Shares in a company registered in Bangladesh is a movable property and transferable in a manner provided in the Articles of Association of the company. Below we have described the procedure of transferring shares of a private limited company registered in Bangladesh.
- In a private limited company, the right to transfer shares may be restricted.
- There is a prescribed form for share transfer known as Form 117.
- Applicable stamp duty must be paid for transfer of shares.
First step: Check for restriction in the Articles and/or other agreements, licenses, permits, approvals.
Share Transfer Restrictions in Articles of Association
The share transfer in a Private Limited Company can be restricted by the Articles of Association (AOA). Hence, the Articles of Association of the Company must be reviewed before beginning the share transfer procedure. It is common in Bangladesh that the company’s articles of association usually contain pre-agreed procedures set out that are required to be followed for any transfer of shares in the company.
Restrictions on right of the shareholders to transfer shares are usually in the form of pre-emption. Which means that if a shareholder wishes to sell some or all of his shares, such shares must first be offered to other existing members of the private limited company at a price determined by the Directors or the Auditor of the Company. In no existing shareholder is interested, then shares of the Company can be freely transferred to an outsider.
If there is any restriction or special procedures, those restriction or procedure must be followed for any share transfer.
Share Transfer Restrictions in any laws, agreement, license, permit, approval
All the license, permits, agreement etc. should be checked for any restriction imposed on the transfer of shares of the company. If there is any restriction, prior approval should be obtained.
Step 2: Notify the company.
The shareholder planning to transfer the shares should serve notice in writing to the Board of Directors of the Company about intention to transfer share of the company. The Director may have the powers to refuse registration of transfer of shares under certain circumstances – prescribed in the Articles of Association. The Board of Directors should hold a board meeting and approve the transfer of the shares. The Director should also issue a certificate in
Step 3: Payment of the price of the shares
Once the company provides its approval, the payment of the price of the shares should took place. If both the buyer and seller are local or foreigner, no proof of the payment is required. However, if the seller is a Bangladeshi and the buyer is a foreigner, Registrar of Joint Stock Companies and Firms (RJSC) will require bank encashment letter for the share transfer.
Step 4: Execute the Form 117 and payment of stamp duty
Once the above steps are completed, the shareholder who is transferring the shares should visit Registrar of Joint Stock Companies and Firms (RJSC) and should sign the Form 117 at the presence of the officials of the RJSC. Other required documents should also be supplied to RJSC.
Stamp duty is payable on the face value of each share.
Once the Form 117 is signed, a copy of the same should be delivered to the Company.
Step 5: Amendment of the registrar books and issuance of share certificate
Once the above steps are done, the company should update their share registrar, share transfer registrar, minutes registrar and issue a share certificate in favor of the new shareholder or amend the existing share certificate to reflect the changes.
- Form 117;
- Affidavit by the seller;
- Board Resolution by the company approving the transfer of the shares; and
- Certificate of Transfer of Shares.
Depending on the situation, other documents might be required.