Most Important Company Law of Bangladesh DU LAW

=== TIER 1 SECTIONS - DIRECTORS (every final 2020-2024) ===

SECTION DIVIDER — skip this card

Section 90

Minimum directors: THREE for a public company; NOT FEWER THAN TWO for every other company.

Section 91(1)(a)

Subscribers of the Memorandum are DEEMED to be directors until the first directors are appointed.

Section 91(1)(b)

Directors thereafter ELECTED BY THE MEMBERS from among their number in general meeting.

Section 94

SIX DISQUALIFICATIONS of directors: unsoundness of mind (declared by competent court, in force); insolvency; failure to pay calls (6 months elapsed); minority; conviction involving moral turpitude; illness.

Section 94(1)(c)

A person who has APPLIED to be adjudicated insolvent is disqualified.

Section 94(1)(d)

Disqualified where a call on shares is unpaid and SIX MONTHS have elapsed from the last day fixed for payment.

Section 96

Duty of a director to ATTEND BOARD MEETINGS.

Section 97

QUALIFICATION SHARES — must be obtained within 60 DAYS of appointment.

Section 97(2)

Penalty for failure to obtain qualification shares: fine not exceeding TK 200 FOR EVERY DAY.

Section 99

Duty of a director to LEAVE OFFICE on becoming bankrupt.

Section 100

A director CANNOT ASSIGN his office to any person.

Section 102

NO EXEMPTION FROM LIABILITY for negligence, default, breach of duty or breach of trust — EVEN WHERE THE ARTICLES SO PROVIDE. (Use this to close off any director relying on a protective article.)

Section 103

LOANS TO DIRECTORS prohibited — except a banking company, or a private company which is not a subsidiary of a public company.

Section 104

OFFICE OF PROFIT — not without consent of the company in general meeting, except managing director, manager, legal/technical adviser, or banker.

Section 105

A director cannot enter a contract for SALE, PURCHASE OR SUPPLY OF GOODS with the company without the board's consent.

Section 107

SALE OF THE UNDERTAKING or REMISSION OF A DIRECTOR'S DEBT — only with consent of the company in general meeting.

Section 108

VACATION OF OFFICE — including failure to attend board meetings for THREE CONSECUTIVE MONTHS or THREE CONSECUTIVE BOARD MEETINGS, WHICHEVER IS LONGER.

Section 108(1)(a)

Office vacated for failure to obtain qualification shares within 60 days.

Section 109

A managing director must not act as MD of MORE THAN ONE OTHER COMPANY while in office.

Section 110

Appointment of a managing director must NOT EXCEED FIVE YEARS, nor be extended more than five years on each occasion.

Section 114

No payment as COMPENSATION FOR LOSS OF OFFICE in connection with the transfer of shares; no money taken indirectly in contravention of ss.111-113.

Section 130 *** MOST EXAMINED

Duty to DISCLOSE THE NATURE OF HIS INTEREST at the board meeting where directly or indirectly concerned or interested in any contract or arrangement. — Every secret-profit problem starts here.

Section 131 *** MOST EXAMINED

A director must NOT VOTE on any contract or arrangement in which he is directly or indirectly concerned or interested. (s.131(3): interested directors of a PRIVATE company MAY vote.)

Regulation 71, Schedule I

Where the Articles are silent, director's share qualification = holding AT LEAST ONE SHARE.

Regulation 84, Schedule I

Company may increase or reduce the number of directors by resolution in general meeting.

Regulation 85, Schedule I

CASUAL VACANCY filled by appointment in general meeting; appointee holds office for the UNEXPIRED TERM of his predecessor.

Regulation 86, Schedule I

Board may appoint ADDITIONAL DIRECTORS, who hold office until the NEXT ANNUAL GENERAL MEETING.

Twenty-directorship rule

No person may be a director of MORE THAN TWENTY companies at once; regularised if he leaves one within FIFTEEN DAYS.

