Real Estate Law in Bangladesh | Law of Construction Matters | A complete overview of Real Estate in Bangladesh

Real Estate Law in Bangladesh | Law of Construction Matters | A complete overview of Real Estate in Bangladesh

Real Estate & Construction Law in Bangladesh – Rules & Regulations & Everything you need to know

Tahmidur Rahman, Senior Associate, Counsels Law Partners

20 Oct 2019

This post in will explain in details the Real Estate & Construction Law in Bangladesh | Law of Construction Matters | A complete overview of Real Estate in Bangladesh | Everything about property law that you need to know and be aware of with diagrams and infographics.

 

Real Estate Law in Bangladesh 

At first let’s break down what is real estate Bangladesh before diving down towards Real Estate & Construction Law in Bangladesh . It is important to understand that Real Estate is not the same thing as personal property, and should not be confused. Personal assets include intangible assets such as investments, as well as tangible assets such as furniture and fixtures such as a dishwasher. Even renters may also claim parts of a home as personal property, provided that you have purchased and installed the property with the permission of the lessor.

What is Real Estate? 

Real estate is a property composed of land and its houses, as well as the land’s natural resources, including uncultivated flora and fauna, farmed crops and livestock, soil, and any other mineral deposits. 

 

Real Estate in Bangladesh  

Real estate is both a tangible asset and an immovable form. Definitions of real property include ground, houses and other facilities, as well as the rights to use and enjoy the land and all its amenities. Renters and leaseholders may be entitled to possess land or structures that are considered part of their house, but these rights are not, strictly speaking, considered ownership. Hence:

 

  • Real estate is real, that is, physical, land-based property and everything on it, including houses, flora and fauna and natural resources.
  • Immovable properties have three basic categories: residential, commercial and industrial.
  • Residential real estate is less costly and more viable for individuals when it comes to finance, whereas commercial real estate is more profitable and secure.
  • As an investment, real estate offers income and capital appreciation.

Jurisdiction of Real Estate Law in Bangladesh

Real Estate Development and Management Act 2010 is the authoritative act in regards to Real Estate Law in Bangladesh. In the act Section 2 explains the registration process of Real Estate Developers and their due responsibilities. (Real Estate & Construction Law in Bangladesh )

 

Registration Requirements for Real Estate Developers in Bangladesh 

If someone wants to enter the real estate market in Bangladesh for commercial purposes, the act specifies that he or she will have to submit the following documentation for registration with the agency concerned.

  • Trade License
  • Tax Identification Number (TIN)
  • VAT Registration Number
  • Credentials of experts in your company
  • Memorandum of Association, Article of Association and Certificate of Incorporation
  • REHAB Membership Registration Copy

Buying, Selling, Transferring of Real Estate in Bangladesh

Real Estate Development and Management Act 2010 is the authoritative act in regards to Buying, Selling, Transferring of Real Estate in Bangladesh Real Estate Law in Bangladesh. In the act Section 3 explains the registration of buying, selling and transferring process of Real Estate Developers and their due responsibilities. The buyer or seller can not adjust the quoted price as set out in the deal. The sum can, however, be changed later if the parties agree to jointly use better materials for the land. First, in no longer than three months, the owner will sign over the land, registry and principal deed. Additionally, if the property has any difference with respect to size or volume after sale, the price must be changed within three months of the transfer. So keep these things in mind when you buy a property next time in Bangladesh.

 All Landowners and Developers / Purchasers will not initiate or carry out construction work on the land project’s construction or development work without receiving design permission from the government’s appropriate authority such as RAJUK, CDA, KDA, RDA, etc.

“Counsels Law Partners is Considered as one of the leading firms in Property Law and Real Estate Law Firm in Dhaka, Bangladesh”

Carpe Noctem Bangladesh

The Property Contract in Real Estate Law of Bangladesh 

For a general landlord in Bangladeh, there has to be a legal property contract for any trade. Again it’s a common thing, too. As a homeowner, he or she will obtain for his / her possession a specific portion of the apartment building. But, if the owner wants to auction off his share’s apartments, he will have to enforce an attorney’s power and give the developer the right to sell his share of the house. Instead, as a proprietor of his new apartment, he is allowed by the owner to receive one year of maintenance facility. Additionally, if any errors arise within two years of the handover, the contractor must repair the damage from their wallet.

 

Real Estate Law For Developers in Bangladesh 

Real Estate Developers have to be committed towards the enhancement and growth of the Real Estate Sector of Bangladesh. If they recognize that for sustainable long term growth of this sector, they must conduct their business with a great proficiency, equality, honesty and ethics. Out of the all the parties in the market, a real estate developer has to deal with clause VI. B of the Memorandum and Articles of Association of the Real Estate Housing Association of Bangladesh incorporated under the companies ACT, 1913 (new 1994) the most. Rules and regulations are much rigorous for the real estate developers. For example, if you want to enter the market for commercial purpose, you will have to produce the following documents as stated above to the concerned authority for registration.

How ‘Tahmidur Rahman & Counsels Law Partners Associates’ helps the purchaser of any land in Bangladesh:

Tahmidur Rahman- Counsels Law Partners, Law Firm in Dhaka assists buyers, financiers, shareholders, developers on their land-related matters like property due diligence (domain identification, encumbrance check, ground limit, permissive land usage, building development) related to ownership and occupancy, lease, stamping and registration of papers, zoning and permissible use of lands, essential ambitions.

 Legal Services Offered by Firms in Regards to Real Estate in Bangladesh

 

 

Drafting, look over & negotiating various property documents.

Legal opinion by vetting all property related documents.

Transaction support for all types of real estate schemes including due diligence and title search.

Arbitration and Litigation relating to property related disputes.

Assist and Advice on issues relating to stamp duty and registration.

Advice on matters relating to land tenures including agricultural land issues

Foreign Direct Investment in real estate.

Drafting and reviewing contract

Negotiating and litigating landlord/tenant disputes by serving Legal Notice.

 

Our real estate lawyers department has extensive experience in Bangladesh on different types of real estate ventures. Our main specialist areas cover acquisitions and divestments, selling, investments and other real estate and real estate transfers; legal aspects of residential property and landlord issues; landlords’, renters’ and homeowners ‘ privileges; real estate title; resolution of property rights claims; cost-sharing arrangements with investors and shareholders, growth and expansion financing etc.

Team Tahmidur Rahman | Counsels Law Partners additionally draws on the experience of the Business Law Practice in its practice of Real Estate & Construction Law in Bangladesh . We give guidance on organizing land co-speculation or joint venture project, raising capital, setting up a suitable business vehicle and verified loaning. CLP team assure their client rapidly assemble a multi-disciplinary group of experienced business real estate specialists to address a diverse range of real property needs.

 

 

“For a general landlord in Bangladeh, there has to be a legal property contract for any trade. Again it’s a common thing, too. As a homeowner, he or she will obtain for his / her possession a specific portion of the apartment building. But, if the owner wants to auction off his share’s apartments, he will have to enforce an attorney’s power and give the developer the right to sell his share of the house.”

 

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Employee Rights in Bangladesh and Employer Rights| Labour & Workers Law in Bangladesh| A complete Overview

Employee Rights in Bangladesh and Employer Rights| Labour & Workers Law in Bangladesh| A complete Overview

Employee Rights & Labour Law in Bangladesh – All you need to know about Employment Law 

Tahmidur Rahman, Senior Associate, Counsels Law Partners

2 Oct 2019

This post in will explain in details the Employee Rights & Labour Law in Bangladesh| Labour & Workers Law in Bangladesh| Everything about Employment law that you need to know and be aware of.

Labour/Workers in Bangladesh 

With a population of 168.1 million people, Bangladesh has a huge and cheap workforce of about 90 million, consisting of 60 million agricultural jobs (growing at one percent per year) and 30 million non-agricultural jobs (growing at six percent per annum). Industrial jobs fall mostly within non-agricultural work. All employers are required to follow federal labor laws that prescribe conditions of employment, working hours, salary levels, leave policies, health and health conditions, and insurance for injured workers. Bangladesh constitution guarantees freedom of association and the right to join unions in it’s jurisdiction of Employee Rights & Labour Law in Bangladesh.  

 

Bangladesh’s employment law is regulated by the 2006 Labor Act (“Act”) and the 2015 Labor Rules (“Rules”). The Act and Rules apply to employees (laborers) working in commercial and industrial enterprises. The laws and regulations prescribe working hours, weekly vacations, annual leave, medical leave. It also uses the company’s profits for gratuity benefits, provident funds and participation. 

