Bangladesh Companies Act 1994 #
The Bangladesh Companies Act 1994 governs the formation, registration, and regulation of companies in Bangladesh. It outlines the procedures for incorporating different types of companies, including private, public, and foreign entities. Company secretaries play a crucial role in ensuring compliance with these procedures, maintaining the Memorandum and Articles of Association, and managing corporate governance practices. They are responsible for organizing board meetings, preparing minutes, and ensuring that the board’s decisions comply with statutory requirements.
The Act also regulates share capital, financial reporting, and audits. Companies must maintain accurate financial records, prepare annual financial statements, and have them audited by qualified auditors. Company secretaries coordinate these processes, ensuring timely submission of audited financial statements to the relevant authorities. Additionally, the Act provides the legal framework for conducting general meetings, issuing shares, and winding up companies. Company secretaries manage these activities, ensuring compliance with legal requirements and protecting the interests of shareholders and creditors.
In 2020, parliament amended the act allowing a single person to form a company (OPC). The act is outdated as it still requires the court’s approval for certain activities e.g. amending the object clause or holding a delayed annual general meeting.
Download:
English Translation (does not cover amendments of 2020)
Companies Act 1994 - Version 1 and Version 2
Financial Reporting Act 2015 #
The Financial Reporting Act 2015 was enacted to enhance the transparency and accountability of financial reporting in Bangladesh. It established the Financial Reporting Council (FRC) as an independent regulatory body responsible for overseeing accounting and auditing standards. The FRC monitors the performance of auditors and audit firms, ensuring they adhere to prescribed standards and practices. This regulation is crucial for maintaining the integrity and reliability of financial statements.
The Act mandates the FRC to develop and enforce financial reporting and auditing standards, aimed at improving the quality of financial statements. It applies to public interest entities, such as banks and insurance companies, requiring them to follow these standards. The Act also includes provisions for penalties and enforcement actions against non-compliance, promoting adherence to the law and protecting the interests of investors and other stakeholders.
Download:
Bank Companies Act 1991 #
The Bank Company Act, 1991 of Bangladesh outlines the regulations for the structure and governance of banking companies. It mandates that all banking companies must obtain a license from the Bangladesh Bank to operate, with specific provisions for cooperative banks and other financial institutions. The Act specifies minimum paid-up capital and reserves, with different requirements for new banks, special banks, and banks incorporated outside Bangladesh. Additionally, any alteration of the memorandum and articles of association requires the Bangladesh Bank’s approval.
The governance framework includes restrictions on the employment of managing agents and certain forms of employment, limiting directors’ tenure to six years with a mandatory gap before reappointment. The Bangladesh Bank holds the authority to remove directors or principal executive officers if necessary. Banking companies are permitted to form subsidiaries for specific purposes such as trust management, property administration, and safe vault provision, subject to prior permission from the Bangladesh Bank.
In terms of secretarial duties, banking companies are required to maintain detailed records and submit various reports to the Bangladesh Bank, including half-yearly reports on assets and liabilities. Annual balance sheets, profit and loss accounts, and financial reports must be prepared and audited. The Bangladesh Bank has the power to inspect banking companies and their records to ensure compliance and proper management. Banking companies must also comply with directions issued by the Bangladesh Bank to safeguard depositors’ interests.
The Act also regulates meetings and elections, allowing the Bangladesh Bank to require banking companies to hold general meetings to elect new directors. There are restrictions on the appointment and removal of managing directors or chief executive officers without the Bangladesh Bank’s approval. Dividend payments are restricted unless certain conditions are met, such as writing off capitalized expenses and maintaining reserve capital. Regulations on paid-up capital, subscribed capital, and voting rights of shareholders are also specified.
Download:
Bank Companies Act 1991 (updated till 2023)
Finance Companies Act 2023 #
The Finance Companies Act 2023 of Bangladesh is designed to ensure transparency and accountability in the operations of finance companies, replacing the Financial Institutions Act 1993.
The Act restricts the concentration of shares among individuals or related parties and limits the holding of shares by foreign entities. It also prohibits creating floating charges on assets without approval and paying dividends without fully writing off capitalized expenses or maintaining required reserves.
The governance framework allows a maximum of 15 directors on the board, including at least two independent directors. The Act sets qualifications and restrictions for directors, including limits on family members serving on the board and prohibitions on holding positions in other financial institutions. The Bangladesh Bank can remove directors or the CEO if necessary for proper management or to protect depositors’ interests.
Finance companies must prepare annual financial statements, have them audited by qualified auditors, and submit these to the Bangladesh Bank. The Bangladesh Bank has the authority to inspect records and operations and issue directions to ensure compliance.
Download:
Insurance Act 2010 #
The Insurance Act 2010 was enacted to regulate and develop the insurance industry in Bangladesh, replacing the Insurance Act of 1938. The Act established the Insurance Development and Regulatory Authority (IDRA) to oversee the industry, ensuring compliance with regulatory standards and promoting transparency and accountability.
As per the act, insurance companies must obtain a license from the IDRA to operate. The application process involves an assessment of the company’s financial stability, management capabilities, and adherence to capital requirements. Company secretaries are responsible for preparing and submitting the necessary documentation for licensing and ensuring ongoing compliance with IDRA’s conditions.
The act requires having a board of directors with specified qualifications and restrictions. As per the act Insurance companies are required to prepare annual financial statements and have them audited by approved auditors. These statements must be submitted to the IDRA and made publicly available. The Act specifies minimum paid-up capital and reserve requirements for insurance companies. The IDRA has the authority to inspect the records and operations of insurance companies to ensure compliance with the Act.
Download: