MST 315
Company Laws &
Secretarial Practices In
Bangladesh
Company Laws & Secretarial Practices
In Bangladesh
Bangladeshi some company name?
Finance sector?
Insurance sector?
Agro based?
Hospital?
Cement?
Pharmaceuticals?
Textile?
Shipbuilding Industry?
Others?
Company Laws & Secretarial Practices
In Bangladesh
Reference books:
1.Muqtadir’s Handbook for company secretary
2.The companies act,1994- Mr.Md. Mahbubur
Rahman
3.Office Management –R.k. sharma,shashik.gupta
Company Laws & Secretarial Practices
In Bangladesh
Company + Laws
About Company:
A company, formed and registered under the
Companies Act (1994), is regarded by law as a
single person, having specified rights and
obligations (Duties/Responsibilities). The law
confers on a company a distinct legal
personality, with perpetual succession and a
common seal. Therefore a company is
different from its members and the individuals
composing it.
Company Laws & Secretarial Practices In Bangladesh

As Under Sec 2 (1) (d) The Company Act,
1994: “Company means a company
formed and registered under this Act or an
existing company.”
Company Laws & Secretarial Practices
In Bangladesh
About laws:
A rule enacted or customary in a
community
and
recognized
as
commanding or forbidding (hostile) certain
actions. Laws collectively as a social
system or subject of study.
Company Laws & Secretarial Practices
In Bangladesh
The companies act
There are two immediate objectives for the
enactment of this Companies Act. They
are:
a) To inject discipline in the management
b) To protect the interest of the investors.
Company Laws & Secretarial Practices
In Bangladesh
History of Company Laws
1.
2.
In 1653 First time East India Start it’s journey by Joint fund & Joint
capital.
In 1720 British Parliament take “ The Bubble Act”
“Bubble Act 1720 (6 Geo I, c 18) was an Act of the Parliament of
Great Britain that forbade (banned) all joint-stock companies not authorized by
royal charter. It was passed on 9 June 1720, and was also known as the Royal
Exchange and London Assurance Corporation Act 1719, because those
companies were incorporated under it.”
1.
2.
3.
In 1825 “The Bubble Act” rejected by Parliament.
In 1834 trading company law introduced.
Basically in 1844 The Joint Stock Companies Act, 1844 passed by British
Parliament.( First Company Law)
Company Laws & Secretarial Practices
In Bangladesh
First Indian Company Act, regarding companies, was
the Joint Stock Companies Act of 1850.
2.
The act of 1850 was replaced by a new Act bearing
the same name in 1857.
( Limited liability was introduced)
8. Acts relating to companies were passed in
1860,1866,1882,1895,1910, and 1913.
9.
The act 1913 remained in force up to 1956
10. The Act of 1956 has been amended
in1960,1963,1965,1969,1971,1984,1988.
11. In 1994 the new company law introduced by our
government.
(Indian companies act 1956 and Pakistan Companies
ordinance 1984
1.
Company Laws & Secretarial Practices
In Bangladesh
Types of Companies :
Private Company
i.
Companies limited by shares
ii.
Companies limited by guarantee ( guarantee for liquidation)
Public Company
i.
Companies limited by shares
ii.
Companies limited by guarantee ( guarantee for liquidation)
iii.
Unlimited companies
Classification on the Basis of Control:
i.
ii.
Holding Company
Subsidiary Company
Classification of others:
i.
ii.
Foreign company
Joint venture company
Company Laws & Secretarial Practices
In Bangladesh

Company Limited Liability by Shares: In these companies there is
a share capital, and each share has a fixed nominal value which the
shareholder pays at a time or by the installments. The member is
not to pay anything more than the fixed value of the share, whatever
may be the liabilities of the company.