 

 

Types of Workers in Bangladesh 

 

Workers employed in any institution are graded according to the type and condition of their work in any of the following classes: (a) Apprentice, (b) Substitute / Badli, (c) Casual, (d) Temporary, (e) Probationer, (f) Permanent and (g) Seasonal.

 

  1. Apprentice: As a trainee + Paid allowance only
  2. Substitute/ Badli: In the post of a permanent Worker or of a probation worker
  3. Casual: Casual in nature
  4. Temporary: Temporary in nature + finished within a limited period
  5. Probationer: In a permanent post + the period of his probation
  6. Permanent: He has completed the period of his probation
  7. Seasonal: Any work season and remain in employment up to the end of the season 

 

Conditions of Employment   

 

It is given in the 2006 Bangladesh Labor Act that any establishment may have its own service rule, but the service rule must include all the regulations specified in the Act.
The service rule will then have to be presented to the Chief Inspector. He must accept it if no change is made within 90 days of receipt.
If he does not agree, however, the aggrieved person can pursue an appeal within 30 days to the Court. The Government will then dispose of such an appeal within 45 days and the Government’s order will be final.  

 RECRUITMENT in Bangladesh (Employee Rights & Labour Law in Bangladesh): 

 No employer shall hire any worker without giving a letter of appointment to such worker and a photo identity card shall be given to each such employed worker.

 

“Counsels Law Parnters is Considered as one of the leading firms in Labour Law in Dhaka, Bangladesh”

Carpe Noctem Bangladesh

Working Hours in Bangladesh Labour Law 

 

Some labor law regimes require legislative working time limits. Originally, it was intended to enforce hour limits to ensure a safe and healthy working environment and sufficient rest or leisure time between shifts. However, over the past century, hour limits have become increasingly seen as a way to advance the additional policy objectives of allowing workers to balance their paid work with their family responsibilities and other aspects of their lives, promoting productivity and reducing unemployment. In our country, the 2006 Labor Act lists the daily and weekly basis of working hours, with the overtime hours and their payment.

 

Under the provisions of Employee Rights & Labour Law in Bangladesh, it is brought up the working hours of a worker, such as:

 

  1. Daily Working Hour: Up to 8 hours per day.
  2. Interval for Rest or Meal:

 

Shift exceeding 6 hours: 1-hour break

 

Shift of 5 hours: 30 minutes

 

Shift of 8 hours: i) Two 30 minutes break, or ii) One 1-hour break

 

  • Weekly Working Hour: Up to 48 hours per week.
  • Overtime: Up to 10 hours per day and 60 hours per week.

 

On average 56 hours per week.

 

For road transport workers, 150 hours of overtime per year.

 

  • Night Shift: A holiday for a whole day which means 24 hours break between each night shift has to be given.
  • Limitation for Women Workers: No shift from 10.00pm to 06.00am without the woman worker’s consent.
  • Restriction on Double Employment: Double employment is not allowed for any worker.

 

Daily Limit in regards to International Standards Labour Law

 

Daily working hour limits are a feature of Conventions Nos. 1 and 30, both of which provide for an 8-hour limit on normal hours. Convention No. 47 and Recommendation No. 116 do not provide for daily limits, the 40-hour week being considered an adequate guarantee of a working day of 8 hours or less[1]. Under the international standards, daily hours can be averaged within the 48-hour week, allowing the 8-hour limit to be extended to 9 hours in industry (Convention No. 1)19 and 10 hours in commerce (Convention No. 30).

 

The Labour Act, 2006: as per section 100, 8-hour day is the daily work limit but it may not exceed 10-hour day subject to the satisfaction of section 108.

