Increasing Authorised and Paid-up Capital: Resolutions, Form IV, Form XV, Fees and the Bank Evidence RJSC Wants

In this guide: Authorised capital: sections 53–56 and Form IV · Stamp duty on the increase · Paid-up capital: allotment and Form XV · Foreign investors: the encashment certificate and Bangladesh Bank · Reducing capital, and the tax side

The short answer

To raise the authorised capital: check the Articles give the power (s.53; if not, amend them first), hold a board meeting, give 21 days’ notice of a general meeting, pass the resolution altering clause V of the Memorandum (ordinary unless the Articles require special), and file Form IV within 15 days with the RJSC fee on the increase — nil if the new total is Tk 10 lakh or less, Tk 80 per lakh between Tk 10 lakh and Tk 50 lakh, Tk 130 per lakh above, less what was paid on the old figure — plus Tk 200 filing fee and 15% VAT, and Form VIII if a special resolution was passed. To raise the paid-up capital: with authorised headroom in place, the board resolves to allot the shares at par or premium to named allottees, the money is paid into the company’s bank account (foreign investors by inward remittance with an encashment certificate), and the company files Form XV, the return of allotment, within 60 days with the bank evidence, the minutes and the list of allottees; then enters them in the register of members and issues certificates. The fee estimator above gives the government cost of the authorised increase; a paid-up increase carries only the Form XV filing fee. If the increase brings in a new shareholder, the Articles’ pre-emption rights must be waived in writing first — the same rule as a transfer.

Authorised capital: sections 53–56 and Form IV

Section 53 lets a limited company with share capital, if so authorised by its Articles, alter its capital clause in general meeting: increase the capital by new shares, consolidate, sub-divide, convert into stock or cancel unissued shares. The resolution is ordinary unless the Articles require a special one; many bespoke Articles do, and in doubt pass it as special (three-fourths majority) and file Form VIII — it costs Tk 200 and removes the question. Section 56 requires notice of the increase to the Registrar within 15 days in Form IV, with a printed copy of the altered Memorandum; default is a fine of up to Tk 200 for every day it continues. The fee: Schedule II charges the registration fee on the increased amount at the slabs applicable to a new company (nil to Tk 10 lakh, Tk 80 per lakh to Tk 50 lakh, Tk 130 per lakh above), so a company going from Tk 10 lakh to Tk 1 crore pays Tk 9,700 plus VAT, and one going from Tk 1 crore to Tk 10 crore pays Tk 1,17,000 plus VAT. Choose the new ceiling with a few years of allotments in mind: the fee is on the whole increase whether or not the shares are ever issued, but a second increase later costs a second meeting and filing.

Stamp duty on the increase

Stamp duty on the Articles is charged under Article 10 of Schedule I to the Stamp Act by reference to the authorised capital — Tk 10,000 where it does not exceed Tk 40 lakh, Tk 30,000 up to Tk 12 crore, and Tk 50,000 above. The Act stamps the instrument once, at execution; but there is no published RJSC rule requiring the differential when an increase crosses a slab. Some desks have nonetheless asked for it on the altered Memorandum and Articles before accepting Form IV — Tk 20,000 on moving from below Tk 40 lakh to above it, Tk 20,000 again on passing Tk 12 crore — so the estimator shows it as a possible cost. No stamp duty is payable on Form IV itself, and none on a paid-up increase, which is not an instrument.

Paid-up capital: allotment and Form XV

Paid-up capital rises only by allotting shares. The board, exercising the power in the Articles (or the members, if the Articles reserve it), resolves to allot a stated number of shares to named persons at a stated price, which may be at a premium above par; the consideration is paid into the company’s account — cash through the bank, or an asset, loan or service valued by the auditor where the shares are issued for non-cash consideration. Section 151 requires a return of allotment to the Registrar within 60 days: Form XV listing the allottees, the shares, the amount paid and, for non-cash issues, the contract or its particulars. The Citizen’s Charter lists the documents: board or EGM minutes, bank statement or encashment certificate, the auditor’s certificate, the list of allottees with NID and eTIN, and 30 days’ processing. Points to watch: an allotment beyond the authorised capital is void until the authorised is raised and the allotment repeated; an allotment to a new member without the existing members’ pre-emption waivers is challengeable; and bonus shares are an allotment too — a capitalisation of reserves by resolution, Form XV, no cash. The new members then go into the register of members and the shareholding appears in the next Schedule X.

Foreign investors: the encashment certificate and Bangladesh Bank

Where the allottee is a foreign national or company, the subscription money must arrive as an inward remittance through an authorised dealer bank in convertible currency, and the bank issues an encashment certificate showing the amount, the rate and the purpose; RJSC will not record the allotment without it, and Bangladesh Bank’s reporting of the foreign shareholding by the AD bank is what makes the capital and future dividends repatriable under chapter 9 of the Guidelines for Foreign Exchange Transactions. Shares issued to a foreign investor against machinery or know-how need the valuation and, in some sectors, Invest Bangladesh (formerly BIDA) approval. Issuing shares to a non-resident at a price below fair value, or recording a foreign subscription that came in as a loan, are the two errors that surface years later when the investor tries to sell. Our registration guide covers the same evidence at incorporation.

Reducing capital, and the tax side

The reverse operation — reduction of share capital, whether to return money to members, cancel lost capital or buy out a shareholder — needs a special resolution and confirmation by the Company Court under ss.59–60, with creditors entitled to object, and is rare in private companies for that reason; a buy-back of its own shares is not available to a Bangladeshi private company. On tax: share premium is capital, not income, but the NBR treats unexplained paid-up capital as income of the company, so the source of every subscription needs to be in the bank records and, for individual subscribers, in their own tax returns; capital contributed by a shareholder who cannot show its source in his return is the single most common trigger of a company tax audit. Share capital is also one of the items examined for the minimum-tax and turnover-tax computations, so keep the paid-up figure in the audited accounts and the RJSC record identical — a mismatch is the first thing an assessing officer finds.