TRW & Co · Company law and business setup
Share Transfer and Capital Increase Procedure in Bangladesh
The share transfer process Bangladesh law sets for private companies runs through the articles, a stamped Form 117, tax on the transfer and registration with RJSC, followed by an updated register of members. Foreign parties add Bangladesh Bank valuation and reporting rules. This guide explains each step, how capital increases work and the mistakes that leave buyers unregistered.
Key pointPaying the price does not make the buyer a shareholder: until RJSC records the transfer and the company updates its register of members, the seller remains the member of record. Tie payment to the filing.
At a glance
Articles come first
Private company articles must restrict transfers, so pre-emption rights and board approval usually have to be cleared before any sale.
Form 117 and stamp duty
The instrument of transfer is executed on RJSC Form 117 and stamped under the Stamp Act 1899 before it is filed.
Tax before registration
Tax on the transfer is collected at source, and for a non-resident seller the transfer may not be registered until the tax on the gain is paid.
Foreign party reporting
No prior Bangladesh Bank permission is needed for most transfers involving non-residents, but fair value applies and the bank must report the deal.
Capital increases
New shares may require an increase in authorised capital, followed by board allotment and a return of allotment filed with RJSC.
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The short answer: the share transfer process Bangladesh law requires
The share transfer process Bangladesh law sets for a private company runs through four gates. First, the company's articles: private company articles must restrict transfers, usually through pre-emption rights and board approval. Second, the instrument of transfer, which in RJSC practice is Form 117, properly stamped and signed. Third, tax: tax on the gain is collected before the transfer is recorded. Fourth, registration: the transfer is filed with the Registrar of Joint Stock Companies and Firms (RJSC) and entered in the company's register of members, and new share certificates are issued.
Where one side is a non-resident, Bangladesh Bank's foreign exchange rules add valuation, payment and reporting requirements. A capital increase follows a related path: the members increase the authorised capital, the company allots new shares, and both steps are notified to RJSC.
This guide walks Chattogram companies, family shareholders and foreign investors through each step, the documents and the mistakes that leave a buyer owning shares the public record does not show.
The legal framework
Shares are movable property, transferable in the manner provided by the company's articles, under section 30 of the Companies Act 1994. Section 38 deals with the transfer of shares and the instrument of transfer, and requires the transfer to be registered with the Registrar. The Act, as amended, provides for the parties' signatures to be verified, including by personal attendance or through a commissioner appointed by the Registrar, and for attestation by a Bangladesh mission where a party is abroad. A private company's articles must restrict the right to transfer shares, which is why board approval and pre-emption clauses are standard.
Stamp duty on the instrument of transfer is payable under the Stamp Act 1899, and an unstamped or under-stamped instrument creates problems with registration and enforcement. Tax on gains from transferring shares is governed by the Income Tax Act 2023, administered by the National Board of Revenue. According to PwC's summary of Bangladeshi withholding taxes, tax is collected at source on the transfer of shares by a resident, and in a transfer by a non-resident the authority registering the transfer may not register it until the tax on the gain has been paid.
Foreign participation brings in the Foreign Exchange Regulation Act 1947 and Bangladesh Bank's guidelines. Sector regulators, such as those for banking, insurance or telecoms, may require their own prior approval for a change of control.
The share transfer process Bangladesh companies follow, step by step
For a private company with no foreign party and no sector regulator, the transfer usually runs as follows.
- Check the articles and any shareholders' agreement. Identify pre-emption rights, consent requirements, valuation mechanisms and lock-ins. A transfer that ignores them can be refused or later challenged.
- Offer to existing members or obtain waivers. If pre-emption applies, offer the shares to the other members on the terms in the articles, or obtain written waivers.
- Agree terms and sign a share purchase agreement. Record the price, payment mechanics, warranties and conditions. For anything beyond a family transfer, a written agreement is essential.
- Obtain board approval. The board considers the transfer at a meeting and approves it, subject to stamping, tax and any regulatory approvals.
