INTRODUCTION

COMPANY
A company is a legal entity that represents an association of people with
specific objective.
Characteristics
1. It is an artificial person created by law
2. Separate Legal Entity
3. Perpetual Succession
4. Limited Liability
5. Ability to sue and to be sued

TYPES OF COMPANIES
1. Public Limited Company: A Public Limited Company (PLC) is a type
of company that is legally authorized to offer its shares to the general
public through a stock exchange.
2. Private Limited Company: Private company means a company
which by its articles-
a. Restricts the right to transfer its share
b. Prohibits any invitation to the public to subscribe for its share or
debenture
c. Limits the number of member minimum 2 and up to 50 (Not
including persons who are in employment.)
3. One person company:
 Only a natural person can form OPC.
 The company need to put OPC at the end of its name.
 The company need to mention a nominee as a legal requirement
of formation. Nominee will become the company’s sole
shareholder in case of the original shareholder’s death or
incapacitation or insanity.
 The minimum paid up capital of an OPC will be Tk.25 lakh and
maximum Tk.5 crore.
4. Companies limited by shares: The key feature of such companies is
that the liability of shareholders is limited to the amount they have
 invested in purchasing shares. The most common form of companies
limited by shares is private and public limited companies.
5. Companies limited by guarantee: Members' liability is limited to a
pre-agreed amount they will contribute if the company is dissolved.
This type of company structure is often used for non-profit
organizations, charities, or clubs.
6. Unlimited company: A company having no limit on the liability of its
members.
7. Holding company & Subsidiary company:
 A Subsidiary Company is a company that is controlled by another
company, known as the Holding Company.
 The holding company holds more than 50% of the voting rights in
the subsidiary, allowing it to influence major decisions.
 The holding company has the right to appoint or remove the
majority of the board of directors.
8. Greenfield Company: Refers to a public company that has not yet
started commercial operations but is in the process of setting up.

STEPS OF COMPANY REGISTRATION

1. Selection of Name and Getting Name Clearance
2. Document Preparation:
 MOA
 AOA
 Form IX, From X and Form XII
 Name Clearance Document
 Singed for IX & Subscriber Page
3. Bank Account Opening:
(This is applicable if the desired company has foreign shareholder)
4. Submission of Documents to RJSC
5. Getting Certificate of Incorporation & Other Documents
 Certificate of Incorporation
 Certified Copy of MOA & AOA
6. Post Registration Requirements
  Applying for Trade Licence, TIN and VAT Registration
Certificate
 Arrangement of AGM in each Calendar Year

CERTIFICATE OF INCORPORATION VS CERTIFICATE OF

COMMENCEMENT
Certificate of Incorporation Certificate of Commencement
1. It is a certificate of 1. It is a certificate of
incorporation. commencement of business.
2. Business cannot be start after 2. Business can be started after
certificate of incorporation. certificate of commencement.
3. Company is not to be listed on 3. Company is to be listed on the
the register before certificate of register before certificate of
incorporation. commencement.

VEIL OF INCORPORATION
The veil of incorporation refers to the legal principle that a company is a
separate legal entity distinct from its shareholders and directors.

PROSPECTUS VS STATEMENT IN LIEU OF PROSPECTUS

Prospectus Statement in lieu of Prospectus
Prospectus is a printed pamphlet When a public limited company
by which a public limited company procures it capital from private
invites the public for subscription arrangement a statement in lieu of
to its shares or debentures. prospectus is submitted to the
registrar in the absence of
prospectus.
Any public limited company can When minimum subscription is not
publish prospectus. collected public limited company
prepares statement in lieu of
prospectus.
It can invite public for subscription It cannot invite public for purchase
or purchase of any shares or of any shares or debentures.
debentures.

DOCTRINE OF CONSTRUCTIVE NOTICE

The Doctrine of Constructive Notice means that when a company’s
key documents, like the Memorandum of Association and Articles of
Association, are registered, they become public documents. Anyone
dealing with the company is expected to be aware of the contents of
these documents. This means that outsiders are assumed to know the
company’s rules, powers, and limitations, as described in these
documents. Even if they haven’t actually read them, it is assumed that
they have, and they are responsible for knowing these details before
doing business with the company.
In simple terms, when you deal with a company, it's your duty to
understand the company’s legal documents because they are publicly
available.

DOCTRINE OF INDOOR MANAGEMENT

The Doctrine of Indoor Management protects people who deal with a
company from having to know its internal workings. It states that
outsiders are not expected to understand or check the company’s internal
procedures or decisions, such as board meetings or approvals. As long as
they act in good faith and the transaction appears consistent with the
company’s official documents (like the Memorandum and Articles of
Association), they are not responsible for any internal mistakes or
irregularities.
In simple terms, you are not required to know or verify how a company
handles its internal operations when doing business with them, as long as
everything looks proper from the outside.

PROTECTION OF MINORITY INTEREST

Key Provisions:
1. Right to Apply to Court: Any member or debenture holder of a
company (individually or jointly) can approach the court if they feel the
company's affairs are being conducted in a way that harms their
interests. This can include:
 Directors using their powers in a way that is unfair or harmful.
 The company discriminating against certain members or
debenture holders.
 A resolution being passed that discriminates against the interest
of some members or debenture holders.
2. Court Action: When the court receives such an application, it sends a
notice to the company’s Board and sets a date for a hearing.
3. Court’s Decision: After hearing both sides, if the court believes the
applicant’s interest has been or is likely to be harmed, it can issue an
order to protect those interests. This could include:
 Cancelling or changing a company resolution or transaction.
 Regulating how the company’s affairs are conducted in the
future.
 Changing any part of the company’s Memorandum or Articles of
Association.
4. Enforcement:
 If the court orders any changes to the company’s Memorandum or
Articles, the company must get the court’s permission to make any
future changes that go against that order.
 The company must notify the Registrar within 14 days of the court
order. Failure to do so may result in a fine of up to 1,000 Taka for the
company and responsible officers.

