R1 CLASS NOTES BY SIR SYED MEHEDI HASAN ACMA - PDF Version 1

CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS
CONTENTS
PART A: GENERAL APPLICATION OF THE CODE
100 Introduction and Fundamental Principles
110 Integrity
120 Objectivity
130 Professional Competence and Due Care
140 Confidentiality
150 Professional Behavior
PART B: PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE

200 Introduction
210 Professional Appointment
220 Conflicts of Interest
230 Second Opinions
240 Fees and Other Types of Remuneration
250 Marketing Professional Services
260 Gifts and Hospitality
270 Custody of Client Assets
280 Objectivity – All Services
290 Independence – Audit and Review Engagements
291 Independence – Other Assurance Engagements
PART C: PROFESSIONAL ACCOUNTANTS IN BUSINESS

300 Introduction
310 Conflicts of Interests
320 Preparation and Reporting of Information
330 Acting with Sufficient Expertise
340 Financial Interests, Compensation and Incentives Linked to Financial Reporting and
Decision Making
350 Inducements
PART D: ADDITIONAL ETHICAL REQUIREMENTS

400 Introduction
410 Unlawful Acts or Defaults by Clients of Members
411 Unlawful Acts or Defaults by or on Behalf of a Member’s Employer
420 Use of Designations and Institute’s Logo
430 Ethics in Tax Practice
431 Corporate Finance Advice
440 Changes in a Professional Appointment
441 Change of Auditors of a Listed Issuer of The Stock Exchange of Hong Kong
450 Practice Promotion
460 Clients’ Monies
PART E: SPECIALIZED AREAS OF PRACTICE

500 Professional Ethics in Liquidation and Insolvency
Syed Mehedi Hasan, ACMA, A-1094

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PART A—GENERAL APPLICATION OF THE CODE
Section 100 Introduction and Fundamental Principles
Section 110 Integrity
Section 120 Objectivity
Section 130 Professional Competence and Due Care
Section 140 Confidentiality
Section 150 Professional Behavior
SECTION 100
Introduction and Fundamental Principles
100.1 A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in
the public interest. Therefore, a professional accountant’s responsibility is not exclusively to satisfy the
needs of an individual client or employer. In acting in the public interest, a professional accountant shall
observe and comply with this Code. If a professional accountant is prohibited from complying with certain
parts of this Code by law or regulation, the professional accountant shall comply with all other parts of this
Code.
100.2 This Code contains five parts. Part A establishes the fundamental principles of professional ethics
for professional accountants and provides a conceptual framework that professional accountants shall
apply to:
(a) Identify threats to compliance with the fundamental principles;
(b) Evaluate the significance of the threats identified; and
(c) Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level.
Safeguards are necessary when the professional accountant determines that the threats are not at a level
at which a reasonable and informed third party would be likely to conclude, weighing all the specific facts
and circumstances available to the professional accountant at that time, that compliance with the
fundamental principles is not compromised.
A professional accountant shall use professional judgment in applying this conceptual framework.
100.3 Parts B, C, D and E describe how the conceptual framework applies in certain situations. They
provide examples of safeguards that may be appropriate to address threats to compliance with the
fundamental principles. They also describe situations where safeguards are not available to address the
threats, and consequently, the circumstance or relationship creating the threats shall be avoided. Part B
applies to professional accountants in public practice. Part C applies to professional accountants in
business. Professional accountants in public practice may also find Part C relevant to their particular
circumstances. Part D sets out additional ethical requirements on specific areas. Part E sets out ethical
requirements that apply to specialized areas of practice.
100.4 The use of the word “shall” in this Code imposes a requirement on the professional accountant or
firm to comply with the specific provision in which “shall” has been used. Compliance is required unless
an exception is permitted by this Code.
Fundamental Principles
100.5 A professional accountant shall comply with the following fundamental principles:
(a) Integrity – to be straightforward and honest in all professional and business relationships.
(b) Objectivity – to not allow bias, conflict of interest or undue influence of others to override professional
or business judgments.
(c) Professional Competence and Due Care – to maintain professional knowledge and skill at the level
required to ensure that a client or employer receives competent professional services based on current

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developments in practice, legislation and techniques and act diligently and in accordance with applicable
technical and professional standards.
(d) Confidentiality – to respect the confidentiality of information acquired as a result of
professional and business relationships and, therefore, not disclose any such information to third
parties without proper and specific authority, unless there is a legal or professional right or duty
to disclose, nor use the information for the personal advantage of the professional accountant or
third parties.
(e) Professional Behavior – to comply with relevant laws and regulations and avoid any action
that discredits the profession.
Each of these fundamental principles is discussed in more detail in Sections 110–150.

Conceptual Framework Approach
100.6 The circumstances in which professional accountants operate may create specific threats to
compliance with the fundamental principles. It is impossible to define every situation that creates threats
to compliance with the fundamental principles and specify the appropriate action. In addition, the nature
of engagements and work assignments may differ and, consequently, different threats may be created,
requiring the application of different safeguards. Therefore, this Code establishes a conceptual framework
that requires a professional accountant to identify, evaluate, and address threats to compliance with the
fundamental principles. The conceptual framework approach assists professional accountants in
complying with the ethical requirements of this Code and meeting their responsibility to act in the public
interest. It accommodates many variations in circumstances that create threats to compliance with the
fundamental principles and can deter a professional accountant from concluding that a situation is
permitted if it is not specifically prohibited.
100.7 When a professional accountant identifies threats to compliance with the fundamental principles
and, based on an evaluation of those threats, determines that they are not at an acceptable level, the
professional accountant shall determine whether appropriate safeguards are available and can be applied
to eliminate the threats or reduce them to an acceptable level. In making that determination, the
professional accountant shall exercise professional judgment and take into account whether a reasonable
and informed third party, weighing all the specific facts and circumstances available to the professional
accountant at the time, would be likely to conclude that the threats would be eliminated or reduced to an
acceptable level by the application of the safeguards, such that compliance with the fundamental
principles is not compromised.
100.8 A professional accountant shall evaluate any threats to compliance with the fundamental principles
when the professional accountant knows, or could reasonably be expected to know, of circumstances or
relationships that may compromise compliance with the fundamental principles.
100.9 A professional accountant shall take qualitative as well as quantitative factors into account when
evaluating the significance of a threat. When applying the conceptual framework, a professional
accountant may encounter situations in which threats cannot be eliminated or reduced to an acceptable
level, either because the threat is too significant or because appropriate safeguards are not available or
cannot be applied. In such situations, the professional accountant shall decline or discontinue the specific
professional activity or service involved or, when necessary, resign from the engagement (in the case of a
professional accountant in public practice) or the employing organization (in the case of a professional
accountant in business).
100.10 Sections 290 and 291 contain provisions with which a professional accountant shall
comply if the professional accountant identifies a breach of an independence provision of the
Code. If a professional accountant identifies a breach of any other provision of this Code, the
professional accountant shall evaluate the significance of the breach and its impact on the
accountant’s ability to comply with the fundamental principles. The accountant shall take
whatever actions that may be available, as soon as possible, to satisfactorily address the
consequences of the breach. The accountant shall determine whether to report the breach, for
example, to those who may have been affected by the breach, the Institute, relevant regulator
or oversight authority.
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100.11 When a professional accountant encounters unusual circumstances in which the application of a
specific requirement of the Code would result in a disproportionate outcome or an outcome that may not
be in the public interest, it is recommended that the professional accountant consult with the Institute or
the relevant regulator.
Threats and Safeguards

100.12 Threats may be created by a broad range of relationships and circumstances. When a relationship
or circumstance creates a threat, such a threat could compromise, or could be perceived to compromise,
a professional accountant’s compliance with the fundamental principles. A circumstance or relationship
may create more than one threat, and a threat may affect compliance with more than one fundamental
principle. Threats fall into one or more of the following categories:
(a) Self-interest threat ─ the threat that a financial or other interest will inappropriately influence the
professional accountant’s judgment or behavior;
(b) Self-review threat ─ the threat that a professional accountant will not appropriately evaluate the
results of a previous judgment made, or activity or service performed by the professional accountant, or
by another individual within the professional accountant’s firm or employing organization, on which the
accountant will rely when forming a judgment as part of providing a current service;
(c) Advocacy threat ─ the threat that a professional accountant will promote a client’s or employer’s
position to the point that the professional accountant’s objectivity is compromised;
(d) Familiarity threat ─ the threat that due to a long or close relationship with a client or employer, a
professional accountant will be too sympathetic to their interests or too accepting of their work; and
(e) Intimidation threat ─ the threat that a professional accountant will be deterred from acting objectively
because of actual or perceived pressures, including attempts to exercise undue influence over the
professional accountant.
Parts B and C of this Code explain how these categories of threats may be created for professional
accountants in public practice and professional accountants in business, respectively. Professional
accountants in public practice may also find Part C relevant to their particular circumstances.
100.13 Safeguards are actions or other measures that may eliminate threats or reduce them to an
acceptable level. They fall into two broad categories:
(a) Safeguards created by the profession, legislation or regulation; and
(b) Safeguards in the work environment.
100.14 Safeguards created by the profession, legislation or regulation include:
ssional standards.
information produced by a professional accountant.

