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Winding up of a company in Bangladesh

Table of Contents

In Bangladesh, the winding up of a company, signifying the end of its corporate existence, can occur through several mechanisms as outlined in the Companies Act 1994. These include voluntary winding up, winding up by the court, or winding up subject to court supervision. Voluntary winding up is the most common route for solvent companies deciding to cease operations.

This guide details the procedure for a members’ voluntary winding up, initiated by a special resolution when the company is solvent and able to pay its debts in full.

The process involves several distinct stages, requiring careful adherence to statutory timelines and procedures.

If you are a foreign investor and need to wind up a company in Bangladesh, please note that there will be an additional step for you - the Post-Liquidation Remittance.

First Step: Preparatory Actions
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Declaration of Solvency
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Before initiating the winding up, the directors must make a formal Declaration of Solvency. This declaration affirms that the company either has no debts or will be able to pay its debts in full within a maximum period of three years from the commencement of the winding up. It must include a statement of the company’s assets and liabilities as at the latest practicable date.

This declaration requires verification by an affidavit, confirming that the directors have conducted a thorough inquiry into the company’s affairs. All directors, or a majority if there are more than two, must sign the declaration.

Accounts and Audit
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Concurrent with preparing the declaration, the company must prepare its Profit and Loss Account and Balance Sheet up to the latest practicable date mentioned in the declaration. These financial statements must be audited, and an auditor’s report obtained.

Second Step: Formal Approvals and Filings
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Board Meeting
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A Board of Directors meeting must be convened according to the company’s Articles of Association and the Companies Act 1994. A majority of directors must be present. The key agenda items are: a. Approval of the audited accounts. b. Approval of the Declaration of Solvency. c. Resolution to convene an Extraordinary General Meeting (EGM) to pass a special resolution for winding up and appointing a liquidator.

Following the board meeting, the Declaration of Solvency and the accompanying affidavit must be notarised.

Filing Declaration with RJSC
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The notarised Declaration of Solvency must be filed with the Registrar of Joint Stock Companies and Firms (RJSC) before the date on which notices for the EGM are sent out.

Extraordinary General Meeting (EGM)
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The EGM is held to pass the crucial special resolution. This resolution formally approves: i. The voluntary winding up of the company. ii. The appointment of one or more liquidators. iii. The remuneration terms for the liquidator(s).

Filing Resolutions with RJSC
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Within fifteen days of passing the special resolution, a copy must be filed with the RJSC. Additionally, the notice of the liquidator’s appointment must be filed with the RJSC using the prescribed form (Form VIII).

Third Step: Liquidation Process
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Liquidator Takes Office
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Upon the passing of the special resolution, the appointed liquidator formally assumes office. Their primary role is to wind up the company’s affairs, realise its assets, pay its debts, and distribute any surplus among the members according to their rights.

Notification to Tax Authorities
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Within thirty days of appointment, the liquidator must provide written notice of their appointment to the Deputy Commissioner of Taxes who has jurisdiction over the company’s tax assessments.

Gazette Publication and Newspaper Advertisement
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Notice of the special resolution for voluntary winding up must be published within ten days of its passing. This involves advertising in the official Gazette and also in a newspaper circulating in the district where the company’s registered office is located. The advertisement must also include details of the liquidator’s appointment.

Annual General Meetings (if applicable)
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If the winding-up process extends beyond one year, the liquidator is required to convene a general meeting of the company at the end of the first year and each subsequent year (or within 90 days thereafter). At these meetings, the liquidator must present an account of their actions, the conduct of the winding up during the preceding year, and a statement detailing the liquidation’s position.

Fourth Step: Tax and Regulatory Compliance During Liquidation
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During the winding-up period, the liquidator must ensure compliance with various tax and regulatory obligations:

Income Tax Compliance
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Under Bangladeshi tax law, if a business is discontinued, a final income tax return must be filed covering the period from the start of the financial year up to the date of discontinuance. The assessment will be based on the total income generated during this final operational period. The liquidator is responsible for ensuring this filing and settling any outstanding tax liabilities.

