Transferring Shares in a Private Limited Company: Form 117, Stamp Duty, Board Approval and RJSC Recording

In this guide: Before signing: the Articles, pre-emption and the price · Form 117, stamp duty and the affidavit · Registering the transfer: the company's duty and RJSC's record · Tax on a share transfer · Foreign buyers and sellers, and OPC transfers

The short answer

Read the Articles first: they will say whether existing members must be offered the shares, how the price is fixed if they are, and that the board may decline to register a transfer. Then: (1) board meeting approving the transfer (and waiving pre-emption, with the other members’ written waivers attached); (2) the buyer pays through the bank, because RJSC asks for the bank proof and a cash transfer cannot be evidenced; (3) Form 117 completed with the names, number and distinctive numbers of the shares and the consideration, executed by both sides before witnesses, with stamp duty of 1.5% of the consideration paid by stamp paper or pay-order; (4) the transferor attends the RJSC desk to sign before the officer and swears a Tk 300 affidavit (a transferor abroad signs before the Bangladesh mission); (5) the company uploads Form 117, the board minutes, the old share certificates and the bank proof at app.roc.gov.bd and pays the Tk 200 filing fee; (6) the Registrar records the transfer; (7) the company enters the transferee in the register of members, cancels the old certificate and issues a new one. If a director is changing, Form XII within 14 days and the new director’s Form IX consent go in the same submission. Three to four weeks end to end when the documents are right.

Before signing: the Articles, pre-emption and the price

Section 2(1)(ট) makes restriction of transfer the defining feature of a private company, and the Articles supply the restriction. The usual provisions, taken from Table A regs 19–23 or a bespoke set: a member wishing to sell must first offer the shares to the other members at a price fixed by the auditor or by agreement; the board may refuse to register a transfer without giving reasons; and transfers to family members may be exempt. A transfer made in breach of a pre-emption clause can be set aside at the suit of the member who was not offered the shares, so the first document in the file is the written waiver of each existing member or the offer letter and its expiry. On price: parties are free to agree any figure, but the stamp duty is on the consideration stated, the seller’s capital gain is computed on it, and a transfer at a price far below the net-asset value of the company between unrelated parties will draw a tax query; between relatives a nominal consideration is common and lawful, but say so in the instrument. Where a shareholders’ agreement exists, its tag-along, drag-along and consent clauses sit on top of the Articles.

Form 117, stamp duty and the affidavit

Form 117 is the instrument of transfer prescribed under the Act: it identifies the company, the shares (number, class, distinctive numbers, certificate number), the consideration, and the transferor and transferee with addresses, and is executed by both with witnesses. Stamp duty under Article 61(a) of Schedule I to the Stamp Act, as substituted by the Finance Act 2022, is 1.5% of the consideration for shares of an unlisted company (listed-company transfers through the exchange are exempt and taxed differently); it is paid by affixing stamps to the instrument or by a treasury pay-order with the Registrar’s endorsement. Some practitioners and desks still describe the duty as 1.5% “of the face value”; the 2022 schedule says consideration, and where the parties state a consideration below face value the Registrar will usually insist on the higher figure — budget on whichever is greater. The affidavit is RJSC practice rather than statute: the transferor swears before the officer that the signature is his and the transfer voluntary, on Tk 300 stamp (Art.4), which is why the transferor must attend or sign before a mission abroad; it exists because forged transfers were once common, and it is the step that cannot be delegated to a lawyer.

Registering the transfer: the company's duty and RJSC's record

Two registrations happen. The company registers the transfer in its own register of members under s.30 after the board approves it; s.38 obliges it either to do so or to send the transferee notice of refusal within one month of lodgment, failing which the company and every officer in default is fined up to Tk 100 per day. A refusal must be under a power in the Articles; an arbitrary refusal is challengeable in the Company Court. The Registrar then records the transfer on the public file when the company uploads Form 117 with the minutes, bank proof and certificates; the Citizen’s Charter allows 30 days and the fee is Tk 200 + VAT. The RJSC record is what banks, buyers and courts rely on, so a transfer registered by the company but never filed is the cause of most “who owns this company” disputes — see our s.233 guide. After recording: cancel the old share certificate, issue a new one within the period the Articles set (Table A: within two months), and if the transferee or transferor was or becomes a director, file Form XII within 14 days — our directors guide. The transfer shows on the public record in the next Schedule X annual return.

Tax on a share transfer

The seller’s gain — consideration less cost of acquisition — is a capital gain under the Income Tax Act 2023, taxed at the capital-gains rate for unlisted shares in the seller’s return for the year; RJSC asks for evidence that the tax has been paid or that no gain arises before recording a transfer above face value, which in practice means a challan or an auditor’s computation in the file. For a company seller the gain is business or capital income on the same principle. The buyer has no tax on acquisition but needs the source of funds documented for the s.264-style reconciliations in the next return, which is the other reason the price goes through the bank. Gifts between spouses, parents and children are transfers for nominal consideration and are recorded as such; a gift to anyone else is taxed in the recipient’s hands as income unless exempt. Our capital gains guide sets out the rates.

Foreign buyers and sellers, and OPC transfers

A foreign buyer pays the consideration by inward remittance through an authorised dealer bank, which issues an encashment certificate; the company reports the change of foreign shareholding to Bangladesh Bank through the bank, and the shares are then repatriable on a later sale under the Guidelines for Foreign Exchange Transactions. A foreign seller may repatriate the sale proceeds through the AD bank with the Registrar’s recorded transfer, the valuation and the tax clearance; sales above a threshold need Bangladesh Bank’s prior approval of the price. A transferor abroad executes Form 117 and the affidavit before the Bangladesh mission, or gives a registered power of attorney. In an OPC, s.392H allows transfer only to another natural person and requires the transferor to appear before the Registrar in person — the same affidavit rule made statutory. Transfers of shares pledged to a bank need the bank’s no-objection; the Citizen’s Charter lists it among the documents.