HC makes 14 recommendations to amend Company Act-1994

The High Court (HC) has made 14 recommendations to the commerce ministry to take necessary measures so that the existing Company Act, 1994 is amended and updated.

The move aims to quickly dispose of the disputes regarding ownership of private and public limited companies.

HC bench of Justice Md Ashraful Kamal made the recommendations in a 232-page full-text judgement on Wednesday (22 February). 

Earlier on 25 August 2022, he had pronounced the verdict after disposing of a case filed over the ownership of Top Ten Fabrics and Tailors Limited. The case was moved under the Company Act, 1994.

The bench, in its observation, said that the current Company Act can longer be used in many cases, adding that under current circumstances, to make Bangladesh a developed nation, it has become absolutely necessary to amend the 109-year-old law.

There is a great number of private and public companies in the country but only one HC bench for dealing with company-related cases. Disposals of numerous company cases are in limbo due to the lack of company courts.

The country will prosper and become developed with advanced and up-to-date company law, the HC further observed.

The court has also directed to send copies of the full verdict to the commerce minister, commerce ministry senior secretary, and the Bangladesh Law Commission chairman so that they can take necessary actions in this regard at the earliest.

The recommendations are as follows:

• Law to be amended and the new law to be drafted similar to India's model promptly, and the commerce minister must update the act every year.
• Constitute one or more company law tribunals in every district in proportion to the number of companies there.
• Create a company appellate tribunal in each department.
• Establish special criminal courts for offences under the Company Act.
• Modernise the Registrar of Joint Stock Companies and Firms (RJSC), strengthen the legal framework and improve its services.
• Every company has to keep a copy of the company law code in Bangla in its office
• Companies must have a permanent legal officer and a lawyer experienced in company law as a consultant.
• Training centres have to be established under the Ministry of Commerce in each district. Compulsory for officers to undergo regular training from the said training centres at least once a year.
• Mandatory appointment of an independent director, a company secretary and an internal auditor in every company.
• Compulsory to have a full-time company secretary (who will be a member of ICSB) in every company if the paid-up capital is above Tk5 crore.
• Issue a circular making annual general meetings (AGM) mandatory in the city where a company's office is registered.
• Avoid and prevent conflicts with stock market laws, and untoward situations in company AGMs, and make the filing of tax returns easier.
• Formulate regulations completely prohibiting any gift, gratuity, or cash payments from companies to its shareholders at AGMs or anywhere else and automatically cancel the registration of a company if it fails to hold an AGM.
• Introduce specific rules for filing profit and loss accounts, balance sheets, and tax returns with the RJSC.