PRIVILEGES OF A PRIVATE COMPANY THAN THAT A PUBLIC

COMPANY
1. The process of setting up a private limited company is generally
quicker and less complicated compared to establishing a public
limited company.
2. A private limited company can be formed with only two
shareholders, whereas a public limited company requires at least
seven shareholders.
3. Private limited company often have fewer regulations concerning
the management structure, making it simpler to operate than public
limited company.
4. While public limited companies are required to have at least 3
directors, private companies can operate with a minimum of 2
directors.
 5. Shares in a private company are restricted from being freely
transferred, providing a greater control over the company’s
ownership.

DIRECTORS
NUMBER OF DIRECTORS
1. Public limited company – 3
2. Private limited company – 2
3. One person company – 1

APPINTMENT OF DIRECTORS
 Section 91, Subscribers of the memorandum deem to be the directors
of a company until first directors are appointed.
 In the first Annual General Meeting (AGM), all the directors will retire
and new directors will be appointed based on majority vote.
 In the subsequent AGM, one-third of the directors will retire and if they
are eligible, quality, and willing to be director, they can be re-elected.
 No person shall act as a director if he does not submit written and
signed consent [Form-9: Consent of Director (section-93)] to the
Registrar of Joint Stock Companies and Firm (RJSC)]

APPOINTMENT BY DIRECTORS
Alternate Director
 The Board of Directors can appoint an alternate director to act in place
of an original director who is absent from Bangladesh for at least three
continuous months.
 The alternate director’s term cannot exceed the period allowed to the
original director.
 The alternate director must step down immediately when the original
director returns to Bangladesh.
 If the original director’s term ends before they return to Bangladesh,
any automatic reappointment rules apply to the original director, not
the alternate director.
Additional Directors
If articles permit, the board may appoint additional directors. These
directors will hold the office until the next AGM.
Casual Vacancies
If a director who was appointed in a general meeting, leaves the position
before their term ends, the remaining directors can fill the vacancy during
a board meeting. The newly appointed director will serve only for the
remaining time of the original director’s, not for a new full term.

APPOINTMENT BY THIRD PARTIES

 Up to one-third of a company’s directors can be appointed by third
parties if the articles allow it. These directors are known as Nominee
Directors.
 They are appointed by third parties, such as banks, financial
institutions, or major shareholders, to protect their interests within the
company.
 Special provisions for nominee directors:
 They do not count towards the total number of directors in the
company.
 They are not considered independent directors.
 Unlike regular directors, they do not need to hold qualification
shares.

APPOINTMENT BY THE GOVERNMENT

The government can appoint directors to a company’s board to prevent
oppression and mismanagement. These directors are appointed to protect
the interests of the company, its shareholders or the public. The
government can decide the number of directors it deems necessary to
effectively safeguard these interests.

QUALIFICATIONS OF DIRECTORS
1. The person must be an adult natural person and of sound mind.
2. There is a requirement for a potential director to provide written
consent to serve in the role.
3. (qualification shares)

QUALIFICATION SHARE OF DIRECTORS

 Definition: Qualification shares are a specific number of common
shares that a candidate for the company’s Board of Directors must own
to be eligible to serve as a director.
 Timeframe: Directors must obtain their qualification shares within 60
days of their appointment.
 Consequences of Non-Compliance: If a director fails to obtain the
required qualification shares within the period, they are subject to a
fine of up to 200 Taka for each day of non-compliance.
 [Minimum 1 share/2% of paid-up capital/according to AOA]

DISQUALIFICATION OF A DIRECTOR / VACATION OF OFFICE OF

DIRECTORS
 If he is found to be unsound mind by a competent court.
 If he adjudged insolvent.
 If he is a minor.
 If he fails to pay call made on share within 6 months.
 If he absents himself from three consecutive meetings of the directors
without leave of absent from the board of directors.
 If he accepts a loan from the company in contravention of section 103
(Allowable loan is maximum 50% off paid-up capital, any contravention
is made fine may be extend to Tk. 5000 or 6 month of imprisonment.)
 If he fails to obtain qualification share.
 If he holds any office of profit.

SANCTIONS OF DIRECTOR NECESSARY FOR CERTAIN CONTRACTS

This section restricts a director from entering into any contract with
company for sale, purchase, or supply of goods and materials except with
the consent of the directors. It must be approved by the board.

STATUTORY AND MANAGEMENT LIABILITIES OF DIRECTORS

(DUTIES)
1. Maintaining register of directors.
 2. Sending annual list of members and summary of share capital to the
registrar.
3. Notify registrar about changes in capital structure.
4. Sending copies of special resolutions to the registrar.
5. Maintaining minutes books of directors and shareholders.
6. Maintain directors’ attendance book.

REMOVAL OF DIRECTORS
 Directors are removed through Extra-ordinary General Meeting (EGM)
 A special resolution must be passed by the shareholders to remove a
director.

REMUNERATION OF DIRECTORS
 Forms of Remuneration: Directors can receive remuneration in various
forms, including-
 Honorarium for attending board and committee meetings.
 Monetary benefits and allowances.
 Rent-free accommodation.
 Life insurance for the director or their family members.
 Other financial benefits as determined by the company.
 The amount and forms of remuneration are decided by the company during
its General Meeting.
 According to the Corporate Governance Code, a Nomination and
Remuneration Committee (NRC) should be established to create and
manage a formal process for determining the remuneration of directors and
top-level executives.

APPOINTMENT OF MANAGING DIRECTORS (SEC 110)

 A company shall not appoint its managing director for a term
exceeding five years at a time.
 The office will be vacated on the expiry of 5 years.
 They can be re-employed or have their term extended for up to 5 years
at a time. Here, consent of the company in general meeting is
necessary.
SECTIONS
Section 90: Number of Directors
Section 91: Subscribers of the memorandum deem to be the directors of a
company until first
directors are appointed.
Section 93: Consent of Directors
Section 94: Disqualification of a director
Section 97: Qualification of a director
Section 98: Validity of the acts of director [Regulation 95 of Schedule I:
Defect in appointment
not to be invalidate the acts of director]
Section 101: Appointment of alternate director
Section 103: Loans to the Directors
Section 104: Directors not to hold office of profit
Section105: Sanctions of director necessary for certain contracts
Section 106: Removal of directors
Section 108: Vacation of office of directors

MEETING AND PROCEEDINGS

TYPE OF COMPANY MEETINGS
Meetings of shareholders
1. Statutory Meeting
2. Annual General Meeting (AGM)
3. Extraordinary General Meeting (EGM)
Meetings of directors
1. Meetings of the Board of Directors
2. Meetings of Committees of Board of Directors

ANNUAL GENERAL MEETING

 A mandatory annual meeting that every company must arrange in
each calendar year.
 Notice: 21 days’ notice must be given to members for calling AGM.
Meeting can be called with shorter notice if all shareholders are
agreed.
 Time and Place: AGM should be held at the registered office or other
place within the city or town where the registered office is located. It
must be held during business hours and cannot be held on a public
holiday.
 Functions of AGM:
 Ordinary Business
 Adoption of Annual Accounts, Directors’ Report, and
Auditor’s Report.
 Declaring the dividend.
 Electing the directors in place of those retiring.
 Appoint auditors and determining their remuneration.
 Special Business
 Increase Authorized Capital
 Altering the MOA and AOA
Regulatory guidelines regarding calling of an AGM
Time limit for holding first Within a period of 9 months from the date
AGM of closing of the first financial year. Or
within 18 months of the company’s
incorporation.
Time limit for holding Within a period of 6 months from the
second and subsequent closing of the accounting year.
AGM
Maximum interval between 15 months
AGM
Maximum extension allowed On request, the registrar may extent the
time for a maximum of 90 days or not
exceeding the 31st Dec of the calendar
year in relation to which the AGM is
required to be held, whichever is earlier.
Effect of Non-compliance with regard to AGM
 The court may, on the application of any member, call or direct the
calling of a AGM and give ancillary or consequential directions as the
court thinks expedient.
 Company and liable officers will be fined Tk. 10,000.
 If the defaults continue, the company and liable officers will be fined tk.
250 for every day after the first day during which such default
continues.

STATUTORY MEETING
 First meeting of the shareholders after incorporation.
 It should be arranged between not less than one month – not more
than 6 months.
 Companies need to arrange the Statutory Meeting:
 Public limited company
 The company limited by shares, guarantee and having a share
capital.
 Companies don’t need to arrange the Statutory Meeting:
 Private company
 Company limited by guarantee having no share capital
 Unlimited liability company
 Notice: 21 days
 Objectives:
 To inform the shareholders’ matters relating to incorporation,
allotment of share, the details of the contracts concluded by the
company
 To discuss and inform the prospects of the company
 Possibilities of success
 Purchase of properties
 The particulars of any contract and the modification or the
proposed modification of any contract
 Various development projects have taken or will be taken by the
company
  Cash position of the company
Statutory Report
 Directors are required to prepare and send a report to every
member at least 21 days before meeting.
 A copy of this report is to be filed with RJSC.
 Certified by at least two (2) directors, one among them will be
Managing Director and it should be properly dated and signed.
 Contents of a statutory report:
1. Total number of shares allotted.
2. Total amount of cash received on different types of shares.
3. An abstract of cash receipts and payments.
4. Details of directors, managers, secretary and auditors.
 Effect of non-compliance a Statutory Meeting:
 Every liable person will be fined up to Tk. 5000.
 The company will be wound up by the court, if failed to file
Statutory Report and failed to hold Statutory Meeting.

EXTRAORDINARY GENERAL MEETING

 EGM is held between Annual General Meetings and it is called to
discuss any particular issues of urgent importance to the company.
 Notice: 21 days
 EGM can be called in the following ways:
 The BOD may convey an EGM if they think fit.
 The members (individual or collective) holding at least 10% of
the total number of paid-up voting shares instruct the board to
call an EGM.
 If EGM is not hold by the Directors within the stipulated time,
then shareholders can call it within the next 45 days.
 Decisions are to be taken based on 3/4th Majority.
 Within 15 days of the meeting, the resolution must be registered
with RJSC.

BOARD MEETING
 Must be held once every 3 months.
  At least four (4) such meetings must be held each year.
 Objective: To ensure that directors are in touch with the
management of the affairs of the company.
 Unlike AGM, no proxy of the directors will be allowed in the board
meetings.
Business done in Board Meeting
1. To issue shares and debentures
2. To make share call
3. To forfeit or transfer shares
4. To appoint Managing Director
5. To fix the rate of dividends
6. To take loan
7. To invest in shares and debentures of another company
8. To invest the wealth of the company
9. To appoint a person to fill up the casual vacancy
Chairman of the Board Meeting
The chairperson of the Board must be a non-executive director. The
chairperson is elected by the members of the Board. The role of
chairperson is to preside over all board meetings.

QUORUM OF MEETING
A quorum is required in a meeting to ensure that there is a sufficient
number of members present to make decisions that represents a majority
interest of the group. This requirement helps to maintain the legitimacy
and legal standing of the meeting’s outcomes. Without a quorum, any
resolutions passed could be challenged as not reflective of the collective
view of the membership.
Public:
 If number of directors are less than six (6), the quorum will be of at
least 2 directors.
 If number of directors are higher than six (6), the quorum will be of
at least 3 directors
Private: Minimum 5 directors.
VOTE
 Any issues will be solved with the majority of the vote.
 Each director has one vote for each resolution to put vote at the
meetings.
 The chairman will have a second or casting vote in case of equality
of the votes of two groups.
 Every equity shareholder of a company will have the right to vote on
every resolution placed before member’s meeting of the company.
One share is equivalent to one vote. Thus, one shareholder owning
10 shares is entitled to 10 votes.
Provisions for vote
A voting right is the right of a shareholder of a company to vote on
matters of corporate policy which may includes
 Decisions on the appointment of the board of directors
 Issuing new securities
 Initiating mergers or acquisitions
 Dividend payouts.
 Making any significant change in the company’s operations.
Voting Rights for Preference Shareholders
Usually, preference shareholders don’t have any voting rights in ordinary
resolutions. Their voting rights are limited. They can only give a vote to
their own issue, not on other issues. These resolutions include:
 Any resolution for winding up the company;
 Resolution for repayment or reduction of share capital.
 If aggregate dividends are not paid for two financial years,
preference shareholders will be entitled to vote in every resolution.
 The voting rights of preference shareholders will be in proportion to
the paid-up value of preference capital.
Proxy Voting
Shareholders may transfer their rights to vote to another party without giving up
the shares if they are unable or unwilling to attend the company's AGM or any
emergency meeting. The person or entity given the proxy vote will cast votes on
behalf of the shareholder without consulting the shareholder.
 MEMORANDUM OF ASSOCIATION
Memorandum of association is the principal document of a company
which regulates the external affairs. Nothing can be done outside the
scope of the object clause of memorandum. So, it is called the constitution
of the company.

