SECRETARIAL PRACTICES

Topic List
Poge No.

I. Procedure for formation and registration of a company................... """""""""""""' 99

2. Documents to be prepared and submitted ""'^""""""""' 100

3. Effect of registration t00

4. Expert Knowledge of Memorandum and t00

5. Regulation of schedule - I to be included t0l

6. Amendments 102

7. Effects of amendment r02

8. Amendment of articles r04

9. Returns to be filed and r0s

I 0. Statutory returns r05

I l. Statutory books and f egiste f S ........... o..................................................................................................... t06

12. Statistical Books 107

I 3. Meetings and resolutions ataa..a a.aaa.aaaaa

""""" """
tt""t""" r08

I 3.1. Kinds of meetings r08

13.2. Resolutions il0

I 3.3. Kinds of resolutions il0

15. Board meeting .'........ I 12

16. Business at the board meeting ........................ I I 3

17. Notice of the meetings .......... ll4

18. Agenda |4
19. Quorum il5
20. Motion I15

2l . Voting I15

22. Proxy il5

23" Minute il6
24. lssues and
25. The initial
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26. Equity
|7
27. Formalities in Public SU bSC fi ptiOn ................ o.......... o............................................. " " " " " " " " " " " " " " " " " t7

28. Listing requirements

il8
29. Delisting and susPension Of listed COmPanieS o....................o..o..........................................o....""""""..
il9
30 Underwriting
il9

3 l. Allotment rules
il9

32. Renunciation of a11otment................. """""""' 120

Issue of shares at a premium and discount"""""""""' ""' 120

33.

34. lssue share at a Premium """"" 120

35. lssue share at a discount ......'.......... """"""""""" """""""' I2I

36. Share certificate """"" l2l

t22
37. Share warrants
122
38. Market lot
122
39. Right shares
123
40. Bonus shares
123
4t. Transfer of shares / debentures....................
124
42. Transmission of shares / debentures..........'......."
t24
43. Corporate disclosure po|icy..........
124
43. I lmmediate public disclosure of material information
127
43.2 Thorough public dissemination...................
r28
43.3 Clarification or confirmation of rumors' and reports

to unusual market action.'..'..... 128

43.4 Response
129
43.5 Unwarranted promotional disclosure ...................
' 43.6 lnsider trading t30

I 3
43.7 Buy / sell of shares bY SPOnSOfS....................................................................................'."""""""r""""' I

Questions for discussion

Appendix

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The Institute of Chartered Account
Section Overview

Significance of unusual market activity:

Clarification or confirmation of reports

Business at the board meeting

Disclosure techniques to be employed by . comPany

l. PROCEDURE FOR FORMATION AND REGISTRATION OF A COMPANY

The procedure for formation and registration of companies under the Companies Act, 1994, is laid
down below:
l. When the Promoters will desire to form a compan),, at first they will have to select its name and
will apply to the Registrar for the same in a plain paper with a fee of TK. 100/- for each name
along with the properfy executed deed of settlement or the minutes of their first meeting.
2. The Promoters may primarily select the name of their proposed comPany through searching the
list of companies by the use of www.registrationofcompaniesbangladesh.com website.
3. The deed of settlement/minutes of the first meeting of the promoters may be prepared in plane
paper and then to be signed by all of them and amongst others it must contain the name, address
and occupation of the authorized person with his connection with the proposed company who
will apply for the clearance of name.
4. After obtaining the name clearance the Promoters shall prepare and print the Memorandum and
Articles of Association which shall be singed by them before at least two witnesses.
5. The Promoters shall collect the necessary special adhesive stamp on the basis of authorized share
capital of the proposed company from treasury by depositing the money through treasury Challan
in the Bangladesh Bank and will affix the same on the printed Memorandum and Articles of
Association of the company.
6. For the purpose of registration of a company the special adhesive stamp worth Tk. 500/- to be
affixed on the Memorandum of Association irrespective of authorized capital and stamp worth Tk.
2,OOOI-,4000/- and 10,000i- to be affixed on the Article of Association for the authorized capital
of Tk. lO,OO,00O/-, Tk. 3,00,00,000i- and above Tk. 3,00,00,000/- up to any amount respectively.
7. Three copies of Memorandum and Articles of Association including the original one on which the
special adhesive stamp is affixed along with dully filled in Form l, Vl, lX and Xll, the clearance of
name and the copy of treasury Challan relating to the collection of adhesive stamp to be filed in the
case of a private company and in the case of a public company a statement in lieu of prospectus
(Schedule 4), the declaration for commencement of business (Form XIV) and (Form Xl) as and when
necessaD/ to be filled by the promoters in addition to the Memorandum and Articles of Association,
papers and documents as mentioned above (see appendix l-5).

8. At the time of filing of Memorandum and Articles of Association, papers and documents, the
promoters will pay fees based on authorized capital of the company as prescribed for the time
being in schedule -ll of the Companies Act, 1994. Fess to be payable are shown below:

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The Institute of Chartered Account
 Authorlzed Share Capieal Fees
TK. 5,00,000 Tk. 2925 + t200
Tk. 10,00,000 Tk.5125 + 1200
Tk. 20,00,000 Tk. 7525 + 1200
Tk. 50,00,000 Tk. 14775 + 1200
Tk. 1,00, 00, 000 Tk. 17025 + t200
Tk. 5,00, 00, 000 Tk 35025 + t200

2. DOCUMENTS TO BE PREPARED AND SUBMITTED

For registration, the preparation and the filling of ceftain 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:
(") 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 witnessed as for the Memorandum (and by 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 [(Sec. 25 (2)].
(d) Notice of situation of registered office (Sec. 77).
(e) Particulars of Directors, Managing Agent, Managers (Sec. I l5).
(D A list of persons who have consented to become directors (S.92).
G) A written consent of the directors to act (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.

3. EFFECT OF REGISTRATION

After registration of the company, it takes the shape of an incorporated organization under the name
mentioned in its memorandum. This organization is empowered to perform all the works of an
incorporated company. lt acquires the permanent inheritance and it shall have a common seal. The
liability of its members is limited by shares. Upon incorporation of the company it is treated as a juristic
person and it shall have a registered office.

4. EXPERT KNOWLEDGE OF MEMORANDUM AND ARTICLES

The memorandum and articles of association, bound generally in one booklet form, are the charter of
the company. While memorandum of association lays the foundation of the company, articles are the

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The Institute of Chartered Accounta
constitution for internal administration of the company. Both need to be printed and paragraphed with
consecutive para numbers. The Act is clearly absent on the language to be adopted for framing the
memorandum or the articles. However, in the context of publication of name by a limited company it is
prescribed in section 78 that the signboard and the letterhead of a company should be in legible Bangla
or English characters. This may be treated as a hint in this respect.
The memorandum of association provides for name, place of business, object, limited liability of
members and the capital of the company. The name of the company should be a concrete one, separate
from any other company name. There should be the mention of a specific place of business of the
company known as the Registered Office. The Act provides at section 78(a) that the name (street no.
and place) should be prominently displayed in a conspicuous place outside the company office. The
object of the company should include all present and foreseeable future areas of activities so that no
legal complications arise on this. The memorandum should be signed by each original subscriber in the
presence of a witness who shall attest the signature.

The articles of association governs the administration of the company in that it spells out all internal
regulations such as the directors, their appointment, conduct of Board meetings, general meetings, share
transfer, books of accounts and audit etc. The articles can not go beyond the terms of the memorandum
and it constitutes an agreement between the company and its shareholders.

The registration of articles by a company limited by shares is only optional. lt may adopt schedule - I in its
entirely or frame its articles to meet its special needs and register it. Where the articles of a company are
silent over any matter, the regulations of schedule- I regarding that matter will apply. But a company limited
by guarantee or an unlimited company or a private company must register its articles.

The articles of association shall also be signed by the subscriber of the memorandum with at least one
witness. The memorandum and articles are public documents and can be inspected by any one dealing
with the company.

5. REGULATION OF SCHEDULE - I 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 Cornpanies Act 1994. But whatever may be the case, there are certain mandatory
regulations which must find places in the Arcicles. Based on section l7(2) the following regulations of
Schedule - | are connpulsory for all companies, including private companies:

No of Regulation Description

56 About meetings at different places and adjournment

66 On signature of proxies
7t Directors qualification shares
95 Defect in appointment not to invalidate acts of dinectors
96 Directors may pay interirn dividend
t05 Bool<s of accounts to be at head office and open for director's
inspection
r08 Contents of profit and Ioss account
fi2 About appointrnent of auditors
!!3to M Provisions for sending notices.

For the public companies and their private subsidiaries the following regulations of schedule- I are also

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compulsory:

78 Disqual ification of directors

79 Rotation of directors
80 Which of the directors to retire
8t for re-e!ection
Eligibility
82 General meeting to elect directors.
lf the articles of association of any company fails to include the mandatory regulations, it will automatically
apply for the company and anything contrary shall stand null and void in the eye of law. The Act requires that
a company can exercise powers only when it is authorized to do so by its articles. Therefore care and
expertise has to be applied in preparing the articles of association of the company. The nature of business
and the administrative interests are to be considered while drafting articles. The contents of articles are
available in part - I (chapter -2 of the Companies Act) of this manual.

6. AMENDMENTS
There are certain statutory provisions as to alteration / amendment of the memorandum and articles of
association of the company. The following table will show the course of changes in the memorandum or
articles:

Changes Resolution Statutory Whether retunns to be filed with section and

required obligations return form no
Name Special Permission form Ruquired sec. I l(6) & 88" Return Form - VIII
resolution Regist rar and
BCr
Registered Ordinary Permission form Needed by sec . 77 (2), and return Form - Vl
Office resolution BOI
Objectives Special Permission form Amended MA with HC confirmation must be filed.
resolution BOI and High Sec. |'2, l5 & 88. Form -Vlll (for allotment of new
Court shares form - XV vide section I 5 I ( l) (.).
confirmation
Capital Ordinary None Ruquired. For authorized capital requisite fee to
I ncrease resolution be deposited. Section 53 & 56. Form - lV
Articles Spec al None R"quired under sec.2A & 88. Form - Vlll
reso ution

Every alteration or amendment needs to be incorporated in all copies of the memorandum and articles
of association of the company.
7. EFFECTS OF AMENDMENT
Amendment in the memorandum and articles have got some statutory obligations and effects which can
not be overlooked. ln the case of amendment of memorandum, section l0 lays down that a company
shall not alter the conditions contained in its memorandum except in the cases and in the mode and to
the extent for which express provision is made in the Act. Again, in section 20 it is prescribed that the
conditions of articles can be altered by way of special resolution provided that it does not conflict the
Act or the memorandum. The cases and places of amendments are listed in the previous topic. Here the
effects of a few of the changes are amplified.