Company Limited by Guarantee: In these companies, each
member promises to pay fixed sum of money in the event of
liquidation of the company. This amount is called the Guarantee.
Company Laws & Secretarial Practices
In Bangladesh
Private Limited Company
As defined in Section 2(q) of the act, a private company means a
company which by its articles:
a) restricts the right to transfer the share, if any; and,
b) prohibits any invitation to the public to subscribe for the
shares , if any, or debentures of the company; and,
c) limits the number of its members to fifty (50) not including
persons who are in the employment of the company.
“A Company incorporates with more than two person and it is limited
to fifty members . In this case it is only a huge partnership and the
liability is unlimited”
Company Laws & Secretarial Practices
In Bangladesh
Public Limited Company
In public limited company,
-public can acquire,
-own, and
-sell the share of such type of company at their wishes.
-The company can issue prospectus to the public to subscribe the
share and debentures of the company and, thus, can collect capital for
the company.
“A companies which is constituted with a minimum of seven
members and maximum is unlimited, and members called share
holders. Here the liability is limited up to level of what he is invested”
Company Laws & Secretarial Practices
In Bangladesh
Classification on the basis of control: In accordance with the basis
of control, Companies may be classified into1.
Holding Company: If a company can control the policies of
another company
(a) through the ownership of its shares or
(b) through control over the composition of its Board of
Directors, the former i.e.
the controlling company is called a Holding Company.
2.
Subsidiary Company: The controlled company is called
subsidiary company of holding company.
Company Laws & Secretarial Practices
In Bangladesh
Classification of others:
Foreign company:
When a company which is incorporated outside Bangladesh but
establishes business in Bangladesh with same name and nomenclature
(arrangement) with or without a place of business in the country, it is
registered as a foreign company in Bangladesh. Sec378 to 392
Joint venture company:
An association of two or more individuals or companies engaged in a
solitary business enterprise for profit without actual partnership or
incorporation; also called a joint adventure.
Government company.
A company which are incorporated holly or jointly with state and
central government or 51% & 49% with other joint ventures or with
other public limited companies. Here also liabilities are limited by
shares
Company Laws & Secretarial Practices
In Bangladesh
Characteristics of a company:
 Legal formation: the company is to be formed according to the
producer prescribed in companies Act in Bangladesh.
 Artificial entity: a company possesses independent and separate
entity.
 Capital: the capital of company is collected through joint contribution
in the form of share capital.
 Perpetual existence: company has a perpetual (unending)
existence.
 Number of shareholders: if the company is a private company then
its maximum number of shareholders is fifty (50) and minimum two
(2), and if the company is public company then the minimum number
of shareholders are seven and maximum number is the number of
shareholder.
Company Laws & Secretarial Practices
In Bangladesh
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Limited liability Company: the liability of shareholder of a company
is limited by the share value.
Public subscription and transferability of share: if the company
is a public company, then it can call the public to subscribe the
share capital and also its shares are freely transferable from one
hand to another. The share capital of private listed company is
transferable among the shareholders.
Separation of ownership from management: in a company, the
ownership is separated from management.
Democratic management: the management of company is done in
a democratic way.
Profit distribution: the earnings of a company are partly distributed
as dividend among shareholder and a portion is kept for future
needs as reserves.
Company Laws & Secretarial Practices
In Bangladesh
Differences between private limited company and
public limited company.
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=== Private company limited by shares - this is the most common type of company.
The important difference from a public limited company is that a private company
may not offer its shares for sale to the general public. ===
=== Private company limited by guarantee - members of this type of company do not
make any contribution to the capital during its lifetime as they do not purchase
shares. The members' liability is limited to the amount that they each agree to
contribute to the company's assets if it is wound up. ===
=== Private unlimited company - this type of company may or may not have a share
capital and there is no limit to the members' liability. Because there is no limitation on
members' liability, far less of the company's affairs have to be disclosed publicly than
is the case with the other types of company. ===
=== Public limited company - this type of company has a share capital and, the
liability of each member is limited to the amount unpaid on shares that a member
holds. The important difference from a private is that a public limited company may
offer its shares for sale to the general public. It may also be quoted on the stock
exchange. ===
Company Laws & Secretarial Practices
In Bangladesh
The Memorandum of Association (MA) :
The Memorandum of Association is a document which contains the
fundamental rules regarding the constitution and activities of a company.
The memorandum contains:
- Name of the company;
- Registered office and agent;
- Rules regarding the capital structure
- The liability of the members
- The objectives of the company
- All other important matters
Company Laws & Secretarial Practices
In Bangladesh
Contents of Memorandum of Association
Contents of Memorandum of Association According to the Companies Act 1994, the
Memorandum of Association must include the following Clauses:

1. Name Clause
Every company name must end with Limited (Ltd.). No name of the company should be
the name of the existing company, king, queen, president, prime minister, Father of
Nation or anything that signifies government sponsorship.

