FE Today Logo

No official seal for forming co

New Companies Act to untie Gordian knot for creating corner-side entrepreneurs

Mehdi Musharraf Bhuiyan | February 06, 2018 00:00:00

A new companies' law currently in the making may eliminate the obligation to obtain official seal as a precondition for forming a company, aiming to create many start-ups.

Officials said the latest Companies Act, which is in the final stage of formulation, provides for liberalising the company-licensing process to help spontaneous growth of corner-side entrepreneurs.

The final draft of the law, which is currently being reviewed with recommendations coming from parties concerned, is likely to be forwarded to the cabinet by next month.

"The new Act is likely to eliminate the requirement of obtaining an official company seal," Commerce Ministry Additional Secretary Obaidul Azam told the FE this week, adding: "The move is aimed at making the process of forming a company easier."

The move will mean amendment to several sections of the existing Companies Act including section 2 (m), 24 (2), 46 (1), 31, 78 (b), 79 (2-a), 85 (2-a), 128, 129 (1,2,4,5), 208, 225, 262 (d), 347 (4) and 363.

The draft Companies Act, which is likely to be passed by parliament within this fiscal, has already incorporated several recommendations for easing the process of forming a company and for protecting the interests of the minority investors, officials informed.

For instance, the new act is set to have a provision requiring shareholders' approval before major disposal of company assets.

The act is also likely to have a provision requiring more detailed notices to be sent to shareholders at least 21 days before general meetings.

"The 21-day timeframe has been added to ensure that shareholders living in small cities and villages can have enough time to come to Dhaka and attend the meeting," Mr Azam said.

"At the same time, the act would also ensure that shareholders are paid within a certain timeframe when dividends are declared."

Earlier, it was also reported that the new act is likely to liberalise the business-registration procedures allowing sole-proprietorship companies ---meaning that even a single person can float a company.

"Such provision would enable numerous sole-proprietorship companies to come under tax net as well as formal auditing scheme," Mr Azam said.

"This would enhance the culture of transparency in business activities and would also increase government revenue from sole proprietorships," he added.

In addition, the latest Companies Act will have a provision for introducing an online single interface for business registration by integrating the name-clearance and-incorporation processes with the tax-and VAT-registration procedures.

"This provision is in line with the One-Stop Shop investor service of BIDA," a Commerce Ministry high official said.

Also, the act is set to promote increased digitization of business processes through incorporating provisions for e-signature and promulgating the use of online-payment gateway.

[email protected]

Share if you like