Corporate Laws and Practices

Questions for discussion

REGISTRATION OF FOREIGN COMPANIES

I. Meaning of foreign company -€ 8*

2. Documents to be delivered by
^
foreign comPany
- 8&
3.Accounts of foreign company --, A8
4. Stating the name of foreign comPany e 8a
5. Requirement of prospectus

Questions for discussion e aO

Questions for Self Assessment -P t I

SECRETARIAL FRACTICE

I. Formation and registration of a comPany

2. Documents to b. PrePared and submitted
3" Effect of registration

4. Expert knowledge of Memorandurn and Articles

5. Regulation of Schedule - I to be included in Articles
6.Amendments
T.Effects of amendment

8. Amendment of Articles of Association

9. Returns to be filed and the time frame

10. Statutory Returns

I l. Statutory books and registers

12. Statistical bool<s

I 3. Meetings and resolutions

I 3. l. Kinds of meetings
13.2. Resolution

I 3.3. Kinds of resolutions

14. Statutory report of a company

15. Board meeting

I 6. Business at Board meeting

17. Notice of meetings
18. Agenda

The Institute of Chartered Accountants of Bangladesh

FO RE I GN COFIPANT ES' RE GISTMTION

Section Overview

business in Bangladesh.

comPany.

l: FOREIGN COMPANY
When a company which is incorporated outside Bangladesh but establishes business in
Bangladesh with same name and nomenclature with or without a place of business in the
country, it is regarded as a foreign company in Bangladesh. The activities of such a foreign
company shall come under the purview of Bangladesh laws and regulations. The principle
underlying such regulation is that a company registered in a foreign land should in the matter of
supplying information to the public about its constitution, directorate, etc., and in submission of
accounts etc., be as far as practicable on the same footing as a comPany registered in
Bangladesh. Section 378 up to section 392 of the Act regulates the activities of companies
established outside Bangladesh.

2: DOCUMENTS TO BE DELIVERED
Accordingto section 379,if foreign companies establish a place of business in Bangladesh shall,
within one month of the establishment of the place of business, deliver the following to the
Registrar for registration:
(a) A certified copy of the charter or statutes ormemorandum and articles of the
company or other instrument constituting or defining the Constitution of the
company; and if the instrument is not written in Bengali or English language, a
certified Bengali or English translation thereof;
(b) The full address of the registered or principal office of the company;

(c) A list of the directors and secretary, if any, of the comPany;

(d) The name and address or the names and addresses of one or more Persons
resident in Bangladesh, authorized to accept on behalf of the company service of
process and any notice or other document required to be served on the comPany

(e) The full address of the office of the company in Bangladesh which is to be deemed
its principal place of business in Bangladesh.

3: ACCOUNTS OF FOREIGN COMPANY

As mentioned in section 380 of the Companies Act 1994, in every calendar Year a foreign
company will maintain the following accounts:
(a) Make out a balance sheet and profit and loss account or in the case of a comPany
not trading for profit, an income, and expenditure account if the company is a
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 holding company, group accounts, in such form, and containing such pafticulars and
including such documents, as under the provision of this Act it would, if it had been
a comPany within the meaning of this Act, have been required to make out and lay
before the company in general meeting; and.
(b) Deliver three copies of those documents to the Registrar.

4: OBLIGATION TO STATE NAME OF FORE|GN COMPANY

According to section 381, every foreign company shall-

(a) ln every prospectus inviting subscription in Bangladesh for its shares or debentures,
state the country in which the company is incorporated;

(b) Conspicuously exhibit on the outside of every office or place where it carries on
business in Bangladesh, the name of the company and the country in which it is
incorporated, in the letters easily legible in Bengali or English character,

(c) Cause the name of the company and of the country in which the company is
incorporated, to be stated in legible Bengali or English characters in all bill heads and
letter PaPer, and in all notices and other official publications of the company;

(d) lf the liability of the members of the company is limited, cause a notice of that fact-

(i) to be stated in every such prospectus as aforesaid and in all bill heads, letter
PaPer, notices, advertisements and other official publications of the company,
in legible Bengali or English characters;

0i) to be conspicuously exhibited on the outside of every office or place where it

carries on business in Bangladesh, in legible Bengali or English characters.

5: REQUIREMENTS AS TO PROSPECTUS
Section 389 states that a Prospectus of a foreign company must contain parciculars with respect
to the following matters:
(i) The objects of the company;
(ii) The instrument constituting or defining the constitution of the company;
(iii)The enactments, or provisions having the force of an enactment, by or under which
the incorporation of the company was effected;
(iv) An address in Bangladesh where the said instrument, enactments or provisions, or
copies thereof, and if the same are in a foreign language other than English, a
translation thereof in the Bengali or English ceftified in the prescribed manner can
be inspected;
(v) The date on which and the countD/ in which the company was incorporated.