 

• Wages in Bangladesh:

 

Wages’ means any remuneration expressed in terms of money or capable of being so expressed that, if the terms of employment, expressed or implied, were met, would be payable to a worker in respect of his or her employment or work performed in that job, and includes any other additional remuneration of the aforementioned nature that would be so payable but not included-

 

o The value of any house accommodation, supply of light, water, medical attendance or other amenity or of any service excluded by general or special order of the government,

 

o  Any contribution paid by the employer to any pension fund, provident fund,

 

o Any traveling allowance on the value of any traveling concession,

 

o Any sum paid to the worker to defray special expenses entitled on him by the nature of his employment;

 

Every worker’s wages shall be paid before the expiry of the seventh day after the last day of the payable wage period.
Where any worker’s employment is terminated by retirement or by the employer, whether by retrenchment, discharge, removal, dismissal or otherwise, the wages payable to him shall be paid before the expiry of the seventh working day from the day on which his employment is so terminated according to Employee Rights & Labour Law in Bangladesh.
All salary payments shall be made on a working day.

 

How ‘Tahmidur Rahman & Counsels Law Partners Associates’ helps the Employee/Employer according to Labour Law Provisions of Bangladesh

 

At Counsels Law Partners in Gulshan, Dhaka, Bangladesh, the barristers, lawyers and lawyers are highly experienced in dealing with labor disputes. It also has experience in consulting and assisting numerous international clients, in addition to handling various issues related to employment service among domestic clients on a regular basis.

For queries or legal assistance, please reach us at:

E-mail: [email protected]
Phone: +8801727983838
Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.

 

 

Leave and Holidays in Bangladesh Labour Law

The topic of’ Leaves and Holidays’ in labor law is relevant and also fundamental. Every employee usually with a holiday is entitled to the following leaves:

  • weekly holy day
  • personal leave
  • Sick leave
  • Festival leave
  • Annual leave and
  • maternity leave with full pay as per the Maternity Benefit Act of 1939 (now abrogated). 

Casual Leave in Bangladesh:

 

Casual leave eligibility is created by circumstances such as sudden illness, minor accidents, urgent purposes. It should be obtained on prior application, unless the urgency prevents such application from being made. Section 115 of the Labor Act, 2006, allows for casual leave. It is given for ten days in a year with maximum wages and will not be carried forward into the next year.

Sick Leave in Bangladesh:

With lieu of a medical certificate sick leave is usually used. Under Section 116 of the Labor Act, 2006 No such leave shall be allowed unless a registered medical practitioner appointed by the employer or, unless such medical practitioner is appointed by the employer, after review, any other registered medical practitioner certifies that the worker is ill and needs sick leave for cure or care for such time as may be specified by the employer. These leave shall not accumulate and be carried forward into the next year. Over fourteen days in a calendar year, any worker other than a newspaper worker shall be entitled to sick leave with full wages.

The Factories Act, 1965 Sub-Section (2) of Sections 80 Provides as follows:
Every worker shall be entitled to fourteen days ‘ sick leave on half-average wages in a year.

Again, Section 16 of the Shops and Establishments Act, 1965 says that Every worker shall be entitled to sick leave With full wages for a total period of fourteen days in a year; if such leave not availed of by any worker during a calendar year may be carried forward, but the total accumulation of such leave shall not exceed twenty-eight days at any one time.

 Annual Leave with wages in Bangladesh:

Labor Act 2006 section 117 deals with annual leave. A worker who completes one year of continuous service at an institution is usually allowed to leave with Wages for a number of days measured at a certain rate during the corresponding span of twelve months. The rate for adults usually is:

 

(a) in case of a shop or commercial or industrial establishment or factory or road transport service, for every eighteen days of work ;

(b) In the case of tea plantation, for every twenty two days of work;

(c) In case of a newspaper worker, for every eleven days of work performed by him during the previous period of twelve months.

Maternity Benefit/Maternity Leave in Bangladesh

 

 

In the last few years there has been a significant increase over women’s participation in Bangladesh’s workforce. Women workers currently account for one-fourth, that is, 12.1 million, of Bangladesh’s total workforce of 49.5 million[19]. Important legal changes have also been implemented through the introduction of the Labor Act, 2006, which eliminates some ambiguities in the existing, diverse labor laws and amends occupational safety issues such as maternity benefits, health and hygiene, injury compensation, etc. 

The Labor Act, 2006 repeals three previous Maternity Benefit Acts-The Maternity Benefit Act, 1939, The Mines Maternity Benefit Act, 1941 and The Maternity Benefit (Tea Estate) Act, 1950 and combines almost all of the provisions of these Acts in Chapter IV. Section 2(xxxiv) of the Act describes maternity benefit as the sum of money payable to a woman under Chapter IV;
Section 45(1) of the Act prohibits an employer from employing a woman for the eight weeks immediately after the day of delivery. Section 45(2) prohibits a woman employee from working in any establishment for the eight weeks immediately after the day of delivery.

