Process of Share Certificate Cancellation

The Process of Share Certificate Cancellation in a Private Limited Company in Bangladesh

In Bangladesh, private limited companies are governed by the Companies Act of 1994, which outlines the legal procedures and requirements for various corporate activities, including share transfers and cancellations. A share certificate is a vital document issued by a company to its shareholders, serving as proof of ownership in the company. However, there may be instances when a share certificate needs to be canceled. This article will guide you through the process of share certificate cancellation in a private limited company in Bangladesh.

I. Understanding Share Certificates

Before delving into the process of cancellation, let’s clarify what a share certificate is and its significance in a private limited company.

Share Certificate Overview:

As per Section 39 of the Companies Act 1994, a share certificate is a document issued by a company to its shareholders. It certifies the ownership of shares in the company. When a shareholder holds a share certificate, it signifies their legal entitlement to the shares mentioned on the certificate.

Key Points About Share Certificates:

1. Representation: When a company certifies an instrument of transfer of shares or debentures, it implies to any concerned party that the presented documents are genuine and accurate.
2. Presumption: If the words “certificate lodged” or similar phrases appear on a transfer document, it is presumed that the shares have been certificated.
3. Certification Authority: The certification of an instrument of transfer is considered valid when issued and signed by an authorized individual with proper authenticity.

II. Reasons for Share Certificate Cancellation

There are various reasons why a private limited company in Bangladesh may need to cancel a share certificate. Some common scenarios include:

1. Transfer of Ownership: When a shareholder transfers their shares to another party, the existing share certificate must be canceled to issue a new one in the new shareholder’s name.
2. Lost or Stolen Certificate: If a share certificate is lost, stolen, or destroyed, the company may need to cancel it and issue a duplicate certificate to the shareholder.
3. Changes in Shareholding: Corporate actions such as mergers, acquisitions, or buybacks can lead to changes in shareholding structure, necessitating the cancellation of old certificates and issuance of new ones.

III. Steps for Share Certificate Cancellation

The process of share certificate cancellation in a private limited company in Bangladesh involves several key steps:

1. Verify the Request:

• Ensure that the request for share certificate cancellation is legitimate and complies with the company’s policies and applicable laws.

1. Board Resolution:

• The company’s board of directors must pass a resolution authorizing the cancellation of the share certificate(s). This resolution should clearly state the reason for cancellation.

1. Notification to Shareholder:

• Notify the shareholder(s) in writing about the impending cancellation, specifying the reasons and the timeline for the cancellation process.

1. Return of Original Certificate:

• Request the shareholder to return the original share certificate to the company.

1. Cancellation of Certificate:

• Once the original certificate is returned, cancel it by marking it as “canceled” or “void” and duly signing it. The canceled certificate should be retained by the company for record-keeping.

1. Issue a New Certificate:

• If applicable, issue a new share certificate in the name of the new shareholder or to replace the lost or stolen certificate. Ensure that this new certificate complies with legal requirements.

1. Update Register of Members:

• Update the company’s register of members with the changes in share ownership, including the issuance of a new certificate or cancellation of the old one.

IV. Maintaining Shareholder Records

Private limited companies in Bangladesh must maintain accurate records of their shareholders. The share certificate serves as an important part of this record-keeping process. The company’s register of members should include:

a. The name and addresses of each member.
b. A statement of the shares owned by each member, specifying each share by its number and the amount paid or agreed to be considered paid on each share.
c. The date when a person was entered in the register as a member.
d. The date when any person ceased to be a member.
e. The folio number of the register book.

The cancellation of a share certificate in a private limited company in Bangladesh is a structured process that involves legal compliance, clear communication with shareholders, and meticulous record-keeping. Share certificates play a crucial role in establishing ownership in the company, and their cancellation should be carried out in accordance with the Companies Act 1994 and the company’s internal policies. By following the outlined steps, companies can ensure the accuracy and transparency of their shareholder records while complying with legal requirements.

Do you need help with issuing, transferring, and cancelling shares of a private limited company in Bangladesh?

Company formation and registration at Tahmidur Rahman Remura Wahid TRW:

The legal team of Tahmidur Rahman, The Law Firm in Bangladesh TRW are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company, Branch office Registration, Share Transfer Process in Bangladesh . For queries or legal assistance, please reach us at:

E-mail: info@trfirm.com
Phone: +8801847220062 or +8801779127165

Address: House 410, Road 29, Mohakhali DOHS, Dhaka 1212