=== TIER 1 SECTIONS - MEETINGS (2022, 2023, 2024 finals) ===

SECTION DIVIDER — skip this card

Section 81(1)

ANNUAL GENERAL MEETING. First AGM within 18 MONTHS of incorporation. Gap between AGMs NEVER MORE THAN 15 MONTHS. Registrar may extend up to 90 DAYS — but NOT the first AGM.

Section 81(2) ***

Where a company fails to call an AGM, the COURT MAY, ON THE APPLICATION OF ANY MEMBER, call or direct the calling of a general meeting, with such ancillary directions as it thinks fit.

Section 82

Penalty for AGM default: fine up to TK 10,000, plus TK 250 PER DAY of continuing default.

Section 83(1)

STATUTORY MEETING — held between NOT LESS THAN ONE MONTH and NOT MORE THAN SIX MONTHS from entitlement to commence business. Once only in the company's life.

Section 83(2)

Notice of statutory meeting + statutory report to every member AT LEAST 21 DAYS before; report CERTIFIED BY AT LEAST TWO DIRECTORS and sent to the Registrar.

Section 83(3)

EIGHT PARTICULARS of the statutory report — incl. abstract of receipts and payments to a date WITHIN SEVEN DAYS of the report.

Section 83(7)

Board must produce at commencement a LIST OF MEMBERS (names, addresses, occupations), open to any member.

Section 83(8)

Members may discuss any matter on formation or arising from the report, BUT NO RESOLUTION MAY BE PASSED of which notice has not been served.

Section 83(9)

Meeting may adjourn from time to time; an ADJOURNED MEETING HAS THE SAME POWERS as an original meeting. (Proves adjournment is a function OF the meeting.)

Section 83(12) ***

A PRIVATE COMPANY IS EXEMPT from holding a statutory meeting. (Also why the s.241 statutory-meeting winding-up ground cannot apply to it.)

Section 85

AGM notice = 14 DAYS in writing. Shorter notice permitted if members entitled to vote CONSENT. Also governs proxies. s.85(3): court may direct a meeting be called.

Section 87 ***

SPECIAL RESOLUTION — 21 DAYS' NOTICE and THREE-FOURTHS MAJORITY. Also: duty of directors to call an EGM on requisition. (Candidates remember the majority and forget the notice.)

=== TIER 1 SECTIONS - MEMORANDUM & ULTRA VIRES ===

SECTION DIVIDER — skip this card

Section 2(1)(d)

'Company' means a company formed and registered under this Act or an EXISTING COMPANY. — Defines PROVENANCE, not NATURE. Nature comes from Salomon.

Section 2(1)(n)

'Existing company' — formed under any earlier law relating to companies, in operation after commencement of the 1994 Act.

Section 9(c)

Memorandum must be printed, in consecutively numbered paragraphs, signed by each subscriber before AT LEAST TWO WITNESSES.

Section 11(1)

A company shall not be registered by a name IDENTICAL WITH or TOO NEARLY RESEMBLING that of an existing company.

Section 11(2)

Change of name by ORDINARY resolution where registered through inadvertence with a resembling name.

Section 11(7)

On change of name the Registrar issues a NEW CERTIFICATE OF INCORPORATION.

Section 11(8) ***

A CHANGE OF NAME DOES NOT AFFECT ANY RIGHT OR OBLIGATION of the company, nor render defective any legal proceedings by or against it. (A company cannot escape liability by renaming itself.)

Section 12(1) *** THE SEVEN PURPOSES

Alter objects by SPECIAL RESOLUTION only for: (i) more economically/efficiently; (ii) by new or improved means; (iii) enlarge or change local area; (iv) CARRY ON A BUSINESS CONVENIENTLY COMBINED with the existing one [WIDEST — solves most problems]; (v) restrict or abandon objects; (vi) sell or dispose of the undertaking; (vii) AMALGAMATE.

