How to Set Up a Foundation in Bangladesh

In Bangladesh, the formation of charitable organizations dedicated to promoting science, literature, fine arts, or other educational and cultural activities is governed by the Societies Registration Act of 1860. This crucial legislation provides the legal framework to ensure such entities operate with transparency and accountability. The registration and regulatory process is administered by the Registrar of Joint Stock Companies and Firms (RJSC) under the Ministry of Commerce, offering a flexible structure that accommodates a wide variety of nonprofit activities.

Eligibility and Application Process

Any group of seven or more individuals united by a common literary, scientific, or charitable objective can initiate the process for registering a foundation in Bangladesh. The primary step involves drafting and subscribing to a Memorandum of Association (MOA), which is complemented by the foundation’s rules and regulations. These foundational pieces of legal documentation are crucial for clearly outlining the foundation's purpose and governance structure.

Detailed Steps for Foundation Registration

Issuance of Name Clearance

The first step in the registration process is obtaining a name clearance certificate from the RJSC. This is essential to ensure the proposed name of the foundation is unique and not too similar to an existing entity. Applicants must submit a formal request through the RJSC's online portal or at their office, along with a nominal fee. A clearance certificate will be issued, which is valid for a limited time, during which the registration application must be completed to avoid its expiration.

Submission of the Registration Application

Once name clearance is secured, the next step is to submit a detailed registration application to the RJSC. This application requires meticulous preparation of various documents. The application must include:

• Memorandum of Association (MOA): This critical document details the foundation's objectives, mission, and vision, aligning with the legal frameworks set out by the Societies Registration Act, 1860.

• Name Clearance Certificate: Proof of the approved and reserved name.

• List of Members: Comprehensive details, including names, contact information, and identification for all the members of the governing body.

• Office Address: A verifiable physical location where the foundation operates.

• Executive Committee Details: Full names, designations, contact information, passport-size photos, Taxpayer Identification Numbers (TIN), and National Identification (NID) numbers.

• Constitution/Bylaws: The rules and regulations governing the foundation’s operations, detailing member rights, roles, and the organizational hierarchy.

Payment of Government Fees

After submitting the application, the required government fees must be paid. These fees can vary based on the foundation's intended activities and scale. Payment is typically made through government treasury challans, online banking, or at designated banks. Proof of payment is necessary to proceed with the registration.

Security Clearance and Verification

A critical part of the process involves a security clearance conducted by law enforcement agencies like the Special Branch (SB) of the Police and National Security Intelligence (NSI). Ensuring all aspects of your application are in order is key to smooth regulatory compliance. This clearance generally includes:

• Verification of Officials: Checks the personal and professional backgrounds of executive committee members.

• Office Location Inspection: Ensures the physical premises listed are legitimate.

• Assessment of Charitable History: Evaluates past charitable or nonprofit activities by the foundation or its members to verify authenticity.

Inspection, Monitoring, and Review

The RJSC and other regulatory bodies may conduct a comprehensive inspection and review of the foundation's documentation and proposed operations to ensure compliance with non-profit. This includes:

• Field Inspections: To check the foundation’s infrastructure, personnel, and operational capacity.

• Document Scrutiny: To ensure all submitted documents are accurate, legitimate, and adhere to the Societies Registration Act.

• Compliance Verification: To verify that the foundation’s activities and objectives align with legal standards.

Issuance of the Registration Certificate

If the foundation fulfils all criteria and passes the inspections, the RJSC will issue a registration certificate. This document confirms the foundation’s legal status, including its registration number, date of registration, name, and scope of activities.

Legal Status and Membership Requirements

A foundation registered under this act is recognized as a separate legal entity, which is crucial for the foundation to enter into contracts or engage in legal actions in its own name. Such entities must maintain a minimum of seven founding or executive committee members for a robust governance structure.

Foreign Donations and Compliance

Foundations in Bangladesh are not automatically permitted to receive foreign donations. To engage in activities involving foreign funding, an organization must secure a Foreign Donations (FD) Registration from the NGO Affairs Bureau (NGOAB). This is a separate, detailed process requiring extensive documentation to ensure full compliance. Navigating the requirements for NGO registration with the NGOAB can be complex, and expert guidance from a firm like Kazi Law Chamber is highly recommended. The necessary documents include:

• Completed FD-1 Form – 9 copies

• List of Executive Committee members according to the constitution – 3 copies

• Passport-size photos and copies of national ID cards of Executive Committee members – 6 copies

• List of Executive Committee approved by the relevant authority and a copy of the registration certificate – 3 copies

• Constitution (approved by registration authority) – 3 copies

• Activity report of the organization – 3 copies

• Plan of Operation (work methodology and organogram, signed by Chairperson) – 6 copies

• Letter of recommendation from parent organization (attested by organization head) – 6 copies

• Minutes of the general meeting regarding the formation of the Executive Committee, with an attendance sheet of members present – 6 copies

• Treasury challan of Tk. 50,000 (fifty thousand taka) deposited to code no. 1-0323-0000-1836 for registration of foreign NGO – 3 copies

• List of general members with name, father’s/husband’s name, address, and national ID number for each member – 3 copies

• Treasury Chalan showing a deposit of 15% VAT to code no. 1-1133-0035-0391 – 3 copies

• Bangladesh Bank Enquiry Form-1 (for individuals) and Form-2 (for proprietorship/partnership/limited or any other company) – 3 copies

• Audit report (if applicable) and source of funds – 3 copies

• Deed/agreement/office rent document for organization’s office – 6 copies

• List of potential manpower – 3 copies

• Proof of completing all financial transactions, including salaries, through banking channels – 6 copies

• Operational guidelines – 3 copies

Annual Compliance and Dissolution

To maintain an active status, registered societies must submit an annual return to the RJSC, detailing the current list of managing bodies within 14 days after the Annual General Meeting (AGM), or in January if no AGM is held. Furthermore, a foundation can be dissolved by a three-fifths majority vote of its members. If the government is involved in the dissolution process, official permission is required.

Different Types of Non-profit Legal Structures

Organizations planning to register as non-profits in Bangladesh can choose from several legal entities, each suited to different operational scopes:

• Society or Foundation: Registered under the Societies Registration Act of 1860, ideal for entities focused on social, cultural, and educational endeavors.

• Charitable Trust: Governed by the Trust Act of 1882, suitable for organizations aiming to provide financial, healthcare, or educational support.

• Social Welfare Organization: Registered under the Voluntary Social Welfare Agencies (Registration and Control) Ordinance of 1961, designed for extensive social welfare activities.

• Non-profit Trade Association: Incorporated under the Companies Act of 1994, these are larger entities that operate without issuing shares, focusing on broader non-profit objectives.

Our Services at Kazi Law Chamber

At Kazi Law Chamber, we offer comprehensive legal services to guide you through the entire foundation registration process in Bangladesh. Our assistance ranges from expert consultation and document preparation to managing the application process with the RJSC and preparing you for regulatory inspections. We ensure meticulous adherence to all legal procedures and compliance for non-profits, facilitating a smooth and successful registration journey for your charitable organization.