proceedings;
holder(s) to provide the necessary documents
the rules in the Brazilian Civil Code relating The EIRELI is a type of limited liability company b. For both Limitada and S.A.: registration of and information to incorporate the company,
to the sociedade simples (a corporate type also which is incorporated by only one individual the foreign shareholder(s) with the Brazilian as well as of the government bodies in charge of
established by the Brazilian Civil Code) or by or legal entity (a national or foreigner), in the Federal Revenue; analyzing the application documents.
the Corporations Law. capacity of sole-owner of the totality of the c. Only for S.A.: deposit, in cash, of 10% of the
The limited liability company structure is usu- company’s corporate capital. In general, the company’s corporate capital in an interim 5. What are the main registration
ally recommended for companies that envisage same rules governing the Limitada also apply bank account opened on behalf of the requirements for companies in your
a simple governance structure. The legislation to the EIRELI, with the following exceptions: Brazilian company in Banco do Brasil S.A; jurisdiction? What are the fees?
grants these types of companies more freedom a. the corporate capital of the EIRELI shall be d. For both Limitada and S.A.: preparing, After registration of the company with the
to organize their internal structure and deci- equivalent to at least one hundred minimum filing and registering the Brazilian company Board of Trade, additional forms must be
sion-making process, as well as a lower grade of wages; and incorporation acts (articles of association or filed with tax, social security and regulatory
transparency and disclosure obligations. That is by-laws, as the case may be) with the Board
b. each individual or legal entity can incorpo- authorities at federal, state, and municipal
why these corporate entities are mostly used in of Trade and obtaining the enrolment of
rate only one EIRELI. levels, vis-à-vis the location, business type, and
wholly owned companies. the Brazilian company with the Brazilian
Federal Revenue;
22 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Brazil 23Annual meeting the Brazilian Central Bank, through the
Her experience is focused in corporate law, An annual meeting of shareholders must be held SISBACEN.
corporate governance, M&A and private within four months following the end of each b. On an annual basis:
equity transactions, foreign investment and corporate year to: i. Brazilian companies that do not meet
commercial contracts. Her experience also a. Limitadas: (i) review management accounts the criteria indicated in (a.i) above must
encompasses planning and structuring of and deliberate on the balance sheet and inform their updated corporate struc-
business transactions and corporate activ- the economic result; and (ii) deliberate on ture to the Brazilian Central Bank on
ities in different sectors of the economy, managers election, as the case may be; and an annual basis; and
legal advice and coordination of corporate
b. S.A.s: (i) review management accounts and ii. A foreign capital annual census must
reorganization projects and joint ventures,
examine, discuss and vote on the financial be completed by Brazilian companies
as well as legal assistance with day-to-day
statements; (ii) decide on the uses to which receiving foreign investment whenever
corporate issues.
the net profits of the corporate year should they have, on the preceding year (i)
Before joining Campos Mello Advogados be put and on the distribution of dividends; direct foreign investment (in equity) in
in 2014, Carolina was a senior associate at and (iii) elect the officers and the members any amount, and, simultaneously, net
Pereira Neto Macedo Advogados, being part of the audit committee, if any. equity equal to, or greater than, US$
of the corporate and contracts team in São 100,000,000.00 (one hundred million);
S.As must have their financial statements
Paulo. She also worked in other recognized or (ii) outstanding balance of short-
audited by an auditor registered before the
Carolina Marcondes law firms in São Paulo, starting her career
CVM and published in a commercial newspa- term foreign accounts receivable (i.e.,
Sant’Angelo as a trainee at Machado Meyer Advogados due within 360 days) equal to, or greater
per and in the Official Gazette, for purposes of
Partner, Campos Mello Advogados back in 2002. than, US$ 10,000,000.00 (ten million).
registering the annual resolution with the Board
Among her clients are Brazilian and foreign of Trade. Limited liability companies consid- c. Every five years:
Carolina Marcondes Sant’Angelo is a partner companies in the sectors of retail, technol- ered as “large entities” for the purposes of Law i. a foreign capital five-year census must
in Campos Mello Advogados’ Corporate ogy, food and beverage and industrial goods No. 11.638/2007 may also be required to pre- be completed by Brazilian companies
practice, based in São Paulo. and services. pare their financial statements in accordance receiving foreign investment whenever
with the Corporations Law, and have such finan- they have, on the preceding reference
cial statements audited by an external auditor year (i) direct foreign investment (in
and published. equity) in any amount; or (ii) out-
activities to be conducted by the company. The for example, environmental licenses and/
main registrations requirements are: or specific authorizations from regulatory Reporting to Brazilian Central Bank standing balance of short-term foreign
agencies. accounts receivable (i.e. due within 360
a. enrolment with Brazilian Federal Revenue All direct foreign investments must be regis-
days) equal to, or greater than, US$
(CNPJ); Costs and fees vary according to each registra- tered in the Electronic Declaratory Registry
1,000,000.00 (one million).
b. enrolment with State and Municipal tax tion and/or government body involved, but they for Foreign Direct Investments (RDE-IED) of
authorities, if so required according to usually refer to governmental fees and expenses the Brazilian Central Bank, through a specific Additional reports
the specific activities conducted by the incurred with public notaries, translators, attor- online system named SISBACEN. Periodic filings regarding the compliance with
company; neys, brokers and external paralegals. In addition, Brazilian companies with direct tax and labor obligations are also required,
c. registration before the National Social foreign investment must comply with the fol- depending on the business type and activities
6. What are the main post-registration
Security Institute (INSS); lowing reporting requirements to the Brazilian conducted by the company.
reporting requirements for companies
Central Bank:
d. registration before the Severance Pay Fund in your jurisdiction? (For example, annual 7. Are there any controlling factors or
(FGTS); reporting requirements: what to file, to a. On a quarterly basis:
restrictions on foreign companies in your
e. obtainment of the operating license with the whom, is a company secretary required?) i. Brazilian companies with direct foreign jurisdiction?