Name: The shareholders may decide to change the name of their organization by passing a special
resolution at any time. But before tabling the issue in a general meeting the Board has to decide, propose
and resolve about the new name of the company. The corporate secretariat, after a new name is adopted

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by the shareholder at a general meeting, will then approach the Board of lnvestment (BOl) of the
Government of Bangladesh with an extract of the resolution for approval and confirmation of such
changes. The change will not affectt any right and obligation of the company or render defective any legal
proceeding by or against the company. The Registrar must also be informed of the change in appropriate
format (i.e. in form Vlllfor special resolution) togetherwith an extract of the resolution and with a copy of
BOI's confirmation of the change. The time limit for this return is fifteen days from the date of resolution
(sec. 88). However, any change in the name of a company will not be effective until it is approved by the
Registrar [sec. I l(6)]. This change should be carried out in all documents of the comPany, primarily in the
memorandum and articles, share certificates, letter pads, bill-heads, sign boards and elsewhere after
alteration duly approved and confirmed.
Registered Office: The Act does not define a registered office but instead has laid down special
emphasis on having a known seat of office of a company and also on forming the Registrar about it.
Strong penal provision is there in section 77 for not sending notice of situation of a registered office or
of any change therein to the Registrar.
From the term it can be construed that registered office is the one which the company declares to be its
place of office at the time of incorporation or afterwards but within twenty eight days of incorporation.
The matte of registered office has come up even earlier in the Act in section 3 dwelling on iurisdiction
of the court. At an interpretation given in section 3, registered office is explained to mean 'the place
which has been the registered office of the company during the six months immediately preceding the
presentation of the petition for winding up'.
The situation or change of address of the company is not an ordinary matter to deal with. The
memorandum of association mentions about registered office, though not very distinctly, at the
beginning of it. And once the memorandum is filed with the Registra4r, change in situation of its office
will require certain formalities to be followed. This includes informing the Board of investment and
obtaining its confirmation and a return in form Vl to the Registrar.
However, sectioh 77(3) stipulates that the notice of situation or change of situation of the registered
office can not be made by way of any collateral document. lt has to be made separately by a return (in
form -Vl) the time limit for which is twenty eight days from the date of situation or of any change
therein. lf it is a listed company, such a change has also to be intimated to the Se.curities and Exchange
Commission and the stock exchange.
Objecfi Change of object is bothersome. A change in the object clause requires (i) a Board resolution
to decide about the necessity and exact amendment, (ii) special resolution of shareholders to pass the
amendment, (ii) intimation to the BOI about change in the object clause, (iv) petition before the High
Court for confirmation of the amendment, and (v) a return to the Registrar within fifteen days of
resolution (sec. 88) enclosing form - Vlll duly filled out with extract of special resolution.
On the petition for confirmation of amendment the court will accord its sanction if it is satisfied that
sufficient notice has been given to all concerned and consent of creditors obtained or their claims
discharged to the satisfaction of the court. A certified copy of the order confirming the alteration
together with a copy of the amended memorandum must be sent to the Registrar within ninety days of
the date of order to note the changes and to issue a certificate for conclusive evidence (sec. I 5). The
alteration will be effective on the Registrar's certifying that the alteration has been registered. A certified
copy of the return together with certified amendment from the Registrar may also serve the purpose.
The provisions relating to change of the object are contained in section I 2 to I 6.
Capital: A company limited by shares may alter the conditions of its memorandum for amendment in
the capital clause, if authorized by its articles [sec. 53(l)]. The procedure for alteration of capital is
rather simple because the company can exercise its powers in this respect simply in a general meeting

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The Institute of Chartered Accountants of Bangladesh
without the consent of the court and the resolution need not be special or extraordinary, unless the
articles of the company so provide. The conditions of the memorandum may be altered with a view to:
a. lncrease its share capital by the issue of new shares of such amount as it thinks proper;
b. Consolidate and divide all or any of its share capital into shares of larger denominations;
c. Convert all or any of its paid-up shares into stock and reconvert that stock into paid-up shares of
any denomination;
Sub-divide its shares or any of them into shares of smaller amount than is fixed by the memorandum;
Cancel shares which, at the date of passing of the resolution in that behall have not been taken or
agneed to
be taken by any person, and diminish the amount of its share capital by the amount of the
shares so cancelled. This cancellation, however, shall not amount to reduction of capital within the
meaning of the Act.
It is furcher provided in sub-section (2) of this section that the powers conferred by this section must be
exercised by the company in general meeting. A notice specifying the alteration should be given to the
Registrar within fifteen days of the alteration in case of increase (sec. 54).

8. AMENDMENT OF ARTICLES OF ASSOCIATION

Any amendment in the articles of association requires a special resolution. lt is provided in section 20
that, subject to the provisions of the Act and the memorandum, a company may, by special resolution
alter or add to its articles. Any alteration or addition so made shall be as valid as if originally sanctioned
in the articles.

However, the general restrictions inherent in the power of the company to alter its articles are
explained below:
a. The articles can only be changed by passing a special resolution and not by passing any other type
of resolution.
b. Even the passing of a special resolution will not be effective if it is inconsistent with an existing
article and a special resolution has not been passed in previous meetings altering that article.
c. The alteration must not contravene the provisions of Companies Act.
d. lf any additional financial obligation is created on any member by altering the articles, the
alteration shall be binding only if the consent of such member in writing has been obtained before
or after the passing of such resolution.
f. The alteration in the articles should be fair and for the benefit of the company as a whole and not
for a class or group of members only.
g. Articles must not be amended to commit a breach of contract with outsiders.
h. By the amendment, articles can not give to a person, whether a member or not, any right in a
capacity other than that of member, as for instance as solicitor, proper etc. for such a right can
not be enforced against the company.
i. lf proper and due notice of the facts and effects of the proposed alteration is not given in time to
all shareholders, the meeting would be invalid and such an alteration would be of no effect.
j. The alteration approved should not be such as would constitute a fraud by the majority on the
minority.
k. The alteration must not be opposed to the provisions of the memorandum of association and
particularly its object clause.
Every special resolution amending the articles of association must be supported by a return to the
Registrar within fifteen days of passing of the resolution as required under section 88 of the Act.

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9. RETURNS TO BE FILED AND THE TIME FRAME

The Companies Act 1994 is the prescription to guide and control the activities of the registered
companies. lt also, in its text and spirit, exercises some protection to the shareholders, in that it
requires some returns to be filed to the Registrar of Joint Stock Companies which have bearing on the
shareholders interests. Returns are nothing but disclosure of some facts as per the relevant sections, in
the prescribed format to the Registrar.
The submission of returns are mandatory, failure of which leads to various penalties and other
complications. Therefore, due care is to be laid in submitting returns as Per statutory time limit and
according to various provisions. Some imporcant returns as Per different sections are given below:
l. Returns of Allotment [Form XV]:- To be filed within 60 days after the date of allotment
(section l5l). The capital allotted to be added and entered in the next annual list of members and
summary.
2. Particulars of Mortgage (PM):- To be filed within 2l days after the date of execution of the
mortgage deed (section 159).
3. Particulars of Modification of Mortgages (PMM):- To be filed within 2l days afterthe date
of execution of modification deed [section 167(3)].
4. Particulars of Satisfaction of Registration of Office (PSM): To be filed within 2l days from
the date of satisfaction of the loans or debts (section 172).
5. Notice of situation of Registration of Office: To be filed within 28 days after establishment
or change of the registered office [section 77][Form Vl].
6. Proceeding of Special or Extra Ordinary General Meeting: To be filed within l5 days from
the date of meeting (section 88).
7. Prospectus: On or before the date of issue of the prospectus (section I 38).
8. Change of name of the company: To be filed within 15 days from the date of special
resolution relating to change of name [section I l(6) and 88].
9. Change of Memorandum of Association: To be filed within 90 days from the date of order
of the court orwithin the extended period sanctioned bythe court [section l2 and 54].
10. Notice relating to consolidation or sub-division of shares or the conversion of shares
into stock: To be filed within l5 days from the date of change or conversion [section 54].
I l. Conversion of private company into public company: To be filed within 30 days after the
date of taking decision of conversion fsection 23 l].
12. Conversion of public company into private company: To be filed within l5 days from the
date of taking decision of conversion fsection 232].
13. otice of increase of share capital or the number of members: To be filed within l5 days
from the date of talcing decision of such increase [section 56].
IO. STATUTORY RETUR S

A company having share capital and incorporated under the Companies Act, 1994 shall have to file the
following statutory returns to the Registrar every year:
l. The annual list of members and summary [Schedule-X]:- To be filed within 2l days after
the date of holding the annual general meeting. The transfer of share if any shall be entered or
reflected in this return.

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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
Pnvate comPany.
3. onsent of auditor [section 210]:- The company shall inform the auditor or auditors in
respect of his / their appointment within 7 days form the date of annual general meeting and the
auditors shall inform the Registrar whether the appointment has been accepted or refused by him
or them within 30 days form the date of receipt of such information.
.1
't tatutory Reporfi lt is applicable in the case of public limited companies (section 83).
q
articulars of directors (Form Xll):- 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 lX), section 92.

I I. STATUTORY BOOKS AND REGISTERS

To meet the requirements of Companies Act, it is obligatory to maintain certain books and registers
which should record the important data and information of the company. Because those are specifically
prescribed by the statute, in addition to the customary books and records, they are called the statutory
registers. lt is to be mentioned that the Acq in cases, allows gap in specifically mentioning about
requirements of some registers, but instead has, in the length of the pafticular section, given the sense
of those registers. Such a few cases are sections 38, 148, 176 etc. where it is not precisely mentioned
that a register has to be maintained, though those can not be overruled. The Act also requires the
registers to be open for inspection by those concerned. Also there are some other books the purpose
of which can not be dispensed with. Those are the subsidiary registers. The fact that various statistical
and financial information are available in those documents, they are called the statistical registers.

The following are the statutory registers:

l. Member Registers (section 34): lt contains names, addresses and descriptions of the
members, number of shares held, distinctive numbers, number of certificates, amount paid, shares
transferred, date of becoming a shareholder and the date of ceasing to be shareholder. An entry in
this register is the prima-facie evidence of membership in the company.
For companies having more than fifty shareholders, an lndex of members (sec. 35) is also necessary, if,
however, the members register is not in a shape to contain an index in itself. This should contain
sufficient indication so as to enable the account of any member in the register be readily traceable.
There should also be a register or a file to contain the Annual list of members and summary of share
capital [sec. 36(3)] which is required to be filed with the Registrar every year after the annual general
meeting. The register of members is of vitally important and the maintenance of which must be followed
meticulously.

ln case of any lapse or breach, the court may, on the application of any member ask the company to
rectiry the register (sec. 43). lf a company makes default in complying with the requirements of section
34, it shall be liable to a fine not exceeding taka one hundred for every day during which the default
continues and every officer of the compan), who knowingly and willfully authorizes or permits the
default shall also be liable to like penalty.