CLAUSE OF MEMORANDUM
1. Name Clause: The name must end with the word “Limited” and
ensure that chosen name is distinct and not identical or closely
resembling any existing company names. It is necessary to take
permission from registrar for use the name of winding up company.
2. Situation Clause: MOA should mention a specific place of business
which is known as the registered office. A company have a registered
office from the day on which a company begins to carry on business, or
from 28 day after the date of its incorporation, whichever is earlier.
Objectives:
 To select nationality
 To select the limit of scope of Court
 To distribute notice, latter etc
 To know the place of list of members
3. Object Clause: The company cannot do any function outside the
object clause. Anything done outside the scope of the object clause is
ultra vires. The company cannot change the object clause without the
permission of the Court.
4. Capital Clause: This clause mentions the total amount of share
capital with which the company proposes to register and the divisions
into a certain number of shares. A public limited company can issue
two types of shares:
 Ordinary share, and
 Preferred share
5. Liability Clause: This clause mentions the limited liability of
shareholders. It is enough to state that the liability is limited but it
should clearly mention whether it is limited by share or by guarantee.
6. Association Clause: This clause consists of information about the
initial subscribers of the company. It includes names, addresses,
signatures and other required information about the subscribers.

ALTERATION PROCEDURES OF MOA

1. A special resolution must be passed to initiate the alteration process.
2. The proposed alteration must be approved by the Court.
3. Court’s Satisfaction:
Before confirming the alteration, the court must ensure:
 Sufficient notice has been given to every debenture holder or
creditor.
 If any creditor objects to the alteration, the court either obtain their
consent or discharged or secured their debt or claim.
4. The Court may approve the alteration either fully or partly, and may
impose terms and conditions as it deems appropriate.
5. After the Court’s approval:
 An attested copy of the Court's approval order and the altered
memorandum must be submitted to the Registrar within 90 days of
the order.
 The Court may extend the deadline for submitting these
documents.
 The Registrar will incorporate the new memorandum in place of the
old one.

ALTERATION OF CLAUSES
Alternation of Name Clause
 A company can alter its name by passing a special resolution.
 Approval is required from the RJSC.
 Upon approval, the RJSC updates the register with the new name
and issue a new certificate of incorporation with the updated name.
 The name change does not alter the company’s rights and
obligations and legal proceedings remain unaffected.
Alteration of Object Clause
 A company may alter this clause by passing a special resolution.
  Purposes for alteration:
1. To operate the business more economically or efficiently
2. To achieve the main purpose using new or improved methods.
3. To expand or change the local area of operation.
4. To undertake additional activities that are convenient or
beneficial in conjunction with the current business.
5. To restrict or abandon any of the existing objects.
6. To sell or dispose of the entire or part of the company’s
undertaking
7. To amalgamate with another company or group of persons.
Alteration of Registered Office Clause
 It can be changed with the Form VI subject to the approval of RJSC.
Alteration of Liability Clause
 Ordinarily the limited liability company’s liability cannot be altered to
unlimited liability. Liability clause of a company can be altered when a
public limited company is converted into private limited company.
Alteration of Capital Clause
 A company limited by shares can alter the capital clause of its
memorandum if authorized by its articles.

ARTICLES OF ASSOCIATION
AOA
The article of association serves as the internal regulations governing the
administration of a company.

CONTENTS OF AOA
1. Full name of the company
2. Daily functions and rules of management
3. Name, address and other description of directors and managing
directors
4. Responsibilities, duties, rights and powers of directors and
managing directors
5. Number of directors
 6. Appointment rules of manager and secretary
7. Remuneration of director
8. Number and value of qualification share of director
9. Total number of authorized share and classification of share
10. Par value and payment system of share
11. Terms and conditions of share forfeiture
12. Procedure of share issue and transfer
13. Commission of share underwriting
14. Borrowing power and procedure of company
15. Calling and operating system of meeting
16. Voting system of the meeting
17. Voting power of the meeting
18. Rules of dividend declared and dividend transfer to the
company
19. Name and address of auditors, bankers, solicitors, broker and
management agent
20. Winding up procedure of company

ALTERATION OF AOA
Article of association can be altered without permission of Court but taking
decision in the members meeting.
1. The AOA can be altered after taking special resolution in the
members meeting.
2. Alteration of articles never violet the rules of memorandum and
company law.
3. The alteration in the article should be fair and for the benefit of the
company as a whole and not for a class or group of members only.
4. Alteration of article is not to be contradiction with the order of the
Court.
5. The right of the minority members cannot be broken by this
alteration.
6. Alteration of articles is not for increasing the liability of all members
or a few members.
 7. Alteration of articles is not for breaking the contract with third party.

MOA VS AOA
MOA AOA
It is the principal document of a It is the internal document of a
company which includes object, company which includes internal
power, and rights of a company. operation rules.
It maintains the relation between It maintains internal relations.
company and third party.
It is the guidance and law of It is controlled by MOA.
articles.
Company law makes it. Company law and MOA makes it.
It must be registered. It is not obligated for registration.
It cannot be altered without the It can be altered without the
permission of Court. permission of Court.