- Execute and stamp Form 117. Transferor and transferee sign the instrument of transfer, which is stamped at the applicable rate. Keep proof of the stamp duty paid.
- Pay the tax on the transfer. Calculate and pay the tax collected on the transfer, and keep the challan. RJSC will expect evidence before recording the transfer.
- File with RJSC. Lodge the stamped Form 117 with the board resolution and supporting documents through RJSC. The parties' signatures must be verified in the way RJSC requires.
- Update the company's records. Enter the transfer in the register of members and share transfer register, cancel the old certificate and issue a new one to the buyer, and reflect the change in the next annual return.
Paying the price is not the same as owning the shares. Until RJSC records the transfer and the company enters the buyer in the register of members, the seller remains the member of record. Buyers should make payment conditional on the RJSC filing, or hold part of the price in escrow until the register is updated.
Documents to assemble before you start
Most delays in the share transfer process Bangladesh companies run come from missing paperwork rather than legal obstacles. Gather the following before agreeing a closing date.
- Company records. Certified copies of the memorandum and articles, the latest Schedule X filed with RJSC, the register of members and the share certificates being transferred.
- Approvals. Pre-emption offers or waivers, the board resolution approving the transfer and any regulator's consent required for the sector.
- Identity and authority. National ID or passport for each individual party, board resolutions or powers of attorney for corporate parties, and attested documents for anyone signing abroad.
- Transaction documents. The share purchase agreement, the stamped Form 117 and evidence of payment through banking channels.
- Tax evidence. TINs, the calculation of tax on the transfer and the challan showing payment.
- Foreign exchange papers. For non-resident parties, the valuation report, inward remittance or encashment evidence and the authorised dealer bank's reporting.
Where shares came to the seller by inheritance, add the succession documents and evidence that the transmission was recorded. A clean document pack makes the share transfer process Bangladesh regulators and banks review far quicker, and it is also the starting point for any legal due diligence a buyer will run.
Increasing share capital
Bringing in new money through new shares is often cleaner than a transfer, because the cash goes to the company rather than to a selling shareholder. The share transfer process Bangladesh companies use and the capital increase procedure often run together in an investment round, so plan them as one transaction.
Increasing authorised capital
If the new shares would take the issued capital above the authorised capital in the memorandum, the members must first increase the authorised capital by resolution in the manner the articles and the Act require. Notice of the increase is filed with RJSC, with the fees and stamp duty calculated on the increased authorised capital, and the memorandum and articles are updated.
Allotting new shares
The board then allots the new shares, observing any pre-emption rights of existing members in the articles or a shareholders' agreement. The return of allotment is filed with RJSC within the statutory period, share certificates are issued and the register of members is updated. If a foreign investor is subscribing, the subscription money must arrive through banking channels before the shares are issued.
| Point | Share transfer | Capital increase (new shares) |
|---|---|---|
| Who receives the money | The selling shareholder | The company |
| Main corporate approvals | Board approval; pre-emption or waivers under the articles | Members' resolution to increase authorised capital if needed; board allotment |
| Key RJSC filings | Form 117 instrument of transfer | Notice of increase in authorised capital; return of allotment |
| Tax and duty | Tax collected on the transfer; stamp duty on the instrument | RJSC fees and stamp duty on increased authorised capital |
| Foreign investor point | Fair value, payment through banks and reporting by the bank to Bangladesh Bank | Inward remittance before issue and reporting by the bank to Bangladesh Bank |
| Effect on others | Shareholding percentages of others unchanged | Existing members diluted unless they subscribe |
Foreign investors and non-resident Bangladeshis
Bangladesh Bank's foreign direct investment portal explains that prior permission is not needed to issue shares to a non-resident, or for a transfer involving a non-resident, but the transaction must follow the guidelines, and the authorised dealer bank must report it to Bangladesh Bank's Foreign Exchange Investment Department within a short period after the RJSC formalities. Transfers are subject to fair value, supported by a valuation report above a modest threshold. Where a resident sells to a non-resident, the sale proceeds must reach the seller's account from abroad before the transfer.
