Barrister Remura Mahbub
22 March 2016
Updated in 2022 August.
The shares of a business registered in Bangladesh are movable property that may be transferred in accordance with the firm’s Articles of Association. Below, we discuss the procedure for transferring shares of a Bangladeshi limited liability business.
- In a limited liability company, the transferability of shares may be restricted.
- Form 117 is the standard form for transfer of shares.
- For the transfer of shares, stamp duty must be paid.
- FIRST STEP: CHECK THE ARTICLES AND/OR OTHER AGREEMENTS, LICENSES,
- PERMITS, AND APPROVALS FOR RESTRICTION.
- RESTRAINTS ON SHARE TRANSFER IN THE ARTICLES OF ASSOCIATION
- The Articles of Association of a Private Limited Company can restrict the transfer of shares (AOA).
Therefore, the company’s Articles of Association must be reviewed prior to initiating the share transfer procedure. In Bangladesh, it is typical for a company’s articles of association to stipulate pre-agreed processes for the transfer of shares.
Typically, restrictions on the right of shareholders to transfer shares take the form of pre-emption. Therefore, if a shareholder intends to sell some or all of his shares, they must first be sold to other existing members of the private limited company at a price decided by the Directors or the Company’s Auditor.
If no existing shareholder is interested, Company shares may be freely transferred to a third party.
If there are any restrictions or special steps, they must be taken in order for a share to be transferred.
RESTRAINTS ON SHARE TRANSFER IN ANY LAW, CONTRACT, LICENSE, PERMIT, OR APPROVAL
Step 1: License and Permits Examination
All licenses, permits, and agreements should be examined for any restrictions on the transfer of company shares. If there are any restrictions, prior authorization is required.
STEP 2: NOTIFY THE COMPANY.
The shareholder who intends to transfer shares must notify the Board of Directors of the Company in writing of their desire to transfer shares. In accordance with the Articles of Association, the Director may have the authority to deny registration of a transfer of shares under specific conditions. The Board of Directors should convene and authorize the transfer of shares at a board meeting. In this regard, the Director should also give a certificate.
3rd STEP: PAYMENT OF THE SHARE PRICE
As soon as the corporation gives its consent, the payment for the shares should occur. If both the buyer and seller are locals or non-natives, payment documentation is not required. Registrar of Joint Stock Companies and Firms (RJSC) will demand a bank encashment letter for the transfer of shares if the seller is a Bangladeshi and the buyer is a foreign national.
STEP 4: COMPLETE THE FORM 117 AND PAY THE TAX DUTIES
After the aforementioned formalities have been completed, the shareholder transferring the shares must visit the Registrar of Joint Stock Companies and Firms (RJSC) and sign Form 117 in the presence of RJSC personnel. RJSC should also receive any other required documentation.
The face amount of each share is subject to stamp duty.
Once the Form 117 has been signed, a copy should be sent to the Company.
STEP 5: REGISTRAR BOOKS REVISION AND ISSUE OF SHARE CERTIFICATE
The corporation should next update its share registrar, share transfer registrar, and minutes registrar, as well as provide a share certificate to the new shareholder or amend the existing share certificate to reflect the changes.
- Form 117;
- Seller’s Affidavit;
- Board Resolution approving the transfer of shares;
- and Certificate of Transfer of Shares.
Depending on the circumstances,
- more documentation may be necessary.
|1997 – 2021
“Drafting of the Memorandum of Articles and Articles of Association, as well as other required documents, as well as the Directors’ resolution to establish a new company in Bangladesh”
The legal team of TR, The Legal Source are highly experienced in providing all kinds of services related to forming and registering a Private Limited Company in Bangladesh . For queries or legal assistance, please reach us at:
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