Tahmidur Rahman, Senior Associate, TR Barristers in Bangladesh

9 January, 2020

Table of Contents

Find the subsections below, If you want to jump through specific sections instead of reading the whole article.

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.

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.

♦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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