How to Set Up a Foundation in Bangladesh

In Bangladesh, the foundation 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 ensures that such entities operate within a legal framework, promoting transparency and accountability. Managed by the Registrar of Joint Stock Companies and Firms (RJSC) under the Ministry of Commerce, the act offers a broad and flexible structure that accommodates a wide variety of nonprofit activities.

Eligibility and Application Process

Any group consisting of seven or more individuals who are united by a common literary, scientific, or charitable objective can initiate the process to register a society. The primary step involves drafting and subscribing to a memorandum of association, complemented by the society’s rules and regulations. These foundational documents serve to clearly outline the society'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 from RJSC. This step is essential to ensure that the proposed name of the society is not already in use or too similar to that of 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 RJSC. This application must include:

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

· Name Clearance Certificate: This serves as proof of the approved and reserved name.

· List of Members: Includes comprehensive details such as names, contact information, and identification details of all society members.

· Office Address: Must be a verifiable physical location where the society operates.

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

· Constitution/Bylaws: These are the rules and regulations governing the society’s operations, detailing member rights, roles, and the organizational hierarchy.

Payment of Government Fees

After the application submission, it is necessary to pay government fees, which vary based on the society's intended activities and scale. This can typically be done through government treasury challans, online banking systems, or at designated banks. Proof of payment is required to proceed with the registration process.

Security Clearance and Verification

A critical part of the registration process involves a security clearance conducted by law enforcement agencies such as the Special Branch (SB) of Police and National Security Intelligence (NSI). This clearance includes:

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

· Office Location Inspection: Ensures the physical premises listed in the application are legitimate.

· Assessment of Charitable History: Evaluates any past charitable or nonprofit activities by the society or its members to verify their authenticity and credibility.

Inspection, Monitoring, and Review

RJSC, along with other regulatory bodies, may conduct a comprehensive inspection and review of the society's documentation, operations, and compliance with the act. This includes:

· Field Inspections: To check the society’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 society’s activities and objectives comply with legal and regulatory standards.

Issuance of the Registration Certificate

If the society fulfils all the criteria and passes the inspections and reviews, RJSC will issue a registration certificate. This document confirms the society’s legal status under the Societies Registration Act, 1860, and includes essential details such as the registration number, date of registration, name of the society, and scope of activities.

Legal Status and Membership Requirements

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

Foreign Donations and Compliance

Foundations registered in Bangladesh are not automatically entitled 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 involves a detailed application process requiring extensive documentation to ensure compliance with regulatory standards. 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 copy of 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 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 Returns and Dissolution

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

Different Types of Non-profit Organizations

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

• Society or Foundation: Typically 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

Kazi Law Chamber offers comprehensive services to assist with the registration process, from expert consultation and document preparation to managing the application process and preparing for regulatory inspections. We ensure meticulous adherence to all procedures, facilitating a smooth registration journey.