The Registrar of Joint Stock Companies and Firms (RJSC) will start incorporating One Person Company (OPC) -- a new type of business entity in the country -- from tomorrow (Sunday).
OPC is a company formed with only one or single person as its board member and does not require having multiple board members.
"We're fully ready for registering OPCs from Sunday," Md Mokbul Hossain, registrar at the RJSC, told the FE on Thursday.
He said entrepreneurs, who are waiting to form such firms, will need to comply with all the requirements needed for traditional company formation.
The Companies (2nd Amendment) Bill 2020 was passed in the parliament in November 2020, keeping legal provision for forming the OPCs in the country, which are available in India and Pakistan.
The RJSC chief said they are hopeful that OPCs would strengthen the country's business and investment environment.
"We expect that many foreign enterprises will incorporate themselves as OPCs, as they face troubles in finding the right kind of people to form a new company in Bangladesh."
He said in the past many foreign companies had failed to establish successful ventures in Bangladesh due to the absence of the provision to form OPCs in the Companies Act.
OPC can be formed by a single natural person instead of the existing two or more natural persons. Company is usually considered as an artificial person or entity and as a going concern.
This new option is believed to promote the current status of sole proprietorship business, as they could not turn their entities into structured ones due to lack of provision.
According to the Companies Act, an OPC has to have a minimum paid-up capital of Tk 2.5 million to maximum Tk 50 million. The minimum turnover for the firms should be Tk 10 million in the immediate past year.
Such a company has to hold at least one meeting of the board in a year. If the sponsor of an OPC dies, then as per the memorandum concerned, the nominated person will get its full shares.
The law mentioned that for handing over the shares of this kind of company, the presence of the particular person signing the handover papers through the commission has to be ensured.
In the meantime, some experts told the FE that the minimum paid up capital of an OPC (Tk 2.5 million) is too high for the small entrepreneurs. It will be a barrier to forming such companies in Bangladesh.
Dr. Masrur Reaz, chairman at the Policy Exchange of Bangladesh -- a local think-tank, said: "The high paid-up capital will not attract the possible entrepreneurs to be listed with the authority."
"Many new enterprises usually do not have such an amount of money, so they will not be interested in the matter."
Dr. Masrur said if there was no such barrier, then many enterprises would have shown their interest.
"With no restriction on the paid-up capital, many small enterprises could enter into the formal economy," he added.
Abul Kasem Khan, chairman at the BUILD, told the FE: "The objective for launching such a system has been violated by incorporating the provision of high paid-up capital."
He said they already spoken against such high paid-up capital to the authorities concerned.
"I think both the provisions of paid up capital and turnover of immediate past year should be free and unconditional."
"There are many old companies in Bangladesh, which still do not have Tk 2.5 million paid-up capital," he mentioned.
jasimharoon@yahoo.com