The rate of registration of One-Person Companies (OPCs) with the Office of the Registrar of Joint Stock Companies and Firms (RJSC) has not witnessed growth as expected due to the imposition of high paid-up capital and the existing economic uncertainty both at home and abroad.
The number of the OPCs stood at 76 during the July-December, 2022 period - the first half of the current financial year, while it was just 124 in the fiscal year of 2021-22, according to the RJSC.
The data shows only 200 OPCs got registration from the RJSC in the last 18 months.
A total of 5,683 companies, trade organisations, societies and partnership firms got registration from the RJSC in the first half of the ongoing fiscal year.
Regarding the lowest rate of OPC registration, an official at RJSC on condition of anonymity told the FE that the registration of OPCs is not gaining pace as expected due to the higher paid-up capital.
The existing paid-up capital should be lowered at Tk 0.5 million, which is now Tk 2.5 million, he observed.
According to the Companies Act 1994, an OPC has to have a minimum paid-up capital from 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.
If the paid-up capital lowers, the trend of the OPC registration will change for the better, the official added.
Many foreign companies had failed to establish successful ventures in Bangladesh due to an absence of the provision for forming OPCs.
OPC is a company formed with only one or single person as its board member and does not require having multiple board members.
The Companies (2nd Amendment) Bill 2020 was passed in the parliament in November 2020 making legal provision for the formation of OPCs in the country, which are available in India, Pakistan and other economies.
Talking to the FE, RJSC Deputy Registrar Abu Essa Mohd Mostafa Bhuiyan said the registration of new firms, including OPCs, is not witnessing the growth as expected.
The registration saw a slower growth due to a persisting economic uncertainty, said Mr Bhuiyan, adding that a good number of small entrepreneurs are not getting loans.
Hotel or restaurant owners were earlier greatly interested in the OPC registration, but they are not showing enthusiasm these days, he said.
Earlier, the company law was amended for the OPCs, in order to give a boost to entrepreneurship, attract investors and support the growth of small and medium entrepreneurs, Abu Essa noted.
A proposal is being made to lower the paid-up capital to draw more investors, Bhuiyan added.
An OPC can be formed by a single natural person instead of the existing two or more natural persons. The company is usually considered 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 such aspirants could not turn their entities into structured ones for a lack of the provision.
While talking to the FE, Barrister Rashna Imam highlighted structural problems and existing weak legal regulatory framework to increase registration rates of companies, including OPCs.
Existing high paid-up capital can be a major reason for the lesser rates of OPC registration, she said, adding that the paid-up capital should be reduced to attract local investors.
The Company Act 1994 and other business-related laws should be amended to attract local and foreign investors, she also suggested.
Regarding the FDI, structural overhaul should be made to create a congenial business-friendly environment, added Imam, a Supreme Court lawyer.
According to the Companies Act 1994, a single-person company has to hold at least one meeting of the board 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 mentions that, for handover of the shares of this kind of company, the presence of the particular person signing the handover papers through the commission has to be ensured.
Dhaka Chamber of Commerce & Industry (DCCI) President Barrister Sameer Sattar said the provision of paid-up capital for the registration of OPCs should be free and unconditional, as the normal companies are doing it with no such provision.
If the threshold of paid-up capital is withdrawn, the number of such companies will grow further, he added.
