Companies Act 1994 & Business Law

The Companies Act 1994 (Act XVIII of 1994) is the principal law governing the formation, operation, and dissolution of companies in Bangladesh. It replaced the Companies Act 1913 and provides the statutory framework for company registration with the Registrar of Joint Stock Companies and Firms (RJSC), corporate governance obligations, share capital requirements, annual reporting duties, and winding-up procedures.

The Act applies to all companies incorporated in Bangladesh, whether private limited (Ltd.) or public limited (PLC). It also regulates foreign companies operating in Bangladesh, requiring them to register a local branch or establish a subsidiary. The RJSC, under the Ministry of Commerce, serves as the registrar and regulator of all companies and partnerships in the country.

Despite periodic amendments, the Act is widely recognised as outdated. A comprehensive Companies Act reform has been under discussion since 2018, with proposals to introduce modern provisions for digital incorporation, beneficial ownership registers, and simplified compliance for small enterprises. The interim government under Chief Adviser Muhammad Yunus has signalled that company law reform is a legislative priority.

The crisis: Bangladesh's civil court system faces a backlog of approximately 4.6 million pending cases, with commercial disputes constituting a significant portion. Commercial cases routinely take 5–15 years to resolve, severely undermining business confidence and foreign investment. The World Bank's Ease of Doing Business rankings have repeatedly cited contract enforcement delays as a major barrier for Bangladesh.

The solution: The Commercial Court Ordinance 2026, promulgated by the interim government, establishes dedicated commercial courts with fast-track procedures for resolving business disputes. Key features include mandatory pre-trial mediation, strict timelines for case disposal (target: 360 days from filing), specialised judges trained in commercial law, electronic case management systems, and simplified evidence procedures for commercial matters.

Jurisdiction: Commercial courts will handle disputes involving company law, contract disputes above a threshold value, banking and financial disputes, insolvency proceedings, intellectual property, and international trade disputes. The ordinance represents the most significant judicial reform for the business community since independence.

Bangladesh Investment Development Authority (BIDA): BIDA is the central agency responsible for promoting and facilitating private investment in Bangladesh, both domestic and foreign. Established under the Bangladesh Investment Development Authority Act 2016, it replaced the former Board of Investment. BIDA provides one-stop services for investment registration, work permits, visa recommendations, utility connections, and regulatory approvals. Foreign investors may hold 100% ownership in most sectors without prior government approval.

Special Economic Zones (SEZs): The Bangladesh Economic Zones Authority (BEZA), established under the Economic Zones Act 2010, is developing 100 special economic zones across the country to attract investment. SEZ investors receive tax holidays of up to 10 years, duty-free import of raw materials and machinery, simplified regulatory compliance, and dedicated infrastructure including power, gas, and water. The Japanese-backed Araihazar SEZ and the Chinese-backed SEZ in Anwara, Chittagong are among the most advanced developments.