2. Register of Directors (sec. I l5): The company is obliged to maintain a register of its directors.
The names, nationalities, addresses, occupations and other business connections of all directors,
with date of becoming or ceasing to be directors are entered in this book. All changes of the
particulars of the directors are also to be noted in this book with the date of change. lf the

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 company fails to maintain this register, the company and every other officer of the compan),
knowingly and in default shall be liable to a fine of Taka five hundred.
3. Register of mortgages and charges (sec. 174): There should be a register to record all
mortgages and charges specifically affecting the propercy of the company. This register contains
the kinds, particulars and descriptions of the mortgages, the amount received and description of
the property in respect of each mortgage and the names of the mortgagees or the persons
entitled thereto. lf any director, manager or other officer of the company knowingly and willfully
authorizes or permits the omission of any entry required under section l74,he shall be liable to a
fine not exceeding Taka two thousand.
4. egister of contracts with Directors (sec. 130): lt must contain the full particulars of all
contracts or arrangements in which any director is directly or indirectly interested. This register
also is indispensable and every officer of the company who knowingly and willfully acts in
contravention of the provisions of this section shall be liable to a fine not exceeding Taka one
thousand.
5. Register of Debenture holders (sec. | 76): The full particulars of the debenture holders, their
names, addresses and occupations, the date of allotment and redemption, the number of debentures
held by each, distinctive numbers, amount paid upon each debenture, the dates when paid and
transfers in respect of any debenture are all to be incorporated in this register. The Act in this
section does not say that this register is necessary, but starts with inspection of such a register.
However, treatment of this book is almost the same as with the register of members.
6. Minute Books (sec. 89): These are used for recording all resolutions and the proceedings of
meetings of the directors and the members of the company. Two minute books are maintained,
one being directors minute book and another for the meetings of the shareholders.
The shareholders minute book should be kept open for inspection by any interested members and copy
of extracts thereof furnished if so requested. lf any such inspection is refused or copy not provided, the
company and every officer of the company who knowingly and willfully is in default shall be liable in
respect of each offence to a fine not exceeding Taka one hundred and a further fine of Taka one
hundred for every day during which the default continues. ln case of any such refusal or default, the
couft may by order compel an immediate inspection of the books in respect of all proceedings of
general meetings or direct that the copies required be sent to the persons requiring them. However,
directors' minute books can not be inspected by anybody other than a director or the auditor of the
comPany.

12. STATISTICAL BOOKS

Statistical Books are required more of necessary than by the Act and are subsidiary in nature. The
following are some of the commonly used statistical books:
l. Application and Allotment register (sec. 148): This book contains names, addresses and
occupations of the applicants of shares, the amount of application mbney received, number of
shares applied for, the number of shares allotted, their distinctive numbers, if nay money is
refunded its particulars, cheque number, date etc. The register is required in case of a new
company or at the time of share flotation for public subscription. The particulars in this book are
important till filing the Allotment Return, after which the descriptions are shifted to the register
called the members register. The Act is not very clear about such a register. But the particulars as
mentioned in section 148 can not be properly recorded and maintained or monitored unless such
a register is there.
2. Register of Share Transfer (sec. 38): This register contains the names, addresses and
occupations of the transferor and the transferee, number of shares transferred, date of transfer

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 and the number of share certificate. This register though not specifically mentioned in this section,
can not be dispensed with if the details of all transfers are required to be kept in one concise
place. Such details may be necessary for any future use; say for any case of litigation.

3. Share Certificate and Debenture Book: The details of each share certificate and debenture
certificate in relation to their number, distinctive number, number of shares contained in each
certificate, name of the holder of the certificate etc., are recorded in these registers. They are also
called scrip register which contains the details of share scrips.
4. Attendance Book: This book is necessary to record the presence of directors in the board
meeting and the amount paid to them as their attendance fees. Signatures of all the directors
present in the meeting are recorded in original and when there is any absence, the reason is laid
down if it is a leave of absence against the director's name (regulation 76).
5. Agenda Book The agenda book contains, in tlre left hand side, the agenda points, in
chronological order and in the right hand side- noting of the Company Secretary as per agenda.
This is very helpful for preparing the minutes of the meetings after the meeting is over.
6. Proxy register: This book records, meeting wise, the detail of proxies received from
different members. lt facilitates a permanent record of who was the proxy and who appointed him and
for which meeting. This may be necessary for any future use.
I3. MEETINGS AND RESOLUTIONS
The primaD/ avenue for companies to
communicate with their shareholders is the annual
general meeting (AGM). General meetings of a company are the forum where shareholders can
raise their concerns and make their influence felt over the management of a company.

13.l: KINDS OF MEETINGS

There are thrbe kinds of meetings: Statutory, Ordinary, Extraordinary meeting. Each type of
meeting is highlighted below:

l. Statutory Meeting: Every company limited by shares and every company limited by a
guarantee and having a share capital is required to hold a Statutory Meeting of the
members of the company within a period of six months and not less than one month
from the date on which the company becomes entitled to commence business (Sec. 83).
2. Ordinary Meetings: A general meeting of a company should be held within l8 months
from the date of its incorporation and thereafter once 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 fifteen months from the previous general
meeting. The articles may provide that such meeting shall be held on a certain date
every year.lf no such meeting is 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 an 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

P/Niz
The Institute of Chartered
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's auditor and the auditor's rePoft 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's business, the amount, if any, which they recommend to be paid by way of dividend
and the amount, if any, which they propose to carry to a reserye fund.

3. Extra Ordinary Meeting: All meetings of the shareholders other than the annual
meetings or those provided for in the articles are known as extraordinary general
meetings. These meetings may be called by the directors either 'suo moto' or on the
requisition of not less than one-tenth of the shareholders. Where the directors fail to
call such a meeting so requisitioned within the prescribed time limit 84 (i) it would be
called, by the requisitionists themselves (84 (3).

The requisition must state the objects of the meetings, and must be signed by the requisitionists
and deposited at the registered office of the company, and may consist of several documents in
like form, each signed by one or more requisitionists.

lf the directors do not cause a meeting to be called within twenq/-one days from the date of
the requisition being so deposited, the requisitionists or a majority of them in value may
themselves call the meeting, but in either case any meeting so called shall be held within three
months from the date from the deposit of the requisition.

Any reasonable expenses incurred by the requisitionists by reason of the failure of the directors
to convene the meeting duly must be repaid to the requisitionists by the company and the
company may deduct the sum so repaid from the fees or other remuneration of such of the
directors as were in default.

4: COMMITTEE MEETING

Committee is the smaller body of the Board and may consist of not or more members. The
directors may delegate their powers to different committees. This committee may be standing
or permanent committee, like transfer or promotion committee, budget committee, inquiry
committee etc. These committees may meet together and transact their business only
according to their convenience.

5: CLASS MEETING

Class meetings are meetings of the particular class of shareholders like preference
shareholders. The company may issue different classes of shares and may attach different rights
and privileges to different classes. This sort of meetings is generally intended to alter terms or
discuss about the specific interests of the holders of shares.

P/l{iz
The Institute of Chartered
6: DEBENTUREHOLDERS MEETING

Debenturehodlers are a special type of creditors. This meeting is convened when it is proposed
to vary the terms of security or to modify their rights, rate of interest, or to incorPorate some
new provisions in the deed and in the schemes of reorganization, reconstruction and
amalgamation of the company. The rules and regulations for holding such meetings are either
contained separately in the deed or endorsed on the Debenture Bonds.

13.2: RESOLUTION
Resolution is the decided conclusion of a motion in any meeting. ln the meetings, differenf
motions may be moved. They are discussed, thrashed out, often amended, seconded or voted
and if finally carried, they become the resolutions. So, the record of expression of the opinion
or decisions of a meeting is what is called the resolution. The ultimate aim of a meeting is to
adopt resolutions.

13.3: KINDS OF RESOLUTIONS

Resolutions passed by a company are of three kinds:
l. Ordinary resolution: This is passed by a majority of members Present at a general
meeting. Such a resolution is passed in the ordinary way and deals with ordinary
business, such as passing of accounts, appointing directors and so on. Unless required by
the articles, no notice of suich resolution needs to be given. But notice must be given of
all ordinary resolutions to be proposed at the statutory meeting.
2. Special resolution: This is passed at one meeting by a three-fourths majority of the
members present in person or by pro4/, provided notice for such meeting specifying
the intention to propose the resolution is given at least twenty-one days before the date
of the meeting. Special resolutions are necessary for the following, among other
PurPoses:
a. to change the name of the compan)' with consent of the Central Government (Sec.
I t).

b. to alter the memorandum with leave of the court (Sec.S. l2).

c. to alter the articles of the comPany (Sec. 20).

d. to reduce the capital (Sec. 59).

g. to convert any portion of the capital, uncalled, into reserve capital (Sec. 74).

f. to appoint inspectors to investigate the company's own affairs ( Sec. 207 ( l).
g. to wind up a comPany voluntarily (Sec. 286 (2).

3. Extra - ordinary resolution: This is passed by such majority as is required for the
passing of a special resolution at a meeting of which 14 d{ys' notice has been given. The
notice must specify the intention to propose the resolution -.as al extra-ordinary
resolution (Sec.87(l)). Such resolution is necessary when a cortrpany is sought to be
wound up voluntarily on the ground that it cannot continue its business on account of

P/ltliz
The Institute of Chartered Accounta
 its liabilities and also for a number of other reasons.

14 : STATUTORY REPORT OF COMPANY

Directors are required to send at least 2l days before the meeting, a report called a Statutory
Repoft to the members of the company (Section - 83(2). According to section 83(3), such
report shall state the following:
a. the number of shares allotted distinguishing those allotted as fully or partly paid up
otherwise than in cash, the amount paid in cash, and the consideration for those
allotted as wholly or partly paid up;
b. an abstract of the receipts and payments made there out up to a date within 7 days of
the date of the report under distinctive headings and an estimate of the preliminary
exPenses;

c. names, addresses and descriptions of the directors, auditors, managing agents and
managers (if any), and the secretary of the company and the changes, if any, which
have occurred since the date of incorporation;

d. if any contract is required to be modified, the particulars of such contract with those
of the proposed modification or the actual modification which is to be submitted for
the approval of the members at the meeting;
e. the extent to which underwriting contracts,if any, have not been carried out;
f. the arrears, if any, due on calls from directors, managing agents and managers; and
g. the particulars of any commission or brokerage paid or to be paid in connection with
the issue or sale of shares to any director, managing agent or manager, or a partner
of the managing agent if it be a firm, or if it be a private company, a director thereof.
Such report shall be certified by at least two directors one of them shall be the Managing
Director (83 (4). A copy of such repoft certified in this manner should also be filed with the
Registrar after the sending thereof to the members of the company.