Sections 6, 7, 8, 226 + Schedules

Form of Memorandum: Sch VI (limited by shares); Sch VII (guarantee, no share capital); Sch VIII (guarantee with share capital); Sch IX (unlimited with share capital).

Section 22 ***

The Memorandum and Articles BIND THE COMPANY AND ITS MEMBERS as if signed by each of them.

Section 347(5)

RIGHT OF PUBLIC INSPECTION of company documents — the statutory foundation of CONSTRUCTIVE NOTICE.

=== TIER 1 SECTIONS - PARTNERSHIP (GROUP B COMPULSORY) ===

SECTION DIVIDER — skip this card

Partnership Act s.4 ***

Partnership is the relation between persons who have agreed to SHARE THE PROFITS OF A BUSINESS CARRIED ON BY ALL OR ANY OF THEM ACTING FOR ALL. Individually 'partners', collectively 'a firm'. — A FIRM HAS NO SEPARATE LEGAL ENTITY.

Partnership Act s.12

The NATURE OF THE BUSINESS cannot be changed without the CONSENT OF ALL the partners.

Partnership Act s.19(1) ***

IMPLIED AUTHORITY — the act of a partner done TO CARRY ON, IN THE USUAL WAY, BUSINESS OF THE KIND CARRIED ON BY THE FIRM binds the firm.

Partnership Act s.19(2) *** THE EIGHT RESTRICTIONS

No implied authority to: (a) submit a dispute to ARBITRATION; (b) open a BANK ACCOUNT IN HIS OWN NAME; (c) COMPROMISE or relinquish a claim; (d) WITHDRAW A SUIT; (e) ADMIT LIABILITY; (f) ACQUIRE IMMOVABLE PROPERTY; (g) TRANSFER IMMOVABLE PROPERTY; (h) ENTER INTO PARTNERSHIP.

Partnership Act s.20 *** THE DISTINCTION

Partners may by CONTRACT extend or restrict implied authority — but a CONTRACTUAL restriction binds a third party ONLY IF HE HAD NOTICE. Contrast s.19(2) statutory restrictions, which BIND EVERYONE regardless of notice.

Partnership Act s.22

To bind a firm, an act must be done IN THE FIRM NAME, or in a manner expressing or implying an intention to bind the firm.

Partnership Act s.25 ***

Every partner is liable JOINTLY WITH ALL THE OTHERS **AND ALSO SEVERALLY** for all acts of the firm done while he is a partner. — A creditor may pursue ANY ONE PARTNER ALONE FOR THE WHOLE.

Partnership Act s.26

Where by the WRONGFUL ACT OR OMISSION of a partner acting IN THE ORDINARY COURSE OF BUSINESS loss is caused to a third party, THE FIRM IS LIABLE TO THE SAME EXTENT AS THE PARTNER.

Partnership Act s.27(a) and 27(b) ***

MISAPPLICATION. 27(a): a PARTNER within apparent authority receives money and misapplies it. 27(b): the FIRM receives money in the course of business and ANY partner misapplies it WHILE IN THE FIRM'S CUSTODY — no requirement of knowledge by innocent co-partners. 27(b) catches the client-account case.

Partnership Act s.28(1)

HOLDING OUT — one who by words or conduct represents himself, or knowingly permits himself to be represented, as a partner is liable to anyone who ON THE FAITH OF IT GAVE CREDIT to the firm.

Partnership Act s.28(2) ***

After a partner's DEATH, continued use of the old firm name does NOT OF ITSELF make his legal representative or estate liable for acts done AFTER his death.

Partnership Act s.30

A MINOR may be admitted to the BENEFITS of partnership only — liability confined to his share in the firm; NOT personally liable.

Partnership Act s.31(2)

A new partner may be introduced with the CONSENT OF ALL existing partners. HE IS NOT LIABLE FOR ANYTHING DONE BEFORE he became a partner.

