Limited Company formation as per Companies Act, 1994

Private or Public Limited Company shall be Registered with Registrar of Joint Stock Companies &
Firms (RJSC), Dhaka, Bangladesh under Companies Act, 1994.

Name of Company

As per section-11 of the Companies Act, 1994-

A Company shall not be registered by a name identical with that by which a Company in existence
is already registered, or nearly resembling the name that there is likelihood of using the name to
deceive, except where the Company in existence is in the course of being dissolved and signifies its
written consent in such manner as the Registrar requires.

Formation of Limited Company

As per section-5 of the Companies Act, 1994-

A private or public Limited Company may form and the types are;

a) Limited by Shares.
b) Limited by Guarantee.
c) Unlimited.

Member of Limited Company

As per section-5 of the Companies Act, 1994-

For Private limited Company the number of members should be not less than 2 and not more 50.
For Public Limited Company the number of members should be not less than 7 and up to limited by
shares.

Memorandum of Association

As per section-5-16 of the Companies Act, 1994-

The Memorandum of Association is a document which contains the fundamental rules regarding the
constitution and activities of a company. It is the basic document which lays down how the
company is to be constituted and what work it shall undertake. The purpose of the memorandum is
to enable the members of the company, its creditors, and the public to know what its powers are and
what is the range of its activities. The memorandum contains rules regarding the capital structure,
the liability of the members, the objects of the company, and all other important matters relating to
the company. The memorandum is altered only after certain formalities are observed.

Articles of Association

As per section-17-21 of the Companies Act, 1994-

The Articles of Association is a document which contains rules, regulations and bye-laws regarding
the internal management of the company. Articles must not violate any provision of the
memorandum or any provision of the Companies Act. The rules laid down in the articles must
always be read subject to the rules contained in memorandum.

Contents Articles

Articles of Association usually contain provisions in respect of the following matters:

a. Share capital, rights of shareholders, payment of commissions, share certificates.

b. Lien on shares.
c. Calls on shares.
d. Transfer of shares
e. Transmission of shares
f. Forfeiture of shares.
g. Conversion of shares into stock.
h. Share warrants.
i. Alteration of capital
j. General meetings and voting rights of members.
k. Appointment and remuneration of directors, board of directors, managers and secretary.
l. Dividends and reserves.
m. Accounts and audits.
n. Capitalization of profits
o. Winding up

Registration of New Company

For registration, the preparation and the filling of certain documents are necessary. These
documents are to be filled with the Registrar of joint Stock Companies together with the requisite
fees. The documents to be delivered are the following:

(a) Memorandum of association signed by each subscriber and dated. The signatures of the
subscribers must be witnessed by a third person, Each of the subscribers undertakes to
subscribe for one or more shares of the company.

(b) Articles of association signed dated and witnesses as for the Memorandum (and b the same
subscribers).

(c) A statutory declaration of compliance by an advocate entitled to appear before High Court
who is engaged in the formation of a company or by a person named in the articles as a
director, manager or secretary of the company to the effect that the requirements of the act
as to registration have been complied with [Section 25(2)]

(d) Notice of situation of registered office (Sec. 77)

(e) Particulars of Directors, Managing Agent, Managers (Sec. 115)

(f) A list of persons who have consented to become directors (Sec. 92)
 (g) A written consent of the Directors to acc (5.92). This does not apply to a private company.

Thereafter the proper stamp duty for registration has to be paid and the Registrar then enters the
name of the company on the register of companies and issues a certificate of incorporation. The
company then comes into existence as legal person.

Regulation of Schedule-1 to be included in Articles

The article of association of a company may include all or any of the regulations contained in the
First Schedule of the Companies Act 1994. But whatever may be the case, there are certain
mandatory ….. Which must find places in the Articles? Based on Section 17 (2) the following
regulation of schedule -1 are compulsory for all companies, including private companies.

No of Regulation Description
56 About meetings at different places and adjournment
66 On signature of proxies
71 Directors qualification shares
95 Defect in appointment not to invalidate acts of directors
96 Directors may pay interim dividend
105 Books of account to be at head office and open for directors inspection
108 Contents of profit and loss account
112 About appointment of auditors
113 to 116 Provisions for sending notices.

