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Leading Law Firm in Dhaka | Barristers & Advocates
Kazi Law Chamber
|27 Mar 2025
Bangladesh’s Corporate litigation legal framework is governed primarily by the Companies Act, 1994, which outlines the legal procedures for the incorporation, operation, and dissolution of companies. However, when disputes arise or corporate compliance needs to be rectified through judicial channels, parties must rely on specific sections of this Act and supplementary laws such as the Arbitration Act, 2001, the Bankruptcy Act, 1997, and the Civil Procedure Code, 1908.
At Kazi Law Chamber, we provide end-to-end Corporate litigation support in matters related to company law, drawing upon decades of experience in representing both corporate entities and shareholders before the Company Bench of the Hon’ble High Court Division of the Supreme Court of Bangladesh.
Common Areas of Company Law Litigation
Our firm routinely handles applications, disputes, and compliance corrections in the following areas:
Alteration of the Objects Clause in the Memorandum of Association
Alteration of the Objects Clause of the Memorandum of Association
The objects clause in a company’s Memorandum of Association defines the company’s primary purpose and limits its operational scope. Under Sections 12 and 13 of the Companies Act, 1994, a company may alter its objects clause by passing a special resolution. This is necessary in circumstances where a company seeks to expand its business, introduce new methods of operation, enter new markets, combine activities, sell or dispose of significant undertakings, or restructure through mergers or amalgamations.
Such an alteration must be initiated by convening an Extraordinary General Meeting (EGM), for which at least 21 days’ notice must be served to the shareholders. During this meeting, the proposed alteration is adopted through a special resolution passed by the required majority of shareholders. Once adopted, the company must apply to the Company Bench of the High Court Division for confirmation under the prescribed legal procedure.
The Court, upon admission of the application, will usually direct that public notice of the proposed changes be published in two national daily newspapers, one in Bengali and one in English, to inform all stakeholders and the public. The company is then required to submit an affidavit-in-compliance certifying that all procedural requirements, including publication, have been fulfilled.
During the hearing, the Court examines whether the proposed alteration meets the legal standards set out in the Corporate Litigation Act and whether it serves a legitimate commercial purpose. If satisfied, the Court grants permission for the amendment, often subject to a nominal donation to a recognised charitable organization. Thereafter, the amended Memorandum of Association, along with a certified copy of the Court's order, must be filed with the Registrar of Joint Stock Companies and Firms (RJSC) for registration and final compliance.
It is also important to note that if the proposed alteration potentially affects creditors, partners, or other stakeholders, notice must be issued to them, and in some cases, a No Objection Certificate (NOC) may be required from creditors under the Bank Companies Act or other relevant laws. At Kazi Law Chamber, our Corporate litigation legal team ensures that such filings are precise, timely, and strategically structured to avoid delays and objections.
Rectification of the Share Register
Another significant area of corporate litigation involves disputes concerning entries in the company’s share register. Under Section 34 of the Companies Act, every company is obligated to maintain a register of its shareholders. This register must accurately reflect the names, addresses, shareholding quantities, and dates of entry and cessation of members.
When errors occur, such as unjustified inclusion, wrongful omission, or failure to timely record changes in shareholding, those affected may approach the Court for rectification of the register under Section 43 of the Companies Act. The provision is broad enough to allow applications from the aggrieved individual, any member of the company, or the company itself.
Before initiating Corporate litigation, it is standard practice to serve a legal notice to the company, requesting correction. If unresolved, the petitioner may file an application with the High Court. Upon admitting the application, the Court generally requires the notice to be published in two daily newspapers (one Bengali and one English), allowing third parties the opportunity to object or intervene, if necessary.
The petitioner must also submit an affidavit-in-compliance confirming that the publication and other formalities have been properly completed. At the hearing stage, the Court evaluates whether the application demonstrates “sufficient cause” and whether the petitioner has legitimate rights over the shares in question.
If the Court is satisfied, it issues an order directing the necessary rectification. As with other company law matters, such an order is typically subject to a charitable donation, reflecting judicial convention. After obtaining the order, the applicant must submit it to the RJSC, along with any other relevant documents, for final implementation in the company’s statutory records.
Applicants should be prepared to provide documentary evidence to substantiate their claim, such as share transfer forms, board resolutions, notices, or shareholder agreements. At Kazi Law Chamber, we assist clients in preparing robust, legally sound applications and supporting affidavits, ensuring that both procedural and evidentiary requirements are met.
Reduction of Share Capital of the Company
Under Sections 59 and 60 of the Companies Act, 1994, a company limited by shares may reduce its authorized share capital in any manner, provided the power to do so is specifically stated in its Articles of Association. The Act grants a company a wide range of powers in this regard. A company may extinguish or reduce the liability of any of its shares in respect of unpaid share capital; cancel any paid-up capital that is lost or unrepresented by available assets; or pay off any paid-up share capital which is considered surplus to the company's requirements.
The reduction of share capital must be approved by passing a special resolution in accordance with the law. Following the resolution, a petition is filed before the Company Bench of the High Court Division for confirmation. The Court, in evaluating such an application, may consider whether the reduction proposal is fair and equitable to all classes of shareholders and whether creditors’ rights are likely to be impacted. It further examines whether all shareholders in the same class are treated equally, and in cases of differential treatment, whether the affected members have given their informed consent. The Court also considers whether sufficient disclosures were made to the shareholders at the time of voting, thereby ensuring they exercised an informed choice.
