Share Transfer Process of a Bangladeshi Company | Cost, Required Documents & Restrictions | A complete Overview of How to Transfer Share

Share Transfer Process of a Bangladeshi Company | Cost, Required Documents & Restrictions | A complete Overview of How to Transfer Share

Share Transfer Process of a Bangladeshi Company | Cost, Documents| Overview

Tahmidur Rahman, Senior Associate, Counsels Law Partners

9 January, 2020

What is ‘Share’ according to Bangladeshi Law?

The term ‘share’ is defined in Sec. 2 (1) (v) of the Companies Act of 1994, which reads as below:

  “Share means a share in the share capital of a company, and includes stock except where a distinction between stock and share is expressed or implied.”

Why a Company would like to Transfer Share in Bangladesh 

Share Transfer Process of a Company in Bangladesh can be a seamless process for both private and public limited companies. If someone (who is the company’s shareholder) wants to transfer his / her share to another person or if he / she does not want to remain the shareholder or director of this company, he / she may leave the share to someone else. Basically the existing shareholder of the company buys this particular share otherwise the new shareholder or director of this company may be involved by purchasing the transfer share. Monitoring of this activity by the Joint Stock Company Registrar and Firms (RJSC). The share allocation of the company is also a process that gets monitored by RJSC in Bangladesh.

The managers of the company may want to add experienced or veteran professional for some time to increase the business capacity of the company. The addition of a new shareholder or the company’s director is therefore a fairly conventional process. Companies generally include experienced business people in a particular area or country to increase the market and profit ratio of the company. RJSC is the only authority in Bangladesh for Company Registration, Share Transfer, Share Allotment, Wind-up and related business activities.

How to Share Transfer of a Company in Bangladesh?

In this infographics, the six steps is shown on how to transfer company shares in Bangladesh.

Shares in a company registered in Bangladesh are a movable property that can be transferred in a manner given in the company’s Articles of Association. But before proceeding with the Transferring Shares process, it is important to remember that the right to transfer shares may be restricted in a private limited company. Share Transfer Process of a Company is pretty straightforward if it’s not then.

If you want to know how to open a company in Bangladesh or about company formation click here!

  • Step by Step Process of Registering a Company in Bangladesh

Six Steps of Transferring Company Shares in Bangladesh

 

Here we have described in details (six steps), the procedure of transferring shares of a private limited company registered in Bangladesh.

 

Step1: Find out whether there was any existing restrictions against Share Transfer

 

The share transfer in a Private Limited Company can be restricted by the Articles of Association (AOA). Thus, the Articles of Association of the Company must be assessed before starting the offer exchange method. It is basic in Bangladesh that the organisation’s articles of affiliation typically contain pre-concurred methodology set out that are required to be followed for any exchange of offers in the organization.

 Limitations on right of the investors to move shares are for the most part as pre-emption. Which implies that if an investor wishes to sell a few or the entirety of his offers, such offers should initially be offered to other existing individuals from the private constrained organization at a value controlled by the Directors or the Auditor of the Company. In no current investor is intrigued, at that point portions of the Company can be unreservedly moved to an untouchable.

On the off chance that there is any limitation or extraordinary techniques, those confinement or strategy must be followed for any offer transfer.Which implies that if an investor wishes to sell a few or the entirety of his offers, such offers should initially be offered to other existing individuals from the private constrained organization at a value dictated by the Directors or the Auditor of the Company. In no current investor is intrigued, at that point portions of the Company can be openly moved to an outcast.

Hence, all the license, permits, agreement etc. should be checked for any restriction imposed on share Transfer Process of a Company. If there is any restriction, prior approval should be obtained.

 

Step 2: Notify the Board of the Directors of the Company

 

The Shareholder intending to move the offers should serve notice recorded as a hard copy to the Board of Directors of the Company about expectation to move portion of the organization. The Director may have the forces to deny enlistment of move of offers in specific situations – endorsed in the Articles of Association. The Board of Directors should hold an executive gathering and endorse the exchange of the offers. The Director ought to likewise give a declaration in this respect. 