For exits, Bangladesh Bank issued a master circular on 8 March 2026 consolidating the rules on transferring shares in non-listed companies and repatriating the proceeds. According to the Invest Bangladesh press release, it raises transaction thresholds, simplifies valuation and gives authorised dealer banks more autonomy. The Invest Bangladesh Authority has succeeded BIDA under the Invest Bangladesh Act 2026, so investment registration records should also be kept consistent with the new shareholding.
Non-resident Bangladeshis who inherit shares in Chattogram family companies face a different problem: the transmission to heirs, supported by succession documents, must be recorded before those shares can be sold. Our guide to foreign direct investment covers the inbound side in more detail.
Illustrative scenario: an investor buying into a Chattogram logistics company
This scenario is illustrative, with generic parties, and shows how the share transfer process Bangladesh law requires interacts with a capital increase. A Singapore-based investor agrees to buy 40% of a Chattogram logistics company, partly by purchasing shares from a founder and partly by subscribing for new shares. The founders want the deal closed in one step.
The lawyers split it into two tracks. On the transfer, the other founders waive pre-emption, the board approves the transfer, the price is valued and paid from abroad into the seller's account, tax is paid and Form 117 is stamped and filed with RJSC. On the subscription, the members increase the authorised capital, the subscription money arrives through banking channels, the board allots the shares and the return of allotment is filed. The authorised dealer bank reports both to Bangladesh Bank.
Because the investor's money was conditional on the RJSC record showing its shares, the timetable was built backwards from the filing dates. The company's annual returns were brought up to date first, because the investor's due diligence found gaps in earlier filings.
Risks and common mistakes
Relying on an unregistered transfer
Family businesses often "transfer" shares by signing a document and handing over share certificates, without filing anything with RJSC or updating the register. Years later, when the transferee wants to sell, borrow against the shares or vote, the public record still shows the original holder, who may have died or fallen out with the family. Rectifying the register then may require court proceedings. Complete every transfer properly at the time, however informal the relationship between the parties.
Ignoring pre-emption rights
Private company articles usually require shares to be offered to existing members before an outsider. A transfer that skips this step can be refused by the board or challenged by a member who was bypassed, and the dispute can block the deal for months. Read the articles and any shareholders' agreement at the outset, obtain written waivers from every member with rights, and record them in the board minutes approving the transfer.
Getting the valuation wrong for a foreign party
Where a non-resident buys or sells, the price must reflect fair value under Bangladesh Bank's rules, and the bank will scrutinise the valuation before processing payments or repatriation. An artificially low or high price can delay remittance or trigger questions from the tax office. Obtain a valuation on the method the rules accept, keep the supporting accounts, and agree in the share purchase agreement who bears the risk of a valuation challenge.
Forgetting tax and stamp duty until the end
Tax on the transfer must be paid before RJSC records the transfer, and stamp duty must be paid on the instrument. Parties sometimes leave these until closing and discover that the seller cannot fund the tax, or that the price allocation creates an unexpected liability. Calculate tax and duty when the price is agreed, decide in the contract who pays, and build the payments into the closing checklist. Our tax due diligence guide explains what buyers check.
Treating a capital increase as a formality
Allotting new shares dilutes existing members. If the board allots without respecting pre-emption rights, or without the members first increasing authorised capital, the allotment can be challenged. In family companies, a disputed allotment is one of the most common sources of shareholder disputes. Follow the articles, give members the information they need and keep a clear paper trail.
Changes on the horizon
As of October 2026, a draft third amendment to the Companies Act would allow companies to use electronic systems for registers of members, share transfers and meeting notices, and would introduce declarations of beneficial ownership where the registered shareholder is not the real owner, according to a Financial Express report in August 2026. We have not seen it enacted. If it passes, nominee and informal shareholding arrangements common in family companies will need to be disclosed, so the share transfer process Bangladesh companies run should already record who really owns each share.
Checklist for buyers, sellers and companies
- Read the articles and any shareholders' agreement for transfer restrictions.
- Confirm the seller is the registered holder and that RJSC records are up to date.
