The government has prepared a draft of the Companies (Third Amendment) Act, 2026. The Act has undergone only two minor reforms since it was enacted in 1913, and the economy stressed the need to make the law more effective and business-friendly in line with the changing times. The law needed updating as business practices, technology, investment structures and global trade had changed considerably since its enactment.
The proposed law includes provisions for digital registration and record-keeping, beneficial ownership disclosure, information sharing with law-enforcement agencies, safeguarding the interests of minor shareholders, creating a position of mandatory company secretaries for large companies and tougher penalties for violations of the law.
A new section, 401A, would allow automatic registration of applications submitted using the model memorandum and articles of association provided electronically by the Registrar. The draft proposes automated electronic systems for company registration and maintaining corporate records. There is no time limit for the decision of the Registrar of Joint Stock Companies and Firms (RJSC). Businesses have already proposed 30 days for the Registrar of the RJSC to decide on applications under the proposed amendment to the Companies Act, with undecided applications deemed approved. An appeal against a decision of the RJSC has been allowed to take place before the government, meaning the Ministry of Commerce. The appeal should be to the High Court.
Companies that have remained inactive or failed to submit returns for two consecutive years could be removed from the register through a simplified procedure. However, such removal would not absolve owners or directors of liabilities arising from their personal actions. A company would be allowed to voluntarily apply for removal from the register with the consent of three-fourths of its total members.
The amendment would require members and directors of companies to provide more detailed information during registration, including parents’ names, National ID or passport numbers, mobile numbers, Taxpayer Identification Numbers (TINs) and email addresses. The move is intended to create a more reliable and transparent database of shareholders and directors. Prescribed classes of companies must maintain a website, email, and other electronic channels. This boosts digital transparency and ensures stakeholders can easily connect with the company.
Recently, it has been reported that companies are formed by some people, but beneficial owners are different behind the screen. A new section, Section 34A, would introduce a definition of ‘Beneficial Ownership’ and require declarations where a registered shareholder is not the actual beneficial owner. These beneficial owners are powerful people of other professions. It is a major instrument of corruption and hides illegally earned money through laundering in and outside countries. A person concealing beneficial ownership would also lose legal rights over the relevant shares and face penalties. The move to disclose beneficial ownership strengthens measures against money laundering and illicit financial flows, and eases doing business.
Under a proposed new section, Section 125A, all listed public limited companies and companies with paid-up capital above Tk50 crore would have to appoint a qualified company secretary. The term ‘company secretary’ would replace ‘secretary’ in relevant provisions to remove ambiguity and distinguish the corporate position from government officials holding the title of secretary. Government officials are very sensitive regarding their position as secretary. Recently, the trade association law has also been amended to replace the term secretary with Executive Secretary.
One of the major changes is the amendment of the Memorandum of Association. Companies would no longer need lengthy High Court proceedings to amend their memorandum of association. The RJSC would have the authority to approve such changes directly. The draft also proposes a new section, Section 184A, requiring company boards to form a Corporate Social Responsibility (CSR) committee comprising at least three directors, including one independent director. The draft would allow chartered accountants, cost and management accountants, chartered secretaries, lawyers and income tax practitioners to act as institutional representatives, in addition to managing directors, CEOs and company secretaries.
The deadline for directors to acquire mandatory qualification shares would be extended to 120 days. To prevent fraudulent share transfers, transferors would have to authenticate transactions physically or through digital or electronic means, including re-signing or biometric verification.
The proposed amendment would significantly widen the scope of One-Person Companies (OPCs). The minimum paid-up capital requirement drops from Tk25 lakh to Tk5 lakh. Maximum paid-up capital increases from Tk5 crore to Tk50 crore. OPCs exceeding Tk50 crore capital or Tk100 crore turnover may be mandated to convert into private or public limited companies. The authority failed to identify the reason for the reluctance of small businesspersons to register as a one-person company: the burden of double taxation, as companies and shareholders are required to pay income tax on the same income.
The existing law made it mandatory to send notices to shareholders solely by postal notice. The draft law proposes that newspaper publication would be allowed as an alternative to sending notices to shareholders. Prescribed documents can be served exclusively via electronic mode to members of certain companies that are deemed sufficient compliance. Members may request physical delivery, subject to a fee.
The mandatory Annual General Meeting is proposed to be held via video conferencing/ audio-visual technology (AV) means; a physical AGM is required at least once every three years.
Registered companies will be required to provide ownership and management information to the Bangladesh Financial Intelligence Unit (BFIU) of the central bank, the Anti-Corruption Commission (ACC), law enforcement agencies and foreign authorities following lawful requests, according to the draft. The Registrar of Joint Stock Companies and Firms will also be authorised to share information when legally required. Such a mandatory inclusion of BFIU and ACC and other law enforcement agencies amounts to undermining the dignity of a profession, and it should be removed from the new law.
The draft has been prepared reportedly based on recommendations from different agencies and institutions, including Bangladesh Financial Intelligence Unit (BFIU), and directions contained in a High Court order in a related writ petition, officials said.
Shareholders’ liability in a limited liability company. Joint Stock companies are authorises to use the word ‘limited’ in the name. It exempts the shareholders and entrepreneurs from the financial risk of the company. The company stand separate from the shareholders, and creditors cannot seize the private property of the shareholders.
Entrepreneurs are legally separate from the company based on the landmark judgment in the British Court, namely Salomon v A Salomon & Co Ltd (1897). The Companies Act of 1913 in South Asia was enacted by British rulers on that principle. The fundamental principle is that shareholders have limited liability to the extent of their paid-up capital. The laws of Bangladesh hardly reflect the concept of limited liability of entrepreneurs, and the draft Companies Law has no reflection of this principle.
The views expressed in this article are solely those of the author
The writer is the CEO, Bangla Chemical & Legal Economist. E-mail: [email protected]
