Comprehensive Guide to Share Issuance in a Limited Company with RJSC in Bangladesh
Issuing shares in a limited company is a vital process that facilitates capital infusion, ownership restructuring, or onboarding of new investors. In Bangladesh, this process is governed by the Companies Act, 1994, and overseen by the Registrar of Joint Stock Companies and Firms (RJSC). Ensuring compliance with the law and proper documentation is essential to avoid complications. This article provides a detailed, step-by-step explanation of the share issuance process for limited companies in Bangladesh.
Understanding Share Issuance
Share issuance refers to the allocation of a company’s shares to existing or new shareholders. It can occur in various contexts, such as:
•Raising capital to fund operations or growth.
•Introducing new investors to the business.
•Restructuring ownership to accommodate strategic changes.
Shares can be issued in different classes, such as equity shares or preference shares, each carrying unique rights and privileges.
Step-by-Step Process of Share Issuance in a Bangladeshi Company
Step 1: Obtain Board Approval
The first step in issuing shares is obtaining approval from the company’s board of directors. This involves the following:
- Convene a Board Meeting:
Schedule a board meeting to discuss and decide on the share issuance.
Include the proposed share issuance as an agenda item in the meeting notice.
2. Pass a Board Resolution:
Approve the issuance of shares through a formal resolution.
Specify details such as the number of shares, type (e.g., ordinary or preference), issue price, and any terms or conditions attached to the shares.
3. Record the Decision:
Document the resolution in the company’s minutes book for future reference and compliance purposes.
Step 2: Secure Shareholder Approval (If Required)
While the board can approve many decisions, certain share issuances may require shareholder consent.
- Check Articles of Association (AoA):
Review the company’s AoA to determine whether shareholder approval is required for issuing shares.
2. Call an Extraordinary General Meeting (EGM):
If approval is needed, organize an EGM to seek consent from the shareholders.
Provide shareholders with a detailed proposal and rationale for the share issuance.
3. Pass a Special Resolution:
Obtain approval through a special resolution (requiring at least 75% of the votes) during the EGM.
If necessary, amend the AoA to authorize additional share issuance.
Step 3: Prepare Required Documentation
Accurate documentation is essential for a smooth and compliant share issuance process.
- Board Resolution:
A certified copy of the board resolution approving the share issuance.
2. Special Resolution:
If applicable, a certified copy of the special resolution passed in the EGM.
3. Share Application Forms:
Completed application forms from prospective shareholders indicating their intent to purchase shares.
4. Offer Letter:
Draft an offer letter detailing the terms of the share issuance for prospective shareholders, especially for external investors.
5. Updated Share Register:
Reflect the changes in the shareholding structure in the company’s statutory register of members.
6. Letter from Auditor
After depositing the paid-up capital into the company’s designated bank account, your auditor will provide a certification letter confirming the capital investment.
Step 4: File with the Registrar of Joint Stock Companies (RJSC)
To legally formalize the share issuance, companies must file the required documents with the RJSC.
- File Form-XV (Return of Allotment):
This form provides detailed information about the shares issued, including the allotment date, number of shares, and names of the allottees.
It must be submitted to the RJSC within 60 days of the allotment.
2. Submit Supporting Documents:
Certified copies of the board resolution and, if applicable, the special resolution.
Updated Memorandum and Articles of Association (if amendments were made).
3. Pay Applicable Fees:
Ensure timely payment of government filing fees to avoid delays or penalties.
Step 5: Allocate and Distribute Shares
Once RJSC filings are complete, the company must allocate the shares to the respective shareholders.
- Receive Payment:
Collect the share capital from shareholders through the company’s designated bank account.
2. Issue Share Certificates:
•Prepare and distribute share certificates to the shareholders as evidence of ownership.
•Ensure that the certificates comply with legal requirements, including stamp duty payment.
Step 6: Update Internal Records
To maintain compliance and transparency, update all relevant company records:
- Register of Members:
Record the names of the new shareholders and their shareholdings in the company’s register of members.
2. Minutes Book:
Document the board and shareholder resolutions in the company’s minutes book.
3. Statutory Registers:
Update the statutory registers, such as the register of shares, to reflect the changes.
Step 7: Notify Stakeholders
Communication is crucial to maintain trust and transparency:
•Notify existing shareholders of the new issuance.
•Inform regulatory bodies, if required.
•Ensure transparency with investors, partners, and other stakeholders.
Legal and Practical Considerations
Compliance with Articles of Association (AoA)
The company’s AoA governs its operational framework. Ensure that all actions align with the AoA, and amend it if necessary.
Pre-Emptive Rights of Shareholders
Existing shareholders may have pre-emptive rights to subscribe to new shares before they are offered to external parties.
Timely Filing with RJSC
Strict adherence to deadlines for filing forms and documents is essential to avoid penalties.
Tax and Regulatory Implications
Consult a tax advisor to understand the tax implications of share issuance, such as withholding taxes or capital gains tax.
Issuing shares in a limited company involves meticulous planning, compliance with legal requirements, and coordination with the RJSC. By following the detailed procedure outlined above, companies can ensure a seamless and compliant share issuance process.
To learn more about the share transfer procedure in Bangladesh, click here.
Simplify Your Company Share Issuance with LegalSeba.com
At LegalSeba.com, our team of experienced legal professionals specializes in corporate services, providing you with end-to-end assistance for company share issuance in Bangladesh. Here’s how we can support you:
Expert Legal Guidance
Receive personalized consultations to address your specific needs and navigate the complex legal framework of share issuance. Our experts offer clear, tailored advice to ensure compliance with all regulations.
Document Preparation and Verification
We meticulously prepare and review all required documents, including board resolutions, Form-X, and updated Articles of Association, ensuring accuracy and compliance with the Registrar of Joint Stock Companies and Firms (RJSC) guidelines.
Compliance Management
From filing necessary forms with the RJSC to updating your statutory registers, we handle all legal formalities to guarantee a smooth and error-free process. Trust us to manage every aspect of the compliance process efficiently.
Transaction Oversight
Our team oversees the entire share issuance process, ensuring transparency and adherence to legal standards. From receiving share capital to issuing share certificates, we ensure every step is executed flawlessly.
Dispute Resolution Support
In the unlikely event of legal challenges or disputes arising during or after the share issuance process, we provide robust litigation support to protect your rights and resolve issues swiftly.
With our extensive expertise and commitment to excellence, LegalSeba.com offers a seamless, hassle-free experience for issuing company shares in Bangladesh.
Contact Us Today
For more detailed information and to book a consultation, visit LegalSeba.com/book-now or contact us:
Phone/WhatsApp: +8801753718223
Email: [email protected]
Let LegalSeba.com be your trusted partner in navigating the complexities of share issuance, ensuring compliance and peace of mind for your business.
