Fraud in transfer of share in Bangladesh
Share in companies are obtained by share holders in a verities of ways for a private limited company where the number of share holders are very limited. Shares can be obtained by a person if he or she is promoter of the company or any share was transferred to him by an existing share holder or if the company increases it’s paid up capital and thus new shares are created. My article is focused on the fraud that is being committed in transfer of share from an existing share holder to another share holder or to any new member.
The Companies Act 1994 regulates the provision relating to formation, operation and winding up etc of companies in Bangladesh. The Registrar of Joint Stock and Companies (RJSC) is empowered with registering companies; authorize transfer of shares and many other powers relating to administration of companies in Bangladesh.
Companies own many properties such as land, factory, cash etc. After the recent amendment of the land registration law on Bangladesh very stringent procedures are followed by a sub register before he allows any transfer of properties. But it is very frightening to note that there is almost no security measure taken by RJSC while they allow transfer of share. Properties worth of millions can be transferred by transferring shares only by forging two or three signature the RJSC does not investigate into transfer of share once the necessary documentation is filed with RJSC; they authorized the transfer.
Once a victim of such fraud discover such he had to fight a long battle in the form of company matter case in the High Court Division of the Supreme Court of Bangladesh. We suggest that amendment needs to be made by the government to make the procedure of transfer of share as stringent as the current procedure for transfer of land in Bangladesh.
Md Sanwar Hossain
Advocate in Bangladesh
LLB (Hons) Barrister at law
Advocate, Supreme Court of Bangladesh