Directors

For Private Limited Company

Unless otherwise determined by the Company in General Meeting the number of Directors shall not
be less than 2 and not more than 15.

The qualification shares of the Directors shall be determined by the Company in General Meeting or
inception.

Managing Director

The Managing Director is normally appointed by the shareholders in the general meeting of the
Company amongst the members of the Board of Directors. The first Managing Director is appointed
by the signatories of Memorandum of Association.

As per section 109 of the CA 1994 no Public Company, no Private Company which is a subsidiary
of a Public Company shall after the Commencement of this Act, appoint any person as a Managing
Director, if he is a Managing Director or Manager of any other Company.

Provided that no appointment shall be made to any person as the Managing Director of the
Company without the consent of the shareholders in the General Meeting.
As per Section 110 no Company shall appoint or employ any individual as its Managing Director
for a term of exceeding five years at a time.

Annual General Meeting

A general meeting of a company should be held within 18 months from the date of its incorporation
and thereafter one at least in every calendar year. This meeting may also be called an Annual
general Meeting. The period during which the subsequent meeting should be held is 15 months
from the previous general meeting. The articles may provide such meeting shall be held on a certain
date every year. If no such meeting in held, the company and every director or manager who is a
party to the default shall be liable to a fine of TK. 10,000 and Tk. 250 for each day of default and
the Court may on the application of any member of the company, call or direct the calling of such
meeting (Sec. 81,82)

The directors of every company must lay before the company in general meeting a balance sheet
and profit and loss account or in the case of a company not trading for profit and income and
expenditure account for a period covering nine months from the date of the meeting and in the case
of the first meeting after incorporation, for a period covering eighteen months from the date of
incorporation. The balance sheet and the profit and loss account or the income and expenditure
account must be audited by the company auditor and the auditor’s report must be attached
therewith.

Every company other than a private company must send a copy of such balance sheet and profit and
loss account or income and expenditure account so audited together with a copy of the auditor’s
report to the registered address of every member of the company, at least fourteen days before the
meeting at which it is to be laid before the members of the company and shall deposit a copy thereof
at the registered office of the company for the inspection of the members. The directors must also
attach to every balance sheet a report about the state of the company business, the amount if any
which they recommend to be paid by way of dividend and the amount, if any which they propose to
a reserve fund.

Statutory Returns

A company having share capital and incorporated under the Companies Act. 1994 shall have to file
the following statutory returns to the Register every year.

1. The annual list of members and summary [Schedule-X]:- To be filed within 21 days after
the date of holding the annual general meeting. The transfer of share if any shall be entered
or reflected in return.
2. Balance sheet and Profit & Loss accounts: To be filed within 30 days from the date of
annual general meeting (section 190). The profit and loss accounts to be filed separately in
the case of a private company.
3. Consent of Auditor [section 210]:- The Company shall inform the auditor or auditor or
auditors in respect of his/their appointment within 7 days form the date annual general
meeting and the auditors shall inform the Register whether the appointment has accepted or
refused by him or them within 30 days form the date receipt of such information.
4. Statutory Report: It is a applicable in the case of public limited companies (section 83).
 5. Particulars of directors (Form XII): The information in respect of appointment of
Directors or any change thereof and in the case of retirement of Directors by rotation and re-
election in public company.
6. The consent of Directors to act (Form IX). Section 92.

Appointment and Remuneration of Auditors, Section -210

 Auditors are appointed in the Annual General Meeting by the Shareholders;

 First Auditors of the Company is appointed by the Directors;
 The Directors may appoint Auditors in case of casual vacancy;
 The Govt. may appoint an Auditor if the above authorities fail to appoint an Auditor;
 Auditor’s remuneration is to be fixed by the authority of appointing the Auditor.

Right and duties of Auditor, Section -213

 The Auditors have right to access any books of accounts, information, voucher, statement as
required to perform the audit work.
 The auditors may require any information explanation from any officers, staff of the Company
for the audit.

Winding Up

According to Section 239, the winding up of a Company may be done in any one of the following
three ways:

1. Compulsory winding up by court.

2. Voluntary winding up by the members or by creditors
3. Voluntary winding up under the supervision of the court.