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100.15 Parts B and C of this Code discuss safeguards in the work environment for professional
accountants in public practice and professional accountants in business, respectively.
100.16 Certain safeguards may increase the likelihood of identifying or deterring unethical behavior. Such
safeguards, which may be created by the accounting profession, legislation, regulation, or an employing
organization, include:
-publicized complaint systems operated by the employing organization, the profession or
a regulator, which enable colleagues, employers and members of the public to draw attention to
unprofessional or unethical behavior.
Conflicts of Interest
100.17 A professional accountant may be faced with a conflict of interest when undertaking a professional
activity. A conflict of interest creates a threat to objectivity and may create threats to the other
fundamental principles. Such threats may be created when:
ntant undertakes a professional activity related to a particular matter for two or
more parties whose interests with respect to that matter are in conflict; or
rests of a
party for whom the professional accountant undertakes a professional activity related to that matter are in
conflict.
100.18 Parts B and C of this Code discuss conflicts of interest for professional accountants in public
practice and professional accountants in business, respectively.
Ethical Conflict Resolution
100.19 A professional accountant may be required to resolve a conflict in complying with the fundamental
principles.
100.20 When initiating either a formal or informal conflict resolution process, the following factors, either
individually or together with other factors, may be relevant to the resolution process:
(a) Relevant facts;
(b) Ethical issues involved;
(c) Fundamental principles related to the matter in question;
(d) Established internal procedures; and
(e) Alternative courses of action.
Having considered the relevant factors, a professional accountant shall determine the appropriate course
of action, weighing the consequences of each possible course of action. If the matter remains unresolved,
the professional accountant may wish to consult with other appropriate persons within the firm or
employing organization for help in obtaining resolution.
100.21 Where a matter involves a conflict with, or within, an organization, a professional accountant shall
determine whether to consult with those charged with governance of the organization, such as the board
of directors or the audit committee.
100.22 It may be in the best interests of the professional accountant to document the substance of the
issue, the details of any discussions held, and the decisions made concerning that issue.
100.23 If a significant conflict cannot be resolved, a professional accountant may consider
obtaining professional advice from the relevant professional body or from legal advisors. The
professional accountant generally can obtain guidance on ethical issues without breaching the
fundamental principle of confidentiality if the matter is discussed with the CODE OF ETHICS
FOR PROFESSIONAL ACCOUNTANTS .

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relevant professional body on an anonymous basis or with a legal advisor under the protection of legal
privilege. Instances in which the professional accountant may consider obtaining legal advice vary. For
example, a professional accountant may have encountered a fraud, the reporting of which could breach
the professional accountant’s responsibility to respect confidentiality. The professional accountant may
consider obtaining legal advice in that instance to determine whether there is a requirement to report.
100.24 If, after exhausting all relevant possibilities, the ethical conflict remains unresolved, a professional
accountant shall, where possible, refuse to remain associated with the matter creating the conflict. The
professional accountant shall determine whether, in the circumstances, it is appropriate to withdraw from
the engagement team or specific assignment, or to resign altogether from the engagement, the firm or the
employing organization.
Communicating with Those Charged with Governance

100.25 When communicating with those charged with governance in accordance with the
provisions of this Code, the professional accountant or firm shall determine, having regard to the
nature and importance of the particular circumstances and matter to be communicated, the
appropriate person(s) within the entity's governance structure with whom to communicate. If
the professional accountant or firm communicates with a subgroup of those charged with
governance, for example, an audit committee or an individual, the professional accountant or
firm shall determine whether communication with all of those charged with governance is also
necessary so that they are adequately informed.

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SECTION 110
Integrity
110.1 The principle of integrity imposes an obligation on all professional accountants to be straightforward
and honest in all professional and business relationships. Integrity also implies fair dealing and
truthfulness.
110.2 A professional accountant shall not knowingly be associated with reports, returns, communications
or other information where the professional accountant believes that the information:
(a) Contains a materially false or misleading statement;
(b) Contains statements or information furnished recklessly; or
(c) Omits or obscures information required to be included where such omission or obscurity would be
misleading.
When a professional accountant becomes aware that the accountant has been associated with such
information, the accountant shall take steps to be disassociated from that information.
110.3 A professional accountant will be deemed not to be in breach of paragraph 110.2 if the
professional accountant provides a modified report in respect of a matter contained in
paragraph 110.2.
SECTION 120
Objectivity
120.1 The principle of objectivity imposes an obligation on all professional accountants not to compromise
their professional or business judgment because of bias, conflict of interest or the undue influence of
others.
120.2 A professional accountant may be exposed to situations that may impair objectivity. It is
impracticable to define and prescribe all such situations. A professional accountant shall not
perform a professional activity or service if a circumstance or relationship biases or unduly
influences the accountant’s professional judgment with respect to that service.
SECTION 130
Professional Competence and Due Care
130.1 The principle of professional competence and due care imposes the following obligations on all
professional accountants:
(a) To maintain professional knowledge and skill at the level required to ensure that clients or employers
receive competent professional service; and
(b) To act diligently in accordance with applicable technical and professional standards when performing
professional activities or providing professional services.
130.2 Competent professional service requires the exercise of sound judgment in applying professional
knowledge and skill in the performance of such service. Professional competence may be divided into two
separate phases:
(a) Attainment of professional competence; and

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(b) Maintenance of professional competence.
130.3 The maintenance of professional competence requires a continuing awareness and an

understanding of relevant technical, professional and business developments. Continuing professional
development enables a professional accountant to develop and maintain the capabilities to perform
competently within the professional environment.
130.4 Diligence encompasses the responsibility to act in accordance with the requirements of an
assignment, carefully, thoroughly and on a timely basis.
130.5 A professional accountant shall take reasonable steps to ensure that those working under the
professional accountant’s authority in a professional capacity have appropriate training and supervision.
130.6 Where appropriate, a professional accountant shall make clients, employers or other users of the
accountant’s professional services or activities aware of the limitations inherent in the services or
activities.
SECTION 140
Confidentiality
140.1 The principle of confidentiality imposes an obligation on all professional accountants to refrain from:
(a) Disclosing outside the firm or employing organization confidential information acquired as a result of
professional and business relationships without proper and specific authority or unless there is a legal or
professional right or duty to disclose; and
(b) Using confidential information acquired as a result of professional and business relationships to their
personal advantage or the advantage of third parties.
140.2 A professional accountant shall maintain confidentiality, including in a social environment, being
alert to the possibility of inadvertent disclosure, particularly to a close business associate or a close or
immediate family member.
140.3 A professional accountant shall maintain confidentiality of information disclosed by a prospective

client or employer.
140.4 A professional accountant shall maintain confidentiality of information within the firm or employing
organization.
140.5 A professional accountant shall take reasonable steps to ensure that staff under the professional
accountant’s control and persons from whom advice and assistance is obtained respect the professional
accountant’s duty of confidentiality.
140.6 The need to comply with the principle of confidentiality continues even after the end of relationships
between a professional accountant and a client or employer. When a professional accountant changes
employment or acquires a new client, the professional accountant is entitled to use prior experience. The
professional accountant shall not, however, use or disclose any confidential information either acquired or
received as a result of a professional or business relationship.
140.7 The following are circumstances where professional accountants are or may be required to
disclose confidential information or when such disclosure may be appropriate:
(a) Disclosure is permitted by law and is authorized by the client or the employer;

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(b) Disclosure is required by law, for example:
(i) Production of documents or other provision of evidence in the course of legal proceedings; or
(ii) Disclosure to the appropriate public authorities of infringements of the law that come to light; and
(c) There is a professional duty or right to disclose, when not prohibited by law:
(i) To comply with the quality review of the Institute or professional body;
(ii) To respond to an inquiry or investigation by the Institute or regulatory body;
(iii) To protect the professional interests of a professional accountant in legal proceedings; or
(iv) To comply with technical standards and ethics requirements.
140.8 In deciding whether to disclose confidential information, relevant factors to consider

include:
(a) Whether the interests of all parties, including third parties whose interests may be affected, could be
harmed if the client or employer consents to the disclosure of information by the professional accountant;
(b) Whether all the relevant information is known and substantiated, to the extent it is practicable; when
the situation involves unsubstantiated facts, incomplete information or unsubstantiated conclusions,
professional judgment shall be used in determining the type of disclosure to be made, if any;
(c) The type of communication that is expected and to whom it is addressed; and
(d) Whether the parties to whom the communication is addressed are appropriate recipients.
Additional requirements are set out in Section 410 “Unlawful Acts or Defaults by Clients of
Members” and Section 411 “Unlawful Acts or Defaults by or on Behalf of a Member’s Employer”.
SECTION 150
Professional Behavior
150.1 The principle of professional behavior imposes an obligation on all professional accountants
to comply with relevant laws and regulations and avoid any action that the professional
accountant knows or should know may discredit the profession. This includes actions that a
reasonable and informed third party, weighing all the specific facts and circumstances available
to the professional accountant at that time, would be likely to conclude adversely affects the
good reputation of the profession.
150.2 In marketing and promoting themselves and their work, professional accountants shall not bring the
profession into disrepute. Professional accountants shall be honest and truthful and not:
(a) Make exaggerated claims for the services they are able to offer, the qualifications they possess, or
experience they have gained; or
(b) Make disparaging references or unsubstantiated comparisons to the work of others.
Additional requirements are set out in Section 420 “Use of Designations and Institute’s Logo”.