So far as it relates to the shares allotted by the company, the cash received in respect of such
shares and to the receipts and payments of the company, the statutoD/ report shall be certified
as correct by the auditors of the company.

The directors shall a copy of the statutory report certified as above to be delivered to the
Registrar for registration forthwith after the same has been sent to the members of the
comPany.

The board of directors shall prepare a list showing the names, descriptions and addresses of the
members of the company, and the number of shares held by them respectively, to be produced
at the commencement of the meeting, and to remain open and accessible to any member of the
company during the continuance of the meeting.
The members of the company present at the meeting shall be at liberty to discuss any matter
relating to the formation of the company or arising out of the statutoq/ report, whether
previous notice has been given or not, but no resolution of which notice has not been given in
accordance with the Act, may be passed.

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The meeting may adjourn from time to time, and at any adjourned meeting any resolution of
which notice has been givgn in accordance with the Act, either before or after the former
meeting, may be passed and an adjourned meeting shall have the same powers as an original
meeting.

lfdefault is made in filing the statutory report or in holding the statutoq/ meeting, a
shareholder, a creditor or the Registrar may apply to the court for the winding-up of the
company and upon the petition being presented, the court may, instead of directing that the
company be wound up, give direction for the statutory report to be filed or the statutory
meeting be held, or make such other as may be deemed just.
The above rules do not apply to a private company.
I5. BOARD MEETING
This means the meeting of the board of directors. This is purely an in-house event. Directors are the
elected representative of the shareholders and the control and administration of the company affairs are
vested in them. That requires them to meet from time to time to discuss and decide matters relating to
policy and for reviewing its affairs and progress. ln this way, they exercise their control over the
company and discharge their responsibilities to the shareholders.
Procedures: The procedure at the Board meeting is less formal than the general meetings and the
directors may regulate their own meetings. Articles may also provide for the codes of conduct. But
those can not move past the Act. The directors sit for the board meeting frequently. However, the
Companies Act 1994 requires that the Board must meet once in every three months and at least four
time a year (sec. 96).The directors may meet more often but they must meet together as a board to
constitute a valid board meeting.
Notice: The chairman, managing director or any director can issue notice calling a board meeting. The
company secretary on the requisition of any one of the above shall convene a board meeting. Such a
notice under the signature of the secretary should be qualified by the words: "By order of the Board." A
meeting convened by secretary without authority may, however, by ratified by the directors at'the
Board meeting. All the directors are entitled to notice of such meeting at their usual address at a
reasonable time with details of the agenda. Notice need not to be given to a director who is out of
Bangladesh for the time being. Section - 95 says that notices of Board meetings are to be served to
directors residing in Bangladesh only.
The length of notice should be reasonable. No such time is prescribed by the Act. Extremely short
notice is acceptable if all directors can attend but if a short notice is issued to exclude a particular
director, it will render the meeting void. The notice should mention the day, date, time, place and
number of the board meeting. lt should also include agenda of the meeting.
Agenda: the agenda points should be clear, lucid and unambiguous. Three is nothing in the Act on this.
However, the agenda needs to be arrayed in good order so that matters are transacted conveniently at
the meeting. The order of business set out in the meeting should be adhered to. lf for convenience of
some directors it is desired to change the order, consent of all directors should be obtained by the
chairman at the meeting. The Board however, can take the business in any order as if thinks proper,
provided that the directors present consent to it.

Quorum: The quorum requisite for directors meeting is subject to the provisions of the Articles of
Association of the Company. Regulation 89 of the Companies Act, however, provides that the quorum
necessar), for the transaction of business at the board meeting may be fixed by the directors, and unless
so fixed, it shall (when the number of directors exceeds three) be three. Business at the board meeting
will be valid if only quorum requisite is present. But this quorum should consist of disinterested

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directors. This is because, the directors who are directly or indirectly interested in certain matters, are
not entitled to vote on the resolution of such matters. This is called disinterested quorum. lf at a board
meeting, there is no quorum, the meeting will be automatically adiourned to the same day next week at
the same time and piace. lf the day, to which the meeting so adiourned, is a public holiday, then the
meeting will be held on the next working day. These all of course, are subiect to the provisions of the
Articles.
proxy: There is no room for proxy in the Board meeting. The merit of directorship is limited to the
appointed individual only which can not be delegated to any other person. So no Pro4/ is allowed in
diiectors meeting. A director can not send his representative or relation to attend and vote for him in
board meeting.
Chairman: There should be a chairman to preside over the board meeting. The directors may elect a
chairman for their meeting and determine the period of office for which he is to hold the position (Reg.
9l). There may, as well, be a permanent chairman from amongst the directors. He will preside over all
the board meetings. When he is absent, a chairman may be elected temporarily to conduct the meeting.
The permanent chairman is usually is empowered to act as the chairman of the general meeting of the
shareholders. This custom has other important aspect also. When in the general meeting there will be
an equality of votes, the chairman of the meeting will have a second and casting vote which may shape
the resolution. To protect that right of the vote, it is usual that there be a permanent chairman.
However, these provisions must be there in the articles which govern the administration of the
comPany.

I6. BUSINESS AT THE BOARD MEETING

The directors in their meeting may take up anything and every thing of the company, which do not fall
within the purview of the members meeting, for transaction. However, the usual businesses transacted
at a Board meeting are as follows:
l. Determining overall business and management policy.
2. lssuance, allotment, call and forfeiture of shares.
3. Approving transfer and transmission of shares.
4. lssuance of debentures and allotment thereof
5. Exercise borrowing powers.
6. lnvestment of company funds.
7. Appropriation of profit with recommendation of final and declaration of interim dividend.
8. Adopting annual report.
9. Convening general meeting.
10. Fixation of the period of book closure.
il. Framing and approval of company contracts and agreements.
12. Recording and correction of statutoq/ books.
I 3. Filing of various returns and statements.

14. Review progress and affairs of the comPany.

15. Conduct nay specific inquiry.
16. Appointment, promotion and dismissal of staff.

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17. NOTICE OF MEETINGS
Notice, in corporate terminology, is an information, intimation or invitation in writing, of any meeting to
persons who are entitled to participate in it for due deliberations. For a meeting to be valid, notice must
6e served to persons who are entitled to receive the same. However, accidental omission or non-
receipt of notice by any individual member shall not invalidate the proceedings of a meeting [sec. 85(l)
(b)]. But the notice must be clear and absolute so far as the date, time and place are concerned. Also, it
inouta state clearly whether it is annual or extraordinary meeting. All general meetings excePt an annual
general meetingwould require a 2l clear days notice [sec.85(l) (a)]'
The notice must give substantial information as to what is proposed to be done in the meeting.
Resolutions p"r."Jupon insufficient notice may be invalid. lf specific business is to be transacted, the
notice must state clearly its nature. For example, notice of a meeting to increase the capital must sPecify
the amount of the proposed increase. However, the terms of any specific resolution to be proposed
need not be set out in ihe notice, unless an extraordinary or special resolution is intended to be passed.
For a Board meeting, however, notice indicating the main lines of items to be covered will suffice.
The notice of company meetings are governed, in general, by the following rules:
l. Notice is to be issued with due authority granted by the directors. For all PurPoses' only directors
are authorized to convene a meeting. The Company Secretary may issue notice for a meeting, but
his signature must be qualified by the words "by order of the Board."
2. Minimum length of notice required for:
(u) Statr"rtory rneeting 2l days.

(b) Annual general rneeting N4 days.

(.) Extraordinary general meeting 7l days

(d) Meeting to Pass special resolution 2l days.
(u) Board meeting No specific tirne lirnit.
I8. AGENDA
The list of items to be discussed at any meeting is called the agenda, literature meaning - things to be
done. lt serves the purpose of a systematicarray of the items of business in their order of importance,
defines the nature of business for information of the persons concerned and also, in this way Puts a
check on any omission or commission of the matters to be discussed. The stePs to be taken in the
preparation of agenda are as follows:
a) The success of a meeting depends largely on the careful array of the agenda points. Therefore,
agenda should be clear and explicit summary of the business of the meeting.
b) The items of agenda may be stated briefly with subject headings of the matters, such as: i)
confirmation of minutes of the last meeting, ii) directors rePort, iii) declaration of dividend etc.
c) The agenda should be circulated along with the notice so that the members may think over the
various matters and come prepared with their considered views. Agenda may form part of the
notice, or may even be given in a separate sheet attached to the notice. This may help make
expeditious disposal of the matters.
d) ln preparing agenda, routine matters should be placed first and controversial or time involving
matters followlng. lf this order is maintained the routine matlers will be dispatched quickly and
lengthy matters n"*t, or if the time does not permit, those may be deferred to the following
meeting or in the adiournment thereof.
e) The agenda points should contain sufficient blank space against each item so that participants in
the meeting, or even the Chairman or the Secretary may take down some notes on it.
P/Niz
The Institute of Chartered
r 9.QUORUM
ln order to
euorum is the minimum number of persons required to enable a meeting go into session.
serve the purpose of a meeting, it is desirable and necessary that it should be attended by a
moderate
or of powers. For this reason' a convention has grown
number of its members to prevent misuse abuse
up for minimum attendance in a meeting. The number of this minimum attendance, which is otherwise
,quorum', is laid down in the rules for quorum. The articles usually provide a reasonable
known as
number of required attendances. Without quorum a meeting is invalid. The quorum must be Present
before a meeting can proceed to business. The quorum requisite is generally a matter of
Articles of any
company. Howe-ver, Regulation 52 provides that the quorum be present at the beginning
of the meeting
and not'through out thJ meeting. Any resolution passed without a quorum at the outset will render the
resolutions, even if subsequently there
whole meetinf void. But quoru,i at the beginning will validate all
was no quorum.
is adiourned to next
lf the quorum be not present within five minutes of the stipulated time, the meeting
week same day and time. lf at the adjourned meeting also there is no quorum, the remembers Present
will from the quorum. lf at the requisitioned meeting of the shareholders, there is no quorum
for half an
hour, the meeting stands dissolved.
20. MOTION
Motion is a proposal which is formally put before a meeting for discussion and decision with or without
'proposal
amendments. A motion when passed is called a resolution. A motion may, therefore, be called
resolution'. The requirements to move a motion in a meeting are that;
a) lt has to be in writing so that a copy of the motion can be passed on to the Chairman for his
consideration.
b) Itshould usually be seconded by somebody. However, there is no hard and fast rule that
it is

required to be seconded by someone.