ACCOUNT
BOOKS OF ACCOUNTS
According to Section 181,
 Every company must prepare and keep its books of accounts and
financial statements for each financial year.
 The accounts must be kept on an accrual basis using the double entry
system.
 Types of records to maintain:
 Records of all money received and spent, along with details of
transactions.
 All sales and purchases of goods by the company.
 A record of the company’s assets and liabilities.
 For specific industries like production, distribution, mining, etc.,
details of material usage, labor, and overhead costs.
 Time and place:
 Books of accounts must be kept at the registered office.
 Directors can inspect the books at any time during business
hours.
 Branch offices:
  If the company has a branch office, relevant books of account
must be maintained there and a summarised return of branch
transactions should be sent to the registered office every 3
months.
 The company must maintain books of accounts for the preceding
12 years along with the current year in proper order.
 Penalty for non-compliance: If the company’s management fails to
maintain proper books of accounts, the responsible individuals may
face:
 Imprisonment for up to 6 months.
 Fine up to 5000 tk.
 Or both imprisonment and fine.

CONTENT OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT

Balance Sheet:
 Provides a summary of the company's property and assets, capital,
and liabilities.
 Must give a true and fair view of the company's affairs at the end of
the financial period.
 Should be prepared following the form outlined in Part-1 of Schedule
VI.
Profit and Loss Account:
 Should give a true and fair view of the company’s profit and loss.
 Must comply with the requirements of Part II of Schedule XI.
 The government can exempt any company from following the
requirements of Schedule XI.
Government Modification:
The government has the authority to modify the requirements of the
balance sheet and profit and loss account for any company.

BALANCE SHEET OF HOLDING COMPANY WITH PARTICULARS OF

SUBSIDIARY
When a holding company prepares its balance sheet, it must include
specific documents and information about its subsidiary:
1. Documents to attach:
 A copy of the subsidiary’s balance sheet.
 A copy of profit and loss account.
 A copy of board of directors’ report.
 A copy of auditors’ report.
2. Additional statement: The balance sheet must also include a statement
with the following particulars:
 The extent of the holding company’s interest in the subsidiary.
 The aggregate amount of the subsidiary’s profit or loss.
 A statement from the auditor if any necessary information is
unavailable for inclusion.

AUTHENTICATION OF BALANCE SHEET & PROFIT AND LOSS

ACCOUNTS
The accounts must be signed by some particular persons.
For Banking Company: Balance Sheet and Profit & Loss Accounts will be
signed by:
 By the Manager or Managing Agent, if any, and
 At least 3 directors
For other Companies: Balance Sheet and Profit & Loss Accounts will be
signed by:
 The Company Secretary or Managing agent or Manager
 Two Directors, one of whom to be the Managing Director
 If the number of directors signing falls short, being out of the
country, a note to that effect should be subjoined to the Balance
Sheet and Profit & Loss Account.
STEPS IN PREPARATION & PRESENTATION OF BOOKS OF ACCOUNT

Books of
Accounts

Financial
Statements

Statements must
be approved by
Authentication BOD before they
are signed.

Sign

Audit
 AUDITOR
APPOINTMENT OF FIRST AUDITOR
 First auditor shall be appointed by the Board of Director within 1 month
from the incorporation.
 An ordinary resolution must be passed to appoint such an auditor.
 If BOD fails to appoint the first auditor, then the company in general
meeting may appoint the 1st auditor.
 The appointed auditor holds the office until the next AGM.

APPOINTMENT OF SUBSEQUENT AUDITOR

 One auditor will be appointed in every AGM.
 Written expression of interest of auditor is mandatory.
 Company will inform the auditor about his appointment within 7 days.
 The auditor will inform RJSC about whether he has accepted or rejected
the audit within 30 days.

RE-APPOINTMENT OF RETIRED AUDITORS

For unlisted companies, retiring auditors can be appointed many times.
But for list companies, retiring auditors should not be re-appointed for
more than three (3) consecutive years.

QUALIFICATION OF AUDITORS
No persons shall be appointed as an auditor of any company unless he is
a “chartered accountant” within the meaning of the Bangladesh Chartered
Accounts Order, 1973.

DISQUALIFICATION OF AUDITOR
 An officer or employee of the company.
 A person who is a partner or employed by an officer or employee of the
company.
 A person who owes the company more than 1,000tk or has provided a
guarantee/security for a third party’s debt exceeding 1,000tk.
 A person who is a direct, member, or partner in a firm or company that
is the managing agent of the company.
 A person who is a director or holds more than 5% of the nominal value
of the subscribed capital in any corporate entity acting as the
managing agent of the company.

REMOVAL OF AUDITOR
By passing a special resolution through EGM.

POWER OF AUDITOR
1. Every auditor shall have the right of access at all times to the books,
accounts, and vouchers of the company.
2. Have the right to have the information and explanation from the
officers of the company as the auditor may think necessary.

CONVERSION
PRIVATE TO PUBLIC
A private limited company with at least seven members must alter its
articles of association to convert into a public limited company. The
company ceases to be a private company on the date of the alteration of
its articles.
Formalities for conversion
1. Special Resolution: The first step is to pass a special resolution in
a general meeting to approve the conversion.
2. Alteration of Articles: The company’s articles must be altered to
allow public to subscribe for its share.
3. Submission of Prospectus: A prospectus or statement in lieu of a
prospectus must be submitted to the Registrar of Joint Stock
Companies (RJSC) within 30 days of the conversion.
4. Number of Directors: The company must ensure a minimum of
three directors, and this updated list must be submitted to the RJSC.
5. Change of Company Name: The word "Private" must be removed
from the company name and replaced with "plc" (Public Limited
Company).
PUBLIC TO PRIVATE
1. Creditors’ Consent: Consent from creditors is required before
passing the special resolution to convert the company.
2. Special Resolution: A special resolution must be passed in a
general meeting to approve the conversion. Shareholders must
receive notice of the meeting at least 2 days before it is held.
3. Alteration of Articles: The company’s articles of association must
be amended to limit the maximum number of members to 50,
restrict the transferability of shares, and prohibit public subscription
of shares.
4. Document Submission: A copy of the special resolution and the
amended Articles of Association must be submitted to the RJSC.
RJSC authorization is required for the conversion.
5. De-listing from Stock Exchange: The company's shares must be
delisted from the stock exchange.
6. Change of Name: The company’s name must be changed to
include "Ltd".