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Conflict of Interest
Resolution Process
LOGO
Conflict
Resolution
Syed Mehedi Hasan, ACMA, A 1094

Conflict of Interest Resolution Process
A professional accountant may be required to resolve a conflict in complying with

the fundamental principles.
When initiating either a formal or informal conflict resolution process, the following
factors, either individually or together with other factors, may be relevant to the
resolution process:
(A) Relevant facts;
(B) Ethical issues involved;
(C) Fundamental principles related to the matter in question;
(D) Established internal procedures; and
(E) Alternative courses of action. Having considered the relevant factors, a
professional accountant shall determine the appropriate course of action,
weighing the consequences of each possible course of action. If the matter
remains unresolved, the professional accountant may wish to consult with other
appropriate persons within the firm or employing organization for help in
obtaining resolution.

Conflict of Interest Resolution Process (Con..)
Where a matter involves a conflict with, or within, an organization, a professional

accountant shall determine whether to consult with those charged with governance of
the organization, such as the board of directors or the audit committee.
It may be in the best interests of the professional accountant to document the

substance of the issue, the details of any discussions held, and the decisions made
concerning that issue.
If a significant conflict cannot be resolved, a professional accountant may consider

obtaining professional advice from the relevant professional body or from legal
advisors. The professional accountant generally can obtain guidance on ethical
issues without breaching the fundamental principle of confidentiality if the matter is
discussed with the relevant professional body on an anonymous basis or with a legal
advisor under the protection of legal privilege. Instances in which the professional
accountant may consider obtaining legal advice vary. For example, a professional
accountant may have encountered a fraud, the reporting of which could breach the
professional accountant’s responsibility to respect confidentiality. The professional
accountant may consider obtaining legal advice in that instance to determine whether
there is a requirement to report.
Conflict of Interest Resolution Process (Con..)
If, after exhausting all relevant possibilities, the ethical conflict remains
unresolved, a professional accountant shall, where possible, refuse to
remain associated with the matter creating the conflict. The professional
accountant shall determine whether, in the circumstances, it is appropriate
to withdraw from the engagement team or specific assignment, or to
resign altogether from the engagement, the firm or the employing
organization.

LOGO
Conflict
Resolution

Key Corporate
Governance Guidelines
(BoD perspective)
LOGO
Corporate
Governance

Board's Size
The number of the board members of the company shall not be less than 5
(five) and more than 20 (twenty):
Provided, however, that in case of banks and non-bank financial institutions,

insurance companies and statutory bodies for which separate primary
regulators like Bangladesh Bank, Insurance Development and Regulatory
Authority, etc. exist, the Boards of those companies shall be constituted as
may be prescribed by such primary regulators in so far as those prescriptions
are not inconsistent with the aforesaid condition.

Independent Directors
All companies shall encourage effective representation of independent directors on

their
Board of Directors so that the Board, as a group, includes core competencies
considered
relevant in the context of each company. For this purpose, the companies shall
comply
with the following:-
(i) At least one fifth (1/5) of the total number of directors in the company’s board
shall be independent directors.
(ii) For the purpose of this clause “independent director” means a director-
a) who either does not hold any share in the company or holds less than one
percent (1%) shares of the total paid-up shares of the company;
b) who is not a sponsor of the company and is not connected with the company’s
any sponsor or director or shareholder who holds one percent (1%) or more
shares of the total paid-up shares of the company on the basis of family
relationship. His/her family members also should not hold above mentioned
shares in the company:
Provided that spouse, son, daughter, father, mother, brother, sister, son-in-law
and daughter-in-law shall be considered as family members;
Independent Directors (Con..)
c) who does not have any other relationship, whether pecuniary or otherwise,
with the company or its subsidiary/associated companies;
d) who is not a member, director or officer of any stock exchange;
e) who is not a shareholder, director or officer of any member of stock exchange
or an intermediary of the capital market;
f) who is not a partner or an executive or was not a partner or an executive
during the preceding 3 (three) years of the concerned company’s statutory
audit firm;
g) who shall not be an independent director in more than 3 (three) listed
companies;
h) who has not been convicted by a court of competent jurisdiction as a defaulter
in payment of any loan to a bank or a Non-Bank Financial Institution (NBFI);
i) who has not been convicted for a criminal offence involving moral turpitude.
(ii) the independent director(s) shall be appointed by the board of directors and approved
by the shareholders in the Annual General Meeting (AGM).
(iii) the post of independent director(s) can not remain vacant for more than 90 (ninety)
days.
(iv) the Board shall lay down a code of conduct of all Board members and annual
compliance of the code to be recorded.
(v) the tenure of office of an independent director shall be for a period of 3 (three) years,
which may be extended for 1 (one) term only.
Qualification of Independent Director (ID)
(i) Independent Director shall be a knowledgeable individual with integrity who is able
to ensure compliance with financial, regulatory and corporate laws and can make
meaningful contribution to business.
(ii) The person should be a Business Leader/Corporate Leader/Bureaucrat/University

Teacher with Economics or Business Studies or Law background/Professionals like
Chartered Accountants, Cost & Management Accountants, Chartered Secretaries. The
independent director must have at least 12 (twelve) years of corporate
management/professional experiences.
(iii) In special cases the above qualifications may be relaxed subject to prior approval
of the Commission.

Chairman of the Board and Chief Executive Officer
The positions of the Chairman of the Board and the Chief Executive Officer of the
companies shall be filled by different individuals. The Chairman of the company shall
be elected from among the directors of the company. The Board of Directors shall
clearly define respective roles and responsibilities of the Chairman and the Chief
Executive
Officer.

The Directors’ Report to Shareholders
The directors of the companies shall include the following additional statements in the
Directors' Report prepared under section 184 of the Companies Act, 1994 (Act No.
XVIII of 1994):-
(i) Industry outlook and possible future developments in the industry.
(ii) Segment-wise or product-wise performance.
(iii) Risks and concerns.
(iv) A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin.
(v) Discussion on continuity of any Extra-Ordinary gain or loss.
(vi) Basis for related party transactions- a statement of all related party transactions
should be disclosed in the annual report.
(vii) Utilization of proceeds from public issues, rights issues and/or through any others
instruments.
(viii) An explanation if the financial results deteriorate after the company goes for
Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Offer, Direct
Listing, etc.
(ix) If significant variance occurs between Quarterly Financial performance and
Annual Financial Statements the management shall explain about the variance on
their Annual Report.
(x) Remuneration to directors including independent directors.
The Directors’ Report to Shareholders (Con..)
(xi) The financial statements prepared by the management of the issuer company
present fairly its state of affairs, the result of its operations, cash flows and
changes in equity.
(xii) Proper books of account of the issuer company have been maintained.
(xiii) Appropriate accounting policies have been consistently applied in preparation of
the financial statements and that the accounting estimates are based on reasonable
and prudent judgment.
(xiv) International Accounting Standards (IAS)/Bangladesh Accounting Standards
(BAS)/International Financial Reporting Standards (IFRS)/Bangladesh Financial
Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in
preparation of the financial statements and any departure there-from has been
adequately disclosed.
(xv) The system of internal control is sound in design and has been effectively
implemented and monitored.
(xvi) There are no significant doubts upon the issuer company's ability to continue as a
going concern. If the issuer company is not considered to be a going concern, the
fact along with reasons thereof should be disclosed.

(xvii) Significant deviations from the last year’s operating results of the issuer company
shall be highlighted and the reasons thereof should be explained.
(xviii) Key operating and financial data of at least preceding 5 (five) years shall be
summarized.
(xix) If the issuer company has not declared dividend (cash or stock) for the year, the
reasons thereof shall be given.
(xx) The number of Board meetings held during the year and attendance by each
director shall be disclosed.
(xxi) The pattern of shareholding shall be reported to disclose the aggregate number of
shares (along with name wise details where stated below) held by:-
a) Parent/Subsidiary/Associated Companies and other related parties (name wise
details);
b) Directors, Chief Executive Officer, Company Secretary, Chief Financial
Officer, Head of Internal Audit and their spouses and minor children (name
wise details);
c) Executives;
d) Shareholders holding ten percent (10%) or more voting interest in the
company (name wise details).

