Company share transfer in Bangladesh is the legal process through which a shareholder sells, gifts or otherwise hands over shares to another person or company. For private limited companies, the transfer is governed by the Companies Act 1994, the company’s Articles of Association and the registration requirements of the Registrar of Joint Stock Companies and Firms (RJSC). This guide explains the full process, required documents, Form 117, stamp duty, tax points and timeline, so you can complete a transfer correctly and avoid costly mistakes.
Quick Summary
- Who can transfer: any shareholder, subject to the company’s Articles of Association.
- Main form: Form 117 (Instrument of Transfer of Shares).
- Where: the RJSC office in Dhaka (or the relevant regional office), together with the company’s own records.
- Key requirements: board approval, stamp duty, supporting documents and the personal presence of the transferor.
- After transfer: the company updates its registers, issues a share certificate and reflects the change in RJSC filings.
What Is Share Transfer in a Bangladeshi Company?
A share is movable property, and the Companies Act 1994 allows it to be transferred in the manner set out in the company’s Articles of Association. The person transferring the shares is called the transferor, and the person receiving them is called the transferee. After a valid transfer, the transferee becomes a member (shareholder) of the company. If the transferor held a director’s position and leaves the board, the company must also file the director change with RJSC.
Share transfer is often confused with two related processes:
| Share Transfer | Share Allotment | Share Transmission | |
|---|---|---|---|
| Meaning | An existing shareholder passes shares to another person | The company issues new shares | Shares pass by law (for example on death or insolvency) |
| Company’s share capital | Unchanged | Increases | Unchanged |
| Who initiates | The shareholder | The company | Legal successor or representative |
| Main documents | Form 117, board resolution | Board/shareholder resolution, return of allotment | Legal heirship or court documents, request to the company |
Who Can Transfer Shares? Private vs Public Companies
Private limited companies. The law requires a private company’s Articles of Association to restrict the right to transfer shares. Common restrictions include:
- Pre-emption rights: existing shareholders must be offered the shares first before an outsider can buy them.
- Board approval: the directors may approve or refuse the transfer, and they must act in good faith in the company’s interest.
Always read the Articles of Association before you sign anything. A transfer that ignores these rules can be challenged later.
Public limited companies. Shares in public companies, especially listed ones, are generally freely transferable. Listed shares are usually traded through the stock exchange and depository system, which follows a different process from the private company transfer described in this guide.
Step-by-Step Share Transfer Process in Bangladesh
Step 1: Review the Articles of Association
Check the transfer restrictions, pre-emption clauses and any approval requirements. If existing shareholders have first rights, get their written waiver or no-objection.
Step 2: Agree the Terms
The seller and buyer agree on the number of shares, price and payment terms. For any significant deal, sign a Share Purchase Agreement (SPA) covering price, warranties, conditions and who pays taxes and costs.
Step 3: Obtain Board Approval
Hold a board meeting and pass a resolution approving the proposed transfer and authorising the directors to sign the necessary documents. Record the number of shares and the names of both parties in the minutes.
Step 4: Prepare the Documents
Prepare the Form 117 and the supporting documents (see the checklist below). Where the transferee is a foreign national or a Non-Resident Bangladeshi (NRB), additional formalities apply.
Step 5: Execute Form 117 and Pay Stamp Duty
Form 117 is the official Instrument of Transfer. Under the amended Section 38(3) of the Companies Act, the transferor must appear personally before the Registrar at RJSC and sign the form there. Stamp duty is payable on the face value of the shares being transferred.
Step 6: Deliver a Copy to the Company
After Form 117 is signed and stamped, give a copy to the company as formal notice of the transfer.
Step 7: Update the Company’s Records
The company updates its Register of Members and share transfer register, records the transaction in the minutes book, cancels the old share certificate and issues a new one in the transferee’s name. Under the Companies Act, the company has a limited period to register a valid transfer or give notice of refusal, and share certificates must be issued within the statutory time after registration.
Step 8: Complete RJSC Compliance
If a director has resigned or a new director has been appointed, file the relevant forms with RJSC (see the compliance section below). The new shareholding must also appear in the company’s next annual return.
Documents Required for Share Transfer
Requirements can vary by case, but the following are typically needed:
- Form 117, duly filled in, stamped and signed by transferor and transferee
- Board resolution approving the transfer
- Affidavit relating to the share transfer
- Original share certificate(s) of the shares being transferred
- No-objection or waiver from existing shareholders, where the Articles require pre-emption
- Latest list of directors
- Latest audited financial statements of the company
- National ID or passport copies of the transferor and transferee, and their photographs
- Share Purchase Agreement (if any)
- For foreign or NRB transferees: consularised documents and bank encashment certificate (see below)
Keep the company’s statutory records up to date before you begin. Missing annual returns or outdated registers are among the most common reasons for delay.