- Obtain pre-emption waivers and board approval.
- Agree the price, valuation basis and who pays tax and stamp duty.
- For foreign parties, route payments through banks and confirm reporting by the authorised dealer bank.
- Execute and stamp Form 117, pay the tax and file with RJSC.
- Update the register of members, issue new certificates and reflect the change in the next annual return.
TRW & Co's Chattogram office runs the share transfer process Bangladesh law requires for local and foreign shareholders, prepares share purchase agreements and handles capital increases and RJSC filings. Our advocates appear before the courts where a transfer or allotment is disputed. See our M&A and corporate pages and our Chattogram office hub, or contact us at info@trw.co, +880 1779 127165, Room 4022, Annex 2, District and Sessions Judge Court Building, Court Hill (Porir Pahar), Kotwali, Chattogram 4000.
Frequently asked questions
01What is Form 117 in a share transfer?
Form 117 is the instrument of transfer used in RJSC practice for transferring shares in a Bangladeshi company. The transferor and transferee sign it, it is stamped under the Stamp Act 1899, and it is filed with RJSC with the board approval and supporting documents. RJSC requires the parties' signatures to be verified, and documents signed abroad generally need attestation by a Bangladesh mission.
02Is tax payable on a share transfer in Bangladesh?
Yes. Under the Income Tax Act 2023, tax is collected at source on the transfer of shares, and for a non-resident seller the authority registering the transfer may not register it until the tax on the gain has been paid. Stamp duty is also payable on the instrument of transfer. The rates change with Finance Acts, so calculate the tax and duty when the price is agreed and decide in the contract who pays.
03Does a foreigner need Bangladesh Bank approval to buy shares?
According to Bangladesh Bank's FDI portal, prior permission is not generally needed to issue or transfer shares to a non-resident, but the deal must follow the foreign exchange guidelines. The price must reflect fair value, payment must come through banking channels and the authorised dealer bank reports the transaction to Bangladesh Bank. A March 2026 master circular updated the rules for exits and repatriation from non-listed companies.
04How long does a share transfer take with RJSC?
The RJSC filing itself can be quick once the documents are complete, but the overall timetable depends on the steps before it: pre-emption offers or waivers, board approval, valuation for foreign parties, payment through banks, stamp duty and tax. Gaps in the company's earlier RJSC filings often cause the longest delays, so check the company's record before agreeing a closing date.
05How do I increase the share capital of a private company?
If new shares would exceed the authorised capital, the members first increase it by resolution as the articles and the Companies Act require, and notice is filed with RJSC with the fees and stamp duty. The board then allots the shares, respecting any pre-emption rights, and the return of allotment is filed with RJSC. For a foreign subscriber, the money must arrive through banking channels before the shares are issued.
06What happens if a share transfer was never registered?
The seller remains the member of record, so the buyer may be unable to vote, receive dividends, sell or pledge the shares. If the seller has died or the parties have fallen out, the register may need to be rectified by court order under the Companies Act. The safest course is to complete the RJSC filing and register entry at the time of the transfer, and to check the RJSC record before buying.
Sources and official materials
- Companies Act 1994 (Bangladesh laws portal) — Sections 30 and 38 on shares and transfers; capital and allotment
- Registrar of Joint Stock Companies and Firms — Form 117 filings, capital increases and certified records
- Bangladesh Bank, Foreign Direct Investment portal — Issue and transfer of shares to non-residents, fair value and reporting
- Invest Bangladesh, press release on Bangladesh Bank master circular (March 2026) — Share transfer repatriation for foreign investors
- National Board of Revenue — Income Tax Act 2023 and tax on share transfers
- PwC Worldwide Tax Summaries: Bangladesh withholding taxes — Tax collected on share transfers (reviewed July 2026)
General information only, current as at 2 November 2026. It is not legal advice and does not create an advocate–client relationship. It reflects the law of Bangladesh unless stated otherwise, and the law, court practice and official fees change frequently. Check current official sources and take advice on the facts of your matter.