Explanation: For the purpose of this clause, the expression “executive” means top
5 (five) salaried employees of the company, other than the Directors, Chief
Executive Officer, Company Secretary, Chief Financial Officer and Head of
Internal Audit.
(xxii) In case of the appointment/re-appointment of a director the company shall

disclose
the following information to the shareholders:-
a) a brief resume of the director;
b) nature of his/her expertise in specific functional areas;
c) names of companies in which the person also holds the directorship and the
membership of committees of the board.

LOGO
Corporate
Governance

Ethical conflicts and
safeguards
LOGO
Ethics

Example 1

Example 2

Example 3

Example 4

Ethical dilemmas and conflict resolution
Benefits & Disadvantages of Principal based

Benefits & Disadvantages of Rule based approach-
approach- Benefits:
Benefits: 1. Recognizes that every threat cannot simply be
1. Easy to check compliance as based on 'listed'.
2. Allows for subjective judgement, so the member
fact.
can apply the principles in accordance with their
2. Easy to amend rule set as required. specific situation and nature of the threat.
Disadvantages: Disadvantages:
1. The list of rules may not be complete. In some situations it may be difficult to confirm that
2. There is no room for individual decision the compliance action was appropriate as two people
making. may make different and valid decisions based on the
same threat and circumstances

LOGO
Ethics

Corporate Governance
CFO, HIA, CS, Audit Com, External Auditor,
Remuneration Com, Reporting & Compliance
LOGO
CG

CFO, HIA, CS, Audit Com, External Auditor, Remuneration Com,
Reporting & Compliance
Appointment
The company shall appoint a Chief Financial Officer (CFO), a Head of Internal Audit and a Company
Secretary. The Board of Directors should clearly define respective roles, responsibilities and duties of
the CFO, the Head of Internal Audit and the Company Secretary.
Requirement to Attend Board Meetings

The CFO and the Company Secretary of the companies should attend meetings of the
Board of Directors, provided that the CFO and/or the Company Secretary shall not
attend such part of a meeting of the Board of Directors which involves consideration of
an agenda item relating to the CFO and/or the Company Secretary.
AUDIT COMMITTEE:
The company shall have an Audit Committee as a sub-committee of the Board of
Directors.
The Audit Committee shall assist the Board of Directors in ensuring that the financial
statements reflect true and fair view of the state of affairs of the company and in ensuring
a good monitoring system within the business.
The Audit Committee shall be responsible to the Board of Directors. The duties of the
Audit Committee shall be clearly set forth in writing.
Constitution of the Audit Committee

(i) The Audit Committee shall be composed of at least 3 (three) members.
(ii) The Board of Directors shall appoint members of the Audit Committee who shall be
directors of the company and shall include at least two independent directors.
(iii) All members of the audit committee should be “financially literate” and at least one member
shall have accounting or related financial management experience.
Explanation: The term “financially literate” means the ability to read and understand the financial
statements like Balance sheet, Income Statement and Cash Flow Statement and a person will be
considered to have accounting or related financial management expertise if (s)he posses
professional qualification or accounting/finance graduate with at least 15 (fifteen) years
experience in corporate management.
(iv) When the term of service of the Committee members expires or there is any circumstance
causing any Committee member to be unable to hold office until expiration of the term of service,
thus making the number of the Committee members to be lower than the prescribed number of 3
(three) persons, the Board of Directors shall appoint the new Committee member(s) to fill up the
vacancy(ies) immediately or not later than 1 (one) month from the date of vacancy(ies) in the
Committee to ensure continuity of the performance of work of the Audit Committee.
(v) The company secretary shall act as the secretary of the Committee.
Chairman of the Audit Committee

(i) The Board of Directors shall select 1 (one) member of the Audit Committee to be
Chairman of the Audit Committee, who should be an independent director
(ii) Chairman of the audit committee shall be present in AGM to answer shareholders
queries

Role of Audit Committee:

Role of audit committee shall include the following:
(i) Oversee the financial reporting process
(ii) Monitor choice of accounting policies and principles
(iii) Monitor internal control Risk Management process
(iv) Oversee hiring and performance of external auditors
(v) Review along with the management, the annual financial statement before submission
to the board for approval
(vi) Review along with the management, the quarterly and half yearly financial statement
below before submission to the board for approval
(vii) Review the adequacy of internal audit function
(viii) Review statement of significant related party transactions submitted by management
(ix) Review Management Letters/Letter of internal control weakness issued by statutory
auditors
(x) Appointment, removal and fixes the terms of reference of internal auditor.
Reporting of the Audit Committee

Reporting to the Board of Directors
(i) The Audit Committee shall report on its activities to the Board of Directors.
(ii) The Audit Committee shall immediately report to the Board of Directors on the
following findings, if any:-
a) Report on conflicts of interests;
b) Suspected or presumed fraud or irregularity or material defect in the internal

control system;
c) Suspected infringement of laws, including securities related laws, rules and
regulations; and
d) Any other matter which shall be disclosed to the Board of Directors immediately.
Reporting to the Authorities

If the Audit Committee has reported to the Board of Directors about anything which has material
impact on the financial condition and results of operation and has discussed with the Board of
Directors and the management that any rectification is necessary and if the Audit Committee
finds that such rectification has been unreasonably ignored, the Audit Committee shall report
such finding to the Commission, upon reporting of such matters to the Board of Directors for
three times or completion of a period of 6 (six) months from the date of first reporting to the
Board of Directors, whichever is earlier.
Reporting to the Shareholders and General Investors

Report on activities carried out by the Audit Committee, including any report made to the Board
of Directors under condition 3.4.1 (ii) above during the year, shall be signed by the Chairman of
the Audit Committee and disclosed in the annual report of the issuer company.

EXTERNAL / STATUTORY AUDITORS

The issuer company should not engage its external/statutory auditors to perform the following
services of the company; namely:-
(i) Appraisal or valuation services or fairness opinions;
(ii) Financial information systems design and implementation;
(iii) Book-keeping or other services related to the accounting records or financial
statements;
(iv) Broker-dealer services;
(v) Actuarial services;
(vi) Internal audit services; and
(vii) Any other service that the Audit Committee determines
REMUNERATION COMMITTEE
(i) The company shall have a Remuneration Committee as a sub-committee of the
Board of Directors.
(ii) The Remuneration Committee shall submit the proposal of remuneration of all
the directors including chairman, chief executive, advisors and consultants to
the Board of Directors. If the Board of Directors differs with the proposal of
remuneration presented by the Remuneration Committee then the reason of
difference will be mentioned in the Annual Report.
(iii) The Remuneration Committee shall be responsible to the Board of Directors.
The duties of the Remuneration Committee shall be clearly set forth in writing.
Constitution of Remuneration Committee

(i) The Remuneration Committee shall be composed of at least 3 (three) members.
(ii) The Board of Directors shall appoint members of the Remuneration Committee who shall be
directors of the company and shall include at least one independent director.
(iii) When the term of service of the Committee members expires or there is any circumstance
causing any Committee member to be unable to hold office until expiration of the term of service,
thus making the number of the Committee members to be lower than the prescribed number of 3
(three) persons, the Board of Directors shall appoint the new Committee member(s) to fill up the
vacancy(ies) immediately or not later than 1 (one) month from the date of vacancy(ies) in the
Committee to ensure continuity of the performance of work of the Remuneration Committee.
Chairman of the Remuneration Committee

The Board of Directors shall select 1 (one) member of the Remuneration Committee to
be Chairman of the Remuneration Committee.
Reporting of the Remuneration Committee

The Remuneration Committee shall report its activities to the Board of Directors.

REPORTING AND COMPLIANCE OF CORPORATE GOVERNANCE

(i) The companies shall submit a quarterly compliance report to the stock exchange and
the commission within 15 days from the close of the quarter as per the above mentioned format.
(ii) The company shall also obtain a certificate from a Professional Accountant/Secretary
(Chartered Accountant/Cost & Management Accountant/Chartered Secretary) regarding
compliance of conditions of Corporate Governance Guideline of SEC and shall send the same to
the shareholders along with the Annual Report on a yearly basis.
(iii) The directors of the company shall state, in accordance with the annexure attached, in the
directors' report whether the company has complied with these conditions as per the following
format:

LOGO
Ethics

Companies Act 1994
MoA, AoA and Company Formation
LOGO
CA
1994

Definition: Sec 2
2. Definitions
(c) "company" means a company formed and registered under this Act or an existing company;
(f) "director" includes any person occupying the position of director by whatever name called;
(h) "existing company" means a company formed and registered under any law relating to companies in force at any time before
the commencement of this Act, and is in operation after commencement of this Act,
(i) "financial year" means, in relation to any body corporate, the period in respect of which any profit and loss account of the body
corporate laid before it in annual general meeting is made up, whether that period is a year or not;
Provided that in relation to an insurance company, "financial year" shall mean the calendar year;
(k) "manager" means an individual who, subject to the superintendence, control and direction of the Board of Directors, has the
management of the whole, or substantially the whole, of the affairs and business of a company , and includes a director or any
other person occupying the position of a manager, by whatever name called, and whether under a contract of service or not;
(q) "private company" means a company which by its articles--

(i) restricts the right to transfer its shares, if any;
(ii) prohibits any invitation to the public to subscribe for its shares or debenture, if any;
(iii) limits the number of its members to fifty not including persons who are in its employment;
Provided that where two or more persons hold one or more shares in a company jointly, the shall, for the purposes of this
definition be treated as a single member;
(r) "public company" means a company incorporated under this Act or under any law at any time in force before the
commencement of this Act and which is not a private company;
(s) "Registrar" means a Registrar or any other officer, by whatever designation, performing under this Act the duty of registration
of companies;

Article of Association and Memorandum of Association
Sec 5-24
Memorandum of Association
5. Mode of forming incorporated company.

