Act/Regulators should be aligned with existing Companies Act 1994 for Ease of

doing business in Bangladesh

A. Salient features of the 2nd amendment of the Companies Act on 26 November 2020
excellent decision taken by the Government for ease of doing business in Bangladesh

(a) Inserted section 11(ka) Indication of limited company:

 Public limited company – PLC
 Private limited company – LTD
 One Person Company - OPC

(b) One Person Company - OPC U/S 2(Kha Kha)

 Shareholder – Only one natural person
 MOA & AOA of OPC U/S 392(ka) - As per Schedule 9(ka) and 9(kha)
 Incorporation U/S 392(kha) - Only one company can be incorporated by a natural person.
 Name of Nominee and written consent of nominee incorporated in the MOA –
 Nominee will be the shareholder if the only shareholder (1) death (2) Incapacity or (3)
Unsound.
 Share Capital of OPC U/S 392(Ga) – minimum 25 Lakh and maximum 5 Crore. Preceding
one year Turnover minimum 1 crore maximum 50 crore. Can be converted into Private
Limited Company or Public limited Company.

Frustration: As per Companies Act 1994 u/s 6 each subscriber of the memorandum shall
take at least 01 (One) share.

 Incorporation process U/S 392(Gha) – Like private limited Company.

 Director U/S 392(Oma) – Only one share holder will be the director.
 Meeting U/S 392(Cha) – Minimum one Board meeting in one calendar year.
 Change of MOA & AOA U/S (ChCha)– Section 12 applicable.
 Share transfer U/S 392(BJa) – Whole share can transfer to another natural person and section
38 applicable.
 Balance Sheet U/S 392(Jha) – Balance sheet should be submitted to the Registrar within 180
of ending the financial year.
 Authentication of FS by the only shareholder director.
 Audit U/S 392(Eno) – Section 210 applicable.
 Loan taken and repayment U/S 392(Ta) – Section 159 to 175 applicable.
 Voluntary winding up U/S 392(Tha) - Section 234 of companies Act 1994 applicable.

(c) Share transfer U/S 38

(3A) Share transferor signature to be verified in the following manner;
(A) Share transferor to be present in the RJSC for Signature verification confirming the
following documents PD (Form –XII), Schedule X, Share transfer instrument Form-117,
Undertaking relating to share transfer.
(B) Share transferor Foreigner or Bangladeshi staying out of Bangladesh can’t appear in the
RJSC (justified reason) Share transfer instrument Form-117 and Undertaking relating to
share transfer verification through nearest Bangladeshi Embassy.
(C) Share transferor can’t appear in the RJSC (justified reason) verification through
Commission by paying requisite fees.

(d) Provision as to Meeting and Votes U/S 85

(a) Notice: AGM – 21 days’ notice in writing.

 (b) Service of notice: to be served by schedule – 1(Regulations 113 to 116), Contained
Agenda , Date, Place and time accidental omission to give notice to or the non-receipt of
notice by any member shall not invalidate the proceedings at any meeting;

(c) Resolution to be considered as Special / extraordinary taken in the EGM;

Provided the followings will not be considered as agenda of EGM
 Dividend approval
 Bonus shares
 Audit report approval
 Director’s report and auditor’s report
 Director’s retirement
 Auditor’s remuneration
(d) Time and place for inspection the supporting documents of special agenda must be
mentioned in the notice of EGM.
(e) 5% shareholder of paid-up capital can present agenda for AGM.