(vi) Whether the company has established a place of business in Bangladesh

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In the event of non-compliance with or contravention of any of the requirements of this
section, a director or other person responsible for the prospectus shall not incur any liability by
reason of the non-compliance /or contravention, if-

(a) As regards any mafter not disclosed, he proves that he was not cognisant
thereof; or

(b) He proves that the non-compliance or contravention arose from an honest

mistake of fact on his part; or

(c) The non-compliance or contravention was in respect of matter which, in the

option of the court dealing with the case, were immaterial or were otherwise
such as ought, in the opinion of the Couft, having regard to all the circumstances
ofthe case, reasonably to be excused.

QUESTTONS FOR DTSCUSSTON

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I . Define foreign company as defined in the Act.

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2. What documents are to be delivered by a foreign company for registration in

Bangladesh? ln what ways these documents differ from that of a local company's
registration ?

3. Mention the contents of prospectus of a foreign company. Do you think that such
contents differ from the contents of local comPany's Prospectus?

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The Institute of Chartered Accountants of Bangladesh
QUESTTONS FOR SELF ASSESSMENT

01. Features of a Chartered Company.

02. Features of a Statutory Company.
03. Lifting the Viel of lncorporation
04. Member's individual relation with the Company.
05. Obligation of Members of an lllegal Association.
06. Effects of lllegal Association.
07. Why the "Common seal" is not really common?
08. Position of Director vs. Shareholders for the control of the company.
09. Features of distinction between a Company & Partnership Firm.
10. Three vital distinction between Pte & Public Ltd. Company.
I l. Amount of liabilities of members of Companies Limited by Guarantee.
12. Past members liabilities in case of Unlimited Companies.
13. Shareholders liabilities in case of Companies Ltd. by shares.
14. Criterion of classification of Companies.
15. An institution as a promoter of a Company.
16. Fiduciary relationship between a Company & Promoter.
17. Actual & express disclosure of Promoter.
18. Disclosure of Promoters to whom?
19. Promoters liability for secret profits.
20. Reasonable remuneration of the Promoters.
21. Mode of payment of remuneration for Promoters
22. Three remedies to company for non-disclosure by Promoters.
23. 2 conditions to recover profit from Promoters
24. Recovery of expenses incurred by promoters is an automatic right.
25. Thirty words on pre incorporation contracts.
26. Documents to be furnished to RJSCF, B for Registration of a company.
77. Exception to Certificate of lncorporation being conclusion evidence.
28. Legal position of a Pre incorporation contracts.
29. Ratification of a pre incorporation contract by a company after incorporation.
30. Exceptions to ratification of pre incorporation contract.
31. Transforming public company into a private one.
32. One man's company.
33. Subsidiarycompany.
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The Institute of Chartered Accountants of Bangladesh
34. A foreign company (F/C)
35. Filing of documents by FIC to Registrar.
36. Restrictions on FIC for sale of shares u/s 388
37. Conception about the case Salomon V Salomon & Co. in 1897.
38. Documents to be filed to RJSCF, B for incorporation of a company.
39. Clauses of Memorandum of Association.
40. Memorandum vs. Articles of Association of a Company.
41. Forms submitted to RJSCF, B for registration of a company.
42. One vital clause of a Memorandum of Association for a company.
43. Three clauses to apply for a company limited by guarantee?
44. Where to find the association clause of a company.
45. Points to change the name of a company.

46. Act of company incidental to & consequential upon objects mentioned in the M/A.
47. Ultra-vires act done by the company.
48. Rights & liabilities from ultra-vires acts.
49. Main object of a company.
50. Exception to the liability clause of a company.
51. A situation with members below 2for a Private Ltd. Company & for a Public Ltd. Company
52. Distinction between classes of Shares & Share capital.
53. Limitation for alteration of objects of a company.
54. Stages or procedure of alteration of objects of a company.
55. Amending a company's obiects & ratifying an ultra-vires transaction.
56. Effect of an ultra-vires transaction.
57. Remedies for creditors not able to claim upon the company when the transaction is void.
58. Assumed know ledge about the company by transacting parties & liabilities there from.
59. Write up on M/A vis - a - vis A/A
60. Requirements of A/A
61. Limitation on wide powers of the company to alter its Articles of Association.
62. Prospective or retrospective effect of changes in A/A.
63. Does the act favour a stranger dealing with a company.
64. When the lender is unable to recover the money from the company he lent to.
65. Short notes on preference shares, ordinary shares, deferred shares & redeemable preference
shares.

66. Preference shares to have right in the capital.

67. Payments to shareholders of different types at winding uP time.

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The Institute of Chartered Accountants of Bangladesh
68. Cumulative & non - Cumulative preference shares.
69. lssue of redeemable preference shares

70. Reducing partly paid up shares.

71. Reserve capital vs. capital reserye.
72. lncrease, consolidation & sub-division of capital.
73. How capital can be reduced.
74. Limitation of objections to capital reduction by creditors.
75. Filing of the order of reduction & effect of a reduction on the name of the company.

76. Minimum subscription.

77. Filing return after allotment.

78. Payment of commission or brokerage on shares.

79. Shares are moveable Property.

80. Restriction on Transfer of Shares.

81. Refusal of registering transfer by Directors.

82. Share warrants & Share Certificate.

83. Ownership of Shares on Forfeiture.

84. Effect of Forfeiture.
85. Surrender of Shares.
86. Classes of Shares.

87. 4 conditions to issue redeemable preference Shares.

