Summary of the Companies Act 1994

The Companies Act 1994 (CA, Act) governs companies from birth to death, i.e. from incorporation up to and including winding up and dissolution. A company may be incorporated by complying with the requirements of the Act in respect of registration. The Act provides for continuing compliance requirements regarding the holding of board and shareholder meetings, filing of annual and other periodic and occasional returns regarding directors, special and extraordinary resolutions, transfer of shares, maintenance of books, accounts and registers, the issue of capital, and many other matters. It also establishes the office of the Registrar of Joint Stock Companies and Firms (RJSC or Registrar), and provides for the powers and responsibilities of the Registrar. While the requirements for registration of a company are not very onerous, no comprehensive guideline is available for persons wishing to form a company, setting out all the requisite information, forms, formats, and the costs involved, although the fee schedule is well set and available from the RJSC. Unlike in India, where more than thirty sets of rules and regulations have been issued to supplement, explain and facilitate the application of the bare provisions of the Companies Act there, no such rules have been promulgated here. The RJSC should be required to provide the forms, electronically and on paper, together with guidelines on how to complete them. The RJSC should also be required to accept the filing of forms on the internet, as and when electronic payment becomes practicable. The CA 1994 provides for mortgages and charges on a companys property to be registered in a register of mortgages and charges maintained by the company and

also requires these to be filed with the RJSC. There is no provision in the law for recording pledges of a companys shares made by a shareholder, which is a very common form of security given for financing in Bangladesh. The CA prescribes penalties for delays and failures in complying with numerous requirements. The penalties are often not substantial enough to act as a deterrent, and are seldom imposed by either the RJSC or the Government, as the case may be. These penalties should be rationalized and uniformly applied. For various matters, including condonation of delay in holding annual general meetings, applications to the High Court Division of the Supreme Court is required, with extensive procedures of advertisement, objections, and fines. The processes are time-consuming, expensive and of dubious value. In the matter of delay in holding meetings or filing certain returns, or amendment/correction of errors in returns, applications are seldom contested and/or turned down by the Court. The RJSC has certain powers of condonation already, which may be enhanced, and the powers in this regard currently given to the Court may be given to the RJSC. Recommendations in relation to enhancement of the RJSCs powers should only be effectuated after a comprehensive upgrading of the RJSCs capacity, which is noted by all concerned as being seriously deficient at present. RJSC as an institution is in need of extensive reform. It consists of just over 50 staff members, including the Registrar, deputy and assistant registrars, and staff who vet and compare documents for filing and providing certified copies. At present, about 250 to 300 companies apply for registration every month. All filing and record-keeping is done by hand. There is a rudimentary computer system. The company files are maintained in a record room where files are taken out of and returned to shelves

manually, which often results in files getting lost. There is not much security, and files may conceivably be tampered with without much difficulty. None of the staff members of RJSC are trained in company law. Allegations of obstructionism, incompetence and corruption abound. There is also confusion and lack of clarity as to what the role of the RJSC is in administering the relevant provisions of the CA. The High Court Division in a recent decision has accepted that the role of the RJSC in relation to the filing of returns is that of a filing house. The role of the RJSC as a filing authority and a register for public notice should be clarified and the powers currently exercised by the RJSC (often not sanctioned by the Act) to accept documents for filing should be restricted to the bare minimum. The RJSC should be required to file documents as they are presented, as long as the prescribed particulars are there, without being given the authority to go behind the documents, since the filings are there to put the public on notice and inquiry of certain facts and events. It should also be required to follow the provisions of the CA in relation to giving certified copies of documents filed with it to anyone making payment of the required fees.

By Business Laws Website Cell Board of Investment (BOI) Bangladesh