Municipality; and investment that have net worth or
The main post-registration reporting require- total assets equal or higher than BRL Brazil is an open jurisdiction for foreign invest-
f. obtainment of the necessary permits to ments for companies in Brazil are as follows: 250,000,000.00 (two hundred and fifty ment. As such, there are no general restrictions
operate the company according to its
million), must submit information on foreign ownership, except in certain specific
corporate purpose, which may include,
regarding their financial statements to sectors.
24 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Brazil 25The Brazilian Federal Constitution provides for state, being the latter, as a general rule, its major-
the following limitations: ity shareholder). Gallo practices in different areas of law, with
a. Foreign equity ownership of Brazilian Officers and board members are jointly referred special emphasis in corporate, mergers and
journalistic and broadcasting companies is to as managers under the Corporations Law. acquisitions, listed companies and corporate
limited to 30%; In general, management structure, composition, governance, foreign investment, energy and
b. Foreign equity ownership of aviation com- functions and responsibilities are determined infrastructure.
panies is limited to 20%; and by the Corporations Law and the company’s Before joining Campos Mello, Gallo was
bylaws. a partner in Tozzini Freire Advogados,
c. Nuclear power can only be exploited by the
Brazilian government. The board of directors is generally responsible co-heading the Corporate and Oil and Gas
for the strategic direction of the company. The practice in Rio de Janeiro. He also worked for
8. What is the typical structure board is a deliberative body only and does not Telecom Italia Group as Legal Director and
of directors (or family management have executive functions. The board members General Secretary of TIM Participações S.A.
structure) and liability issues do not have specific titles. However, the board Among his clients are Brazilian and foreign
for companies in your jurisdiction? must have a chairman, chosen from among the companies in the sectors of industrial goods
board members. and services, energy and infrastructure,
The typical management structure of Brazilian
The board of executive officers is incumbent defense and security, food and beverage,
companies varies according to the type of busi-
upon the corporation’s representation before telecommunications, healthcare and retail.
ness entity incorporated.
third parties and the performance of all acts Fabiano Gallo
8.1. Limitada necessary for the exercise of the corporation’s Partner, Campos Mello Advogados
The Brazilian Civil Code does not establish activities. Although officers are not required
a formal management structure for limited to have a specific designation, it is common Fabiano Gallo is a senior partner in Campos
liability companies. Similarly, the existence of a for companies to designate their officers in the Mello Advogados Corporate and Energy
board in a limited liability company, although bylaws (for example, as chief executive officer practices, based in São Paulo.
possible, is not expressly provided for, since the (CEO) and chief financial officer (CFO)). An
board is only regulated by the Corporations Law. exception is made for publicly held companies
that are required to have an investors’ relations
The Limitada’s management is carried out by shareholders, who can be individuals or legal b. Transferring quotas: quotaholders may
officer with specific functions.
one or more officers (or managers) resident entities, whether residents in Brazil or not. transfer their quotas to third parties, subject
in Brazil, who may be, but do not have to be, A corporation must have at least two officers to the approval of other quotaholders rep-
The incorporation and ownership by a single
shareholders. Their appointment is made by and, if there is a board, three directors. resenting 75% of the company’s corporate
shareholder is allowed for S.A.s, provided that
the shareholders, who may attribute a specific Generally, up to one-third of the board mem- capital. Any transfer of quotas is subject
such shareholder is a Brazilian company.
designation to them. The managers’ functions bers can also serve as officers. Directors may to the execution of an amendment to the
and responsibilities are set out in the applica- be nationals or foreigners, resident in Brazil 9.2 Minimum number of Directors Company’s articles of association;
ble legislation and the company’s articles of or abroad. Officers must be Brazilian residents Please refer to question 8 above. c. Issuing new quotas: quotaholders of
association. (nationals or foreigners).
Limitadas have a preemptive right to
10. What are the requirements on how
8.2. Sociedade Anonima 9. What is the minimum number
subscribe new quotas of the company pro-
shares are offered in your jurisdiction?
of directors and shareholders required
portionally to their respective participation
Under the Corporations Law, the management
to set up a company in your jurisdiction?
in the company’s corporate capital. New
powers are vested in the company’s officers and 10.1. Limitada
Are there any requirements that
quotas may only be issued if the company’s
the board of directors, or only the officers. The a. General structure: The corporate capital
a director must be a natural person?
original corporate capital has been fully paid
existence of a board of directors is mandatory of Limitadas is divided into quotas, which up; and
only for publicly held companies, companies must have an assigned par value. Company’s
with authorized capital and mixed capital 9.1 Minimum number of Shareholders d. Public offer: Limitadas are not allowed to
subscribed capital and ownership of quotas
companies (that is, companies whose corporate make public offerings.
As a general rule, Limitadas and S.As must must be duly ref lected in the articles of
capital is held both by private parties and the be incorporated and held by, at least, two association;
26 LexisNexis® Company Law Guide 2018–2019 Jurisdictional Q&A – Brazil 27You can also read