Any seven or more persons or, where the company to be formed will be a private company, any two or more persons associated
for any lawful purpose may, be subscribing their names to a memorandum of association and otherwise with the requirements
of this Act in respect or registration form an incorporated company, with or without limited liability, that is to say, either--
(a) a company limited by shares, that is to say, a company having the liability of its member limited by the memorandum to the
amount, if any, unpaid on the shares respectively held by them; or
(b) a company limited by guarantee, that is to say, a company having the liability of its members limited by the memorandum to
such amount as the members may respectively thereby undertake to contribute to the assets of the assets of the company on the
event of its being wound up; or
(c) an unlimited company, that is to say, a company having no limit on the liability of its members.
6. Memorandum of company limited by shares.

In the case of a company limited by shares.-
(a) the memorandum shall state.--
(i) the name of the company, with "limited" as the last word in its name;
(ii) The address of the registered office;
(iii) the objects of the company, and, except in the case of trading companies, the territories to which they extend;
(iv) that the liability of the members is limited;
(v) the amount of share capital with which the company proposes to be registered, and the divisions thereof into shares of a fixed
amount;
(b) each subscriber of the memorandum shall take at least one share;
(c) each subscriber shall write opposite to his name the number of shares he takes.

Sec 5-24
7. Memorandum of company limited by guarantee.

In the case of a company limited by guarantee--
(a) the memorandum shall state--
(i) the name of the company, with "limited" as the last word in its name.
(ii) the address of the registered office;
(iii) the objects of the company, and, except in the case of trading companies, the territories to which they extend;
(iv) that the liability of the members is limited;
(v) that each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a
member or within one year afterwards, for payment of the debts and liabilities of the company contracted before he ceases to be
a member, ad of the charges and expenses of winding up, and for adjustment of the right of the contributories among themselves,
such amount as may be required, not exceeding a specified amount;
(b) if the company has a share capital--
(i) the memorandum shall also state the amount of share capital with which the company proposes to be registered and the
division thereof into shares of a fixed amount;
(ii) each subscriber of the memorandum shall take at least one share;
(iii) each subscriber shall write opposite to his name the number of shares he takes.
8. Memorandum of unlimited company.
In the case of an unlimited company
(a) the memorandum shall state-
(i) the name of the company;
(ii) the address of the registered office of the company;
(iii) the objects of the company and, except in the case of trading companies, the territories to which they extend.
(b) if the company has a share capital-
(i) each subscriber of the memorandum shall take at least one share;
(ii) each subscriber shall write opposite to his name the number of shares he takes.
9. Printing and signature of memorandum.
The memorandum of every company shall--
(a) be printed;
(b) be divided into paragraphs numbered consecutively; and
(c) be signed by each subscriber, who shall add his address and description in the presence of at least two witnesses who shall
attest the signature. Syed Mehedi Hasan, ACMA, A 1094
Sec 5-24
10. Restriction on alteration of memorandum.

(1) A company shall not alter the conditions on continued in its memorandum except provisions is made in the Act.
(2) Only those provisions which by any other specific provision contained in this Act, are required to be stated in the memorandum
of the company concerned shall be deemed to be the conditions contained in its memorandum.
(3) Other provisions contained in the memorandum, including those relating to the appointment of director, managing agent or
manager may be altered in the same manner as the articles of the company, but if there is any express provision in this Act
permitting the alteration of such provisions in any other manner, they may also be altered in such other manner.
(4) All reference to the articles of a company in this Act shall be construed as including references to the other provisions
contained in its memorandum as referred to in sub-section (3).
11. Name of company and change of name.
(1) A company shall not be registered by a name identical with that by which a company in existence is already registered, or so
nearly resembling the name that there is likelihood of using the name to deceive, except where the company in existence is in the
course of being dissolved and signifies its written consent in such manner as the Registrar requires.
(2) If a company, through inadvertence or otherwise, is, without the consent referred to in sub-section (1), registered by a name
identical with that by which a company in existence is previously is registered, or so nearly resembling the name that there is
likelihood of using the name to deceive, the first mentioned company shall, on he direction of the Registrar, change its name
within a period of one hundred and twenty days.
(3) If a company makes a default in complying with the direction made under sub-section (2), the company shall be punishable
with fine of five hundred take for every day during which the default continues and every officer who is in default shall be
punishable with fine of one hundred taka for every day during which the default continues.
(4) Except with the previous consent in writing of the Government, no company shall be registered by a name which is declared
by the Government by notification in the official Gazette, as undesirable:
Provided that nothing in this sub-section shall apply to companies registered before the commencement of this Act.
(5) No company shall be registered by a name containing in any form the name or any abbreviation of the name of the United
Nations or of any subsidiary body set up by the United Nations or of the World Health Organisation unless the company has
obtained the previous authorisation in writing of the Secretary General in the case of the United Nations or the subsidiary body as
aforesaid or of the Director General of the World Health Organisation in the case of that Organisation.
(6) Any company may, by special resolution and subject to the approval of the Registrar signified in writing, change it name.
(7) Were a company changes its name, the Registrar shall enter the new name on the register in place of the former name, and
shall issued a certificate of incorporation in its new name to meet the circumstances of the case and on the issue of such a
certificate, the change of name shall be complete. Syed Mehedi Hasan, ACMA, A 1094
Sec 5-24
12. Alternation of memorandum.

(1) Subject to the provisions of this Act, a company may, by special resolution, alter the provisions of its memorandum with
respect to the objects of the company, so far as may be required to enable it--
(a) to carry on its business more economically or more efficiently; or
(b) to attain its main purpose by new or improved means; or
(c) to enlarge or change the local area of its operations; or
(d) to carry on some business which, under the existing circumstances. may conveniently or advantageously be combined with
the business of the company; or
(e) to restrict or abandon any of the objects specified in the memorandum; or
(f) to sell or dispose of the whole or any part of the undertaking of the company; or
(g) to amalgamate with any other company or body of persons.
(2) The alteration shall not take effect until and except in so far it is confirmed by the Court on petition.
(3) Before confirming the alteration, the Court must be satisfied--
(a) that sufficient notice has been given to every holder of debentures of the company, and to any person or class of person
whose interest will, in the option of the Court, be affected by the alteration; and
(b) that, with respect to every creditor who in the opinion of the Court is entitled to object, and who signifies his objections in
manner directed by the Court, either his consent to the alteration has been obtained or his debt or claim has been discharged or
has been determined, or has been secured to the satisfaction of the Court;
Provided that the Court may, in the cases of any person or class, for special reasons, dispense with the notice required by this
section.
13. Power of Court when confirming alteration.
The Court may make an order confirming the alteration either wholly or in part, and on such terms and conditions as it thinks fit,
and may make such order as to costs as it thinks proper.
14. Exercises of discretion by Court.
The Court shall, in exercising its discretion under sections 12 and 13, have regard to the class of them, as well as to the rights
and interests of the creditors, and may if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the
satisfaction of the Court for the purchase of the interests of dissenting members; and may give such directions and make such
orders as it may think expedient for facilitating or carrying into effect any such arrangement;
Provided that no part of the share capital of the company may be expended in any such purchase.
Sec 5-24
15. Procedure on confirmation of the alternation.