In many cases, especially when creditors’ interests are likely to be affected, the Court may require the applicant company to obtain a No Objection Certificate (NOC) from its creditors. This is particularly relevant for financial institutions, where provisions of the Bank Companies Act and related financial regulations may be triggered.
The procedural framework closely mirrors that for alteration of the objects clause under Sections 12 and 13. The company must issue a 21-day notice convening an Extraordinary General Meeting (EGM). Upon adoption of the special resolution, an application is made to the High Court under Section 59/60. Following admission, the Court will direct publication of notice in two national daily newspapers—one in Bangla and the other in English. The applicant must then file an affidavit-in-compliance, confirming that procedural steps, including newspaper publication, have been completed.
At the final hearing, the Court may allow the application and pass orders permitting the reduction of share capital, usually subject to the company making a nominal donation to a recognized charity. Thereafter, the company must submit the certified judgment, amended Memorandum and Articles of Association, and other required documents to the Registrar of Joint Stock Companies and Firms (RJSC) within the stipulated timeframe for final registration.
At Kazi Law Chamber, we meticulously assist clients in drafting special resolutions, preparing court applications, and coordinating compliance with the RJSC and creditor requirements, ensuring a smooth and fully compliant reduction process.
Condonation of Delay in Holding the Annual General Meeting (AGM)
Under Section 81(2) of the Companies Act, 1994, every company is required to hold its Annual General Meeting (AGM) within the calendar year, typically by 31st December. The AGM is a statutory requirement where the company places its financial statements, appoints or reappoints directors and auditors, and allows shareholders to review and participate in governance matters. However, if a company fails to hold its AGM within this timeframe, it may approach the Court for condonation of delay.
Section 81(2) enables the Court, upon application by any member of the company, to either call or direct the calling of a general meeting. In doing so, the Court may also give any ancillary or consequential directions that it deems necessary to facilitate the holding of the AGM in a lawful manner.
Further guidance is found in Section 85(3) of the Act, which provides for circumstances where it becomes impracticable to call a meeting using the regular procedure. In such cases, the Court may, either on its motion or on application by a director or any member entitled to vote, order that the meeting be held in a manner it thinks fit. The law allows wide discretion to the Court to adapt procedures where strict compliance with the Articles of Association or the Act becomes infeasible. Once such an order is passed, any meeting held in accordance with that order is deemed legally valid and binding for all statutory purposes.
The procedure for obtaining such relief follows the familiar course: the applicant issues a legal notice, followed by submission of a court application under Section 81(2) or 85(3). If the Court admits the application, it directs publication of notice in two national dailies, one in Bangla and one in English, providing stakeholders with the opportunity to object. An affidavit of compliance must be filed verifying the completion of publication and all preliminary requirements. The Court, upon hearing, considers whether the delay was justified, and if so, may pass an order allowing the AGM to be conducted either retroactively or in the near future, with instructions on procedure, quorum, and documentation.
Once the meeting is held as per the Court’s directions, the minutes and resolutions passed must be submitted to the RJSC within the statutory deadline. The company is expected to regularize its filings, including Form X for AGM notices, auditor reappointment forms, and any amendment or approval resolutions that were passed at the AGM.
Kazi Law Chamber regularly assists companies and stakeholders in preparing comprehensive petitions, resolving procedural barriers, and representing clients in securing timely judicial approval. We also assist with drafting AGM notices, resolutions, directors’ reports, and RJSC forms to restore full statutory compliance.
Condonation of Delay in Filing the Return of Allotment of Shares
Under Section 151, read with Section 396 of the Companies Act, 1994, it is mandatory for a limited company to submit a report of share allotments to the Registrar of Joint Stock Companies and Firms (RJSC) within 60 days from the date of allotment. The report must detail the number and value of shares allotted, the identity of the allottees, and the nature of consideration received—whether in cash, kind, or otherwise.
Non-compliance with this requirement leads to serious consequences. The law imposes a daily fine of up to one thousand taka for each day the violation continues, on every officer of the company who knowingly and wilfully participated in the default. This includes directors, managers, and company secretaries.
However, delays often result from administrative oversights, internal miscommunication, or procedural bottlenecks. To address such issues, Section 396 offers relief by allowing the responsible company personnel to file an application before the Company Bench of the High Court Division seeking condonation of the delay.
The Court has discretionary powers to grant relief if it is satisfied that the delay was unintentional, caused by oversight, or attributable to other just and fair reasons. Upon approval, the Court may pass an order extending the time allowed for filing the return of allotment. This ensures that the company can cure its default without incurring ongoing penalties, thereby restoring compliance with statutory obligations.
Such applications may be initiated by company directors, managers, or officers, provided they are authorized by the Board of Directors through a properly adopted board resolution. The process mirrors that used for other corporate filings under judicial supervision.
After passing the board resolution, the authorized officer files an application before the High Court, stating the reasons for delay, supported by relevant documents such as board meeting minutes, auditor statements, and draft Forms IX/X. Upon admission of the petition, the Court may require publication of notice in two national daily newspapers to give notice to any interested party. Once this is done, an affidavit-in-compliance is filed. After the hearing, if satisfied, the Court may allow the delayed filing, usually directing the applicant to make a nominal donation to charity. The judgment must then be submitted to the RJSC, along with the overdue Forms and supporting records, for final registration.