Section 45(2) forbids a woman employee from serving in any institution for the eight weeks immediately following the day on which she was born. Section 45(3) prohibits the use of any woman for some arduous work if she is likely to be delivered from a child within 10 weeks or if she has been delivered from a child within 10 weeks.
In Section 46 of the Labor Act provisions have been made for maternity leave of 16 weeks (8 weeks before and 8 weeks after the delivery).It has also made the provision that this benefit shall only be available to workers who have served under the owner for a minimum period of6-months prior to the notice of the probability of the delivery.

 

 

Implementation of Maternity Benefit/Maternity Leave in Bangladesh

 

 

The main purpose of having 16 weeks maternity leave was to combat hunger and to ensure that the new generation grows to be physically and mentally much healthier[20]. It was also expected to help increase the productivity and motivation of working women. Nevertheless, the reality is that many women working in the private sector are unaware of their maternity-related rights, especially those in the garment industry and in low-paid labor-intensive jobs. In fact, most non-governmental organizations and ready-made textile companies don’t even give their female employees four months of leave.

 

For queries or legal assistance in regards to Bangladesh Labour Law, please reach us at:

E-mail: [email protected]
Phone: +8801727983838

 

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Contract Agreement| Breach of Contract | A complete overview of Contract Law in Bangladesh

Contract Agreement & Breach of Contract in Bangladesh| A complete overview of Contract Agreement in Bangladesh

Tahmidur Rahman, Senior Associate, Counsels Law Partners

12 Nov 2019

This post in details will explain Contract Agreement & Breach of Contract in Bangladesh and remedies and consquences with detailed definitions and infographics, i.e will provide a complete overview of Contract Law in Bangladesh and everything you need to know about contracts and breach of contracts.

 

 

Definition of Contract in regards to Law of Bangladesh 

 

A contract is generally an agreement made between two or more parties or persons. In order for a contract to have legal effect under the Contract Act 1872, the following factors must be present:

 

Contract Agreement & Breach of Contract in Bangladesh

Breach of Contract in Bangladesh

Before we deep dive into Contract Agreement & Breach of Contract in Bangladesh, let’s clarify our knowledge about the types of Breaches in Bangladeshi Law.

There are four main types of contract breaches:

  1. Minor Breach:

    A minor contract breach occurs when a party fails to perform a part of the contract, but does not infringe the entire contract. To be considered a minor breach, the infringement must be so non-essential that any remaining contractual obligations may otherwise be fulfilled by all parties involved. A minor infringement is sometimes referred to as an unbiased infringement.

  2. Material Breach:

    A material violation of a contract is such a significant infringement, it severely impairs the contract as a whole; in addition, the infringement must make the object of the agreement fully defeated. Often, this is considered a complete violation.

  3. Fundamental breach:

    A fundamental breach of contract is exactly the same as a material breach, in that the non-breaching party is entitled to terminate the contract and claim damages in the event of a breach. The distinction is that a substantive breach is deemed to be much more egregious than a material breach; and

  4. Anticipatory Breach:

    An anticipatory breach happens when one party makes it clear to the other party, either orally or in writing, that they will not be able to fulfill contract terms. Therefore, the other party may immediately claim a contract violation and seek a settlement, such as reimbursement. Anticipatory violation may also be called anticipatory repudiation.

If a party to a contract fails or refuses to meet his / her obligations under the contract (also contains an indication of reason for non-performance) is known as the breach of contract. (Contract Agreement & Breach of Contract in Bangladesh)

 

“Counsels Law Partners Considered as one of the leading firms in Commercial Law in Dhaka, Bangladesh”

Carpe Noctem Bangladesh

Things the innocent party can do in breach of a contract in Bangladesh

Contract terms, contracting parties rights and obligations and the effects of breach or violation of contract can be found in the 1872 Contract Act. The innocent party can lodge a claim for:

  • Specific performance of contracts
  • Compensation
  • Revocation of contracts after breach of contract

Compensatory Damage:
Upon breach of a contract, the party suffering from such breach shall be entitled to receive compensation from the wrongdoer. The Court is likely to conduct 3-tier tests in awarding the compensation as stipulated below:

  • Has there been a breach of contract? The answer is Yes.
  • Has there been a failure or injury arising from that breach? Yes should be the resolution.
  • Is the damage too remote? Answer is No.