A certified copy of the order confirming the alternation, together with a printed copy of the memorandum as altered, shall be filed
by the company with the Registrar within ninety days from the date of the order or within such time as may be extended by the
court, and he Registrar shall register the same. and shall certify the registration under his hand, and the certificate shall be
conclusive evidence that all the requirements of this Act, with respect to the alteration and the confirmation thereof, have been
complied with, and hence forth the memorandum so altered shall be the memorandum of the company.
16. Effect of failure to register within extended time.--No such alteration shall have any operation until registration thereof has
been duly effected in accordance with the provisions of section 15, and if such registration is not effected within the period
specified in that section such alteration and the order of the Court confirming the alteration, and all proceedings connected there
with shall, at the expiration of the period specified under that section become absolutely null and void :
Provided that the Court may, on sufficient cause shown, revive the order on application made within a further period of thirty days
after the said period.
Articles of Association
17. Registration of articles.
(1) A company limited by guarantee and an unlimited company shall, and a company limited by shares may. have an articles of
association herein provision shall be made for regulating the affairs of the company; and the article shall be signed by the
subscribers of the memorandum and be registered together with the memorandum.
(2) Articles of association may adopt all or any of the regulations contained in Schedule I, and shall in any event be deemed to
contain regulations identical with or to the same effect as regulation 56, 66, 71, 78, 79, 80, 81, 82, 95, 97, 105, 108, 112, 113, 114,
115, and 116 contained in that Schedule :
Provided that regulations 78, 79, 82, 81, and 82 shall not be deemed to be included in the articles of any private company except
a private company which is the subsidiary company of a public company :
Provided further that regulation, 108 shall be deemed to require that a statement of the reasons why of the whole amount of any
item of expenditure which may in fairness be distributed over several years, only a portion thereof is charged against the income
of the year, shall be shown in the profit and, loss account, unless the company in general meeting shall determine otherwise.

Sec 5-24
(3) In the case of an unlimited company or a company limited by guarantee, the articles, if the company has a share capital, shall
state the amount of share capital with which the company proposes to be registered.
(4) In the case of an unlimited company or a company limited by guarantee, if the company has not a share capital, the articles
shall state the number of members with which the company proposes to the registered; and on the basis of such number the
Registrar shall determine the fees payable on registration.
18. Application of Schedule I.
In the case of a company limited by shares and registered after the commencement of this Act, if articles not registered, or, if
articles are registered, in so far as the articles do not exclude or modify the regulations in Schedule I, those regulations shall, so
far as applicable be the regulations of the company in the same manner and to the same extent as if they were contained in the
duly registered articles.
19. Form and signature of articles.
Articles shall
(a) be printed;
(b) be divided into paragraphs numbered consecutively;
(c) be signed by each subscriber of the memorandum, who shall add his address and description in the presence of at least two
witness who shall attest the signature.
20. Alteration of articles by special resolution.
Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may by special resolution
alter, exclude from or add to its articles: and any alteration, exclusion or addition so made shall be as valid as if originally
contained in the articles, and be subject in like manner to alteration, exclusion or addition by special resolution.
21. Effect of alteration in memorandum or articles.
Notwithstanding any thing in the memorandum or articles of a company,, no member of the company shall be bound by an
alteration made in the memorandum or articles after the due on which he becomes, member, if and so far as the alteration
requires him to take or subscribe for more shares than the number held by him at the date on which the alteration is made, or in
any way increases his liability is at that date to contribute to the share capital of, or otherwise to pay money to the company.
22. Effect of memorandum and articles.
(1) The memorandum and articles shall when registered bind the company and the members hereof to the same extent as if they
respectively had been signed by each member and contained a convenient on the part of each member his heirs and legal
representatives to observe all the provisions of the memorandum and of the articles subject to the provisions of this Act.
(2) All money payable by any member to the company under the memorandum or articles shall be a debt one from him to the
company. Syed Mehedi Hasan, ACMA, A 1094
Sec 5-24
23. Registration of memorandum and articles.

(1) The memorandum and articles if any shall be field with the Registrar who if satisfied that the requirements of this Act have
been complied with shall retain and register them within thirty days from the date of their receipt and in the event of refusal he
shall communicate the grounds within ten days after that period to the company.
(2) An person on being aggrieved by a refusal of the Registrar under sub-section (1) may make an appeal to the Government
within thirty days of the receipt of the refusal order.
(3) The petition of appeal shall be accompanied by a treasury challan showing of a fee of two hundred fifty taka to be credited
under the head of account specified in this behalf.
(4) The decision of the Government in an appeal under this section shall be final.
24. Effect of registration.
(1) On the registration of the memorandum of a company the Registrar shall certify under his hand that the company is
incorporated and in the case of a limited company that the company is limited.
(2) From the date of incorporation mentioned in the certificate of incorporation the subscribers of the memorandum together with
such other persons as may from time to time become members of the company shall be a body corporate by the name contained
in the memorandum capable forthwith of exercising all the functions of an incorporated company and having perpetual succession
and a common seal but with such liability on the part of the members to contribute to the assets of the company in the event of its
being wound up as is mentioned in this Act.
25. Conclusiveness of certificate of incorporation.

(1) A certificate of incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the
requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with and
that the association is a company authorized to the registered and duly registered under this Act.
(2) A declaration by an advocate entitled to appear before the High Court Division who is engaged in the formation of a company
or by a person named in the articles as a director manager or secretary of the company of compliance with all or any of the said
requirements shall be filed with the Registrar and the Registrar may accept such a declaration as sufficient evidence of
compliance.

Memorandum of Association AND the contents of the
The memorandum of association is the charter /constitution of the company. It is the written
documents containing the object and power of the company upon which the company is incorporated
and the company cannot go beyond the limitation/contained in the M/A. It cannot change without the
consent of the court / Govt. The memorandum shall be:
1. Printed
2. It shall be divided into paragraphs and numbered consecutively, and
3. It shall be signed by each subscribed (giving his address and description) in the presence of at
least one witness who shall attest his signature.
Contents of Memorandum of association:
1. Name clause: The memorandum shall state the name of the company with “limited” as the last word
in its name. It signature that the liability of the shareholders is limited. The liability may Limited by
shares or by guarantee.
2. Registered office situate clause: After the name the M/A usually state the name of the place where
the registered office of the company. The reasons why the place of its registered office is stated in the
M/A
It fixed the domicile of the company and determines jurisdiction of the court with regard to the
company
It provides some definite places at which notice and other processes may be served on it.
It also determines where the records of the company are to be kept
Changes the register office
3. Object clause: The third requirement of the M/A is object clause. It determines:
The power of the company and
It restricts the power of the company Syed Mehedi Hasan, ACMA, A 1094
Memorandum of Association AND the contents of the
4. Liability clause: The fourth particular in an M/A is a statement that the company’s liability is limited.
In case of a company limited by shares is wound up the members of company will not be liable to
contribute more than the amount up paid on their shares But if the number of members is reduced in
case of Pvt. Limited co below two and in case of public limited co. below seven and the business carried
on more than 6 months thereafter, then the member are personally liable irrespectively of limited
liability for all debts contracts during the period (U/S 222).
5. Capital clause: The amount of the nominal capital of the company and the number of the shares must
be clearly stated in M/A. There is or legal limit to the amount of the capital or of each shares. Alteration
of capital clause: may by usually. The article of association contains the power and procedure to alter
the capital clause. Otherwise a special resolution has to be passed in a general meeting to alter the A/A
in this regard. A notice in this regard shall have to be filed to the registrar within 15 days.

Difference between MoA and AoA
Memorandum of Association Articles of Association
The memorandum is the fundamental The Articles are rules regarding internal
constitution of the Company determining its management
Objectives
Memorandum is the main guideline of the Any rules in the articles contrary to the
company memorandum is invalid
Alteration of Memorandum is difficult, in some Alternation of article is easy; it requires a
cases it requires Court's permission special resolution only
Memorandum defines the power of the Articles define the internal regulation and
Company Management process
Acts done by the company beyond the power Acts done by the Company beyond the
of the memorandum is void which cannot be articles can be ratified by the share holders
ratified provided they are within the power of the
Memorandum
There are 5 clauses There are long list of clauses

Certificate of Incorporation and principal documents to be filed for the
purpose of incorporation of a company
The certificate issued by the registrar after a company is registered is called the Certificate of
incorporation. Section 25 of the Act states that the Certificate about the following matters:
1. All the requirements of the Act have been complied with respect of registration and matters
precedent and incident thereto;
2. The association is a company authorized to be registered and duly registered under the Act;
and
3. The legal existence of the company begins from the date of issue of the certificate.
To obtain a certificate of incorporation the following documents need to submit:

1. Memorandum of association signed by each subscriber and dated.
2. The signature must be witnessed by a third party.
3. Articles of association signed, dated and witnessed as same subscribers.
4. A statutory declaration that all the legal formalities have been complied.
5. Notice of situation of registered office.
6. Particulars of directors, managing agent and Manager
7. A list of persons who have consented to become directors.
8. A written consent of the directors to act as such.
9. Thereafter, the proper stamp duty for registration has to be paid and the register shall enter
the name of the company on the register of the companies and issue a certificate of
incorporation.