Condonation of Delay in Registering Mortgages or Charges
Under Section 159, read with Section 171 of the Companies Act, 1994, any company that creates a mortgage or charge over its assets must register the same with the RJSC within 21 days from the date of creation. The types of charges requiring registration include those related to securing debentures, mortgages on property or receivables, pledges on uncalled share capital, and other security arrangements.
Failure to register the charge within the statutory period results in severe legal consequences. The mortgage or charge becomes invalid against the liquidator and any creditor in the event of winding up. This means that although the obligation to repay the underlying loan or liability remains enforceable, the secured creditor loses the benefit of the security interest, and the debt becomes immediately payable.
Importantly, if the mortgage or charge is registered correctly, it serves as constructive notice to the public. Anyone acquiring the company’s property is deemed to be aware of the encumbrance. Thus, timely registration protects both the company and its secured creditors from future legal complications.
However, where the company fails to register the charge within the 21-day window, or where there has been a clerical error or oversight, the High Court Division may grant relief. This relief is contingent upon the applicant demonstrating that the failure was due to accidental omission, inadvertence, or other just cause. The Court must also be satisfied that the interests of creditors and shareholders are not adversely affected.
Upon a successful petition, the Court may grant an extension of time or permit the omission to be corrected. The order may be subject to the payment of costs or compliance with additional conditions. However, the law is clear that such an order shall not prejudice the rights of third parties who may have acquired interests in the subject property before the actual registration.
Applications for such relief are generally filed by the company itself, represented by the Managing Director or any other officer authorized by board resolution. The application must include the original mortgage or charge instrument, draft Form XVIII, proof of non-registration, and an explanation for the delay. As with other company law applications, notice of the petition is published in two national newspapers, followed by submission of an affidavit-in-compliance. The Court then hears the matter and, if satisfied, allows the extension.
Once the Court order is obtained, the company must submit it, along with all relevant mortgage or charge documents and Form XVIII, to the RJSC for completion of registration. Failure to comply within the revised timeframe may result in the relief lapsing and the original default being reinstated.
Amalgamation of Two Companies / Corporate Restructuring (Merger/Demerger, etc.)
The legal mechanism governing the amalgamation, merger, demerger, or any broader corporate restructuring scheme between companies in Bangladesh is primarily contained in Sections 228 and 229 of the Companies Act, 1994. These provisions empower the Court to sanction corporate arrangements, compromises, or reorganizations that are binding on companies, shareholders, and creditors, subject to specific approvals and procedural safeguards.
Under Section 228, if a company proposes an arrangement or compromise with its creditors or members, whether during ordinary business or in the course of winding up, the High Court Division of the Supreme Court may direct that a meeting of the concerned stakeholders be convened. This includes creditors and shareholders, as determined by the Court. If the compromise or scheme is approved by a majority representing three-fourths in value of the creditors or members present and voting, and the Court deems it fair and reasonable, it may sanction the arrangement, rendering it legally binding upon all parties, including dissenting stakeholders and the company.
In support of the arrangement, the Court may also impose a moratorium on legal proceedings, temporarily staying any suits or enforcement actions against the company until the application for the scheme is fully resolved.
Expanding on this, Section 229 of the Act lays out the Court’s power when a scheme is part of a broader reconstruction or amalgamation involving the transfer of undertakings between two or more companies. Upon being satisfied with the scheme, the Court may issue a comprehensive order which may include the following directions:
Transfer of assets and liabilities from the transferor company to the transferee company;
Issuance or allocation of shares, debentures, or other securities by the transferee company to the shareholders of the transferor;
Continuation of pending legal proceedings by or against the transferee company in place of the transferor;
Dissolution of the transferor company without going through a formal winding-up;
Resolution of claims by dissenting shareholders or creditors who oppose the scheme;
Any other orders deemed necessary to ensure the success of the reconstruction or amalgamation.
It is significant to note that when such an order is passed, the transfer of property or liabilities occurs automatically, and the property may even be discharged from existing charges or encumbrances, if so ordered by the Court. This provides a strong statutory foundation for clean, enforceable transfers in corporate reorganizations.
Procedural Framework
The procedural steps for court-sanctioned amalgamation or restructuring are detailed and must be meticulously followed.
Proposal and Consent by Majority Stakeholders:
The process begins with a proposal for a compromise or arrangement between the companies involved, usually a transferor and a transferee entity. The scheme must be formally approved by the Board of Directors of each company and consented to by a majority of the shareholders and/or creditors representing more than fifty percent.
Extraordinary General Meeting (EGM):
Following board approval, a Court-directed Extraordinary General Meeting (EGM) is held involving the shareholders and creditors of both companies. In this meeting, a special resolution is proposed and must be passed by at least three-fourths of those present in value, whether in terms of shareholding or credit exposure. The resolution should include detailed terms of the scheme, structure of share swaps, liabilities assumed, legal treatment of dissenting parties, and post-merger governance.
Application to the High Court Division:
Once the EGM adopts the resolution, a formal application under Section 229 is submitted to the Company Bench of the High Court Division. The application must be accompanied by:
A verified copy of the scheme of amalgamation or restructuring;
Audited financial statements of both companies in accordance with the International Accounting Standards (IAS);
Board resolutions authorizing the scheme;
Affidavits from directors, financial disclosures, and creditors’ consents (if required).
The Court, upon admitting the application, examines the merits, commercial rationale, and fairness of the proposed scheme. The Court may also exercise its inherent powers under Section 151 of the Code of Civil Procedure (CPC) and Rule 8 of the Company Rules, 2009, where necessary to effectuate the restructuring.
