How to Transfer Shares in a Bangladeshi Company
Shares in a Bangladeshi-registered business are movable property that can be transferred in accordance with the firm’s articles of association. We have discussed the process of transferring shares in a private limited company registered in Bangladesh.
KEY HIGHLIGHT:
- In a private limited company, the transfer of shares may be restricted.
- Form 117 is a specified share transfer form.
- Stamp duty must be paid for the transfer of shares.
FIRST, CHECK FOR RESTRICTION IN THE ARTICLES AND/OR OTHER AGREEMENTS, LICENSES, PERMITS, AND APPROVALS.
Step 1: Check Share transfer restrictions in the articles of association
The Articles of Association (AOA) of a Private Limited Company may restrict share transfers. As a result, the Company’s Articles of Association must be revised before the share transfer process can begin. In Bangladesh, it is normal for the company’s articles of association to include pre-agreed procedures that must be followed when transferring shares in the firm.
Pre-emption is commonly used to restrict shareholders’ rights to transfer shares. This means that if a shareholder desires to sell some or all of his shares, he must first offer them to other existing members of the private limited company at a price decided by the Directors or the Company’s Auditor. If no present shareholders are interested, shares of the Company may be freely transferred to an outsider.
If there are any restrictions or special processes in place, these must be followed when transferring shares.
Share transfer restrictions in any laws, agreements, licenses, permits, or approvals.
All licenses, permits, agreements, and so on should be verified to see whether there are any restrictions on the transfer of company shares. If there are any restrictions, prior approval is required.
Step 2: Notify the company.
The shareholder intending to transfer the shares should provide written notification to the Company’s Board of Directors of their desire to transfer shares. Under specific circumstances outlined in the Articles of Association, the Director may refuse to register a share transfer. The Board of Directors should hold a meeting to approve the transfer of shares. The Director should also provide a certificate in this regard.
STEP 3: PAYMENT OF THE SHARE PRICE
Once the corporation has given its consent, the payment for the shares should occur. If both the buyer and seller are locals or foreigners, no evidence of payment is necessary. However, if the seller is a Bangladeshi and the buyer is a foreigner, the Registrar of Joint Stock Companies and Firms (RJSC) will demand a bank encashment letter to transfer the shares.
STEP 4: EXECUTE THE FORM 117 AND PAY STAMP DUTY
Once the preceding formalities are completed, the shareholder transferring the shares should visit the Registrar of Joint Stock Companies and Firms (RJSC) and sign Form 117 in the presence of RJSC personnel. Other required documentation should also be submitted to RJSC.
Stamp duty is levied on the face amount of each share.
Once signed, a copy of the Form 117 should be provided to the company.
STEP 5: AMENDMENT OF THE REGISTRAR BOOKS AND ISSUE OF SHARE CERTIFICATE
Once the following steps have been completed, the firm should notify their share registrar, share transfer registrar, and minutes registrar, as well as issue a share certificate in favor of the new shareholder or alter the existing share certificate to reflect the changes.
REQUIRED DOCUMENTS:
Required documents include Form 117, an affidavit from the seller, a Board Resolution from the corporation sanctioning the transfer, and a Certificate of Transfer of Shares.
Depending on the situation, more documentation may be required.