Conditions are to be fulfilled before a company commences business
A public company, having a share capital and issuing a prospectus, cannot commence business
until the Registrar issues a certificate known as the "Certificate of Commencement of Business".
This certificate is issued after the following formalities have been complied with:
i. The minimum subscription has been raised.
ii. Every director has paid the money payable on application and an allotment for the shares
taken up by him.
iii. No money is repayable for failure to obtain stock exchange recognition for the shares, where
such recognition was promised.
iv. A duly verified declaration by a director or the secretary has been filed with the Registrar that
the above requirements have been complied with.
However, a public company having share capital but not issuing a prospectus will get the
commencement certificate if the following conditions are fulfilled:
i. A statement in lieu of prospectus has been filed with the Registrar.
ii. The directors have paid the money due from them on account of shares.
iii. A declaration by a director or the secretary has been filed with the registrar stating that
condition (b) has been satisfied.

Power to alter the Articles of Association of a company and the
restrictions/limitations, if any, on the nature and extent of the alterations
that can be made
Subject to the provisions of this Act and to the conditions contained in its memorandum, a
company may by special resolution alter, exclude from or add to its articles: and any alteration,
exclusion or addition so made shall be as valid as if originally contained in the articles, and be
subject in like manner to alteration, exclusion or addition by special resolution.
Notwithstanding anything in the memorandum or articles of a company, no member of the

company shall be bound by an alteration made in the memorandum or articles after the due on
which he becomes, member, if and so far as the alteration requires him to take or subscribe for
more shares than the number held by him at the date on which the alteration is made, or in any
way increases his liability is at that date to contribute to the share capital of, or otherwise to pay
money to the company.

Company Formation
Formation of a Company:
2 (two) or more persons (not more than 50) and 7 or more persons (unlimited) may form a Private or a
Public Limited Company respectively by subscribing their signature in the Memorandum of Association.
They may form -
a Company limited by shares;
a Company limited by guarantee;
an unlimited Company.
There are 3 stages for formation of a company -
i. Promotion;
ii. Registration;
iii. Commencement of business.
Promotion stages -
i. Promoters
ii. Clearance of name
iii. Sponsors' equity
iv. Consent of the Directors
v. Selection of objectives.
Registration:
i. Submission of Memorandum & Articles of Association.
ii. Payment of stamp duty & Registration fees.
iii. Obtaining certificate of incorporation.
Commencement of business:
For a Private Limited Company, the business of the Company can be commenced after
getting the registration i.e. certificate of incorporation.
For a Public Limited Company, the Company shall obtain the certificate of
commencement of business from the Registrar. Syed Mehedi Hasan, ACMA, A 1094
‘Member’ of a company
Every subscriber of the memorandum of company shall be deemed to have agreed to become
a member of the company and on its registration shall be entered as a member in its register of
members.
Every other person who agrees to become a member of a company, and whose name is
entered in its register of members shall be a member of the company.

LOGO
CA
1994

Companies Act 1994
Meetings and Resolutions
LOGO
CA
1994

Procedure of calling Annual General Meeting and Extraordinary General
Meeting of a company & businesses are transacted in an Annual General
Meeting
A general meeting shall be held (within eighteen months from the date of its incorporation and
thereafter once at least in every year) at such time (not being more than fifteen months after the
holding of the last preceding general meeting) and place as may be prescribed by the company in
general meeting.
Proceedings at General Meeting
Fourteen days' notice at least (exclusive of the day on which the notice is served or deemed to
be served, but inclusive of the day for which notice is given) specifying the place, the day and
the hour of meeting.
No business shall be transacted at any general meeting unless a quorum of members is present
at the time when the meeting proceeds to business
If within half an hour from the time appointed for the meeting a quorum is not Present, the
meeting, if called upon the requisition of members, shall be dissolved.
The Chairman selected among them by the Board of Directors shall preside as chairman at every
general meeting of the company. Provided that the Chairman and the Managing Director shall
not be the same person.
lf there is no such chairman, or if at any meeting he is not present within thirty minutes after
the time appointed for holding the meeting, or is unwilling to act as chairman, the members
Present shall choose someone of their number of be chairman'
The chairman may with the consent of any meeting at which a quorum is present, adjourn the
meeting from time to time and from place.
Extra Ordinary Meeting:
All meetings of the shareholders other than the annual meetings or those provided for in the articles are
known as extra ordinary meeting. These meetings may be called by the directors either ‘suo moto’
or the requisition of not less than one-tenth of the shareholders and where the directors fail to call such
a meetings so requisitioned within the prescribed time limit, by the requisitions themselves.
Procedure of calling Annual General Meeting and Extraordinary General
Meeting of a company & businesses are transacted in an Annual General
Meeting
As per Section-84, the above meeting can be called on requisition from holders of 1/10lh members or
1/10 holders of paid-up capital. If the Directors do not cause a meeting to be called within twenty-one
days from the date of the requisition being so deposited, the requisionist or a majority of them in value
may themselves call the meeting, but in either case any meeting so called shall be held within three
months from the date from the deposit of the requisition. Notice for holing the meeting is to be given at
least 21 days before the date of the meeting. The Agenda of the meeting is to be mentioned in the
notice.
Businesses that are transacted in an Annual General Meeting:

1. To receive, consider and adopt the Directors’ Report and the Audited Balance Sheet and the
Profit and Loss Account with Auditors’ Report thereon.
2. To declare dividend.
3. To elect Director (s)
4. To appoint the auditors and fix up their remuneration.
5. To transact any other business which can be transacted by ordinary resolution, with the
permission of the chair.

Different type of resolutions
Different type of resolutions:

i. Ordinary resolution
ii. Special resolution
iii. Extra-ordinary resolution.
Ordinary Resolution:
This is passed by the majority vole of members present at a general meeting. Such a resolution is passed
in the ordinary way and deals with ordinary business, such as passing of accounts, appointing directors,
auditors, and declaration of dividends and so on.
Special resolution:
This is passed in a General Meeting by the three-fourth majority of the members present in person or by proxy
where proxy is allowed. Notice for which 21 days specifying the-intention to propose the resolution is to be
given before the date of the meeting. Special resolutions are necessary for the following purposes:
i. To change the name of the Company;
ii. To alter the Memorandum of Association;
iii. To alter the Articles of Association;
iv. To reduce the share capital;
v. To convert any portion of the capital, uncalled in to reserve capital;
vi. To appoint inspectors to investigate the company's own affairs;
vii. For winding-up of a Company voluntarily.
viii. To pay interest out of capital for raising money to meet expenses of construction
work;
ix. To convert public limited company to private limited company
Different type of resolutions
Extra Ordinary resolution:

This is passed by three-fourth majority vote at general meeting of which 14 days’ notice has been
given. The notice must specify the intention to propose the resolution as an extra-ordinary
resolution (Section-87(i). Such resolution is necessary when a company is sought to be wound-
up voluntarily on the ground that it cannot continue its business on account of its liabilities and
also for a number of other reasons. (Sec- 87)
Copy of such resolution is to be filed with the register within 15 days from the date of such
meeting. (Section-88)

Statutory Meeting & Extra ordinary meeting
Statutory meeting:
Every public company limited by shares and every company limited by guarantee and having a share
capital, must within a period of not less than one month and not more than six months from the date at
which the company is entitled to commence business, hold a general meeting of members which is to be
called, the Statutory Meeting. In this meeting the members are discuss a report by directors, known as
the Statutory Report, which contains particulars relating to the formation of the Company.
Difference between Statutory meeting and Extra ordinary meeting:

Statutory Meeting:
Every company limited by shares and every company limited by a guarantee and having a share capital is
required to hold a statutory meeting of the members of the company within a period of six months and
not less than one month from the date on which the company becomes entitled to commence its
business (section - 83)
Extraordinary Meeting:
All meetings of the shareholders other than the annual meeting or those provided for in the articles are
known as extraordinary general meetings. These meetings may he called by the Directors either "suo-moto"
or on the requisition of not less than 1/10th shareholders.

Extra Ordinary and Special Resolutions
Provisions of the Act for filing these resolutions with the Registrar
Special resolution:
This is passed in a meeting by a three-fourths majority of the members present in person or by
proxy, provided, notices for such a meeting specifying the intention to propose the resolution at
least twenty one days before the date of the meeting has been given. Special resolutions are
necessary for:
a) to change the name of the company;
b) to alter the memorandum;
c) to alter the articles.
Extra Ordinary resolution:

This is passed by three-fourth majority vote at general meeting of which 14 days’ notice has been
given. The notice must specify the intention to propose the resolution as an extra-ordinary
resolution (Section- 87(i). Such resolution is necessary when a company is sought to be wound-
up voluntarily on the ground that it cannot continue its business on account of its liabilities and
also for a number of other reasons.
(Sec- 87)
Copy of such resolution is to be filed with the register within 15 days from the date of such
meeting.
(Section-88)

LOGO
CA
1994

Companies Act 1994
Directors
LOGO
CA
1994

Appointment of directors
As per Section 91 of CA 1994 directors are appointed as follows:
Subscriber of Memorandum shall be treated as the first Directors;

Generally Directors are appointed at the AGM by the shareholders among themselves;
One-third of Directors shall retire by rotation in each year;
Existing Director may appoint a person as Directors to fill up any casual vacancy.