Partnership Act s.32(1)

THREE MODES OF RETIREMENT: (a) with the CONSENT OF ALL other partners; (b) by EXPRESS AGREEMENT; (c) in a partnership AT WILL, by NOTICE IN WRITING to all the other partners.

Partnership Act s.32(2)

A retiring partner REMAINS LIABLE for acts of the firm done UP TO THE DATE OF HIS RETIREMENT, unless discharged by agreement with the third party and continuing partners.

Partnership Act s.40

Dissolution BY CONSENT of all partners or IN ACCORDANCE WITH A CONTRACT between them.

Partnership Act s.41

COMPULSORY DISSOLUTION — (a) adjudication of ALL partners, or ALL BUT ONE, as insolvent; (b) any event making the business UNLAWFUL. Proviso: illegality of one adventure does not dissolve the firm as to lawful ones.

Partnership Act s.42

CONTINGENT DISSOLUTION — (a) expiry of a FIXED TERM; (b) COMPLETION of the adventures; (c) DEATH of a partner; (d) ADJUDICATION OF A PARTNER AS INSOLVENT.

Partnership Act s.43

Partnership AT WILL — dissolved by any partner giving NOTICE IN WRITING to all the other partners.

Partnership Act s.44 *** SEVEN GROUNDS

Dissolution BY THE COURT: (a) partner of UNSOUND MIND; (b) partner (other than the one suing) PERMANENTLY INCAPABLE; (c) conduct PREJUDICIAL to the business; (d) wilful/persistent BREACH, or conduct making it NOT REASONABLY PRACTICABLE to carry on with him; (e) TRANSFER OF WHOLE INTEREST; (f) BUSINESS CANNOT BE CARRIED ON SAVE AT A LOSS; (g) JUST AND EQUITABLE.

Partnership Act s.45(1)

After dissolution, partners remain liable to third parties for acts which would have been acts of the firm UNTIL PUBLIC NOTICE OF THE DISSOLUTION IS GIVEN.

Partnership Act s.48(a) ***

LOSSES, INCLUDING DEFICIENCIES OF CAPITAL, are paid first out of PROFITS, next out of CAPITAL, and lastly by the partners individually IN THE PROPORTIONS IN WHICH THEY WERE ENTITLED TO SHARE PROFITS. — NOT in proportion to capital contributed.

Partnership Act s.48(b)

ORDER OF APPLICATION OF ASSETS: (i) DEBTS TO THIRD PARTIES; (ii) each partner rateably for ADVANCES; (iii) each partner rateably for CAPITAL; (iv) RESIDUE divided in profit-sharing proportions.

Partnership Act s.49

Firm property applied FIRST to FIRM debts; a partner's separate property first to his SEPARATE debts.

Partnership Act s.58

FIRM NAME must not imply Government/Bangabandhu sanction without written consent; nor use UNITED NATIONS (s.58(3A)) or WORLD HEALTH ORGANIZATION (s.58(3B)) without authorisation.

Partnership Act s.69 *** THREE DISABILITIES

Unregistered firm: (1) NO SUIT BY A PARTNER against the firm or a co-partner [69(1)]; (2) NO SUIT BY THE FIRM against a third party on a contract [69(2)]; (3) NO CLAIM OF SET-OFF or other proceeding. Criminal proceedings are still available.

Partnership Act s.69(3) *** THE EXCEPTION

PRESERVED despite non-registration: the right to sue for DISSOLUTION of the firm, for ACCOUNTS OF A DISSOLVED FIRM, or for REALISATION OF THE PROPERTY of a dissolved firm.

s.69 — the five exceptions

(1) THIRD PARTIES may always sue the firm — the disability is ONE-WAY; (2) s.69(3) dissolution/accounts/realisation; (3) powers of Official Assignee, Receiver or the Court; (4) firms with NO PLACE OF BUSINESS IN BANGLADESH; (5) suits or set-off NOT EXCEEDING TK 100.