c) It must be within the powers of the meeting and the scope of the notice covering the meeting.
d) It needs to be framed in definite and unambiguous words and in affirmative terms.
e) It should commence with word 'That' so that when passed it reads 'Resolved that'.
21. voTlNG
Shareholders may claim the use of voting as a matter of right. Such right is endowed to them by section
85(l). But to exercise the right to vote, a shareholder must be present in person or Proxy. Then again,
on a show of hands a pron/ can not vote. Shareholders Present may demand a pool on any question
other than selection of Chairman of the meeting or the adjournment thereof. On a poll votes may be
given either personally or the proxy. Apart from sec. 85(l), regulation 61,62,63,64 e) deals with votes
of members.
22. PROXY
A proxy is a written document authorizing the person named therein to vote at a meeting for and in
place oi the appointer. The term proxy is also applied to the appointee. A shareholder entitled to attend
and vote at a meeting is entitled to appoint a proxy in his stead to rePresent him at the meeting. This
privilege is allowed by sec.85 and regulations 6l to 68 of the Act. The person appointed as Proxy may
or may not be an existing member of the comPany concerned'
There is, however, difference between a proxy and representative. A proxy is appointed by an individual
shareholder who, necessary, is another person. But when the shareholder is a corPorate body, it is
represented through-not
an authorized person who, in the meeting concerned, will be known as
dccording to sec. 86, will
representative and iust a proxy in anybody's place. Such a rePresentative,
exercise the same powers on behalf of the company which he represents, as if he were an individual
shareholder of that other company.
It seems that the job of a proxy is only to attend and vote at a meting. But if a shareholder appoints a
pron/, he can still attend the meeting and vote regardless of whether or not he has given notice of
revocation. A vote by proxy, in that case has to be rejected.
The proxy form, usually supplied by the company, duly executed and stamped must be deposited with
the company concerned at least 48 hours before the meeting (reg. 67). This was a mandatory provision
in the old Act of I 9 I 3, but is not made mandatory in the Act of 1994, may due to oversight. Section I 5
of the Securities and Exchange Ordinance 1969 on regulation of proxies mayalso be noticed.
23. MINUTE
First of all, let us note that the term is 'minit' and 'minoot' which has different dictionary meaning.
Minute is the unit of segmented part of time lying between hour and second. Dictionary meaning is - a
note or memorandum to assist the memory. ln corporate matters, however, 'minute' is known as
recording of meeting proceedings methodically. Every motion, discussion, and the consequent
resolutions when recorded minute by minute in a summarized description, they constitute the minutes.
It is minute because it details the debate by minute of time.
There is, however, difference between and proceedings of a meeting. Proceedings include the very many
details of the matters transacted at any meeting with an often without inference. lt is descriptive in
nature and may or may not be signed. But minutes of a meeting must be duly authenticated and bear
agenda wise the instrumentation, i.e., the mention of one who moved a motion, who seconded it and
finally the exact resolution. ln fact, minutes are the summary of the proceedings of a meeting.
Minutes also differ from report in that reports write about what is said, while minutes described what is
done, decided and agreed upon. Because minutes narrate past events and are preservative records,
those are written, conventionally, in past tense.
Recording in minutes: lt is the chairman who will decide what to and what not to record in the
minutes. The chairman at his absolute discretion may omit to record in the minutes any matter which is
or could reasonably be regarded as defamatory of any person, or is irrelevant or immaterial to the
proceedings or is detrimental to the interest of the company. This discretionary power, however, does
not entitle the chairman to omit to record a resolution passed at the meeting.
Corrections of minutes: There may be occasions where it would be desirable to make a correction in
the minute. lf any correction is necessary, that can be done by a resolution and recorded in another
minute. But in no case the original minute should be deleted, erased or crossed out.
24. ISSUES AND ALLOTMENT OF SHARES
ln the course of formation of the company or consequent upon any expansion program, shares are
issued for subscription. A public company after incorporation often issues prospectus inviting public for
subscribing to the capital of the company. Banks collect share application money and send those to the
company concerned. The applicants are allotted with shares on the basis of their application. lf
subscription surpasses the extent of the offer, the matter is generally settled in the following ways:
a)

i. Full allotment is made to the applicants of minimum acceptable units.

ii. Allotment is made for the remainders on pro-rata basis.
iii. Refund warrant is issued for the balance amount.

P/Itriz
The Institute of Chartered Accountants of Bangladesh
 Or
b)

i. Allotment is made by lottery or as prescribed by the Securities and Exchange

Commission (SEC).
ii. Refund warrants are issued to the unsuccessful applicants.
25. THE lNlTlAL PUBLIC OFFER or IPO
moves, it expands. hen it expands, it needs further
usiness is like a wheel. lt keeps moving, and as it
fund to finance the expansion. This fund may be generated from: l) internal mobilization of resources, 2)
bank finance, 3) lease finance, 4) suppliers credit and 5) public floatation of shares etc. ln our Present
context, we will focus on public flotation of shares.
26. EQUTTY
This is the fund available to the organization in the form of capital. Equity, however, also includes the
profit generated internally and remaining unpaid to the owners. So, equity consists of capital, reserves
and undistributed surplus. When a company, generally the big industrial enterprise, with public limited
status, can not cope with the ever increasing demand of equity, say for working capital needs or for
meeting the current commitments because of businesses expansion, it takes recourse to public flotation.
This is a common, increasingly popular and widely accepted means of raising fund or capital from the
market. There are two ways of raising capital from the market, viz. l) by offering of shares, and 2) by
offering of debentures.
l. Sale of shares: Shares of public limited companies are offered in the open market for buying by
the public which is called public subscription. This is an open invitation to the public to participate
in the ownership of the company and thereby taking the risk of profit or loss of the undertaking to
the extent of their participation. This extent of participation is what is generally referred to by the
phrase 'limited liability' of the company. The buyers of shares are then known as the shareholders
of the company. They sit yearly in a meeting called the annual general meeting, appoint the
directors of the company and engage them for running the business. This is the whole philosophy
behind public participation in shares of a company.
2. lssue of debentures: Debenture is an instrument acknowledging a debt by the company. lt can
also be offered for sale in the open market. The amount borrowed from the public by the sale of
debentures is refundable with interest over a period of time. Debentures are issued usually in bonds
by a company and are offered by means of prospectus. The formalities for floatation of debenture in
the market are the same as in the case of shares. However, in the case of debenture a trust is
required to be created before the same is offered to the public. ln the case of debenture issues,
credit rating and worchiness of the company is an important factor.
27. FORMALITIES IN PUBLIC SUBSCRIPTION
The following are the steps required for making a public offer of shares:
I. Drafting of a prospectus.
2. Sanctioning of capital by the Securities and Exchange Commission beyond certain limit.
3. Approval of the prospectus by the SEC.
4. Filing of the prospectus with the Registrar of Joint Stock Companies.

5. Underwriting agreement with the underwriters.

6. Arrangement with bankers and Manger to the lssue.

P/Niz
The Institute of Chartered Accountants of Bangladesh
7. Listing with stock exchange.
8. Publication of prospectus.
9. Data entry and summation of applications.
10. Board meting for consideration of allotment.
I l. Allotment under SEC guidelines, within a time limit.
12. Refund of excess subscription, if any, within a time limit'
13. Return of allotment to be submitted with the Registrar of Joint Stock Companies within a time
limit.
14. Share certificates are to be issues within a time limit'
28. LTSTINGREQUIREMENTS
According Regulation-6 of the Dhaka Stock Exchange Listing Regulations 1997, the following
to
documenis and particulars duly certified by the company or authorized representative Presenting the
security shall be submitted to ih" Exchange at the time of application for listing or any time on demand
by the Exchange:

(i) Application for listing as Per Form l; (see appendix- 6)

(ii) Memorandum & Articles of Association;
(iii) Copy of the Certificate of incorporation;
(iv) Copy of the Certificate of Commencement of Business;
(v) Copy of the Feasibility Report, in case of a new proiect;
(ui) Copy of the certificate of registration of the industrial units issued by the Council of lnvestment or
any other comPetent authority;
(vii) Copies of all material contracts and agreements entered into or exchanged with foreign
participants, machinery suppliers and any other financial institutions;
(vii) Copies of Letter (s) of Credit established in favor of Machinery Suppliers, if linked with the public
issue;

(i*) Copy of Consent Order issued by the Commission;

(") Names of Directors along with directorship of other comPanies listed on the Exchange;
(*i) Draft prospectus/Offer for Sale;

(xii) Auditors Certificate for the amount subscribed by the promoters/directors/subsidiaries

/associates;
(xiii) Copies of the agreements relating to issue of securities for consideration other than cash, if any;
(xiv) Copy of underwriting agreement (if any)
("u) Statement of audited accounts for the last 5 years or for a shorter number of years if the company
is in operation only for such shorter period;
(xvi) Statement showing the cost of project and means of finance;
(xvii) Copies of the approval of tax-holiday application under Ordinance, 1984:
(xviii) Copies of the consenr Lefters from Bankers or Financial lnstitution to the lssues;

(xix) Application for submission of undertaking and payment of fees as Per Form ll; (see appendix -7).

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The Institute of Chartered Accounta
("x) copy of approval of prospectus / offer for sale from commission; and
(nci) Any other documents / material contract and such other Particulars as may be required by the
exchange or by the Council and / or by the Commission'
29. DELISTING AND SUSPENSION OF LISTED COMPANIES
According to Regulation 3l of the Dhaka Stock Exchange Regulations 1997, a listed comPany may be de-
listed or suspended for any of the following reasons:
(a) lf any securities are quoted below 50 percent of face value for a continuous period of three
calendar years.
(b) if it has failed to declare dividend or bonus:
i. for five years from the date of declaration of last dividend or bonus; or
ii. in the case of manufacturing companies, for five years from the date of commencement of
commercial Production; and
iii. for five years from the date of commencement of business in all other cases.

(.) if it has failed to hold its hula general meeting for a continuous period of three years;
(d) if it has gone into liquidation either voluntarily or under court order;
(") has failed to pay the annual listing fees as prescribed in these regulations payable to the
if it
exchange for a peiiod of 2 years or penalty imposed under these regulation or any other dues
payable to the exchange for a period of two years;
(f) if ir has failed to comply with the requirements of any of these Regulations"
(S) no cornpany which has been de-listed or suspended shall be restored and its shares re-quoted
until it rernembens the causes of de-listinglsusPension and receives the assent of the Council or
Exchange for the restoraeB*s'T"

It is to be mentioned that no company will be de-listed under the Listing Regulations unless the company
has been given an adequate opportunity of being heard.

30. UNDERWRITING
Underwriting means a contract to take up a number of shares of the comPany in consideration of the
payment of a certain amount of commission, in case the issue is not fully subscribed for. Those who
enter into this contract are known as underwriters. As we have seen before, commission for
underwriting must be allowed by the articles and the ProsPectus must disclose the rate of the
underwriter's commission.
3I. ALLOTMENT RULES
The general rules and procedures governing allotment of share are as follows:
l. No allotment can be made before filing of the prospectus or a statement in lieu of prospectus with
the Registrar of Joint Stock Companies [Sec. I 38( l)and I 4 I ( I )].
7" Allotment is to be made on the basis of application on prescribed form. The acceptance of
application should be absolute, unqualified and needs to be communicated to the applicants. Mere
entry of the applicant's name in the register is not sufficient to establish that allotment was made.
3. No allotment can be made unless applications to the extent of minimum subscription as stated in
the prospectus have been received and at least 5%of the minimum subscription has been received
in cash [sec.l48 (l)].

