The private companies which are incorporated in Bangladesh under
the Company Act, 1994 are mostly have the following structure: a)
the shareholders are members of the same family; b) joint venture
between local partners; c) joint venture between local and foreign
partner; d) 100% foreign owned.
In case of family owned companies and 100% foreign owned
companies, dispute amongst shareholders are relatively uncommon.
However, this simplicity comes with risks, as in order to grow and
to sustain in competitive market, local or foreign partners are
Disputes tend to arise mostly in Joint Venture companies. The
majorities who are in the control often are not transparent and
tend to disregard the interest of minority shareholders. It is not
very uncommon in Bangladesh that a minority shareholder often files
a petition under Section-233 of the Company Act, 1994 for
protection of their rights, or to seek assistance of court in
selling their shares to the existing management or outsider at a
The common issues which are found in such applications are as
(a) Majority has produced false accounts before minority and by
showing fictitious expenditure consequently siphoned out
substantial amount of money from the company's account for
their personal gain; (b) Majority have produced two sets of account
one for minority showing loss and another for other bodies showing
profit; (c) Majority has not informed the minority about EGM, AGM,
Board meeting and in extreme cases has passed resolution without
notice or by means of fraud.
The Honorable Court, depending on the merit of the case, often
directs majority to purchase the shares of the minority, at a fair
value. Consequently the joint venture comes to an end. The above
practice not only discouraging joint venture but also not allowing
the company to grow and compete with the global brands. Hence
Government, Professional, Businessman etc have a duty in greater
interest of the country not to facilitate such practices.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This is a review of a number of recent cases involving corporates caught in what may be described as corrupt behaviour.
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