2. Situation and Address Clause
This clause should include the address and situation of the company, which is mention in
the registration.

3. Area of Business
It should include the current and potential area of the business. It should be written
carefully, because it made the boundary around the business operations.
Company Laws & Secretarial Practices
In Bangladesh
4. Objective Clause
This clause is the most important clause of MA. This clause identifies the scope
of the business. Beyond these identified scopes, the business can’t move. For
example, If a company says its objective to do only Shoe business, it cannot do
another business.
 5. Liability Clause
This clause tells about the duties and responsibilities of the Owners; i.e.,
whether the share holders are liable for their share capital or promise.
 6. Capital Clause
This clause includes the amount of capital, its type, each share price, etc.
 7. Consent Clause
Here the directors declare in a written statement that they are agreeing to be
the director of the proposed company by buying certain amount of a share.
Generally, the promoters become the directors. This statement should include
a witness and the directors’ signature with their name, address and occupation.

Company Laws & Secretarial Practices
In Bangladesh
The Articles of Association (AA) :
The Articles of Association is a document which contains rules, regulations and bye-laws
regarding the internal management of the company.

The Articles can cover a medley of topics,
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the issuing of shares (also called stock), different voting rights attached to different
classes of shares
the appointments of directors - which shows whether a shareholder dominates or
shares equality with all contributors
directors meetings - the quorum and percentage of vote
management decisions - whether the board manages or a founder
transferability of shares - assignment rights of the founders or other members of the
company do
special voting rights of a Chairman, and his/her mode of election
the dividend policy - a percentage of profits to be declared when there is profit or
otherwise
winding up - the conditions, notice to members
confidentiality of know-how and the founders' agreement and penalties for disclosure
first right of refusal - purchase rights and counter-bid by a founder.
Company Laws & Secretarial Practices
In Bangladesh
Articles of Association
Registration of articles
 Application of Schedule I
 Form and signature of articles

Registration of articles
Application of Schedule I

In the case of a company limited by shares
and registered after the commencement of
this Act, if articles not registered, or, if articles
are registered, in so far as the articles do not
exclude or modify the regulations in Schedule
I, those regulations shall, so far as applicable
be the regulations of the company in the
same manner and to the same extent as if
they were contained in the duly registered
articles.
Form and signature of articles
Articles shall
(a) be printed;
(b) be divided into paragraphs numbered consecutively;
(c) be signed by each subscriber of the memorandum, who
shall add his address and description in the presence of
at least two witness who shall attest the signature.

Registration of memorandum
and articles
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


(1) The memorandum and articles if any shall be field with the
Registrar who if satisfied that the requirements of this Act have been
complied with shall retain and register them within thirty days from
the date of their receipt and in the event of refusal he shall
communicate the grounds within ten days after that period to the
company.
(2) A person on being aggrieved by a refusal of the Registrar under
sub-section (1) may make an appeal to the Government within thirty
days of the receipt of the refusal order.
(3) The petition of appeal shall be accompanied by a treasury
challan showing of a fee of two hundred fifty taka to be credited
under the head of account specified in this behalf.
(4) The decision of the Government in an appeal under this section
shall be final.
Prospectus
Dating of prospectus
 Matters to be stated and reports to be
set out in prospectus
 Registration of prospectus

Dating of prospectus

A prospectus issued by or on behalf of a
company or in relation to an intended
company shall be dated, and that date
shall, unless the contrary is proved, be
taken as the date of publication of the
prospectus.