If satisfied, the Court sanctions the scheme and issues binding directions, including the transfer of assets and liabilities, the issuance of new securities by the transferee company, and the dissolution of the transferor entity without winding-up. The Court may also direct the publication of the order and compliance filings with the Registrar of Joint Stock Companies and Firms (RJSC).
Protection of Minority Shareholders
The Companies Act, 1994, through Section 233, provides a statutory safeguard for minority shareholders or debenture-holders who face discriminatory or prejudicial conduct within a company. Any member or debenture-holder who satisfies the ownership thresholds outlined in Section 195(a) and (b) may seek judicial intervention from the High Court Division when the company’s conduct adversely affects their interests.
An application may be made when the affairs of the company are being managed in a way that harms or neglects the interests of one or more shareholders or debenture-holders. This remedy also applies where the company is acting, or is likely to act, in a manner that unfairly discriminates against specific members, or when a resolution has been passed or is likely to be passed that operates detrimentally toward minority shareholders. The Court, after hearing the parties, may make any order it considers necessary for protecting the applicant's interests and ensuring equitable treatment of shareholders. This may include cancelling or modifying a resolution or transaction, regulating the future conduct of the company, or ordering amendments to its memorandum or articles of association.
To file such an application, the shareholder must be genuinely aggrieved by an act or omission of the company that falls within the circumstances described above.
The Court, in considering whether relief should be granted, evaluates several factual and legal criteria. One of the primary considerations is whether the petitioner is acting in good faith, meaning the application is not driven by ulterior motives or vexatious intent. The Court also considers whether the applicant has alternative remedies available under the law or corporate governance framework and whether those alternatives have been reasonably pursued. It also examines whether any fair or reasonable offer was made by the controlling shareholders to resolve the grievance.
Importantly, the Court will scrutinize the motives of those in control of the company. If their conduct reflects genuine commercial judgment in the interests of the company, the Court may refrain from intervention. However, if the conduct appears to be motivated by personal gain, exclusion, or oppression, the Court is likely to act.
The timing of the application is also relevant. Unjustified delay in presenting the petition may weaken the applicant’s claim unless compelling reasons for the delay are provided. The substance of the company’s management is another factor. If the company’s affairs are being conducted in a manner that adversely impacts its goodwill, financial health, contracts, or shareholding in subsidiaries, this can form the basis for judicial relief.
Similarly, exclusion of the petitioner from participating in management, particularly where such exclusion is orchestrated unfairly, can justify intervention. The presence of fraud, intentional suppression of shareholder rights, or resolutions aimed at forcibly removing a shareholder from the company (such as through share expropriation) may also lead the Court to issue protective orders.
Kazi Law Chamber advises clients on both sides of these disputes, minority shareholders seeking protection, and companies defending against such claims. Our approach emphasizes evidence-backed litigation strategies and careful navigation of corporate records, resolutions, and statutory thresholds to ensure our clients’ positions are fully protected in line with prevailing judicial standards.
Winding-up of a Company by Judicial Intervention
Winding-up by the Court is an exceptional remedy provided under Section 241 of the Companies Act, 1994. It allows the High Court Division to order the dissolution of a company when statutory or equitable grounds are satisfied. The provision outlines several distinct grounds under which a company may be wound up.
These include where the company has resolved, by special resolution, that it should be wound up; where the company defaults in filing its statutory report or holding its statutory meeting; or where it has failed to commence business within a year of incorporation or has suspended operations for a full year. A winding-up order may also be sought where the number of shareholders falls below the statutory minimum, two in the case of a private company and seven in the case of a public company, or where the company is unable to pay its debts. Finally, the Court may wind up a company if it considers it just and equitable to do so.
Section 242 of the Act explains when a company shall be deemed unable to pay its debts. This may occur when a company owes more than BDT 5,000 and fails to satisfy a written demand within three weeks, or when execution of a court decree in favour of a creditor is returned unsatisfied. The Court may also independently assess whether the company is commercially insolvent.
As held by the Appellate Division in Agrani Bank vs. Bangladesh Tyres Ltd. [43 DLR (AD) 164], commercial insolvency arises when the company’s assets, existing and potential, are insufficient to meet its liabilities, and it is heavily indebted with no realistic prospect of profitability or recovery.
When the winding-up petition is filed on just and equitable grounds, the Court considers broader circumstances such as deadlock in management, mismanagement, loss of confidence in leadership, or evidence that the company was formed or operated with fraudulent intent. These grounds are assessed contextually and do not require the company to be insolvent.
The procedural steps begin with an application under Section 241, which in some cases must be preceded by a statutory notice. Upon admission, the Court may appoint a Provisional Liquidator to protect assets during the pendency of proceedings. A formal hearing follows, and if the Court is satisfied, it may order winding-up and appoint an Official Liquidator to take charge of the company’s affairs, realize assets, and distribute proceeds to creditors.
In exceptional cases, such as the one referenced in MM Structural, the Court may appoint a Provisional Liquidator even before admitting the petition, if immediate intervention is necessary to prevent asset dissipation or fraudulent transfers.
At Kazi Law Chamber, we provide strategic representation in winding-up proceedings, acting for creditors, shareholders, or the company itself. We ensure procedural compliance, draft and issue statutory notices, and support clients throughout the judicial winding-up lifecycle, while also exploring alternatives such as voluntary liquidation, corporate restructuring, or private settlement where more commercially viable.