88. Stock vs shares as you know them.
89. How capital may be reduced ?

90. Creditors objection to Capital Reduction.

91. Exceptions to capital reduction by Company purchasing its own Shares.
92. Matters for which minimum subscription is to be raised.
93. Effects of irregular allotment of Shares.

94. Filing of return after allotment to the Registrar.

95. Comment on Commission or Brokerage on Shares.
96. Refusal of Directors to Register transfer, Blank transfer, Forged transfer & Share warrants
97. Prerogative of shareholders over Dividends.
98. Cum-dividend vs Ex-dividend transfer of Shares.
99. 5 ways to become a Shareholder.

100. Conditions on application for shares.

l0l. Qualification of membership of a Company.

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102. A membership may cease in 8 ways.
l03. Liability at winding up of one ceased to be a member.
104. Contents of Register of Members.
l05. Particulars of annual list of Members & Summary.

106. Borrowing Powers of a Company.

107. Limitation to Borrowing Powers
l08. Remedy to Lender for an Ultra-vires borrowing.

l09. Modes of company's (borrower) security to lender'

I 10. Why reserye capital or books can not be let as security to borrower.
II l. Effect of the floating charge on winding up.
l12. Definition of Debenture.
I 13. Debenture as a negotiable instrument.

I 14. Advantages of a Debenture with Trust Deed.

I 15. Feature about the period of debenture.
I I 6. lnterest on debenture out of capital
I17. Remedies of Debenture holders.
I 18. Debenture stock
I 19. 6 compulsorily registerable mortgages & charges.
l20. Adverse effect of non registration on lender.
l2l. Particulars of Register of Mortgages & Charge
122. Retirement of Directors by rotation.
123. Directors number appointed by the Managing Agent.
124. Casual vacanq/ of Directors.
125. A paragraph on Managing Director & his appointment.
126. Written consent of Directors & validity of his acts for the comPany.
127. Comment on "There need not be any qualification of directors"
128. Meaning of holding of shares in own right.
129. Commencement of business until Directors have paid up.
130. Disqualification of Directors.
I 3 l. Director without qualification shares.
I 32. Circumstances for vacation of office of a Director.
133. Removal of Director by E/O resolution.
134. Directors not subiect to removal by rotation.
135. Directors remuneration & prospectus.
136. Position of Directors as Agent & Trustees.

137. 4 vital disabilities of Director that you think first.

138. Liabilities of Director - limited to unlimited.

139. Liabilities to outsiders with illustration.

l4O. When the liability of Directors to comPany to arise?

l4l. payments to directors to for loss of office due to transfer of undertaking or ProPerty.
142. A minutes unsigned by Chairman as evidence.

143. Definition of Managing Agent.

144. Removal and Disabilities of Managing Agent as laid down in S- I l7 in 6 points.
145. Managing Agent of Company to engage in same business management of other Company.
146. Additional remuneration to Managing Agent without sanction by a special resolution.
147. Terms of office of a Managing Agent.
148. Types of meeting.
149. Statutory meeting & the notice.
150. Contents of statutory meetinS'
l5l. When the statutory rePoft to be sent to Registrar.
152. First & subsequent AGM and the penalties.
153. Distinguish between AGM & EOGM & Statutory Meeting.
154. Ordinary meeting & attachments with balance sheet by the Directors.
155. EOGM by requisition.
156. Linking notice to different meeting.
157. Quorum, where A/A is silent.
158. Validity of Minutes *iahoua Chairman's signature'
159. Passing of Resolutions by type of Quorum.
160. Purpose of special Resolutions.
l6l. Voles, Poll & No of shares hold.
162. Minutes book for the members at Registered office.
163. Statutory books of a Company.
164. Requirement for maintaining Books of Accounts.
165. Copies of Balance Sheet to the Registrar.
166. Where the inspection rePort is to be sent ?

167. Registrar/ inspectors Powers for inspection of the affairs of the company.
168. Protection of minority shareholders.
169. Appointment of Auditor & Shareholders prerogative.

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170. Duties of Auditors in 4 lines.
17l. Contents of the Auditors Report.
172. Disclosure of interest of Directors in contracts.
173. Register of Contracts.
174. Appointment and removal of Auditors.
175. Disqualification of Auditors.
176. Auditor to attend General Meeting.
177. Comment upon Auditor's responsibilities for ensuring view of company's performance in the
Audited Accounts.
178. Process of Liquidation or winding up.

179. Dissolution & bankruptcy of a Company.

180. Methods of winding up.

l8l. Meaning - Deemed unable to pay debts by a Company.

182. When the court is to exercise its jurisdiction being "Just & Equitable".
183. Who can apply for winding up.
184. How to effect a voluntary winding up.

185. Classes of such winding up.

186. Liabilities of a fully paid up share holder in winding up.

187. Preferential payments and winding up.

188. Winding up & powers of directors.

I 89. Proof of fraudulent preference.

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The Institute of Chartered Accountants of Bangladesh