Trade Organization

Trade Organization

Here at Satkhira Consulting Firm Ltd., we can help you register your Trade Organization. The details and registration procedure for set up of Trade Organization in Bangladesh is set out below.

The laws relating to Business Organization in Bangladesh are The Trade Organization Ordinance, 1961, as amended by The Trade Organization (Amendment) Ordinance, 1984 and the Rules made there under in March, 1994 after repealing the Rules made in 1985. The Rules made in March 1994 were further amended in July, 1994. Besides the above, the other law that is relevant for a business organization is the Companies Act, 1994. All subsequent reference to The Trade Organization Ordinance, 1961 shall mean The Trade Organization Ordinance, 1961 as it stands amended by the Trade Organization (Amendment) Ordinance, 1984 and reference to the Companies Act shall mean the Companies Act, 1994.

Review of the existing Business Organization Laws of Bangladesh The Trade Organization Ordinance, 1961

The Trade Organization Ordinance was promulgated in 1961. It was amended in 1984 by The Trade Organization (Amendment) Ordinance, 1984. The object of the Ordinance is to provide for the regulation and control of Trade Organizations in the country and for matters ancillary thereto. A trade organization has been defined as an association which is formed or intended to be formed with the object of promoting any trade, commerce or industry or any group or class thereof or for representing for any purpose, in any manner and to any extent any trade, commerce or industry or any group or class thereof.

A trade organization has to be capable of being formed as a limited company. It has to be, however, a non-profit organization. The law prohibits payment of any dividend to the members of a Trade Organization. A Trade Organization applies or intends to apply its profits or other income for achieving its objects.

No trade organization shall be registered under the Companies Act or such other law unless it holds a license granted by the Government authorizing it to be so registered.

No trade organization shall function or engage in any activities without first obtaining a license under this Ordinance. Nor any company or a trade organization other than a registered trade organization can use in its name or title the words "Federation" or "Chamber" or "Association".

Trade Organizations Eligible for License

Section 3 of the Ordinance states that no trade organization shall be registered under the Companies Act or such other law unless it holds a license granted by the Government authorizing it to be so registered. Sub-section (2) of section 3 provides that no license shall be granted to a trade organization for its registration under the Companies Act unless it fulfils the following conditions:

(i)
It is a Federation of Chambers of Commerce and Industry organized on all-Bangladesh basis to represent Chambers and Associations enumerated in b., c., and d.
(ii)
It is a Chamber of Industry organized on all-Bangladesh basis
(iii)
It is a Chamber of Commerce and Industry organized to represent trades and industries of specific areas, such as, divisions, districts, upazilas and municipalities
(iv)
It is an Association of trade or industry or both, organized on all Bangladesh basis to represent specific trades or industries or both
(v)
It is a Town Association organized to represent trades and industries at a place where there is no Chamber of Commerce and Industry
(vi)
It is a Group organized to represent specific trades or industries or both of specific areas, such as divisions, districts, upazilas and municipalities.

It is further provided that license for registration as a Federation of Chambers of Commerce and Industry shall not be granted to more than one trade organization. Hence, there can be only one Federation of Chambers of Commerce and Industry in the country. This is in keeping with the principle that there should be one voice for effective representation. So Federation of Chambers of Commerce and Industry is the apex body of all trade organizations in our country. Similarly, license shall not be granted to more than one Chamber of Industry, which means there will be only one Chamber of Industry in the country. Likewise, an Association of trade or industry organized for representing specific trades or industries can be only one for its kind, as license shall not be granted to more than one trade organization for any specific trade or industry in the country.

At places where there is no Chamber of Commerce and Industry, Town Associations can be organized to represent trades and industries. Such Town Associations will have to be affiliated to the Chamber of Commerce and Industry of the District in which the place is situated. For representing specific trades or industries in specific areas, such as divisions, districts, upazilas and municipalities Groups can be organized but there cannot be more than one Group to represent specific trade or industry in a specific area and in particular no Group shall be granted a license where there is a registered Town Association. The whole scheme is to ensure that there is one voice of representation and multiplicity of trade organizations for representing trade, commerce or industry is not encouraged and there is no competition or conflict of interest among the business organizations.

Manner of Application for Granting License for Registration

Rule 3 prescribes the manner in which a trade organization has to apply for a license for its registration.

Eligibility and Class of Members

Rule 5 prescribes as to who are eligible to be members of a trade organization. Any individual, company, partnership firm or establishment can be a member of a trade organization other than a Federation, which represents the trade, commerce or industry run by them.

In a Chamber of Commerce and Industry there will be four classes of members:

  • 1. Ordinary Members
  • 2. Associate Members
  • 3. Group
  • 4. Town Association

In Town Association, Group Association and Chamber of Association there will be two classes of members: – Ordinary Members and Associate Members. In a Federation there will be two classes of members: -

  • a) Members of Chamber Groups where all Chamber of Commerce and Industry and all Chambers of Industry shall be included
  • b) Members of Association Group where all Associations on all- Bangladesh basis will be included.
Compulsory Membership

Rule 7 provides that any individual, partnership firm, company or any other establishment engaged in import or export, or any other business or industry, and if on account thereof they pay income tax or income tax is payable by them, such individual, partnership firm, company or organization has to be compulsorily a member of the concerned trade organization.

Rule 8 makes it mandatory for all trade organizations who have been granted license to apply, within 60 days of receipt of their license, for their affiliation with the Federation or the respective Chamber of Commerce and Industry as the case may be; otherwise, the license of a defaulting organization shall be deemed to be cancelled.

Review of relevant Provisions of The Companies Act, 1994

A trade organization has to be capable of being formed as a limited company within the meaning of the Companies Act, 1994. It has to be therefore compliant with all the requirements as applicable for a limited company which are enumerated in section 6 of the Trade Organization Ordinance, 1961.

A trade organization has to be a non-profit organization. It prohibits payment of dividend to its members and applies or intends to apply its profit or any other income in promoting its objects. The provisions of section 28 of the Companies Act, 1994 will therefore be applicable in case of incorporation of a trade organization. A license has to be obtained from the government which will be granted under such conditions as the Government thinks fit. The organization will not have to use the word "limited" in any part of its name. All these matters have also been provided for in the Trade Organizations Ordinance, 1961 and these do not need to be separately dealt with or commented upon.

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