Companies Act 1994

Companies Act 1994 (Act XVIII of 1994) governs company law in Bangladesh. It received the assent of the President of the People's Republic of Bangladesh on 11 September 1994. Before its enactment in 1994, company law was governed by the Companies Act 1913 which was amended in 1915, 1920, 1926, 1930, 1932, 1936, 1938, 1949 and 1969, 1973 and 1984.

The early history of company law of India was laid in the British Companies Act 1844 on the basis of which the Joint Stock Companies Act 1850, the first company law for the sub-continent, was formulated. This act was based on 'unlimited liability'. In 1857, the Joint Stock Companies Act 1850 was amended with the provision of unlimited liability was replaced by 'limited liability' and the act was renamed as The Companies Act 1857. With the expansion of trade and commerce in the sub-continent, the Companies Act 1857 was amended in 1860, 1866, 1882, 1887, 1891, 1895, 1900 and 1908. The Indian Companies Act 1913 was actually the amended and reformed version of The English Companies Act 1908.

The Companies Act 1994 has eleven parts. Part-I contains the preliminary aspects of the act including the short title of the act, commencement and extent, definitions of various terms. Part-II is concerned with formulation and incorporation of companies, including bank companies, and memorandum of association for various types of companies, articles of association, general provision for registration of memorandum and articles of association, associations not for profit, and companies limited by guarantee. Part-III mainly narrates the rules for share capital, registration of unlimited company as limited, and the limited liability of directors. This part states the rules and procedures for distribution of share capital of companies and the provisions for reduction of share capital.

Part-IV states the framework for regulating the management and administration of companies, the requirements for having a registered office of a company with a distinct name at a specific place, the provisions for penalties for non-disclosure of name, and the way to show the authorised, subscribed and paid up capital of companies. It contains the procedures and rules for holding meetings of companies, provisions and procedures for appointment of company directors, their responsibilities, rights and obligations, powers, tenure, loans to and from a company, and their relationship with the managers, and managing agents of a company. This part includes the rules and conditions for appointment of managing agent, the provision for contracts and execution of deeds, power of companies to use their seal abroad, rules regarding company prospectus, the powers of a company to pay interests, commissions and discounts and to allocate and issue additional shares, the provisions for information and procedure as to mortgage and other unregistered charges. Issuing and redemption of debentures, appointment of receivers, and their submission of returns, and registration of charges are also the concerns of this part. It also provides requirements and rules to keep proper accounts, preparation and submission of balance sheets, other statements and records, as well as provisions for penalty for not keeping proper books of accounts.

Further, this part states the provisions for statements to be published by banking and certain other companies; the power of the registrar of joint stock companies to investigate into and seize any accounts, statements, records and information; the requirements and procedures for inspection and audit of company affairs; appointment of auditors; their powers and duties, qualification, remuneration, etc.; provisions for service; issue and authentication of company documents; provisions for arbitration and compromise; and rules of conversion of private company into public company, and protection of interest of minority shareholders.

Part-V of the act provides details of the mode and methods of winding up, liabilities of company directors, owners of the shares and their successors, procedures and options of winding up, ordinary and extraordinary power of courts to be involved in the winding up process, appointment of official liquidator and their powers and duties, settlement of debts of companies and transfer and distribution of assets and liabilities. Part-VI deals in matters relating to the registered office/s of companies; appointment of registrar/s by the government; their powers and responsibilities, payment of registration fees and submission of returns and documents to registrar by the companies. Part-VII interprets the rules of application of the act to companies formed and registered under former Companies Acts. Part-VIII identifies and defines the companies capable of being registered, the various aspects required for registration and the power to substitute memorandum and articles for deed of settlement, etc.

The main concern of Part-IX of the act is the procedure for winding up of unregistered companies. This part explains the meaning of unregistered companies; procedure for their winding up; power to stay or restrain proceedings; suits stayed on winding up order; directions as to property in certain cases; and the status of provisions of this part cumulative. The contents of Part-X include the requirements for establishing foreign companies in Bangladesh, rules for regulating them, preparation, maintenance, audit and submission of their accounts to the host country regulators; notice for closure of foreign companies in Bangladesh; and restrictions on sales and offer for sale of shares. Finally, Part-XI is supplemental and relates legal proceedings, offences, etc. The subject matters elaborated in it are cognisance of offences, application of fines, power to require limited company to give security for costs, and penalty for wrongful withholding of property.

The Companies Act has twelve schedules. The following is a list of them along with the section numbers: Regulation for management of a company limited by shares (sections 2, 17, 18, 86, 367); table of fees to be paid to the registrar (sections 348, 363); particulars of prospectus and reports incorporated in it (section 135); statement in lieu of prospectus (section 141); memorandum and articles of associations of the various types of companies; summary of share capital and lists of shareholders/directors in accordance with Part One of the Companies Act 1994 (section 36); specimen of company balance sheets and instruction for profit and loss accounts (section 185); and statements to be published by bank and insurance companies, deposits/provident/welfare associations (section 192). [Abul Kalam Azad]