SHARE CAPITAL
Share: The capital of a company is divided into different units where each
unit is called share.

TYPES OF SHARE CAPITAL

1. Nominal/Authorized/Registered Share Capital: This is the
maximum amount of capital a company is authorized to raise, as
stated in its Memorandum of Association (MOA) at the time of
registration. The company pays certain fees based on the size of this
capital.
2. Issued Share Capital: It is the portion of share capital that a
company offers to the public for subscription and allotment.
3. Subscribed Share Capital: This is the part of issued share capital
that the public has subscribed to.
4. Paid-Up Capital: It represents the total amount paid by the
shareholders for the shares they have subscribed to.
5. Reserve Capital: This is uncalled capital that can only be called upon
during the company’s winding-up process.
6. Capital Reserve: Created from the company’s profits, this reserve is
used to safeguard against future uncertainties like inflation, economic
instability, or for business expansion.

TYPES OF SHARES
1. Equity Share/Ordinary Share: Equity shareholders receive dividends
after preference shareholders have been paid. They have the right to
vote at the Annual General Meeting (AGM) and can be appointed as
directors. Equity shareholders bear more responsibilities but enjoy
dividends and capital returns based on ordinary rights.
2. Preference Share: Preference shareholders receive a fixed dividend
and are paid before ordinary shareholders. They do not participate in
the company’s business operations.
Types of preference shares:
 Cumulative: Unpaid dividends are carried forward and paid when
the company earns a profit, up to 6 years.
 Non-cumulative: Dividends are not carried forward if the company
cannot pay them in a given year.
 Participatory: In addition to a fixed dividend, they may receive
extra dividends if the company has surplus profits.
 Non-participatory: They receive only a fixed dividend.
 Redeemable: These shares can be repaid after a fixed period at a
predetermined rate.
 Irredeemable: Shareholders receive dividends but are repaid their
share value only when the company winds up.
3. Deferred Share/Promoter Share: Typically allotted to company
promoters or underwriters as compensation for their role in forming the
company. The contract details must be filed with the Registrar, and the
number of shares must be stated in the prospectus or in the statement
in lieu of prospectus (Sec. 135).
4. Bonus Share: These are additional shares issued to existing
shareholders at no cost. Issuing bonus shares requires permission from
the Articles of Association (AoA) and must be within the authorized
share capital limit. Bonus shares do not affect the rights of existing
shareholders.
5. Right Share: These are shares issued to existing shareholders,
typically at a discount, with the approval of the Board of Directors and
the shareholders in an AGM/EGM. The Articles of Association (AoA)
must permit the issuance of right shares.

SHARES VS STOCK
Basis Share Stock
Definition A share represents a small, Stock is a collection of fully
equal unit into which the paid-up shares, converted
company’s capital is divided. in a single fund.
First Yes No
Issue/IPO
Payment Either partly or fully paid-up Must be fully paid up
Status
Definite Have a definite, distinctive Does not have a distinctive
Number number number
Nominal Have a nominal value (face Does not have a nominal
Value value) value
Denominati Always in equal amounts Can exist in unequal
on amount

SHARE CERTIFICATE
A share certificate is a legal document issued by a company that serves
as proof of ownership of a specific number of shares by a shareholder. It
contains important details about the shareholder and the shares held, and
is signed on behalf of the company.
Key Aspects:
 Issuance Deadline: The company must issue the share certificate
within 90 days of the share allotment, transfer, or registration of
shares.
  Penalties for Delay: If the certificate is not issued within this time,
each responsible officer is liable to a fine of up to Tk. 500 per day
of delay (Sec-158).
Contents:
 The name and address of the registered office of the company
 The name and address of the shareholders
 Number of shares with its class
 Individual number of shares
 Amount paid on the shares
 Date of the issue of certificate and certificate numbers

SHARE WARRANT
A share warrant is a legal document issued by a company that grants its
bearer the right to the shares or stock specified within the warrant. Unlike
a share certificate, which is registered in the name of a specific
shareholder, a share warrant is bearer-based, meaning whoever holds
the warrant is considered the owner of the shares.
Features:
 Fully paid up
 Transferable
 No voting rights
 Surrender and Cancellation: The warrant can be surrendered for
cancellation, allowing the holder to convert it into a share
certificate, subject to the company’s Articles of Association.
 Director Qualification: Shares held under a share warrant do not
count as qualification shares required for being a director or
manager of a company.

SHARE CERTIFICATE VS SHARE WARRANT

Basis Share Certificate Share Warrant
Meaning A share certificate is a A share warrant is a legal
legal document issued by a document issued by a
company that serves as company that grants its
proof of ownership of a bearer the right to the
specific number of shares by shares or stock specified
 a shareholder. within the warrant.
Power of Both public and private ltd. Only public limited
Issue company company
Membership Holder of the share Holder of the share
certificate is the registered warrant is not registered
member of the company. member of the company.
Qualificatio The share holds under share Is not considered as
n share certificate valid for qualification share for
considering as qualification being director.
share for being director.
Transferabili Can be transferred by Can be done by mere hand
ty executing a valid transfer delivery.
deed.
Issuing Can be issued for fully or Only can be issued for fully
criteria partly paid share. paid share.
Time limit Issued within 90 days No time limit
AOA Not required any provision of Required provision of AOA
AOA
Issue Must be issued by the Not compulsory to issue
company