B. Few sections of existing law are barrier of Ease of doing business in Bangladesh

Registrar of RJSC & F has been giving registration for the followings;
 One Person company (OPC)
 Public limited company (PLC)
 Private Limited Company (Ltd)
 Foreign company
 Trade Organization(TO)
 Society
 Partnership Firm

RJSC & F has been controlling the above mentioned registered organizations by the following
Laws;
 Companies Act 1994
 Societies Registration Act 1860
 Partnership Act 1932

Due to some reasonable causes or unavoidable circumstances a company may fail to hold AGM,
needs to change memorandum of the company and also for the following sections have to go to the
competent Court;

Jurisdiction of the Court U/S 3 of the Companies Act 1994

(1) The Court having jurisdiction under this Act shall be the High Court Division.
Government by notification in the Official Gazette empower any District Court to exercise all or any
of the jurisdiction by this Act conferred upon the court.

Jurisdiction:
U/S 12(2) the alteration of memorandum shall not take effect until and except in so far it is
confirmed by the Court on petition.

U/S 43 power of Court to rectify register.

U/S 60 Application to Court for confirming order of reduction of share capital.

 U/S 81(2) if a company defaults in complying provisions relating AGM the Court may, on application
of any member of the company, call or direct the calling of general meeting of the company and give
such ancillary/incidental or consequential direction as the Court thinks expedient in relation to the
calling holding and conducting of the meeting.

U/S 85(3) if for any reason it is impracticable to call a meeting of a company in any manner in
which meeting of that company may be called or to conduct the meeting of the company in manner
prescribed by the articles or this Act the Court may either or its own motion or on the application of
any director or any member of the company who would be entitled to vote at the meeting, order a
meeting to be called, held and conducted in such manner as the Court thinks fit, and where any such
order is given the Court may give such ancillary/incidental or consequential directions as the Court
thinks expedient in relation to the calling holding and conducting in accordance with any such order
shall for all purposes be deemed to be a meeting of the company duly called , held and conducted.

U/S 157 Power of company to pay interest out of capital in certain cases.

U/S 197 Inspection of books and examination of officers.

U/S 233 Power of Court to give direction for protecting interest of the minority.

U/S 241 Circumstances in which company may be wound up by the Court.

Frustrations:
 Increasing financial burden
 Facing difficulties to cope up new ideas and thoughts
 Wastage of time
 Fail to increase the scope of the company
 Facing difficulties merger and acquisition
 Number of company is taking registration without adding value
 Volume of work of RJSC & F are increasing without adding value

Recommendation:
Empowering RJSC & F and imposing penalty in many cases will mitigate the frustration which will
save the auditors to sign audit report in back date.

C. Requirements for valid AGM to be followed rather presence of scrutinizer under

directive given by BSEC on 10 March 2021;

A meeting would be valid u/s 81(1)

Agenda to be fixed as per regulation – 51
Proper notice has been given u/s 85 (1)(a) 21 days’ notice
Quorum was present u/s 85(2)(b)
Chairman of the meeting was appointed as per articles. Regulation 55 may apply if required.
Presence of Chairman/ Directors/CS in the AGM is not mandatory.
Meeting place may be changed by the members assembled for the meeting as per regulation – 56 of 1 st
schedule of the Companies Act 1994.

D. Number of Director’s should be aligned

(a) U/S 90 of the Companies Act 1994
 Every public company and a private company which is a subsidiary of a public
company shall have at least 03 directors.
 Every private company shall have at least 02 directors.
 (b) U/S 15(9) of Bank Company Act 1991
Notwithstanding anything contained in any other law, there will be not more than 20
(Twenty) directors in a banking company with 03 (Three) independent directors.
Provided that, if the number of directors of a banking company is less than 20 (Twenty),
in that case, the number of independent directors will be not less than 02(Two).
(c) Prudential Regulations for Financial Institutions ( FID circular No. 09 dated
11.09.2002)
Directors of any Financial Institution within the limit 9 (Nine) to 11(Eleven).
(d) U/S 76 of Insurance Act 2010
Notwithstanding anything contained in the Articles of Association or Articles of
Memorandum , if the insurer registered under the Companies Act , the number of
directors shall not exceed 20(Twenty) persons and then 12 ( Twelve) members as
director of promoter/ sponsors and 6 (six) public shareholders and 2(Two) independent
directors.