Corporate litigation legal framework is governed primarily by the Companies Act, 1994, which outlines the legal procedures for the incorporation, operation, and dissolution of companies. However, when disputes arise or corporate compliance needs to be rectified through judicial channels, parties must rely on specific sections of this Act and supplementary laws such as the Arbitration Act, 2001, the Bankruptcy Act, 1997, and the Civil Procedure Code, 1908.
At Kazi Law Chamber, we provide end-to-end Corporate litigation support in matters related to company law, drawing upon decades of experience in representing both corporate entities and shareholders before the Company Bench of the Hon’ble High Court Division of the Supreme Court of Bangladesh.
Common Areas of Company Law Litigation
Our firm routinely handles applications, disputes, and compliance corrections in the following areas:
Alteration of the Objects Clause in the Memorandum of Association
Rectification of the Share Register
Reduction of Share Capital
Condonation of delay in holding the AGM
Condonation of delay in filing the Return of Allotment
Delay in registering Mortgages or Charges
Mergers, Demergers, and Corporate Restructuring
Protection of Minority Shareholders
Judicial Winding-Up of Companies
Alteration of the Objects Clause of the Memorandum of Association
The objects clause in a company’s Memorandum of Association defines the company’s primary purpose and limits its operational scope. Under Sections 12 and 13 of the Companies Act, 1994, a company may alter its objects clause by passing a special resolution. This is necessary in circumstances where a company seeks to expand its business, introduce new methods of operation, enter new markets, combine activities, sell or dispose of significant undertakings, or restructure through mergers or amalgamations.
Such an alteration must be initiated by convening an Extraordinary General Meeting (EGM), for which at least 21 days’ notice must be served to the shareholders. During this meeting, the proposed alteration is adopted through a special resolution passed by the required majority of shareholders. Once adopted, the company must apply to the Company Bench of the High Court Division for confirmation under the prescribed legal procedure.
The Court, upon admission of the application, will usually direct that public notice of the proposed changes be published in two national daily newspapers, one in Bengali and one in English, to inform all stakeholders and the public. The company is then required to submit an affidavit-in-compliance certifying that all procedural requirements, including publication, have been fulfilled.
During the hearing, the Court examines whether the proposed alteration meets the legal standards set out in the Corporate Litigation Act and whether it serves a legitimate commercial purpose. If satisfied, the Court grants permission for the amendment, often subject to a nominal donation to a recognised charitable organization. Thereafter, the amended Memorandum of Association, along with a certified copy of the Court's order, must be filed with the Registrar of Joint Stock Companies and Firms (RJSC) for registration and final compliance.
It is also important to note that if the proposed alteration potentially affects creditors, partners, or other stakeholders, notice must be issued to them, and in some cases, a No Objection Certificate (NOC) may be required from creditors under the Bank Companies Act or other relevant laws. At Kazi Law Chamber, our Corporate litigation legal team ensures that such filings are precise, timely, and strategically structured to avoid delays and objections.
Rectification of the Share Register
Another significant area of corporate litigation involves disputes concerning entries in the company’s share register. Under Section 34 of the Companies Act, every company is obligated to maintain a register of its shareholders. This register must accurately reflect the names, addresses, shareholding quantities, and dates of entry and cessation of members.
When errors occur, such as unjustified inclusion, wrongful omission, or failure to timely record changes in shareholding, those affected may approach the Court for rectification of the register under Section 43 of the Companies Act. The provision is broad enough to allow applications from the aggrieved individual, any member of the company, or the company itself.
Before initiating Corporate litigation, it is standard practice to serve a legal notice to the company, requesting correction. If unresolved, the petitioner may file an application with the High Court. Upon admitting the application, the Court generally requires the notice to be published in two daily newspapers (one Bengali and one English), allowing third parties the opportunity to object or intervene, if necessary.
The petitioner must also submit an affidavit-in-compliance confirming that the publication and other formalities have been properly completed. At the hearing stage, the Court evaluates whether the application demonstrates “sufficient cause” and whether the petitioner has legitimate rights over the shares in question.
If the Court is satisfied, it issues an order directing the necessary rectification. As with other company law matters, such an order is typically subject to a charitable donation, reflecting judicial convention. After obtaining the order, the applicant must submit it to the RJSC, along with any other relevant documents, for final implementation in the company’s statutory records.
Applicants should be prepared to provide documentary evidence to substantiate their claim, such as share transfer forms, board resolutions, notices, or shareholder agreements. At Kazi Law Chamber, we assist clients in preparing robust, legally sound applications and supporting affidavits, ensuring that both procedural and evidentiary requirements are met.
Reduction of Share Capital of the Company
Under Sections 59 and 60 of the Companies Act, 1994, a company limited by shares may reduce its authorized share capital in any manner, provided the power to do so is specifically stated in its Articles of Association. The Act grants a company wide-ranging of powers in this regard. A company may extinguish or reduce the liability of any of its shares in respect of unpaid share capital; cancel any paid-up capital that is lost or unrepresented by available assets; or pay off any paid-up share capital which is considered surplus to the company's requirements.
The reduction of share capital must be approved by passing a special resolution in accordance with the law. Following the resolution, a petition is filed before the Company Bench of the High Court Division for confirmation. The Court, in evaluating such an application, may consider whether the reduction proposal is fair and equitable to all classes of shareholders and whether creditors’ rights are likely to be impacted. It further examines whether all shareholders in the same class are treated equally, and in cases of differential treatment, whether the affected members have given their informed consent. The Court also considers whether sufficient disclosures were made to the shareholders at the time of voting, thereby ensuring they exercised an informed choice.