Matters to be stated and reports to be set out in
prospectus
Section134-135, Companies act (Bangladesh)1994
Registration of prospectus
Section139, Companies act (Bangladesh)1994
Promoters
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
A corporate promoter (also "projector") is a
person who solicits people to invest money into
a corporation, usually when it is being formed.
An investment banker, an underwriter, or a stock
promoter may, wholly or in part, perform the role
of a promoter.
Promoters general owe a duty of utmost good
faith, so as to not mislead any potential
investors, and disclose all material facts about
the company's business
Types of Promoters
Promoters may be classified into the following types.

Professional Promoters
They are experts who specialize in company promotion. They float the company and
hand it over to the shareholders or their representatives. Promotion is their main
profession or occupation.

Occasional Promoters
There promoters take interest in floating some companies. They are not engaged in
promotion work on a regular basis. They take up the promotion of some company
and once it is over they go to their original profession. For instance, engineers,
lawyers etc. may float some companies.

Entrepreneur Promoters
They are both promoters and entrepreneurs. They conceive idea of a new business
unit, do the groundwork to establish it and subsequently become a part of the
management.

Financier Promoters
Some financial institutions, like investment banks or industrial banks, may take up the
promotion of a company with a view to finding opportunities for investment.
Functions of Promoters
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Discovery of a business idea
The first stage in company promotion is the conception of a new idea. It is the
promoter who conceives the idea of setting up a business. If makes an assessment
of the viability of a particular business.
Detailed investigation
Promoters undertakes a detailed investigation of the viability, profitability and future
prospects of the growth of the proposed activity. To assist then in this venture, they
seek the help of specialists such as chartered Accountants, Cost Accountants,
Company Secretary, Engineers. Organizations engaged in market research and other
specialized agencies. Specialists are in a position to make an objective analysis of
their own areas which may help the promoters. Decisions have to be taken regarding
the size, location, layout, man power etc.
Assembling the factors of production
If the proposed endeavor gives promise of success and the promoter is willing to
undertake the risk of forming the business, steps must be taken to assemble various
factors of production viz, land, labor, capital and managerial personnel. Assembly of
resources involves making contracts for the purchase of material, land, machinery,
etc.
Entering into preliminary contracts
The promoter enters into contracts with different parties before the registration of the
company. After registration, the company approves these contracts.

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RJSC
The Registrar of Joint Stock Companies and Firms
(RJSC) is the sole authority which facilitates formation of
companies etc.; and keeps track of all ownership related
issues as prescribed by the laws in Bangladesh.
The Registrar is the authority of the Office of the
Registrar of Joint Stock Companies and Firms,
Bangladesh.
Company Laws & Secretarial Practices
In Bangladesh
Historical Background
 After the partition of India, the Office of the Registrar of
Joint Stock Companies & Firms under the Ministry of
Commerce was first set up in Chittagong, the port and
2nd biggest city of Bangladesh with some files and
records
of
Companies,
Associations
(Trade
Organizations) and partnership firms received from
Kolkata, India. The office was transferred to Dhaka, the
capital of Bangladesh in 1962. Currently there are
around 110,000 entities registered under RJSC.
Company Laws & Secretarial Practices
In Bangladesh
RJSC deals with the following types of entities:
i.Private companies
ii.Public companies
iii.Foreign companies
iv.Trade organizations
v.Societies, and
vi.Partnership firms
Company Laws & Secretarial Practices
In Bangladesh

RJSC accords registration and ensures lawful
administration of the entities under the provisions of
applicable act as under:
i.Companies and Trade Organizations: Companies Act, 1994
(Amendment of Companies Act 1913)
ii.Societies: Societies Registration Act, 1860
iii.Partnership Firms: Partnership Act, 1932
Company Laws & Secretarial Practices
In Bangladesh
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The major functions and activities of RJSC are To
incorporate Companies (including Trade Organization),
Societies and Partnership Firms under the respective
Companies Act 1994, Societies Registration Act 1860
and Partnership Act 1932, and
To administer and enforce the relevant statutory
provisions of these acts in relation to the incorporated
companies (including Trade Organization), societies and
partnership firms.
Company Laws & Secretarial Practices
In Bangladesh
Company Laws & Secretarial Practices
In Bangladesh