Cost of Share Transfer in Bangladesh
| Cost item | Details |
|---|---|
| Stamp duty | Payable on the face value of the shares. It is commonly applied at 1.5%; confirm the current rate before filing. |
| RJSC fee | As per RJSC’s current fee schedule. |
| Capital gains tax | May apply to the seller’s gain under the Income Tax Act 2023. The rate and timing depend on your situation; consult a tax professional. |
| Affidavit, notary and attestation | Varies by document and provider. |
| Professional fees | Lawyer or company secretary fees for drafting, filing and follow-up. |
Share Transfer to a Foreign Person or Company
Foreign investors often enter a Bangladeshi company by buying shares from local shareholders, which is one way to form a joint venture company. In this case the foreign buyer may become a shareholder, director or even chairman, subject to the Articles of Association and applicable laws. The extra requirements include:
- Consularisation: where the transferee is a foreign national or NRB, the transfer documents and affidavits must be certified by the Bangladesh Embassy or High Commission, counter-verified by the Ministry of Foreign Affairs and stamped by the Deputy Commissioner’s office.
- Encashment certificate: where the seller is local and the buyer is foreign, RJSC asks for a scheduled bank’s certificate showing the payment has been received through proper banking channels.
- Foreign exchange rules: inward remittance and later repatriation of sale proceeds go through an Authorised Dealer bank under Bangladesh Bank rules. Foreign sellers should keep proof of the original investment, a valuation and tax payment records.
- Sector approvals: some industries (for example banking, insurance, telecom) may need regulator approval before ownership changes.
How Long Does Share Transfer Take?
The time depends on how ready your documents are and whether the Articles need shareholder waivers. As a rough guide:
| Stage | Indicative time |
|---|---|
| Due diligence and agreement | 2 to 4 weeks |
| Board approval | 1 to 2 weeks |
| Payment and documentation | About 1 week |
| RJSC execution and stamp duty | 1 to 2 weeks |
| Register update and new certificate | About 1 week |
These are estimates, not guarantees. Foreign transfers and cases with incomplete records usually take longer.
Common Mistakes and Risks
- Ignoring the Articles of Association. A transfer that skips pre-emption or board approval can be disputed.
- Incomplete or outdated company records. RJSC may not accept the filing until the company’s documents are up to date.
- Forged or unauthorised signatures. Share transfer fraud does happen, and victims often need to file a company matter in the High Court Division. Verify the identity and authority of everyone signing, and insist on the transferor’s personal appearance.
- Wrong or unpaid stamp duty. An instrument that is not properly stamped can be invalid.
- No written agreement. Verbal deals over price and payment are hard to prove.
- Forgetting tax and foreign exchange steps. Sellers, especially foreign sellers, should plan tax and repatriation before signing.
After the Transfer: Compliance Checklist
- Update the Register of Members and Share Transfer Register
- Record the transaction in the Minutes Register
- Cancel the old certificate and issue a new share certificate to the transferee
- If a director resigns or is removed, file Form XII with RJSC within 14 days
- If the transferee becomes a director, complete the director appointment filings (including consent to act) with RJSC
- Reflect the new shareholding in the next annual return
- Update your bank mandates, trade licence, TIN and other records where the shareholder or director details appear
Why Work With Us
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Ready to transfer your company’s shares? Call or WhatsApp us at [Phone Number], email [Email], or fill in the contact form for a free initial consultation.
Frequently Asked Questions
1. Can I transfer shares without going to RJSC?
For a private limited company, the transferor is generally required to sign Form 117 in person before the Registrar at RJSC. Ask your adviser to confirm the current procedure and any commissioning arrangement before you plan the signing.
2. What is Form 117?
Form 117 is the prescribed Instrument of Transfer of Shares. It records the names of the transferor and transferee, the number and distinctive numbers of the shares, and the consideration.
3. How much is the stamp duty on share transfer in Bangladesh?
Stamp duty is calculated on the face value of the shares and is commonly applied at 1.5%. Confirm the current rate at the time of filing.
4. Can a foreigner buy shares in a private limited company in Bangladesh?
Yes, subject to the company’s Articles of Association, foreign exchange rules and any sector-specific approvals. The transfer documents of a foreign transferee must be consularised, and RJSC may ask for a bank encashment certificate.
5. Is capital gains tax payable on share transfer?
Gains from selling shares may be taxable under the Income Tax Act 2023, and payment timing can affect the transfer process. The rate depends on factors such as residency and holding period, so speak to a tax professional.
6. What if the board refuses to register the transfer?
The Articles of Association may allow directors to refuse a transfer, but they must act in good faith and in the company’s interest. If you believe the refusal is improper, get legal advice; the matter may go before the High Court Division as a company matter.
7. Do I need to file anything with RJSC after the transfer?
Yes. The change must appear in the company’s annual return, and any change in directors must be filed with the relevant forms, for example Form XII, within the prescribed time.
8. What is the difference between share transfer and share allotment?
In a share transfer, an existing shareholder passes existing shares to someone else, so the company’s capital does not change. In a share allotment, the company issues new shares, which increases its share capital.
Disclaimer: This article provides general information and is not legal or tax advice. Rules, fees and procedures may change, so consult a qualified lawyer or company secretary before acting.