In many cases, especially when creditors’ interests are likely to be affected, the Court may require the applicant company to obtain a No Objection Certificate (NOC) from its creditors. This is particularly relevant for financial institutions, where provisions of the Bank Companies Act and related financial regulations may be triggered.
The procedural framework closely mirrors that for alteration of the objects clause under Sections 12 and 13. The company must issue a 21-day notice convening an Extraordinary General Meeting (EGM). Upon adoption of the special resolution, an application is made to the High Court under Section 59/60. Following admission, the Court will direct publication of notice in two national daily newspapers—one in Bangla and the other in English. The applicant must then file an affidavit-in-compliance, confirming that procedural steps, including newspaper publication, have been completed.
At the final hearing, the Court may allow the application and pass orders permitting the reduction of share capital, usually subject to the company making a nominal donation to a recognized charity. Thereafter, the company must submit the certified judgment, amended Memorandum and Articles of Association, and other required documents to the Registrar of Joint Stock Companies and Firms (RJSC) within the stipulated timeframe for final registration.
At Kazi Law Chamber, we meticulously assist clients in drafting special resolutions, preparing court applications, and coordinating compliance with the RJSC and creditor requirements, ensuring a smooth and fully compliant reduction process.
Condonation of Delay in Holding the Annual General Meeting (AGM)
Under Section 81(2) of the Companies Act, 1994, every company is required to hold its Annual General Meeting (AGM) within the calendar year, typically by 31st December. The AGM is a statutory requirement where the company places its financial statements, appoints or reappoints directors and auditors, and allows shareholders to review and participate in governance matters. However, if a company fails to hold its AGM within this timeframe, it may approach the Court for condonation of delay.
Section 81(2) enables the Court, upon application by any member of the company, to either call or direct the calling of a general meeting. In doing so, the Court may also give any ancillary or consequential directions that it deems necessary to facilitate the holding of the AGM in a lawful manner.
Further guidance is found in Section 85(3) of the Act, which provides for circumstances where it becomes impracticable to call a meeting using the regular procedure. In such cases, the Court may, either on its motion or on application by a director or any member entitled to vote, order that the meeting be held in a manner it thinks fit. The law allows wide discretion to the Court to adapt procedures where strict compliance with the Articles of Association or the Act becomes infeasible. Once such an order is passed, any meeting held in accordance with that order is deemed legally valid and binding for all statutory purposes.
The procedure for obtaining such relief follows the familiar course: the applicant issues a legal notice, followed by submission of a court application under Section 81(2) or 85(3). If the Court admits the application, it directs publication of notice in two national dailies, one in Bangla and one in English, providing stakeholders with the opportunity to object. An affidavit of compliance must be filed verifying the completion of publication and all preliminary requirements. The Court, upon hearing, considers whether the delay was justified, and if so, may pass an order allowing the AGM to be conducted either retroactively or in the near future, with instructions on procedure, quorum, and documentation.
Once the meeting is held as per the Court’s directions, the minutes and resolutions passed must be submitted to the RJSC within the statutory deadline. The company is expected to regularize its filings, including Form X for AGM notices, auditor reappointment forms, and any amendment or approval resolutions that were passed at the AGM.
Kazi Law Chamber regularly assists companies and stakeholders in preparing comprehensive petitions, resolving procedural barriers, and representing clients in securing timely judicial approval. We also assist with drafting AGM notices, resolutions, directors’ reports, and RJSC forms to restore full statutory compliance.
Condonation of Delay in Filing the Return of Allotment of Shares
Under Section 151, read with Section 396 of the Companies Act, 1994, it is mandatory for a limited company to submit a report of share allotments to the Registrar of Joint Stock Companies and Firms (RJSC) within 60 days from the date of allotment. The report must detail the number and value of shares allotted, the identity of the allottees, and the nature of consideration received—whether in cash, kind, or otherwise.
Non-compliance with this requirement leads to serious consequences. The law imposes a daily fine of up to one thousand taka for each day the violation continues, on every officer of the company who knowingly and wilfully participated in the default. This includes directors, managers, and company secretaries.
However, delays often result from administrative oversights, internal miscommunication, or procedural bottlenecks. To address such issues, Section 396 offers relief by allowing the responsible company personnel to file an application before the Company Bench of the High Court Division seeking condonation of the delay.
The Court has discretionary powers to grant relief if it is satisfied that the delay was unintentional, caused by oversight, or attributable to other just and fair reasons. Upon approval, the Court may pass an order extending the time allowed for filing the return of allotment. This ensures that the company can cure its default without incurring ongoing penalties, thereby restoring compliance with statutory obligations.
Such applications may be initiated by company directors, managers, or officers, provided they are authorized by the Board of Directors through a properly adopted board resolution. The process mirrors that used for other corporate filings under judicial supervision.
After passing the board resolution, the authorized officer files an application before the High Court, stating the reasons for delay, supported by relevant documents such as board meeting minutes, auditor statements, and draft Forms IX/X. Upon admission of the petition, the Court may require publication of notice in two national daily newspapers to give notice to any interested party. Once this is done, an affidavit-in-compliance is filed. After the hearing, if satisfied, the Court may allow the delayed filing, usually directing the applicant to make a nominal donation to charity. The judgment must then be submitted to the RJSC, along with the overdue Forms and supporting records, for final registration.