Step 3: Paying the Price of the intended shares

Once the company has granted its approval, the price of the shares should have been paid. If both buyer and seller are local or foreign, there is no requirement for proof of payment. However, if the seller is a Bangladeshi and the buyer is a foreigner, the Joint Stock Companies and Firms Registrar (RJSC) will require a letter of bank encashment for the transfer of the share.

Step 4: Completion of Form 117

Once the company has granted its approval, the price of the shares should have been paid. If both buyer and seller are local or foreign, there is no requirement for proof of payment. However, if the seller is a Bangladeshi and the buyer is a foreigner, the Joint Stock Companies and Firms Registrar (RJSC) will require a letter of bank encashment for the transfer of the share.

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Step 5: Payment of Stamp Duty

Stamp duty is payable on the face value of each share.

Once the Form 117 is signed, a copy of the same should be delivered to the Company.

Step 6: AMENDMENT OF THE SHARE CERTIFICATE REGISTRAR BOOKS AND ISSUANCE.

Upon completion of the above steps, the company should update its share registrar, share transfer registrar, minutes registrar, and issue a share certificate in favour of the new shareholder or modify the existing share certificate to reflect the changes.

Essential documents needed for Share Transfer of the Company

 

Essential documents needed for Share Transfer of the Company:

1. Letter from Company’s board of director approving the transfer company’s share.
2. A document indicating Number of shares to be transferred of the Company.
3.A completed (signed) Company form 117.
4. Board Resolution by the company approving the transfer of the shares; and
5.Certificate of Transfer of Shares.

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What to do When cheque dishonour or bounce in Bangladeshi Law?

What to do When cheque dishonour or bounce in Bangladeshi Law?

Cheque Dishonour or Bounce in Bangladesh – Law, Solution, Retrieve, Remedies, Punishment – A complete Overview

Tahmidur Rahman, Senior Associate 

5 Aug 2019

What to do When Cheque Dishonour or Bounce in Bangladesh? How can you take legal actions to retrieve your money? This post provides complete overview of how to deal with cheque dishonouring in Bangladesh.

Cheque Dishonour or Bounce in Bangladesh

Currently, even a business organisation in Bangladesh like many other countries, without maintaining a bank account, can not operate its daily activities. Despite the massive development in the recent past in Bangladesh of alternative delivery channels such as Internet Banking, BEFTN (Bangladesh Electronic Funds Transfer Network), RTGS (Real Time Gross Settlement) and many other aspects of digital banking, people are still comfortable enough to use checks for personal and business transactions. In the case of large-scale transactions, the use of checks is obviously the best way in our country because of security issues.

The possibility of a check being dishonoured is significantly high due to the high number of transactions through this mode. The receiver of checks must therefore have sufficient and effective legal redress, which they can consider when faced with this situation. Recently, in a case of dishonouring the test, a well-known film actor has been accused and filing these cases is almost regular occurrences with different courts across our country. People deliberately issue checks without making funds available in their bank accounts due to a lack of integrity and ethical practice. It may only seem to be a misdemeanour, it is, in fact, a serious crime.

Cheque Dishonour or Bounce – In Laws of Bangladesh

Both the government of Bangladesh and the Bank of Bangladesh have taken a number of steps to provide adequate legal remedy to protect and pull this state. The following discussion will focus on our country’s prevailing check dishonour law:

1. The most vital law enacted to provide legal remedy to such a situation is the Negotiable Instruments Act, 1881 (Act No. XXVI of 1881). Section 6 of this Act established what constitutes a cheque, stating that’ a bill of exchange drawn on a stated banker and not presented as payable other than on order.’ In addition, in the case of laws, a check was also known as an order on a borrower by a lender to pay the whole or part of a debt to another person.

2. If a check is not cleared because of insufficient funds or if the debtor who issued the check to the lender ordered his bank to dishonor the check or for any other reason, then the remedy will be under Section 138 of the above Act.

3. Section 138 of the Negotiable Instrument Act, 1881 makes it clear that, whenever a check is bounced, it is then accepted as correct until it is otherwise proved that an unscriptural guilt is created which involves punishment of a criminal nature which may include 01 (one) year of captivity or fine, which may extend to three times the value of the dishonoured check or both. In addition, the person who is regrettable also has a civil remedy under the same section, and in order to obtain the civil remedy, the person has to take some steps.