P/Niz
The Institute of Chartered Accounta
F

4. All moneys received from the applicants must remain deposited in a scheduled bank. The money
can not be withdrawn before the receipt of the certificate of commencement [ 148(4)]
5. The company shall proceed to make allotment after closure of the subscription list (DSE Listing
Regulations).
6. The work for dispatch of allotment letters after receipt of the applications must be completed
within 40 days after the closure of subscription list (Listing Regulations).
7. ln case the prospectus contains reference that application will be made for shares to be traded on
the floor or recognized stock exchange, that applications is to be made soonest possible.
8. Within sixty days after allotment, the company must file with the Registrar a Return of Allotment
according to section l5 I in respect of shares allotted for cash and otherwise than for cash.

12. RENUNCIATION OF ALLOTMENT

Renunciation means giving up claim in favor of others. The allottee may be given the right of renounce
his title to the shares in favor of his nominee. For this, the allottee will have to forward to the company
a Letter of Renunciation, a printed copy of which is often attached to the letter of allotment or generally
printed on the reverse side of the allotment letter. The renunciation is preceded by a letter of request
from the nominee to the company requesting for enrollment if his name in the register of members in
place of the original allottee. The company generally on its own allows a specified date for such
renunciation, otherwise, the name of the original allottee will be entered on the register and the transfer
after that date will follow the usual transfer procedures.

3I. ISSUE OF SHARES AT A PREMIUM AND DISCOUNT

It is not always that shares of the company have to be issued at par value for subscription by the public.
Depending on specific circumstances, a company may, subject to certain control and restrictions by the
government, issue its shares at discount, i.e. at a price below the nominal value; or at a premium, that is
at a price more than the actual value per share. There are specific provisions in the Companies Act for
both situations which are discussed below:
34. ISSUE OF SHARE AT A PREMIUM
Shares may be issued at a premium that is at a price more than their face value. The Companies Act
provides that a company may issue shares at a premium, but stipulates specific application of the
premium fund (sec. 57). There is also no prohibition in the Act against issue of shares at differential
premiums. But such premiums are to be transferred to a separate Share Premium Account and utilized
for certain specific purposes, such as:
a) ln paying up un-issued shares of the company to be issued to members as fully paid bonus shares.

b) ln writing off the preliminary expenses.

c) ln writing off the expenses of or the commission paid or discount allowed on any issue of shares
or debentures of the company.
d) ln providing for the premium payable on redemption on any redeemable preference shares or
debentures of the company.
e) Subject to prior approval, for adjustment or amortization of intangible assets.

Shares issued at a premium and accepted by the public establish the strength and trust owned by the
issuing company.

P/Niz
The Institute of Chartered Accountants of Bangladesh
35. ISSUE OF SHARE AT A DISCOUNT
There is specific statutory provision for issuance of shares at a discount. Section 153 of the Companies
Act provides that a .o.i"ny can issue shares at a discount, i.e., at a value lee than its face value if the
following conditions are fulfi lled:
a) Such issuance of shares at a discount must be

i. Sanctioned bY the court,

ii. Authorized by shareholders in general meeting'
b) The resolution of the shareholders must be specific, that is -
i. lt must fix the rate of discount
ii. This rate can not exceed l0% as the maximum'
c) The company can not issue shares at a discount before expiry of at least one year from the date
of its commencement of its business.
d) The issuance of shares at a discount must be made within six months of the sanction of the court,
or within such extended time as is allowed by the court'
It is provided furcher in sub-section (2) of this section that the prospectus for the issue and the balance
sheet issued subsequently must contain detailed particulars of the discount allowed, failing which a fine
of Taka five hundred is prescribed in sub-section (3) of this section.
36. SHARE CERTIFICATE
Letters of allotments are supposed to be exchanged by definitive scrips called the share certificates. A
share certificate is often referred to as 'scrip' (not script) by the trading circle, meaning an instrument
containing shares. This term is in vogue particularly in the stock exchange.
The Act provides ninety days time after allotment by which period those certificates are to be
completed and kept ready for delivery [sec. 185( l)]
Share certificates are issued only in pursuance of a Board resolution and in exchange of allotment letters. lf
the letter is lost, or destroyed, sufficient indemnity in the form of an indemnity bond and other formalities,
such as FIR at the police station and press announcement shall have to be made by the incumbent. lf the
share certificate is lost or destroyed the same procedures need to be followed. Before issuance of a duplicate
certificate, it is a good practice to notiry the Stock Exchange about the matter.
The share certificate should also conform to certain degree of standards so far as size, thickness and
contents etc. are concerned. However, there is no such rule framed so far in Bangladesh in this regard.
Based on the usage and practice, a share certificate should match and include the following:

l. lt should look like a certificate of worth with a consecutive number.

2. Name of the company with monogram, authorized capitalwith nominal value.

3. Specification of the shareholder.
4. Number of hares, distinctive numbers and folio.
5. Embossed Common Seal of the company.
6. At least two authorized signatures.
7. Revenue stamp as Per the Stamp Act (if required).
Share certificates should be delivered to the shareholders without incorporating the details of each certificate in
the members register and in the scrip book The best is to make out the computerized print.

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37. SHARE WARRANTS
By virtue of section 46 of the Companies Act, a public limited company, limited by shares, if authorized
by its articles may, in respect of fully paid shares, issue under its common seal, a share warrant stating
that the bearer thereof is entitled to shares therein specified and may further provide for the payment
of future dividends on the shares included in the warrants by means of coupons or otherwise.
It is to be noted that, only public companies may issue share warrants and that too on the fulfillment of
certain conditions as stated below. A public company may issue share warrants under its common seal
provided:
l. there is authority in the articles to issue them;
2. the shares are fully paid up.
Since share warrants entitlethe bearer to the shares specified in it, and since the shares may be
transferred by mere delivery of the share warrant, it follows that a share warrant, unlike a share
ceftificate, is a negotiable instrument.
Section 50( l) provides that on the issue of a share warrant, the company must strike out of its register
of members the name of the member and must enter the following Particulars:
l. The fact of the issue of the share warrant;
2. The description of the shares included in the warrant, distinguishing each share by its number;
3. Date of issue of the warrant.
38. ARKET LOT
The market value of shares per unit may be of various categories, such as shares of Tk. 10, Tk. 100, and
Tl<. lO00 etc. But a minimum number of units or lots are also fixed for user convenience, namely 50
shares for the unit of Tk. 10, 5 shares of the unit of Tk. 100 or 2 shares for the unit of Tk. 1000 etc. The
minimum lot offered at the market for transaction is called the market lot. The lowest minimum lot of
the lots of shares of a company is known as the market lot of that company. Share ceftificates are
generally prepared at market lots of shares to facilitate easy, economic and acceptable transaction in the
secondary market. Share transfer requests are also made accordingly which facilitates disciplined woks
at the company's office. lf more lots are combined together in one share certificate, or in other words, if
one certificate is issued for a big bulk of shares, say 500 shares of the unit of Tk. 100 each issued in one
scrip, it is sure to come back in course of time to the company with request for splitting up into market
lots.
37. RIGHT SHARES
Right shares are those shares which are issued after the original issue of shares, but having an inherent
right of the existing shareholder to subscribe to these shares in proportion to their holdings. This right '

has been conferred on the equity shareholders by the Companies Act in section 155(l). This right has
authorized the directors to issue right shares. The articles of the company may also include similar
provisions. These shares can, however, be issued to the non-members when the existing shareholders
renounce or do not accept the offer within a prescribed time limit. The issue of right shares must be
within the limit of authorized capital of the comPany.
Generally right shares are issued to the existing shareholders at a concessive rate, that is when the
prevailing market price of the shares are much above par they are offered to the existing shareholders
at nominal value. Alternatively, if shares are sold in the market at par or even below the face values,
right shares may be offered at a price lower than that.
Right issues are to be made as per SEC guidelines and listing regulations. According to regulation 22(l)
of the DSE listing regulations, a listed company shall issue entitlement letters .or right offers to all the

P/Niz
The Institute of Chartered Accounta
shareholders within a period of forty five days from the date of re-opening of the share register of the
company closed for this PurPose.
40. BONUS SHARES
The company may capitalize its accumulated resources and profits by the issue of shares called bonus
shares. Bonus shares are issued by ploughing back un-appropriated profit or reserve in order to
strengthen the capital structure or to meet the working capital needs of the company.
ut the articles of the company must permit the issue of such bonus shares. Like the right shares, the
bonus shares are also issued to the existing shareholders in proportion to their shareholding and
dividend rights. But bonus shares can not be renounced. Often bonus shares are issued in lieu of
dividend. So bonus shares may well be termed as dividend in kind. However, in the annual return bonus
shares are shown and included as cash issue. The right shares of the bonus issue do not affect the rights
of the existing shareholder in any way.
The requirements to issuance of bonus shares are outlined below. lf bonus shares are to be issued by a
comPany:
l. There must be like provisions in the company's articles'
2. lts authorized capital must be sufficient to cover the same.
3. The shareholders must resolve to capitalize profits or to apply the share premium account or
utilize other reserves and to issue bonus shares'
4. The shares must be allotted by a Board resolution in the proportion determined by shareholders
in general meeting.
5. A return of allotment must be submitted to the Registrar within sixty days after allotment of
shares.
41. TRANSFER OF SHARES / DEBENTURES
Shares are movable properties and transferable from one Person to another in a manner provided by
articles [sec. 30(l)]. Burthe fact of this transfer must be intimated to the comPany together with the
share certificate or the letter of transferee. lt is to be remembered that share cercificate is not a
negotiable instrument in the first place, but it can transfer hands subject to endorsement, registration
d"liu"ry by the company concerned. The transfer instrument duly executed by both parties and
"nJ
properly signed must be deposited to the company office together with the certificate [sec.38 (3)]' The
company Secretary will then place it before the Board for approval of that transfer and on approval he
will endorse the name of the transferee at the back of the share certificate under authorized signature.
The share certificate, with transfer endorsement, should be ready to be returned to the new owner
within ninety days from the date of lodgment for transfer [sec. I 58( l)]. This time limit, according to DSE
listing regulations, however, is 45 days and as per the SEC-7 days which are puzzling indeed. The
important statutory provision in this regard is that 'if a company refuses to register the transfer of any
shares or debentures, the company shall, within one month from the date on which the instrument of
transfer was lodged with the company, send to the transferee and the transferor notice of the refusal'
[sec.3g(4)]. Failure to do so may lead to legal complications. The act provides
heavy fine as punitive
measures- Taka one hundred for every day during which the default continues [sec. 38(5)]. The
signature of the transferor on the transfer instrument is vital and is the only source of checking the
genuineness of the intention of transfer. lt is, as such, the duty of the pompany Secretary to comPare
the signature of the transferor with his admitted signature kept in the office. For this PurPose specimen
signatures of all shareholders should be called for and preserved in a separate card index in alphabetic
oid"r. The Secretary still can not shrug off his responsibility in the event of fraudulent transfer.
It is therefore, good as a practice to notify both the parties after endorsement of each transfer if,
however, the volume is not too large.