    Final Stage: Court grants damages determining the loss number.

Now the consequences of the breach of contract and remedies available in Bangladeshi contract law.

A. Cases in which specific performance enforceable according to the Contract Law of Bangladesh

Specific performance of any contract may be imposed at the Court’s discretion-

  1. Where the act agreed to be performed is in the service of a trust;
  2. Where there is no criterion for assessing the actual damage caused by the act agreed to be performed;
  3. Where the essence of the act agreed to be performed is such that monetary compensation for its failure to perform would not be sufficient
  4. When it is probable that monetary compensation cannot be obtained for the non-performance of the act agreed to be done.

    Since the order of particular performance is voluntary, the Court is not obligated to grant such relief merely because it is lawful to do so.

The following contracts cannot be specifically enforceable-

How ‘Counsels Law Partners’ help one of the contracting party in any agreement in Bangladesh

Team Tahmidur Rahman | Counsels Law Partners Law Firm in Dhaka, Bangladesh is very astutue and outcome driven law firm, that has a vast amount of experience in dealing with contractual infringements, effects and demands for money. For legal aid or questions in regards to Contract Agreement & Breach of Contract in Bangladesh, please contact us at:

E-mail: [email protected]
Phone: +8801727983838
Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka.

 

Contracts which is not enforceable according to the Contract Law of Bangladesh:

 

  • A contract for the non-performance of which compensation in cash is an adequate relief;
  • A contract which encompasses such a minute or numerous details, or which is so dependent on the parties ‘ personal qualifications, or otherwise by its nature, that the Court can not endorse the specific performance of its material conditions;
  • A contact with the duration of which the Court can not find reasonableContract for Sale: If the seller and buyer agree to sell or buy the property at a later stage, the seller and buyer must enter into a contract for sale.
  • A agreement establishes a contractual responsibility between the buyer and the seller, and
  • A contract for sale does not change ownership of the property. A sales contract in the sub-registry should be registered.
  • A contract made by trustees either in excess of their powers of in breach of their trust;
  • A contract concluded by or on behalf of a corporation or public company founded for special purposes or by the promoters of such a company which exceeds its powers;
  • A contract whose performance involves the performance of a continuous duty stretching over a period of more than 3 years from its date; and
  • A contract in respect of which a substantial part of the subject matter is deemed to be performed by both parties

 

B. Monetary Compensation in Contract Agreement & Breach of Contract in Bangladesh

 

1. Monetary compensation for loss or damage incurred by infringement:

When a contract has been violated, the party arising from such violation is entitled to receive compensation from the party violating the contract for any loss or damage resulting from such infringement, which inevitably resulted from such infringement in the normal course of events.
This compensation shall not be provided for any loss or damage caused internally or indirectly because of the breach.

2. Compensation for violation of the contract: 
Where a penalty has been levied for infringement of the contract, where a sum is specified in the contract as the amount to be paid in the event of such infringement, or where the contract includes any other clause by way of penalty, the party complaining of the infringement is entitled to receive from the contract, whether or not the actual damage or loss has been found to have been incurred thereby. The innocent party may also demand the section interest on the amount listed above.

 

C. Contract withdrawal

 

  Any person interested in a contract in writing may sue for having it withdrawn, and such withdrawal may be permitted by the Court in the following cases–where the contract is invalid or terminable by the plaintiff; where the contract is unlawful for reasons not apparent to the plaintiff and the defendant is more to blame than the plaintiff; where there is a decree for a contract specific;

 

Contract Agreement & Breach of Contract in Bangladesh Services By Counsels Law Partners

 

At Counsels Law Partners, as the leading law firm in Dhaka, we also already supported our clients in securing the full compensation for a broken contract by means of out – of-court settlement or litigation. We will inform our clients with full clarity on the steps that need to be taken to minimize the damage caused by the breach and also enable them to obtain the best possible solution in the event of damage that has already been sustained in Contract Agreement & Breach of Contract in Bangladesh.

 

 

 

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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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