=== TIER 2 SECTIONS - CAPITAL, SHARES, TRANSFER ===

SECTION DIVIDER — skip this card

Section 31

A share certificate under the COMMON SEAL is PRIMA FACIE EVIDENCE OF THE TITLE of the member named in it.

Section 38

TRANSFER OF SHARES. A company may refuse registration but must give NOTICE OF REFUSAL WITHIN ONE MONTH to BOTH transferor and transferee. s.38(7): the power to restrict must be in the ARTICLES and exercised BONA FIDE.

Section 39

CERTIFICATION OF TRANSFER; also the duty to DELIVER SHARE CERTIFICATES WITHIN 90 DAYS of allotment.

Section 39(2) ***

If a company certifies NEGLIGENTLY so that the certification is erroneous, and a person acts on the faith of it and suffers loss, THE COMPANY IS UNDER THE SAME LIABILITY AS IF THE CERTIFICATION HAD BEEN MADE FRAUDULENTLY.

Section 39(3)(a)

An instrument is deemed certified only where it bears the words 'CERTIFICATE LODGED' or words to like effect.

Section 46(2)

ONLY A PUBLIC COMPANY may issue a SHARE WARRANT, and only for FULLY PAID-UP shares.

Section 57(1) ***

The whole PREMIUM must be transferred to the SHARE PREMIUM ACCOUNT, and the provisions on REDUCTION OF CAPITAL APPLY TO IT AS IF IT WERE PAID-UP SHARE CAPITAL. — Hence it CANNOT be used to pay dividends.

Section 57(2) — four permitted uses

(1) Issue FULLY PAID BONUS SHARES; (2) write off PRELIMINARY EXPENSES; (3) write off EXPENSES, COMMISSIONS OR DISCOUNTS on an issue of shares/debentures; (4) provide for PREMIUM PAYABLE ON REDEMPTION of redeemable preference shares or debentures.

Section 59(1) — four modes of reduction

(a) EXTINGUISH/REDUCE LIABILITY on capital not paid up; (b) CANCEL PAID-UP CAPITAL WHICH IS LOST or unrepresented by assets; (c) PAY OFF CAPITAL IN EXCESS OF THE WANTS of the company; (d) any other way approved by the court.

Reduction of capital — three mandatory steps ***

(1) AUTHORITY IN THE **ARTICLES** [Re St James' Court Estate Ltd — NOT the Memorandum]; (2) SPECIAL RESOLUTION (ss.59(1), 87); (3) CONFIRMATION BY THE COURT (ss.59(1), 60).

Section 61

On confirmation the company must add the words 'AND REDUCED' to its name until the court fixes a date — dispensable where no diminution of liability on unpaid capital.

Section 62(1) and 62(2)

CREDITORS may OBJECT to a reduction where liability on uncalled capital is reduced or paid-up capital is paid off; the COURT SETTLES A LIST of objecting creditors.

Section 64

Court may confirm on terms where every entitled creditor has CONSENTED, or his debt DISCHARGED, DETERMINED OR SECURED.

Section 65

The order of confirmation and the MINUTE OF REDUCTION must be REGISTERED with the Registrar.

Section 153 *** SIX CONDITIONS (discount)

(1) Shares of a CLASS ALREADY ISSUED; (2) ONE YEAR since commencing business; (3) RESOLUTION IN GENERAL MEETING **AND** COURT SANCTION; (4) MAXIMUM RATE SPECIFIED; (5) issued WITHIN SIX MONTHS of sanction; (6) particulars in EVERY PROSPECTUS AND BALANCE SHEET. Penalty s.153(3): fine up to TK 500.

Section 155

RIGHT ISSUE — shares offered to existing members in proportion to paid-up capital; offer open NOT LESS THAN 15 DAYS; if declined, board may dispose in the manner MOST BENEFICIAL TO THE COMPANY.