(e) As per Corporate Governance Code (03 June 2018)

The total number of members of a company’s Board of Directors (hereinafter
referred to as “Board”) shall not be less than 5 (five) and more than 20 (twenty).At least
one-fifth (1/5) of the total number of directors in the company’s Board shall be
independent directors.

E. Disqualification, Qualification, Vacation of office of directors and Return as to

allotment need to be aligned.
(a) Disqualification of Directors U/S 94
94(1) (d) he has not paid any call in respect of shares of the company held by him, whether alone or
jointly with others, and 06 (Six) months have elapsed from that last day fixed for the payment of the
call.

(b) Qualification of Director U/S 97

Without prejudice to the restrictions imposed by section 92, it shall be the duty of every director to
hold qualification shares to be specified in the articles and, if he is not already qualified, he shall
obtain his qualification shares within 60 (Sixty) days after his appointment, or such shorter time as
may be fixed by the articles.

(c) Vacation of office of directors U/S 108

The office of a director shall be vacant, if-
 He fails to obtain within the time specified in section 97(1); or
 he fails to pay calls made on him in respect of shares held by him within 06 months
from the date of such calls being made; or

(d) Return as to allotment U/s 151

Where a company having a share capital makes any allotment of its share, the company shall within
60 (Sixty) days thereafter, file with Registrar the documents.

F. Section 104 director not to hold office of profit only is a law;

No director or firm of which such director is a director is a partner of private company of which such
director is a director shall, without the consent of the company in general meeting, hold any office of
profit under the company except that of a managing director or manager or a legal or technical adviser
or a banker.

G. Noncompliance of section 105 Sanction of directors necessary for certain contracts

Except with the consent of the directors, a director of the company or the firm of which he is a partner
or any partner of such firm or the private company of which he is a member or director, shall not enter
into any contract for the sale, purchase or supply of goods and materials with the company.
H. Noncompliance of section 130 disclosure of interest by director in respect of contract etc
one of the root cause for bad loans;
Every director who is directly or indirectly concerned or interested in any contract or arrangement
entered into by or on behalf of the company shall disclose the nature of his interest at the meeting
of the directors at which the contract or arrangement is determined on, of his interest then exists,
or in any other case, at the first meeting of the directors after the acquisition of his interest or the
making of the contract or arrangement;

I. Compromise with the section 131 prohibition of voting by interested director which is
seriously harmful for banking company.
No director shall as a director , vote on any contract or arrangement in which he is either directly
or indirectly concerned or interested, nor shall his presence count for the purpose of forming a
quorum at the time of any such vote, and if he does so vote his vote shall not be counted;

J. Enlistment frustrated the mother law relating to qualification and disqualification of

auditors
(a) Section 212(1) of CA 1994.
No person shall be appointed an auditor of any company unless he is a “chartered
accountant” within the meaning of the Bangladesh Chartered Accountants Order, 1973 (P.O
No 2 of 1973).
(b) Section 39 of Bank Company Act 1991.
The profit and loss account and financial report of a banking company shall be audited in
accordance with the balance sheet prepared under section 38 by a person qualified under
the Bangladesh Chartered Accountants order, 1973 (P.O. 2 of 1973) or any law of the time
being in force to be an auditor of companies and approved by the Bangladesh Bank to be
qualified to audit a Banking company.
(c) Section 2(39) of Insurance Act 2010.
“Auditor” means auditor as per section 212 of the Companies Act 1994.
(d) Regulation 12(3) of the Securities and Exchange Rules, 1987.
The financial statements of an issuer of a listed security shall be audited by a partnership
firm of chartered accountants within the meaning of the Bangladesh Chartered Accountants
Order, 1973 (P.O No 2 of 1973).consisting of not less than 02 (Two) partners in practice for a
minimum of 07 (seven) years none of whom were associated in any way with the issuer
during the auditing period.
(e) Enlistment criteria issued by IDRA for audit firm to include their panel Insurance company
shall be audited by a partnership firm of chartered accountants within the meaning of the
Bangladesh Chartered Accountants Order, 1973 (P.O No 2 of 1973).
 Consisting of 02 (Two) partners in practice who are affiliated with foreign Firm.
 Consisting of 04 (Four) partners in practice.
 Minimum 07 years practicing experience is required for minimum 02 partners.
 Every partner should have minimum 15 (Fifteen) articled students.