P/Niz
The Institute of Chartered Account
The formalities for transfer of debentures are some what the same excePt that those are to be
recorded in seParate registers.
42. TRANSMISSION OF SHARES / DEBENTURES
Transfer of shares through sale or otherwise is a voluntary act of the transferor or the transferee. But
transmission of shares ii an involuntary act resulting from the operation of law due to death or
insolvency of a shareholder. The owner of shares of a deceased member, in such a case, vests in his
heirs or legal representative. A succession certificate from the court of comPetent authority is the legal
requirement in case of transmission of shares. However, the documentary entries are the same for
transfer or transmission of shares in the books of the comPany'
43. CORPORATE DISCLOSURE POLIC
Disclosure policy of publicly traded companies is of great concern to the stakeholders in general and
to
the stockholders in partic;lar. Because, in such companies, there is a seParation of ownership from
control. Therefore, the Exchange consider that the conduct of a fair and orderly market requires, every
listed company to make available to the public information necessary to informed investing; and to take
reasonable steps to ensure that all who invest in its securities enjoy equal access to such information.
ln
applying this iundamental principle, the Stock Exchange has adopted the following specific policies
concerning disclosure (Regulation - 43):
L lmmediate Public Disclosure of Material lnformation
2. Thorough Public Dissemination
3. Clarification or Confirmation of Rumours and Reports
4. Response to Unusual Market Action
5. UnwarrantedPromotionalDisclosure
6. lnsider Trading
7. Buy/ Sell of Shares bY SPonsors
43.I IMMEDIATE PUBLIC DISCLOSURE OF MATERIAL INFORMATIO
Material information refers to the information relevant to the interest of the stockholders. A listed
company is required to release material information to the public in a manner designed to obtain its
fullest possible public dissemination'
43.1.1 Standards to be employed to determine whether disclosure should be made:
lmmediate disclosure should be made of information about a company's affairs or about events or
conditions in market for the company's securities which meets either of the following standards:
(') Where the information is likely to have a significant effect on the price of any of the
company's securities, or
(b) Where such information (after any necessary interpretation by securities analysts or
other experts) is likely to be considered important, by a reasonable investor in
determining his choice of action
43.1.2 lnformation to be disclosed:
Any material information of a factual nature that has a bearing on the value of a company's
securities or on investor decisions as to whether or not to invest or trade in such securities
should be disclosed. Such information include information concerning the company's property,
business financial conditions and prospects, mergers and acquisitions and dealings with employees,
suppliers, customers and others as well as information concerning a significant change in
ownership of the company's securities owned by insiders or rePresenting control of the comPany.
The Exchange does not normally consider disclosure of a company's internal estimates or
prolections of its earnings or of other data relating to its affairs to be necessary. lf such estimates
or projections are released, they should be prepared carefully, on a reasonable factual basis, and
should be stated realistically, with appropriate qualifications. Moreover, if such estimates or
projections subsequently appear to have been mistaken, the), should be promptly and publicly
corrected.
43.1.3 vents and conditions in the market that may require disclosure:
The price of a company's securities, as well as a reasonable investor's decision whether to buy or
sell those securities, may be affected as much by factors directly concerning the market for the
securities as by factors concerning the company's business. Factors directly concerning the market
for a company's securities, or events materially affecting the size of the "public issue" of its
securities.
While, as is noted above; a company is expected to make appropriate disclosulre about significant
change in insider ownership of its securities, the company should not indiscriminately disclose
any knowledge it has of the trading activities of outsiders, such as trading by unit trusts or
publicly-instltutions,
other for such outsiders normally have a legitimate interest in preserving the
confi dentiality of their securities transactions.

43.1.4 Examples of a company's affairs or market cottditions typically requiring

disclosure:
The following events, while not comprising a complete list of all the situations which may require
disclosure are particularly likely to require PromPt announcements:
(') A joint venture, mergers, acquisitions or takeovers.
(b) The declaration or omission of dividends or the determination of earnings.
(.) The acquisition or loss of a significant contract.
(d) A significant new product or discovery.
(") A change in control or a significant change in management'
(0 A call of securities for redemption.
(S) The borrowing of a significant amount of funds.
(h) The public or private sale of significant amount of additional securities.
(i) Significant litigation.
(i) The purchase or sale of a significant assets.
(1.) A significant change in capital investment plans.

(t) A significant labor dispute with sub-contractors or suPPliers.

(r) A tender offer for another company's securities.
(n) An event of default on interest and/or principal Payment in respect of loans.
43.1.5 Withholdinginformation:
Occasionally, circumstances arise in which provided that complete confidentiality is maintained a
company ma)' temporarily refrain from publicly disclosing material information. The following

The Insti
circumstances where disclosures car'"n he withheld ane Eimited and constitute an infrequenc
exception to the normal requirement of imrnediate public disclosure. Thus, in cases of doubt the
presumption must always be in favoun of discBosLfrB-e:
(") When immediate disclosure would prejudice the ability of the comPany to pursue its
corporate objectives.
Although public disclosure generally necessary to Protect the interest of investors,
is
circumstances may occasionally arise where disclosure would prejudice a company's ability to
achieve a valid corporate objective, public disclosure of plan to acquire certain real estate for
example, could result in an increase in the company cost of the desired acquisition or could
prevent the company from carrying out the plan at all. ln such circumstances, if the unfavorable
result to the company outweighs the undesirable consequences of non-disclosure, disclosure may
properly be deferred to a more appropriate time.
(b) When the facts are in a state of flux and a more appropriate moment for disclosure is

imminent.
Occasionally corporate developments give rise to information which, although material, is subject
to rapid chinge. If the situation is about to stabilize or resolve itself in the near future, it may be
proper to wiihhold public announcements concerning the same subiect but based on changing
facts may confuse or mislead the public rather than enlighten it.
ln the course of a successful negotiation for the acquisition of another comPany, for example, the
only information known to each party at the outset may be the willingness of the other to hold
discussions. Shortly thereafter it may become apparent to the parties that it is likely an agreement
can be reached. Finally, agreement in principle may be reached on specific terms. ln such
circumstances a company need not issue a public announcement at each stage of constantly
changing facts but may await agreement in principle on specific terms. lf, on the other hand,
progi"ri in the negotiations should stabilize at some other point, disclosure should then be made
if the information is material.
Whenever the material information is being temporarily withheld, the strictest confidentiality must
be maintained, and the company should be prepared to make an immediate public announcement,
if necessary. During this period, the market action of the company's securities should be closely
watched, since unusual market activity frequently signifies that a "leak" may have occurred.
Company or securities laws may restrict the extent of permissible disclosures before or during a
public offering of securities or a solicitation of proxies.
43.1.5. Action required if insider trading occurs while material information is being
temPorarilY withheld:
lmmediate public disclosure of the information in question must be effected if the Company
should learn that insider trading, has taken or is taking place. ln unusual cases, where the trading is
insignificant and does not have any influence on the market measures sufficient to halt the insider
trading and prevent its recurrence are taken exceptions might be made which should be discussed
with the Exchange. The Exchange listing department can provide current information regarding
market activity in the Company's securities with which to help assess the significance of such
trading.
43.1.7 Maintaining confidentiality:
lnformation that is to be kept confidential should be confined, to the extent possible to the
highest possible echelons of management and should be disclosed to officers, employees and
others on a need to know basis only. Distribution of paper work and other data should be held to
a minimum. Where the information must be disclosed more broadly to company personnel or

The Insti
 others their attention should be drawn to its confidential nature and to the restrictions that apply
to its use, including the prohibitions of insider trading.
It may be appropriate to require each person who gains access to the information to rePort any
transactions which affects in the company's securities to the Company. lf company's accountants
or financial or public relations advisers or other outsiders are consulted, steps should be taken to
ensure that they maintain similar precautions within their respective organizations to maintain
confidentiality.
43.2 THOROUGH PUBLIC DISSE I ATIO
A listed company is required to release material information to the public in a manner designed to
obtain its fullest possible public dissemination.
43.2.1 Disclosure techniques to be employed by a company:
Ttrre steps required are as follows:-
(a) Disclosure of material information can often be made after the market closes.
Otherwise, when it is necessary to make disclosure of material information before or
during trading hours, the Exchange expects a company to notify the Exchange in advance
of suih disclosure if the material information is of a non-routine nature or is expected
to have a substantial impact on the market for the securities of the company. The
Exchange with the benefit of all the facts provided by the company will be able to
consider a temporary halt in trading pending an announcement would be desirable on
the company or its securities, but provides an opportunity for disseminating and
evaluating the information released'
Such a step frequently helps avoid rumours and market instability as well as the unfairness to
investors that may arise when material information has reached Part but not yet all of the
investing community. Thus in appropriate circumstances, the Exchange can often provide a
valuable service to investors and listed companies by arranging for such a halt.
(b) At time of Public Disclosure: As a minimum, any public disclosure of material informa-
tion should be made by an announcement released simultaneously to be business and
financial news media the Chittagong Stock Exchange.
Companies may also wish to broaden their distribution to other news or broadcast media such as
those in the location of the company's plants or offices and to trade publications. The information
in question should always be given to the media in such way as to Promote publication by them as
promptly as possible i.e. telephone or in writing by hand delivery in both cases on an immediate
release basis. Companies are cautioned that some of these media maY refuse to publish
information given by telephone until it has been confirmed in writing or may require written
confi rmation after its publication.
Forty copies or such other number as the Exchange may determine of all public announcements
should be sent to the Exchange.
43.2.2 Application of the policy on thorough public dissemination to meeting with
securities analysts, iournalists, stockholders and others:
The Exchange recommends that companies observe an open door policy in dealing with analysis of
journalist, slockholders and others. However, under no circumstances, should disclosure of
material corporate developments be made on an individual or selective basis to analysts,
stockholders or other persons unless such information has previously been fully disclosed and
disseminated to the public. ln the event that material information is inadvertently disclosed on the
occasion of any meetings with analysts or others, it must be publicly disseminated as promptly as
possible by the means described above.

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 The exchange also believes that even any appearance of preference or partiality in the release of
explanation or information should be avoided. Thus meeting with analysts or other special groups
where the procedure of the group sponsoring the meetings permits representatives of the news
and other media should be permitted to attend any such meeting.
43.3 CLARIFICATION OR CONFIRMATION OF RUMOURS AND REP RTS
Whenever a listed company becomes, or is made aware of a rumour or rePort true or false, that
contains information that is likely to have, or has had an effect on the trading in the Company's
securities or would be likely to have a bearing on investment decisions, the company is required to
publicly clarify the rumour rePorts as PromPtly as rePofts as possible.