ALLOTMENT OF SHARE
A Public Limited Company after incorporation issues prospectus for
inviting public to
subscribe the capital of the company. Banks collect share application
money and send
those to the company concerned. The applicants are allotted with shares
on the basis for
their application. This is called allotment of shares. If subscription
surpasses the extent of
offer, the matter is generally settled in the following ways:
a. Full allotment is made to the applicants of minimum acceptable units.
b. Allotment is made for the remainders on pro-rata basis.
c. Refund warrant is issued for the balance amount.
Or
a. Allotment is made by lottery or as prescribed by the Securities and
Exchange Commission.
b. Refund warrant is issued to the unsuccessful applicants.
ALTERATION OF SHARE CAPITAL
A company limited by shares, with the authorization of its Articles of
Association, may alter its share capital in the following ways:
1. Increase Share Capital: The company can increase its share capital
by issuing new shares in an amount deemed necessary.
2. Consolidate and Divide Shares: The company can consolidate and
divide its share capital into shares of a larger denomination than the
existing shares.
3. Convert Shares into Stock and Reconvert: Fully paid-up shares
can be converted into stock, and the stock can be reconverted back
into shares of any denomination.
4. Subdivide Shares:
 Shares can be subdivided into smaller denominations than those
stated in the memorandum.
 The ratio of the paid and unpaid amount on the shares must
remain the same as before the subdivision.
5. Cancel Unissued Shares:
 The company may cancel shares that have not been taken or
agreed to be taken by any person at the time of passing the
resolution.
 By doing so, the company reduces its share capital by the amount
of the cancelled shares.

REDUCTION OF SHARE CAPITAL

1. Court Confirmation: The first step in reducing share capital is to
obtain confirmation from the court.
2. Special Resolution: A company limited by shares must pass a special
resolution to reduce its share capital.
3. Methods of Reducing Share Capital:
 Extinguishing or Reducing Liability: The company may
extinguish or reduce the liability on any unpaid share capital.
 Cancel Paid-Up Capital:
  The company may cancel any paid-up share capital that has
been lost or is no longer represented by available assets.
 This can be done with or without reducing liability on other
shares.
 Pay Off Excess Capital: The company may pay off any paid-up
share capital that exceeds the company’s needs.
 Alteration of Memorandum: The company may alter its
memorandum to reflect the reduced share capital and adjust the
share structure accordingly.

CERTIFICATE OF TRANSFER
 Transfer Process: The share certificate with a transfer endorsement
must be returned within 90 days from the date of submission for
transfer.
 Public Listed Companies: For public limited companies listed on
stock exchanges, the time frame is reduced to 7 days, as per the order
of the Bangladesh Securities and Exchange Commission (BSEC).
 Penalties for Delay:
 The company may be fined up to Tk. 500 per day for each day the
default continues.
 Any officer responsible for the delay, if intentional, will also face a
fine of Tk. 500 per day.

TRANSMISSION OF SHARES
 Transmission of shares occurs when a shareholder dies, becomes
insane, insolvent, or in the case of a company shareholder, upon its
liquidation.
 The legal representative, administrator, official assignee, or receiver
becomes entitled to the shares.
 This process is considered an involuntary transfer, as it is triggered by
external circumstances rather than a voluntary sale.
 A succession certificate from a competent court is typically required
to validate the transmission of shares.
TRANSFER OF SHARE VS TRANSMISSION OF SHARE
Basis Transfer of Share Transmission of Share
1. Nature Occurs voluntarily by sale, Occurs involuntarily due to
of Processdonation, or other similar death, insolvency, winding
actions. up, or nationalization.
2. Requires a specific form Follows the law of
Documenta and written agreement inheritance, no formal
tion between the parties. agreement needed.
3. Fees A fee must be paid when No fee is required, only a
applying for the transfer. general letter is sent to the
company.
4. The transferor remains the Ownership is automatically
Ownership legal owner until the transferred to the legal heir
transferee registers the or representative.
shares.
5. Only members of the Legal representatives can
Membershi company can transfer transfer shares without
p shares. being company members.
6. Notice Notice of transfer is No notice is required for
mandatory. transmission.

PROCEDURE FOR SHARE TRANSFER

1. Shares are transferable according to the company's Articles of
Association.
2. A written agreement must be made between the transferor (seller) and
transferee (buyer) for the share transfer.
3. Either the transferor or transferee can submit an application to the
company to register the share transfer.
4. Notice (for Partly Paid Shares):
If the transferor applies for partly paid shares, the company must notify
the transferee. If no objection is raised within 2 weeks, the transfer is
registered. No notice is required for fully paid shares.
5. Documents of Transfer:
A transfer form, signed by both parties, with required details (name,
address, profession of transferee), must be submitted along with the
share certificate or allotment letter.
6. Refusal of Transfer: If the company refuses to register the transfer,
they must notify both parties within 1 month of the application.
7. Appeal: The applicant can appeal if the company refuses to transfer
the shares.
8. Transferor's Rights: The transferor retains full rights over the shares
until the transfer is registered.
9. Issue of New Certificate: After the transfer is completed, a new
share certificate is issued to the transferee.

FIXING OFFERING PRICE IN IPO UNDER BOOK BUILDING METHOD

1. Indicative Price: The issuer company, along with the issue manager,
sets an indicative price for the shares, which is the price range within
which the final offer price is likely to be determined. The indicative
price is set based on consultations with institutional investors.
2. Bidding by Eligible Investors (Institutional Investors): Eligible
institutional investors bid within this indicative price range and specify
the price and quality of shares they are willing to buy.
3. Cut-off Price Determination: The highest price at which all shares
can be sold is determined as the cut-off price.
4. Pricing Announcement: The final offering price, along with the
allocation details, is publicly announced.

SHARE FORFEITURE
Forfeiture of Shares:
A company has the right to forfeit shares if a shareholder fails to pay the
call money (the amount requested by the company for the unpaid part of
the shares) within a specified period. This right is provided by the
company's Articles of Association or by regulations in Schedule-I.
 The company must issue a 14-day notice to the shareholder
regarding the failure to pay.
 If payment is still not made, the company may pass a board
resolution to forfeit the shares.
 The shareholder loses their ownership rights, and any money
already paid is retained by the company.
 The forfeiture can be reversed if the shareholder pays the
outstanding dues, provided the shares haven't been reissued to
someone else.
Effect of Forfeiture:
 The shareholder’s rights and membership in the company cease
immediately upon forfeiture.
 If the company is wound up within one year of forfeiture, the
shareholder may be listed in List 'B' and held liable for any
remaining obligations related to the shares.
 If the company winds up after one year, the shareholder incurs no
further liability for the forfeited shares.

