Manpower crisis at RJSC hurts company registration, ease of doing business

Infographic: TBS

The Office of the Registrar of Joint Stock Companies and Firms (RJSC), the only agency responsible for registering new companies and overseeing the existing ones, is encountering difficulties in performing its obligated duties and delivering timely services to entrepreneurs due to personnel shortages, say officials.

According to RJSC sources, nearly 300,000 companies were registered as of March this year, with an average of 10,000 new registrations annually. The agency operates with a workforce of 79 officials and employees, which, they say, is already inadequate for the huge workload. Moreover, 23 of these positions have remained vacant for years.

Aside from registering new companies, the RJSC, under the commerce ministry, also manages renewals and ownership-related matters such as ownership changes.

RJSC's effectiveness has long been a subject of scrutiny, with business owners consistently reporting significant hurdles, instances of harassment, and corruption during the company registration process and other interactions with the agency.

Legal experts warned that the intricacy of the company registration process deters potential investors, suggesting that the RJSC must enhance manpower to simplify registration procedures and promote business efficiency.

Acknowledging the manpower shortage, RJSC Registrar (Additional Secretary) Mizanur Rahman told TBS, "Discussions are underway with government officials to address this issue and recruit more officials. We anticipate positive outcomes soon."

He said, "Starting from next July, all activities, including company registration, will be fully digitised. The automation will reduce the registration hurdle and time significantly," he added.

Business owners, however, said the RJSC requires a workforce 10 times larger than its current size of 79 to streamline the registration process and other services to improve the ease of doing business.

In the World Bank's 2020 Ease of Doing Business Index, Bangladesh holds the 168th position out of 190 countries.

In the index's category of "starting a new business", which is one of its ten indicators, entrepreneurs highlighted delays in acquiring company registration services from the RJSC. This significantly adds to the complexity of initiating a new business in Bangladesh.

Additionally, corruption issues related to company registration are also highlighted, with Bangladesh ranking 131 globally in the business start-up index.

Businessmen alleged that the understaffing issue has opened avenues for corruption among certain individuals within this office.

How businesses are being affected

Sobur Akther Chowdhury, the founder of Akhter and Chowdhury Fashion Ltd, applied for registration with the RJSC in July last year for his medium-sized ready-made garment company in Narayanganj.

He had already completed all necessary steps by May after obtaining the initial "clearance status", but he has yet to receive the final registration paper.

"I had to correct minor errors in the documents submitted to the RJSC. I have not received final approval yet. RJSC officials told me that due to the heavy workload, my file could not be processed promptly," he told TBS.

An RJSC official acknowledged the complexities in processing files, which require extensive scrutiny, leading to delays. He said sufficient manpower could alleviate this issue.

RJSC data indicates a total of 290,086 registered public-private companies, one-person companies (OPCs), and partnership firms in the country, with approximately 10,000 new companies registering annually. Following registration, the RJSC is mandated to supervise these institutions through inspections.

RJSC Registrar Mizanur Rahman said a letter had been forwarded to the Bangladesh Public Service Commission, seeking additional manpower. However, the decision regarding recruitment approval is still pending.

Buying old companies easier?

Business owners have said due to harassment in the RJSC, starting a new company is becoming increasingly time-consuming, prompting them to opt for existing ones for easier business operations.

Azimul Islam, managing director of Alif Group which recently acquired C&A Textile, said, "After acquiring the company, we swiftly started business. However, initiating a new venture would have taken at least three years due to RJSC complications."

According to the RJSC, approximately 2,700 companies were acquired by individuals and organisations in the fiscal 2022-23, while 8,021 new companies were registered. Similarly, as of February of FY24, roughly 1,800 companies have been acquired, with 4,369 new registrations.

How do other countries handle company registration?

To initiate a new business in India, registration with the relevant branch of the Central Ministry of Corporate Affairs is mandatory. According to the Ministry's website, approximately 2,380 individuals hold various positions within the "Incorporating" branch, tasked with completing company registration and related processes.

Additionally, each state in India operates separate agencies responsible for overseeing companies and executing related functions. Maharashtra, one of the most populous states, hosts around 600,000 companies. The state's Companies and Firms Commission employs roughly 3,000 personnel who handle tasks such as renewal, return collection, ownership changes, and winding up procedures for public-private companies, one-person companies, and partnership firms.

In Singapore, the Accounting and Corporate Regulatory Authority employs approximately 7,000 individuals. With 592,343 registered companies and firms, new company registration typically takes one to two days.

Similarly, Malaysia's Companies Commission operates with around 11,000 personnel. The country hosts approximately 758,398 companies and firms. According to the commission's website, all company registration and supervision activities in Malaysia are conducted online, with a government-mandated maximum registration period of five days.

Barrister Tanjib-ul Alam, a company law expert, told TBS, "The government is trying to boost domestic and foreign investment in Bangladesh. However, the complexity of the business registration process often discourages potential investors."

Alam suggested strengthening the RJSC by increasing manpower and restructuring the organisation as essential measures.

Business leaders for an effective RJSC

Jasim Uddin, former president of the FBCCI, emphasised the multitude of tasks handled by the RJSC, all of which are crucial.

He stressed the necessity of enhancing transparency and accountability within the RJSC and addressing allegations of harassment and corruption by traders.

To expedite registration processes, he suggested increasing manpower by at least tenfold. Jasim expressed hope that the Ministry of Commerce would take appropriate measures in this regard.

State Minister for Commerce Ahsanul Islam Titu told TBS that the government is actively pursuing initiatives to enhance the business environment.

He also highlighted the RJSC's significant role in facilitating new businesses and assured that any manpower shortage would be swiftly addressed.