Frustrating/Contradictory panel/grading & enlistment has been doing by;

(a) Bank & NBFI – Bangladesh Bank
(b) Insurance company – IDRA
(c) Listed company – BSEC
(d) NGO- NGOAB
(e) Microcredit – MRA
(f) PIE – FRC U/S sec 31 of FRA 2015 very shortly will start.
K. Registrar may strike defunct company off register U/S 346 all the company will come
under compliance , more company will come under Tax net than DVS will be
successful;

(1) Where the Registrar has reasonable cause to believe that a company is not carrying on
business or in operation, he shall send to the company by post a letter inquiring
whether the company is carrying on business or in operation;

(2) If the Registrar does not within 30 (thirty) days of sending the letter receive any
answer thereto, he shall within 14 (fourteen) days, after the expiration of the said 30
(thirty) days send to the company by post a registered letter referring to the 1 st letter
and stating that no answer thereto has been received and that, if an answer is not
received to the 2nd letter within 30 (thirty) days from the date, thereto, a notice will be
published in the official Gazette with a view to striking the name of the company off
the register;

(3) If the registrar either receives an answer from the company to the effect that it is not
carrying on business or in operation, or does not within 30 (thirty) days after sending
the 2nd letter receive any answer, he may published in the Official Gazette, and send to
the company by post a notice that, at the expiration of 90 (ninety) days from the date
of that notice, the name of the company mentioned therein will, unless cause is shown
to the contrary, be struck off the register and the company will be dissolved, and in
such a case the Registrar may send a copy of the notice to the company while in
sending it to the concerned authority for its publication in Official Gazette;

(4) If, in any case where a company is being wound up, the Registrar has reasonable cause
to believe either that no liquidator is acting or that the affairs of the company are fully
wound up, and the returns required to be made by the liquidator have not been made
for a period of 06 (six) consecutive months after notice by the Registrar demanding
the returns, has been sent by post to the company, or to the liquidator at his last
known place of business, the Registrar may publish in the Official Gazette and sent to
the company a like notice as is provided in the sub-section (3);

(5) At the expiration of the time mentioned in the notice the Registrar may unless cause
to the contrary is previously shown by the company, strike its name on the register
and on the publication in the Official Gazette of a notice to the effect the company shall
be dissolved;

Provided that the liability, if any, of every director and member of the company shall
continue and may be enforced as if the company had not been dissolved.

(6) If a company or any member or creditor thereof feels aggrieved by the company’s
having been struck off the register, the Court, on the application of the company or
member or creditor, may, if satisfied that the company was at the time of the striking
off carrying on business or in operation or otherwise that it is just that the company
be restored, to the register, and thereupon the company shall be deemed to have
continued in existence as its name had not been struck off; and the Court may by
order give such directions and make such provisions as seems just for placing the
company and all other persons in the same positions as nearly as may be as if the
name of the company had not been struck off;

(7) A letter or notice under this section may be addressed to the company at its registered
office, or, if no office has been registered, to the care of some director, manger or
 other officer of the company or, if there is no director, manager or other officer of the
company whose name and address are known to the Registrar such letter or notice
may be sent to such of the persons who subscribed the memorandum, at the address
mentioned in the memorandum.

Conclusion:
Alinement and coordination amongst the different Act/ regulations is the demand for the day not
only the registration process but also doing business to ensure the ease of doing business in
Bangladesh.