WINDING UP

Winding up

Under
By Court Voluntary supervision of
court

WINDING UP BY COURT
A company may be wound up by the following reasons:
1. Special resolution has been passed by the shareholders that the
company be wound up by the Court (21 days’ notice is required to pass
the resolution).
2. Default is made in filling the statutory report or in holding statutory
meeting.
3. Company do not commence its business within a year from its
incorporation or suspends its business for a whole year.
4. The number of members is reduced (in case of a private company
below two and in case of any other company below seven).
5. The company is unable to pay its debts.
6. Court is of opinion that it is just and equitable that the company should
be wound up.

Ground for Just and Equitable

1. The company violated its objectives as set on its MOA.
2. When the primary purpose for which the company was formed is no
longer achievable, it can be considered a loss of substratum, leading to
potential winding up.
3. Bubble company, a company formed solely to raise funds from
shareholders without any intention of conducting business can be
wound up.
4. If a company's activities are illegal or fraudulent, it can be subject to
winding up.
5. A complete breakdown in relations between management or owners
can lead to a deadlock situation, justifying winding up.
6. If major shareholders use their power illegally for personal gain or to
harm minority shareholders, it can be grounds for winding up.
7. If a company's business operations indicate a significant risk of failure,
it can be considered a loss of going concern assumption, potentially
leading to winding up.
8. If a company's activities harm the public interest, it can be subject to
winding up.
9. Fraud, serious misconduct, or mismanagement by directors or majority
shareholders can erode public confidence and lead to winding up.

WINDING UP UNDER THE SUPERVISION OF COURT

Who can file petition for winding up under the supervision of
Court?
Company registrar, member, any attorney appointed by member, creditor
or company itself can file petition for winding up under the supervision of
court. Labor union cannot file petition for winding up of a company.
Legal procedure for Winding up under the Supervision of
Court
 Once the court orders winding up under supervision, no legal action
can be taken to challenge this decision.
 The court will appoint a liquidator to oversee the winding up process.
 The company’s assets and property will be taken under the custody of
the official liquidator.
 The liquidator will sell the company’s assets and distribute the
proceeds according to the priority set out in the law.

VOLUNTARY WINDING UP
Voluntary Winding Up
 If the company’s articles specify a duration and that time has passed.
 If a specific event occurs as outlined in the articles, triggering
dissolution.
 A special resolution passed by the company's shareholders to
voluntarily wind up.
 An extraordinary resolution stating the company cannot continue due
to liabilities and winding up is advisable.
Notice for Voluntary Winding Up
Requirement for Notice:
 A company must publish a notice of a special resolution for voluntary
winding up within 10 days of its passage.
 The notice should be published in the official Gazette and a local
newspaper circulating in the district where the registered office is
located.
Penalty for Non-Compliance:
A company that fails to publish the notice will be liable to a fine not
exceeding 1000 tk. for each day of default.
Types of Voluntary Winging Up
1. Members’ voluntary winding up
2. Creditor’s voluntary winding up
Members’ Voluntary Winding Up
Where the majority of directors declare by swearing an affidavit that the
company is solvent enough to bear the liabilities of the creditors, it is
called the members voluntary winding up.
Procedures:
1. Preparing the documents: Declaration of solvency, financial
statements, and auditor’s report.
2. Board meeting and EGM:
Directors approve accounts and declaration in the meeting. The
declaration needs to submit to the RJSC within 5 weeks from the date
of declaration. Then shareholders pass a special resolution for winding
up and appoint a liquidator.
3. Appointment of liquidator: Liquidator accepts appointment and notify
RJSC about his/her appointment.
4. Gazette publication: Publish notice of winding up resolution in official
gazette and newspaper.
5. Final meeting and filing:
 Liquidator prepares final account.
 Shareholders pass a resolution to dispose of company books and
papers.
 File winding up meeting return with RJSC.
Creditors' Voluntary Winding Up
This process occurs when the company cannot pay its debts and directors
don't declare solvency.
Triggering Event:
A creditor is owed more than 5,000 taka and the company fails to pay
within three weeks of a demand notice.
Procedures:
1. Without making any declaration by the director about the financial
position, decision of the winding up has to be taken in any general or
special meeting.
2. The day or following the day on which the general or special meeting is
held the creditor convene a meeting and send notice to the company.
3. The director of the company must present a full statement of the
position of the company’s affairs together with the list of creditors.
4. The creditor and the contributor may appoint their respective
liquidator.
5. The creditor and contributor each may nominate five (5) members to
form an inspection team to inspect the process of winding up.

Member’s Voluntary Winding Up VS Creditor’s Voluntary

Winding Up
Member’s Voluntary Winding Creditor’s Voluntary Winding
Up Up
1. Declaration of solvency is 1. Declaration of solvency is not
required. required.
2. Initiated by special resolution. 2. Initiated by special resolution or
extraordinary resolution.
3. No meeting of creditors is held 3. Meeting of creditors is required
or is necessary. whenever meeting of contributors
is held.
4. It is not required any committee 4. The creditors appoint the
of committee of
inspection. inspection.
5. Members of the company 5. Creditors of the company
control such control such
winding up. winding up.

LIQUIDATOR
A liquidator or official receiver is a person who manages the entire
liquidation process.
Roles and Responsibilities of Liquidator
1. Assess all debts and decide which should be repaid in full or in part,
and may reject claims if necessary.
2. Send notices to creditors and members when required.
3. End any outstanding contracts or legal disputes of the company.
4. Maintain financial and administrative records related to the liquidation.
5. Ensure proper valuation of company assets to maximize returns for
creditors.
6. Keep proper books of record as required by law.
7. Arrange general meetings and prepare meeting minutes.
8. Present the minutes to the court twice a year in a prescribed form.
9. Keep creditors informed and involve them in decision-making where
appropriate.
10. Convey information about creditor claims, reasons for the
company's failure, and details about asset redistribution.
11. Distribute realized assets to creditors fairly, starting with the fees
and expenses of the liquidation.
12. Dissolve the company and file the final return.