How to Transfer Share of
Private Limited Company in Bangladesh
A step-by-step compliance guide under the Companies Act 1994 and applicable RJSC requirements.
The first step is to check and review the Articles of Association (AOA) for any transfer restrictions — particularly any pre-emption rights clause. Under this clause, shares must first be offered to existing shareholders at a price set by the Directors or Auditor. Transfer to outsiders is allowed only if existing shareholders decline and the AOA conditions are met.
Additionally, prior approval from relevant authorities may be required — for example, share transfers in a telecommunications company require BTRC approval.
- Prepare a Share Purchase Agreement (good approach to start)
- Review the AOA to check if a pre-emption rights clause exists
- Obtain board approval for the share transfer
- NOC from the board or existing shareholders, if pre-emption rights apply
- If the company has existing bank loans, clearance from the bank may be necessary under the Bank Companies Act 1991 (Section 27A)
- Review other specific conditional issues relevant to your company’s nature and applicable regulatory framework
The existing shareholder intending to transfer the shares should serve a formal written notice to the Board of Directors about their plan to transfer the shares.
The Board has absolute discretion to refuse the transfer of shares as per section 38(7) of the Act. In general, the Board holds an EGM to approve the share transfer. Furthermore, the Board may also issue an NOC to acknowledge that the pre-emption obligation has been fulfilled.
- Transferor formally notifies the board in writing of their intention to transfer shares
- Board approves or refuses the transfer request through a Board Meeting / EGM
- NOC is issued by the Board if there is a pre-emption obligation
Upon Board approval, the transferee makes the agreed payments for the shares. The requirements vary depending on the parties involved:
- For transfers between Bangladeshi parties, proof of payment is generally not required.
- If the transferee is a foreign national or entity and the transferor is local, the RJSC will require an Encashment Certificate from a scheduled bank confirming receipt of the share price. Additional compliance with Bangladesh Bank regulations may also apply.
- If the transferee is a foreign national or Non-Resident Bangladeshi (NRB), all transfer documents and supporting affidavits must be consularised — certified by the Bangladesh Embassy/High Commission, verified by the Ministry of Foreign Affairs, and duly stamped by the Deputy Commissioner’s office — as per section 38(3)(b) of the Act.
Once Step 3 is completed, the following actions must be taken:
- The transferor must submit required documents (e.g., list of directors, audited financial statements, share transfer affidavit, etc.) to the RJSC.
- The transferor must be physically present at the RJSC office and sign Form 117 (instrument of transfer) in the presence of the Registrar, as required under section 38(3)(a).
- Stamp duty is payable at 1.5% of the face value of the shares.
- After signing, a copy of Form 117 must be submitted to the Company.
After completing all above steps, the following must be done to complete the transfer:
- The Company must update its share register, share transfer register, and minutes book.
- Issue a new share certificate to the transferee, or endorse the existing certificate to reflect the transfer.
Documents Usually Required for Share Transfer
In Case of Dispute: If a dispute arises in connection with a share transfer issue, the aggrieved party may apply to the High Court Division of the Supreme Court under section 43 of the CA-1994.
FMG Chartered Accountants
For assistance with share transfers, corporate restructuring, tax compliance related to transfers, or other RJSC compliance issues in Bangladesh, please reach out to us.