Condonation of Delay in Registering Mortgages or Charges
Under Section 159, read with Section 171 of the Companies Act, 1994, any company that creates a mortgage or charge over its assets must register the same with the RJSC within 21 days from the date of creation. The types of charges requiring registration include those related to securing debentures, mortgages on property or receivables, pledges on uncalled share capital, and other security arrangements.
Failure to register the charge within the statutory period results in severe legal consequences. The mortgage or charge becomes invalid against the liquidator and any creditor in the event of winding up. This means that although the obligation to repay the underlying loan or liability remains enforceable, the secured creditor loses the benefit of the security interest, and the debt becomes immediately payable.
Importantly, if the mortgage or charge is registered correctly, it serves as constructive notice to the public. Anyone acquiring the company’s property is deemed to be aware of the encumbrance. Thus, timely registration protects both the company and its secured creditors from future legal complications.
However, where the company fails to register the charge within the 21-day window, or where there has been a clerical error or oversight, the High Court Division may grant relief. This relief is contingent upon the applicant demonstrating that the failure was due to accidental omission, inadvertence, or other just cause. The Court must also be satisfied that the interests of creditors and shareholders are not adversely affected.
Upon a successful petition, the Court may grant an extension of time or permit the omission to be corrected. The order may be subject to the payment of costs or compliance with additional conditions. However, the law is clear that such an order shall not prejudice the rights of third parties who may have acquired interests in the subject property before the actual registration.
Applications for such relief are generally filed by the company itself, represented by the Managing Director or any other officer authorized by board resolution. The application must include the original mortgage or charge instrument, draft Form XVIII, proof of non-registration, and explanation for the delay. As with other company law applications, notice of the petition is published in two national newspapers, followed by submission of an affidavit-in-compliance. The Court then hears the matter and, if satisfied, allows the extension.
Once the Court order is obtained, the company must submit it, along with all relevant mortgage or charge documents and Form XVIII, to the RJSC for completion of registration. Failure to comply within the revised timeframe may result in the relief lapsing and the original default being reinstated.
Amalgamation of Two Companies / Corporate Restructuring (Merger/Demerger, etc.)
The legal mechanism governing the amalgamation, merger, demerger, or any broader corporate restructuring scheme between companies in Bangladesh is primarily contained in Sections 228 and 229 of the Companies Act, 1994. These provisions empower the Court to sanction corporate arrangements, compromises, or reorganizations that are binding on companies, shareholders, and creditors, subject to specific approvals and procedural safeguards.
Under Section 228, if a company proposes an arrangement or compromise with its creditors or members, whether during ordinary business or in the course of winding up, the High Court Division of the Supreme Court may direct that a meeting of the concerned stakeholders be convened. This includes creditors and shareholders, as determined by the Court. If the compromise or scheme is approved by a majority representing three-fourths in value of the creditors or members present and voting, and the Court deems it fair and reasonable, it may sanction the arrangement, rendering it legally binding upon all parties, including dissenting stakeholders and the company.
In support of the arrangement, the Court may also impose a moratorium on legal proceedings, temporarily staying any suits or enforcement actions against the company until the application for the scheme is fully resolved.
Expanding on this, Section 229 of the Act lays out the Court’s power when a scheme is part of a broader reconstruction or amalgamation involving the transfer of undertakings between two or more companies. Upon being satisfied with the scheme, the Court may issue a comprehensive order which may include the following directions:
Transfer of assets and liabilities from the transferor company to the transferee company;
Issuance or allocation of shares, debentures, or other securities by the transferee company to the shareholders of the transferor;
Continuation of pending legal proceedings by or against the transferee company in place of the transferor;
Dissolution of the transferor company without going through a formal winding-up;
Resolution of claims by dissenting shareholders or creditors who oppose the scheme;
Any other orders deemed necessary to ensure the success of the reconstruction or amalgamation.
It is significant to note that when such an order is passed, the transfer of property or liabilities occurs automatically, and the property may even be discharged from existing charges or encumbrances, if so ordered by the Court. This provides a strong statutory foundation for clean, enforceable transfers in corporate reorganizations.
Procedural Framework
The procedural steps for court-sanctioned amalgamation or restructuring are detailed and must be meticulously followed.
Proposal and Consent by Majority Stakeholders:
The process begins with a proposal for a compromise or arrangement between the companies involved, usually a transferor and a transferee entity. The scheme must be formally approved by the Board of Directors of each company and consented to by a majority of the shareholders and/or creditors representing more than fifty percent.
Extraordinary General Meeting (EGM):
Following board approval, a Court-directed Extraordinary General Meeting (EGM) is held involving the shareholders and creditors of both companies. In this meeting, a special resolution is proposed and must be passed by at least three-fourths of those present in value, whether in terms of shareholding or credit exposure. The resolution should include detailed terms of the scheme—structure of share swaps, liabilities assumed, legal treatment of dissenting parties, and post-merger governance.
Application to the High Court Division:
Once the EGM adopts the resolution, a formal application under Section 229 is submitted to the Company Bench of the High Court Division. The application must be accompanied by:
A verified copy of the scheme of amalgamation or restructuring;
Audited financial statements of both companies in accordance with the International Accounting Standards (IAS);
Board resolutions authorizing the scheme;
Affidavits from directors, financial disclosures, and creditors’ consents (if required).
The Court, upon admitting the application, examines the merits, commercial rationale, and fairness of the proposed scheme. The Court may also exercise its inherent powers under Section 151 of the Code of Civil Procedure (CPC) and Rule 8 of the Company Rules, 2009, where necessary to effectuate the restructuring.
If satisfied, the Court sanctions the scheme and issues binding directions, including the transfer of assets and liabilities, the issuance of new securities by the transferee company, and the dissolution of the transferor entity without winding-up. The Court may also direct the publication of the order and compliance filings with the Registrar of Joint Stock Companies and Firms (RJSC).
Protection of Minority Shareholders
The Companies Act, 1994, through Section 233, provides a statutory safeguard for minority shareholders or debenture-holders who face discriminatory or prejudicial conduct within a company. Any member or debenture-holder who satisfies the ownership thresholds outlined in Section 195(a) and (b) may seek judicial intervention from the High Court Division when the company’s conduct adversely affects their interests.
An application may be made when the affairs of the company are being managed in a way that harms or neglects the interests of one or more shareholders or debenture-holders. This remedy also applies where the company is acting, or is likely to act, in a manner that unfairly discriminates against specific members, or when a resolution has been passed or is likely to be passed that operates detrimentally toward minority shareholders. The Court, after hearing the parties, may make any order it considers necessary for protecting the applicant's interests and ensuring equitable treatment of shareholders. This may include cancelling or modifying a resolution or transaction, regulating the future conduct of the company, or ordering amendments to its memorandum or articles of association.
To file such an application, the shareholder must be genuinely aggrieved by an act or omission of the company that falls within the circumstances described above.
The Court, in considering whether relief should be granted, evaluates several factual and legal criteria. One of the primary considerations is whether the petitioner is acting in good faith, meaning the application is not driven by ulterior motives or vexatious intent. The Court also considers whether the applicant has alternative remedies available under the law or corporate governance framework and whether those alternatives have been reasonably pursued. It also examines whether any fair or reasonable offer was made by the controlling shareholders to resolve the grievance.
Importantly, the Court will scrutinize the motives of those in control of the company. If their conduct reflects genuine commercial judgment in the interests of the company, the Court may refrain from intervention. However, if the conduct appears to be motivated by personal gain, exclusion, or oppression, the Court is likely to act.
The timing of the application is also relevant. Unjustified delay in presenting the petition may weaken the applicant’s claim unless compelling reasons for the delay are provided. The substance of the company’s management is another factor. If the company’s affairs are being conducted in a manner that adversely impacts its goodwill, financial health, contracts, or shareholding in subsidiaries, this can form the basis for judicial relief.
Similarly, exclusion of the petitioner from participating in management—particularly where such exclusion is orchestrated unfairly—can justify intervention. The presence of fraud, intentional suppression of shareholder rights, or resolutions aimed at forcibly removing a shareholder from the company (such as through share expropriation) may also lead the Court to issue protective orders.
Kazi Law Chamber advises clients on both sides of these disputes, minority shareholders seeking protection and companies defending against such claims. Our approach emphasizes evidence-backed litigation strategies and careful navigation of corporate records, resolutions, and statutory thresholds to ensure our clients’ positions are fully protected in line with prevailing judicial standards.
Winding-up of a Company by Judicial Intervention
Winding-up by the Court is an exceptional remedy provided under Section 241 of the Companies Act, 1994. It allows the High Court Division to order the dissolution of a company when statutory or equitable grounds are satisfied. The provision outlines several distinct grounds under which a company may be wound up.
These include where the company has resolved, by special resolution, that it should be wound up; where the company defaults in filing its statutory report or holding its statutory meeting; or where it has failed to commence business within a year of incorporation or has suspended operations for a full year. A winding-up order may also be sought where the number of shareholders falls below the statutory minimum, two in the case of a private company and seven in the case of a public company, or where the company is unable to pay its debts. Finally, the Court may wind up a company if it considers it just and equitable to do so.
Section 242 of the Act explains when a company shall be deemed unable to pay its debts. This may occur when a company owes more than BDT 5,000 and fails to satisfy a written demand within three weeks, or when execution of a court decree in favour of a creditor is returned unsatisfied. The Court may also independently assess whether the company is commercially insolvent.
As held by the Appellate Division in Agrani Bank vs. Bangladesh Tyres Ltd. [43 DLR (AD) 164], commercial insolvency arises when the company’s assets, existing and potential, are insufficient to meet its liabilities, and it is heavily indebted with no realistic prospect of profitability or recovery.
When the winding-up petition is filed on just and equitable grounds, the Court considers broader circumstances such as deadlock in management, mismanagement, loss of confidence in leadership, or evidence that the company was formed or operated with fraudulent intent. These grounds are assessed contextually and do not require the company to be insolvent.
The procedural steps begin with an application under Section 241, which in some cases must be preceded by a statutory notice. Upon admission, the Court may appoint a Provisional Liquidator to protect assets during the pendency of proceedings. A formal hearing follows, and if the Court is satisfied, it may order winding-up and appoint an Official Liquidator to take charge of the company’s affairs, realize assets, and distribute proceeds to creditors.
In exceptional cases, such as the one referenced in MM Structural, the Court may appoint a Provisional Liquidator even before admitting the petition, if immediate intervention is necessary to prevent asset dissipation or fraudulent transfers.
At Kazi Law Chamber, we provide strategic representation in winding-up proceedings, acting for creditors, shareholders, or the company itself. We ensure procedural compliance, draft and issue statutory notices, and support clients throughout the judicial winding-up lifecycle, while also exploring alternatives such as voluntary liquidation, corporate restructuring, or private settlement where more commercially viable.
