This week Your Advocate is Barrister Tanjib-ul Alam Advocate, Supreme Court of Bangladesh. He is the head of the chamber of a renowned law firm, namely, 'Tanjib-ul Alam and Associates ',which has expertise mainly in commercial law, corporate law, admiralty, employment and labor law, land law, banking law, constitutional law, telecom law, energy law, Alternative Dispute Resolution, Intellectual Property Rights and in conducting litigations before courts of different hierarchies.
I am a shareholder at a public limited company which has 5000 shares distributed among 100 shareholders. I have 5% share in the company. The Board of Directors' by taking a majority decision at the board meeting took away my membership. Please advice me as to what legal steps I can take against the company.
Thank you for your question. However, in order to fully answer your query it would have been more helpful had you given further information. I will try to answer your question on certain assumptions.
As a matter of general principle of law, it is not possible under the Companies Act, 1994 (“the Act”) to take away your “membership” by a majority decision. It is not clear to me what you meant by the expression “took away my membership”. Since you are a shareholder of a public limited company, you have absolute right to own and retain the shares that you have subscribed and paid for.
The company can, however, take away your “membership” by “forfeiting” your shares. Forfeiture of shares can only take place when the payment for the shares remain due. Your question is silent about this issue. Assuming that you had subscribed 5% of the total issued shares but did not pay for the price of the shares, then no wrong was committed by the company and its Board of Directors by taking away your membership. However, before taking away your membership, the company is under an obligation to give you a notice (“call notice”) with a provision for at least 14 days time to make payment for the “unpaid” shares. Your question does not provide any information in what form your membership had been taken away.
Since you only hold 5% of the issued shares, you will not be eligible to seek remedy from the High Court as a “minority shareholder” under section 233 of the Act. However, you will be able to file an application under section 43 of the Act seeking rectification of share register of the company. The High Court Division has the power to pass any order in an application under section 43 of the Act.
You should consult a lawyer who is specialised in corporate and company matter to redress your remedy.
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