4 !.3.1 umours and reports to be clarified or confirmed:

A public circulation by any means whether by an article published in a newspaper, by a brokers
market letter or by word of month information either correct or false which has not been
substantiated by the company and which is lilcely to have or has had an effect on the price of the
company securities or would be likely to have a bearing on investment decision must be clarified
or confirmed.
4,.3.2 Response to be made to rumours or reports:
ln the case of material rumour or report containing erroneous information which has been circu-
lated the company should prepare an announcement denying the rumour or rePoft and setting
forth facts sufficient to clarify any misleading aspect of the rumour. ln the case of a material
rumour or report containing information that is correct an announcement setting forth the facts
should be prepared for public. ln addition in the case of false rumour or report a reasonable effort
should be made to bring the announcement to the attention of the particular group that initially
distributed it. ln the case of an erroneous newspaper article for example by sending a coPy of the
announcement to the newspapers, financial editor or in the case of an erroneous market letter by
sending a copy to the broker responsible for the letter.
ln the case of rumour or repoft predicting future sales earning or other data no response from
the company is ordinarily required. However if such a repoft is manifestly based on erroneous
information or is wrongly to the supposedly factual source the company should respond PromPtly
to the supposedly factual elements of the rumour of a supposedly factual nature. Moreover if a
rumour or report contains a prediction that is clearly erroneous that company should ensure an
announcement to the effect that company itself has made no such predictions and currently knows
of no facts that would justify making such prediction.
43.4 RESPONSE TO UNUSUAL MARKET ACTION
Whenever unusual market action takes place in a listed company's securities, the company is expected
to make inquiry to determine whenever rumors or other conditions requiring corrective action exits,
and if so, to take, whatever action is appropriate. lf, after the company's review, the unusual market
action remains unexplained it may be appropriate for the company to announce that there has been no
material development in its business and affairs not previously disclosed to its knowledge, nor any other
reason to account for the unusual market action.
43.4.1 Significance of unusual market activity:
Where unusual market action, in price movement, trading activity or both occurs without any
apparent publicly available information which would account for the action, it may signify trading
by persons who are acting either on unannounced information or on a rumour or report whether
true or false about the company . Most often, of course, unusual market activity may not be trace-
able either to insider trading or to rumor or report. Nevertheless the market action itself may be

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 misleading to investors who are to
assume that a sudden and appreciable change in the price
lil<ely
of a company's stock must reflect a parallel change in its business or prospects similarly unusual
trading volume even when not accompanied by a significant change in price tenders to encourage
rumors and give rise to excessively speculative trading which may be unrelated to actual devel-
oPment in the affairs.
43.4.2 Response required of a company when unusual market action in its securities
takes place:
(A) First the company should attempt to determine the reason for the market action by
considering in particular (a) whether any information about its affairs which wouid
account for the action has recently been publicly disclosed, (b) whether there is any
information of this type that has not been publicly disclosed in which case the unusual
market action may signify that a leak has occurred and (c) whether the company is the
subject of rumour or report.
lf the company determines that the market action results from material information that has
already been publicly disseminated generally no further announcement is required. Although if the
market action indicates that such information may have been misinterpreted it may be helpful after
discussion with the Exchange to issue a clarifying announcement.
lf the market action results from the leak of previously undisclosed information, the information in
question must prompdy be disseminated. lf the market results from a false rumor or report, the
Exchange policy on correction of such rumors and report should be complied with. Finally, if the
company is unable to determine the cause of the market action, The Exchange may suggest that
the company a public announcement to the effect that there have been no undisclosed recent
developments affecting the company or its affairs which would account for the unusual market
activity
43.5 UNWARRANTED PROMOTIONAL DISCLOSURE
A listed Company should refrain from promotional disclosure activity which exceeds what is necessaq/
to enable the public to mal<e informed investment decisions. Such activity includes inappropriately
worded news release, public announcements not justified by actual development in a company's affairs,
exaggerated reports or predictions, flamboyant wording and other forms of overstated or overzealous
disclosure activity which may mislead inventors and cause unwarranted price movements and activity in
a company's securities.

43.5. I Unwarranted promotional disclosure activity:

Disclosure activity beyond that necessary to inform investor and explicably essential as an attempt
to influence securities' prices, is considered to be unwarranted and promotional. Although the
distinction between legitimate public relation activities and such promotional activity is one that
must necessarily be drawn from the facts of a particular case the following are frequent instances
of promotional activity:
(') A series of public announcements unrelated in volume or frequency to the materiality of
actual developments in a company's business and affairs.
(b) Premature announcements of products still in the developments stage with unproven
commercial prospects.
(.) Promotion and expense-paid trips or the seeking out of meetings or interviews with
analysts and financial writers which could have the effect of unduly influencing the
market activity in the company's securities and are not iustified in frequency or scope
by, the need to disseminate information about actual developments in the company's
business and affairs.

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The Institute of Chartered Accounta
 (d) Press release or other public announcement of a one-sided or unbalanced nature.
(e) Company's or product advertisement which in effect Promotes the company's
securities.

43.6 INSIDER TRADING

lnsiders should not trade on the basis of material information which is not known to the investing public.
Moreover, insiders should refrain from trading, even, after material information has been released to the
press and other media, for a period at least 5 marked days to permit through public dissemination and
evaluation of the information.
43.6.1 lnsiders:
lnsiders are all persons who come into possession to material information, before its public release
is considered. duch persons include controlling shareholders, directors, officers and employees and
frequently also include outside attorneys accountants, investment bankers, public relation advisers,
advertising agencies, consultants and other independent contractors. The husbands, wives,
immediate families and those under the control of insiders may also be regarded as insiders. Where
acquisition or other negotiations are concerned, the above relationships apply to the other Pafties
to the negotiations as well. Finally, for purpose of the Exchange disclosure policy, insiders include
tepees who come into possession of material inside information.
43.5.2 Insider information:
lnsider information is that which has not been publicly released and which is intended for use
solely for a corporate purpose and not for any personal use and which the company withholds'
4,.6.3 lnsidertrading:
lnsider Trading refers not only to the purchase or sale of a company's securities but also to the
purchase or sale of options with respect to such securities. Such trading is deemed to be done by
an insider whenever he has any beneficial interest, direct or indirect in such securities or options
regardless of whether they are actually held in his name.
lncluded in the concept of insider trading is tipping, or revealing inside information to outside
individuals to enable such individuals to trade in the company securities on the basis of undisclosed
information.
41.6.4 How soon after the release of material information any insiders begin to
trade?
This depends both on how thoroughly and how quickly after its release the information is
published by the news media services and the press. ln addition, following dissemination of the
information, insider should refrain from trading until the public has had an oPPortunity to evaluate
it thoroughly. Where the effect of the information on investment decisions is readily
understandable, as in the case on earnings, the required waiting period will be shorter than where
the information must be interpreted before its bearing on investment decisions can be evaluated.
While the waiting period is dependent on the circumstances, the Exchange recommends that, as a
basic policy, when dissemination is made in accordance with Exchange policy insiders should wait
for at least twenty four hours after the general publication of the release in news media.
43.6.5 Steps can be taken to prevent insider trading:
Companies can establish, publish, and enforce effective procedures applicable to purchase and sale
of its securities by officers, directors, employees and other insiders designed not only to Prevent
improper trading but also to avoid any question of the propriety of insider purchases or sales.
One zuch procedure might require corporate insiders to restrict their purchases and sale of the

The Insti
 company's securities with following the release of the annual statements, or other releases
setting
forth the financial condition and status of the company. Another could involve the purchase of a
company's securities on a regular periodic basis by an agent over which neither the
company nor
the individual has anY control.
43.7 BUYI SELL OF SHARES BY SPONSORS
Every sponsor (which include every director, Promoter, officer and /or other sponsor)
of listed
.on.'p"ni", required to report to the Exchange in writing about his/heritheir intention to buy or sell or
otherwise dispose off the shares held by him/her/them in the concerned comPany
in the following
date for disposal/acquisition of the shares with
format at least four working days before the scheduled
copy to the Securities and Exchange Commission'
Format
Report to Exchange under regulation 43 (7\ of the listing regulations of the Exchange:

L Name of the comPany:

2. Name with full address of the sPonsor:
3. Folio No. in the ComPanY:
4. Quantity of shares to buY/sell;
5. Scheduled date for buY/sell:
6. Details of disposal/acquisition planned for other than through stock exchange:

Signature of the sPonsor

PlaCe r-rrrrrr-rrr-rrrr

Signature verified byt

Date -r-rrrrrrrr-rr

(Seal & signature with date of the authorized official of the

company)

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The Institute of Chartered Accounta
QUESTTONS FOR DTSCUSSTON:
L Discuss the procedure of formation of a company as laid down in the Companies Act 1994.
2. What documents are to be prepared and submitted during the formation stage of a company? Are
the requirements alike for all classes of companies?
3. Discuss the procedure for amendment of memorandum and articles of association.
4. What are possible effects of changes in the various clauses of memorandum of association?
E
Specifr the returns to be submitted to the Registrar of Joint Stock Companies along with the time
frame.
?
b. Briefly discuss the laws relating to statutory books to be maintained by a company.
7" Discuss various types of meetings and resolutions.
8. When extra ordinary general meeting can be held on requisition of its members?
9. Spell out the contents of statuary report of the company.
t0. Explain nature of notice with illustration.
il. Discuss the provisions of companies act relating to meeting, voting and proxy voting.
t7. What formalities are there for public subscription?
t3. Discuss the allotment rules.
t4" Describe the provisions relating to the issue of shares at a premium and drscount.
I5. What standards should be employed to determine whether disclosure should be made?
I6. What kind of information about a company's affairs should be disclosedl
lv" What kind of events and conditions in the market for a company's securities may require
disclosure?
18. What are some specific examples of a company's affairs or market conditions typically requiring
disclosure?
10. When may a company properly withhold information?
20. What action is required if insider trading occurs while material information is being temporarily
withheld?
21. How can confidentiality best be maintained?
22. What special disclosure techniques should a company employ?
23. How does the policy on thorough public dissemination apply to meeting with securities analysts,
journalists, stockholders and othersl
24. What rumours and reports must be clarified or confirmed.
25. What response should be made to rumours or reports?
26. What the significance of unusual market activity from the standpoint of disclosure?
is
27. What resPonse is required of a companywhen unusual market action in its securities takes place?
23. What is unwarranted promotional disclosure activity?
24. Who are insidersl
25. What is insider information?
26. What is insider trading?
27. What steps can companies take to prevent insider trading?
28. How soon after the release of material information any insiders begin to trade?

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