Company Share Transfer Procedure in Bangladesh
Shares in a company registered in Bangladesh are considered movable property and can be transferred as stipulated in the company’s Articles of Association (AOA). Below is a comprehensive guide to the process of transferring shares in a private limited company registered in Bangladesh.
Key Highlights
- The right to transfer shares in a private limited company may be restricted.
- Share transfers must comply with the procedures outlined in the Articles of Association.
- A prescribed form (Form 117) is required for share transfers.
- Stamp duty must be paid as part of the transfer process.
Step 1: Check for Restrictions in the Articles or Other Agreements, Licenses, or Approvals
Share Transfer Restrictions in Articles of Association (AOA)
The Articles of Association of a private limited company may impose restrictions on the transfer of shares. Before initiating a share transfer, it is critical to review the AOA to identify any specific requirements or restrictions.
Typical restrictions include pre-emption rights, which require shareholders who intend to sell their shares to offer them first to the existing shareholders of the company. The price is usually determined by the company’s Directors or Auditor. If no current shareholders express interest in purchasing the shares, the shareholder may then transfer them to an external party.
If the AOA specifies any additional restrictions or procedural requirements, these must be adhered to during the share transfer process.
Restrictions in Laws, Agreements, Licenses, or Approvals
In addition to the AOA, all relevant licenses, permits, and agreements should be reviewed for any restrictions on share transfers. For example, certain industries may have sector-specific regulatory requirements or conditions.
If such restrictions exist, prior approval from the relevant authority or counterparty must be obtained before proceeding with the share transfer.
Step 2: Notify the Company
The shareholder intending to transfer their shares must formally notify the Board of Directors of the company. The notice should be in writing and clearly state the intention to transfer the shares.
The Board of Directors, depending on the provisions in the AOA, may have the authority to refuse the registration of a share transfer under certain conditions. A Board meeting must be convened to deliberate on the request, and approval for the transfer must be granted through a resolution.
Once approved, the Board should issue a certificate confirming its approval of the transfer.
Step 3: Payment of the Share Price
Following approval from the company, the transferor and transferee should arrange for the payment of the agreed-upon share price.
- Local Transactions: If both the buyer and seller are either Bangladeshi or foreign nationals, no proof of payment is required.
- Cross-Border Transactions: If the seller is Bangladeshi and the buyer is a foreign national, the Registrar of Joint Stock Companies and Firms (RJSC) will require a bank encashment certificate as proof of payment before approving the share transfer.
Step 4: Execute Form 117 and Pay Stamp Duty
The transferor must complete Form 117, which is the prescribed form for share transfers, and submit it to the RJSC. This form must be signed in the presence of RJSC officials. Additionally, the required supporting documents must be submitted along with Form 117.
Stamp Duty
Stamp duty is calculated on the face value of the shares being transferred and must be paid as part of the process. Once the form is executed, a copy should be provided to the company for their records.
Step 5: Update the Company Registers and Issue a New Share Certificate
After completing the share transfer, the company must:
- Update its Share Register and Share Transfer Register.
- Record the transaction in the company’s Minutes Register.
- Issue a new share certificate in the name of the transferee or amend the existing share certificate to reflect the changes.
These steps ensure the company’s records accurately reflect the new ownership structure.
Required Documents for Share Transfer
The following documents are typically required for transferring shares in a Bangladeshi private limited company:
- Form 117 (duly signed by the transferor in the presence of RJSC officials).
- Affidavit by the Seller, affirming the sale of shares.
- Board Resolution, approving the share transfer.
- Certificate of Transfer of Shares, issued by the Board of Directors.
Additional documents may be required depending on the specific circumstances of the share transfer.
To learn more about the share issuance procedure in Bangladesh, click here.
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We provide personalized consultations to address your specific needs and guide you through the legal intricacies of share transfers. Our experts deliver clear and practical advice to ensure compliance with all applicable regulations.
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With our extensive expertise and commitment to excellence, LegalSeba.com ensures a seamless, hassle-free experience for transferring company shares in Bangladesh.
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For more detailed information and to book a consultation, visit LegalSeba.com/book-now or reach out to us:
Phone/WhatsApp: +8801753718223
Email: [email protected]
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