4. The first issue to be assessed by the court is whether the check has been presented to the bank for withdrawal within six months of the person being dismissed. If the check has been presented to the bank for withdrawal any time after it has been given to the regrettable person for six months, then the court will not allow the claim. Considering that the check has been submitted within a valid period of time and if it is dishonored, then pursuant to Section 138 of the Negotiable Instrument Act, 1881, the unfortunate person must send a written notice by registered post with acknowledgement due to the person who gave the check claiming the money back.

5. This notice requiring the money back must be sent within 30 days after the check has been bounced, that is, when the regrettable person has been notified that the check given has bounced due to insufficient funds or other reasons. Again, the court will not provide any redress if the notice demanding the money is not sent within the constitutive time. After the above process has been completed and the person receiving the notice does not pay back the money within 30 days of receiving the notice, the mortified person will be allowed to bring a civil claim against that person for the recovery of the money.

6. It should be remembered that the crime of dishonor of the search referred to in section 138 of the Act is considered a criminal offence. The legislation was aimed at punishing and not obtaining a due sum. Nevertheless, the section retains the possibility of restitution as the owner of the check can be paid by the court an amount of any fine recovered up to the check value. If someone wants to recover cash that has not been discovered then he or she will file a civil suit for money recovery. In reality, however, it was found that filing a criminal proceeding under s.138 was the most effective way to recover money.

 

Step by Step Process for filing a case for Cheque Dishonour or Bounce in Bangladesh

The recipient of the check may file a case against the applicant under the following conditions:

(A) Submitting the check to the bank:

The default check must be submitted to the bank for encashment within 6 months from the date it is drawn. If the check is dishonored, due to such dishonour, the bank shall give a slip.

(B) Legal Notice:

Upon obtaining a check dishonor slip from the bank, the payment application shall be made by notifying the giver of the check within 30 days by registered post. The recipient will give the money back for 30 days.

(C) Implementing Section 138

Unless, within 30 days of receiving the notice, the giver of the check fails to make the payment of the said amount of money, the receiver of the check shall file a case under section 138 of the Negotiable Instruments Act, 1881.

Now where and how to file a case for Cheque Dishonour or Bounce in Bangladesh

 

The recipient of the check may file a case against the applicant under the following conditions:

When the owner presents the check for encashment to a bank, he will bring in court the claim for check dishonor that has local jurisdiction over that bank.
The offense of check dishonor can be completed with the emphasis on certain specifics:

i) drawing of the check,

ii) presenting the check,

ii) returning the check unpaid by the drawee bank,

iv) giving written notice to the drawer of the check demanding payment of the check sum,

v) failure of the drawer to make payment within 30 days of receipt of the notice.s of receiving the notice, the giver of the check fails to make the payment of the said amount of money, the receiver of the check shall file a case under section 138 of the Negotiable Instruments Act, 1881.

Now, if the above five different acts were carried out in five different locations, one of the courts exercising jurisdiction in one of the five local areas could become the place of trial for the offense of cheque dishonour. The plaintiff may select any of the courts in whose jurisdiction any of the five components of the said offense have been made.

Essential documents you need if you would like to file a case against a dishonoured cheque in Bangladesh

Before proceeding to file a case, a complainant must keep some essential requirements in mind which are as follows:

  • The dishonoured cheque
  • Bank slip regarding cheque dishonour
  • Copy of legal notice
  • Postal receipt and acknowledgment letter of legal notice
  • Copy of newspaper where legal notice is published, if any
  • Authorization letter or power of attorney if ‘Authorized Agent’ files the case
  • List of witnesses
  • Costs of the case such as Court fee, lawyer’s fee etc.
  • Government or private legal aid if unable to bear the costs of the case
  • Intention to go for settlement with the offender to get the money.

“Tahmidur Rahman|Counsels Law Partners is Considered as one of the leading firms in Banking Law in Bangladesh”

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PENALTY FOR CHEQUE DISHONOUR or Bounce in Bangladesh:

The offender who commits the dishonor of the cheque shall be punished with imprisonment for a term of up to one year or with a fine of up to three times the value of the cheque or both.

Skyscrapers in Bangladesh

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