VAT Compliance
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All outstanding Value Added Tax (VAT) obligations must be settled. Following the cessation of business activities and settlement of dues, the liquidator must apply for the cancellation of the company’s Business Identification Number (BIN), effectively deregistering it for VAT purposes under the Value Added Tax and Supplementary Duty Act, 2012 and associated rules.

Other Regulatory Compliance
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The liquidator must notify any other relevant regulatory bodies under whose purview the company operated (e.g., industry-specific regulators). This includes formally cancelling any licenses, permits, or registrations held by the company to ensure a clean regulatory closure.

Fifth Step: Final Procedures and Dissolution
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Final Account Preparation
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Once the company’s affairs are fully wound up, the liquidator prepares a final account. This document details how the winding up was conducted, how the company’s assets were collected and disposed of, how liabilities were settled, the costs of liquidation, and the distribution of any surplus assets among the shareholders.

Final Extraordinary General Meeting
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The liquidator then calls a final EGM. Notice for this meeting must be given at least one month prior, specifying the time, place, and objective (which is to lay the final account before the members and provide explanations). This notice must be advertised in the official Gazette and a local newspaper. At this meeting, a special resolution is typically passed regarding the disposal of the company’s books and records.

flowchart TD subgraph "Step 1: Preparation" A["Prep Solvency Declaration & Accounts"] end subgraph "Step 2: Approvals & Initial Filings" B["Board: Approve Docs & Call EGM"] --> C["File Declaration (RJSC)"] C --> D["EGM: Pass Winding-Up Resolution & Appoint Liquidator"] D --> E["File Resolution & Liquidator Details (RJSC)"] end subgraph "Step 3: Liquidation Activities" F["Liquidator Takes Office"] --> G["Notify Tax Authority"] G --> H["Advertise Resolution & Liquidator (Gazette/Newspaper)"] H --> I{"Winding Up > 1 Year?"} I -- Yes --> J["Annual GM(s) & Liquidator Report"] I -- No --> K[Continue Liquidation] J --> K end subgraph "Step 4: Compliance During Liquidation" L["Settle Liabilities & Realise Assets"] --> M["File Final Income Tax Return"] M --> N["Settle VAT & Cancel BIN"] N --> O["Cancel Other Licenses/Registrations"] end subgraph "Step 5: Finalisation & Dissolution" P["Prepare Final Account"] --> Q["Advertise & Hold Final EGM"] Q --> R["File Final Return & Account (RJSC)"] R --> S["Company Deemed Dissolved"] S --> T{"Foreign Shareholders & Surplus?"} T -- Yes --> U["Apply to Bangladesh Bank (FEID) via AD Bank for Remittance Approval"] T -- No --> V((End Process)) U --> W["Remit Funds Post-Approval"] W --> V end A --> B E --> F K --> L O --> P

Filing Final Return with RJSC
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Within one week after the final EGM, the liquidator must file a return with the RJSC. This return confirms that the meeting was held and includes a copy of the final account presented.

Dissolution
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Upon the filing of this final return, the company is legally deemed to be dissolved. Its name is eventually struck off the Register of Companies by the RJSC.

Post-Liquidation Remittance to Foreign Shareholders
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A critical final step arises if surplus assets remain for distribution to foreign shareholders after settling all debts and expenses. Bangladeshi foreign exchange regulations, enforced by the Bangladesh Bank, require specific approval before these funds can be remitted abroad. The liquidator, typically acting through the company’s Authorised Dealer (AD) bank, must submit an application to the Foreign Exchange Investment Department (FEID) of the Bangladesh Bank. This application requires supporting documentation verifying the completion of the winding-up, the calculation of the surplus, and the foreign shareholders’ entitlements. Remittance can only occur after FEID grants permission.


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Key Contact

For assistance with the company winding-up process in Bangladesh, including navigating the legal, tax, and regulatory requirements, please contact: