Share Transfer Agreement

A Share Transfer Agreement is the contract by which a shareholder in a Bangladeshi private limited company sells or gifts its shares to a buyer. It is distinct from — and executed before — the statutory Form 117 that must be filed with the Registrar of Joint Stock Companies and Firms (RJSC) under the Companies Act, 1994. The agreement carries the commercial content: the number and class of shares, the price and payment schedule, the seller's warranties about the company (title to shares, no undisclosed liabilities, tax compliance, litigation status), indemnities, conditions precedent such as board approval and any pre-emption waiver required under the company's Articles of Association, and the closing mechanics. In listed public companies additional Bangladesh Securities and Exchange Commission (BSEC) rules apply. On ChuktiQ the parties can negotiate and sign the agreement digitally; the Form 117 and updated share register still have to be lodged with RJSC to make the transfer effective against the company.

Stamp & registrationThe Share Transfer Agreement is executed on non-judicial stamp paper (typically Tk. 300, though some sub-registrars require higher for high-value deals) with witnesses. The statutory Form 117 filed with RJSC carries its own stamp duty — currently a percentage-based ad valorem duty calculated on the consideration or the fair value of the shares, whichever is higher, under the Stamp Act, 1899 as adapted for share transfers. Confirm the current rate with your company secretary before closing; the RJSC will reject Form 117 that is under-stamped, and the transfer will not be entered in the share register.

What this agreement typically contains

Seller and buyer identity — full name, NID / passport, address, nationality
Company details — name, RJSC registration number, registered office
Number, class and distinctive numbers of shares being transferred
Consideration (price) in figures and words, and payment schedule
Seller's warranties — title to shares, no encumbrance, no undisclosed liabilities, tax compliance
Pre-emption waiver from other shareholders under the company's Articles of Association
Board resolution approving the transfer as a condition precedent
Indemnities and cap on liability
Closing deliverables — original share certificate, signed Form 117, board minutes
Post-closing filings with RJSC and update of the register of members
Governing law and dispute resolution

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Frequently asked questions

Is a Share Transfer Agreement enough, or do I also need to file Form 117?: Both are required and they do different things. The Share Transfer Agreement is the private contract between the seller and the buyer that fixes the price, warranties and indemnities — it binds them personally. But under the Companies Act, 1994, a transfer of shares is not effective against the company until Form 117 is executed, stamped and lodged with the company, the board formally approves the transfer, and the company's register of members is updated (and the change is intimated to RJSC through annual return / Schedule X filings). Skip Form 117 and the buyer will not be recognised as a shareholder — no voting rights, no dividends, no standing to attend general meetings.
Do other shareholders have a right of first refusal?: In most Bangladeshi private limited companies, yes — the Articles of Association contain a pre-emption clause requiring the selling shareholder to first offer the shares to existing shareholders at a specified price (often the fair value certified by an independent auditor) before selling to an outsider. Skipping this step makes the transfer voidable by the company or the other shareholders. The Share Transfer Agreement should therefore either attach a written waiver from every other shareholder or make delivery of that waiver a condition precedent to the buyer's payment obligation.
Can a foreign buyer take shares in a Bangladeshi private company?: Yes, subject to sectoral limits and foreign-exchange approvals. The foreign buyer must remit the purchase price through a scheduled bank with a Bangladesh Bank encashment certificate, and depending on the sector, prior BIDA or sector-regulator approval may be required. Without the encashment certificate the shares cannot be lawfully allotted or transferred to the foreign shareholder, and any future dividend and capital repatriation under the Foreign Exchange Regulation Act, 1947 will be blocked. Build these approvals in as conditions precedent, and coordinate the RJSC Form 117 filing with the bank's inward-remittance evidence.

Other contracts in this category

What this agreement typically contains

Seller and buyer identity — full name, NID / passport, address, nationality

Company details — name, RJSC registration number, registered office

Number, class and distinctive numbers of shares being transferred

Consideration (price) in figures and words, and payment schedule

Seller's warranties — title to shares, no encumbrance, no undisclosed liabilities, tax compliance

Pre-emption waiver from other shareholders under the company's Articles of Association

Board resolution approving the transfer as a condition precedent

Indemnities and cap on liability

Closing deliverables — original share certificate, signed Form 117, board minutes

Post-closing filings with RJSC and update of the register of members

Governing law and dispute resolution

Frequently asked questions

Is a Share Transfer Agreement enough, or do I also need to file Form 117?

Both are required and they do different things. The Share Transfer Agreement is the private contract between the seller and the buyer that fixes the price, warranties and indemnities — it binds them personally. But under the Companies Act, 1994, a transfer of shares is not effective against the company until Form 117 is executed, stamped and lodged with the company, the board formally approves the transfer, and the company's register of members is updated (and the change is intimated to RJSC through annual return / Schedule X filings). Skip Form 117 and the buyer will not be recognised as a shareholder — no voting rights, no dividends, no standing to attend general meetings.

Do other shareholders have a right of first refusal?

In most Bangladeshi private limited companies, yes — the Articles of Association contain a pre-emption clause requiring the selling shareholder to first offer the shares to existing shareholders at a specified price (often the fair value certified by an independent auditor) before selling to an outsider. Skipping this step makes the transfer voidable by the company or the other shareholders. The Share Transfer Agreement should therefore either attach a written waiver from every other shareholder or make delivery of that waiver a condition precedent to the buyer's payment obligation.

Can a foreign buyer take shares in a Bangladeshi private company?

Yes, subject to sectoral limits and foreign-exchange approvals. The foreign buyer must remit the purchase price through a scheduled bank with a Bangladesh Bank encashment certificate, and depending on the sector, prior BIDA or sector-regulator approval may be required. Without the encashment certificate the shares cannot be lawfully allotted or transferred to the foreign shareholder, and any future dividend and capital repatriation under the Foreign Exchange Regulation Act, 1947 will be blocked. Build these approvals in as conditions precedent, and coordinate the RJSC Form 117 filing with the bank's inward-remittance evidence.