Qualification and disqualifications of Directors as laid down in
section 94 of the Companies Act, 1994
Qualification of Directors:
Articles of Association of a Company usually fix the minimum number of shares which every Director must
subscribe in order to become a Director. The minimum number which is determined by the Articles is known as
qualification number of shares as contained in Section 97(1) of CA 1994. Every Director shall hold that
minimum qualification shares within 60 days or within the lime as may be specified in the Articles whichever is
earlier.
As per Section 97(2), if after the expiration of the period mentioned in sub-section (1) any such unqualified
person acts as a Director of the Company he shall be liable to pay fine not exceeding Tk.200 per day for the
period of holding as an unqualified Director under this section.
As per section 92 every person shall not act as a Director unless he has -
signed and filed with the Registrar to consent in writing to act as such Director and;
signed the Memorandum for a number of shares not less than his qualification shares, or taken
from the Company and paid or agreed to pay for his qualification shares.
Disqualifications of directors as per section 94 of the Companies Act 1994:

(1) A person shall not be capable of being appointed director of a company, if -
(a) he has been found to be of unsound mind by a competent court and the finding is in force; or
(b) he is an undischarged insolvent; or
(c) he has applied to be adjudicated as an insolvent and his application is pending; or
(d) he has not paid any call in respect of shares of the company held by him, whether alone or
jointly with others, and six months have elapsed from the last day fixed for the payment of the
call; or
(e) he is a minor.
(2) A company may in its articles provide additional grounds for disqualification of a director.
"Directors are trustees as well as agents of the company"
Directors are trustee and agent of the Company

Directors are trustees as well as agents of the Company. All activities, business and transactions of the
Company for its developments, promotions is done by the directors for and on behalf of the Company
like an agent. The articles of association empowered the Directors to do/run the Company. The directors
can do the followings for and on behalf of the Company as contained in the articles of association:
1. To run the business of the company;
2. To recommend dividend;
3. To enter into contract;
4. To maintain reserves;
5. To issue, forfeiture of share;
6. To issue debenture;
7. To Invest fund;
8. To take, redeem loan; and
9. To appoint officers & staffs and to pay their emoluments.
The above activities are done by the directors as agent of the Company.
Directors are to do all activities as trustee of the Company. All assets resources are to be kept safety and
to utilize them for the interest of the Company. Under any circumstances Directors are not allowed to
use asset of the Company for their own without the approval of the Board. Directors are to maintain
proper accounts as required by law and to do many other activities as trustee of the company, such as:
1. To run the Company efficiently;
2. To optimum utilization resources;
3. To save the Company from losses/damages;
4. To maintain proper books of accounts;
5. To call the AGM;
6. To maintain secrecy of the organization; and
7. To refrain from doing such activities prohibited by the act.
In the above sense it is said Directors are trustees of the Company.
The position, powers and liabilities of directors
Legal position of Directors:

There are different views about the legal position of Directors. They have been described
sometimes as trustees of the company and sometimes as its agents. Neither view is wholly
correct but both contain elements of truth.
Fiduciary Position:
It is generally agreed that the Directors occupy a fiduciary position in relation to the Company.
They must make full disclosure of all material facts of the Company.
Officers:
The Section 2(i) (o) of the Companies Act provides that a Director is an officer of the Company.
Power of Directors:
Directors derive their power and authority from two sources (i) the Articles of Association of the
Company and (ii) the Companies Act.
The articles of association generally contain a list of the powers, which may be exercised by
Directors
and the limitation on those powers.
All acts and things done by the Board of Directors, within the powers given to it by the articles,
are valid
and binding on the company.
It may be noted that a Director individually has no authority over the affairs of the Company
except as
regards matters, which have been specifically delegated to him by the Board.
The position, powers and liabilities of directors
Liabilities of Directors:
The liabilities of Directors may be analyzed with reference to liability of Directors to third parties,
liability to the company, liability for breach of statutory duties and liability for acts of his Co-
Directors. Directors‘ liability may be civil liability, criminal liability and unlimited liability.
Civil Liability:
The directors may, under certain circumstances, be liable to pay compensation to the Company
and to outsiders, such as:
1. Untrue statements in the prospectus.
2. Ultra vires acts.
Criminal liability:
For certain breaches of duty the Companies Act imposes criminal liabilities upon Directors such
as: Untrue statements in prospectus, failing to keep certain register, falsification of books and
reports etc.

Can a director be removed? How?
As per section 106 of the Companies Act 1994 –
(1) The company may be extraordinary resolution remove any share-holder director before the
expiration of his period of office and may by ordinary resolution appoint another person in his
stead and
the person so appointed shall be subject to retirement at the same time as if he had become a
director
on the day on which the director in whose place he is appointed was last elected director.
(2) A director so removed shall not be re-appointed a director by the Board of Directors.

Provisions of the Companies Act, 1994 as to appointment,
terms and remuneration of Managing Directors
The managing director is a director who is “entrusted with any substantial power of Management”
The appointment of managing director:

The appointment of a managing director or of a whole time director can be made by any of the
methods:
1. An agreement with the company
2. A clause in a memorandum or articles of the company
3. A resolution passed by a company in its general meeting
4. Resolution of the board of director
No company shall, after the commencement of this Act, appoint or employ any individual as its
managing director for a term exceeding five years at a time.
Power and duties of a managing director

The power and duties of a managing director are specified in
the agreement with the company by which he is appointed
in the memorandum or articles of the company
in a resolution passed by the company in general meeting
a resolution by its board of director

The effect of an "ultra vires" transaction as far as the company
and its directors are concerned
Meaning of the term "ultra Vires":
Any transaction, activity or business done by the Company beyond the power of the
Memorandum and Articles of Association is "ultra vires" i.e. void. The Company cannot do
anything outside the memorandum of association.
Effect of an ultra vires transaction:

The company and its Director's shall do all activities within the power of Memorandum and Article
of Association any transaction beyond the power is "ultra vires" and the transaction will not bind
the Company, effect of an ultra vires transaction relating to the Memorandum and Article of
Association are as follows:
1. Transaction beyond the memorandum.
2. Transaction beyond the article of association.
Transaction beyond the memorandum:

The transaction is ultra vires and void. It will not bind the Company and the Directors will be
personally liable.
Transaction beyond the Articles:

The transaction is also ultra vires and Directors are personally liable, but if the transaction is
incidental or non-sequential then the transaction will be valid and binding on the Company.
Duties and functions of promoters & directors of a company
Duties and functions of Promoters:

The main duties and functions of a promoter is to undertake to form a Company with reference to
agreement for the project. He has to handle all legal formalities for formation of a Company.
Promoters may have three possible positions:

1. He may be a promoter to acquire the property for the company in which case, all the rules of
agency would apply. Accordingly, any profit he may make will belong to the company.
2. He may acquire the property himself and then decide to form a Company and sell the property
to it in which case no question of agency or trusteeship arises. He can make what bargain he
chooses without being under any obligation to disclose the profits.
3. He may acquire the property with a view to resell it to the Company which he intends to
promote, in which case he becomes bound by the fiduciary obligation and if he makes a profit
he must disclose it to the Company.

Duties and functions of promoters & directors of a company
Duties and functions of Directors:

1. Distribution of work: among the staff;
2. Every director must act honestly and in the interest of the Company;
3. A Director must exercise such degree of skill and diligence as would amount to the reasonable
care.
4. A Director should perform his duties at a greater degree of skill.
5. A Director should attend the Board or other meetings and should act according to the decision
of the meeting.
6. To hold the AGM.
7. To maintain proper books of accounts.
8. Recommendation of dividend.
9. Disclosure of information as required by the Act and as required by others Act, rules,
regulations and regulatory authorities.

Director’s qualification share
Qualification shares of Directors

The Articles of a Company usually fix a minimum number of shares which every Director must
subscribe in order to become a Director. This minimum number is known as the qualification
shares of Directors. It is the duty of every Director who is required by the articles to hold a
specified number of shares for qualification and who has" not already qualified himself
accordingly, to obtain his qualification within two months after his appointment or such shorter
time as may be fixed by the articles,. If after the expiration of the period mentioned above any
such unqualified person acts as a Director of the Company, he shall be liable to a fine not
exceeding two hundred taka for every day between the expiration of the said period and the last
day on which it is proved that he acted as a Director (both days inclusive).

Director’s vacant position
Vacation of the office of the Director

As per section 108 of the Companies Act, the office of a Director shall become vacant under the
following circumstances:
1. If he fails to obtain within the due time or at any time thereafter ceases to hold the
qualifications shares, if any, necessary for his appointment; or
2. If he is found to be of unsound mind by a competent court; or
3. If he is adjudged an insolvent; or
4. If he fails to pay calls money made on him in respect of shares held by him within six months
from the date of such calls being made; or
5. If he or any firm of which he is a partner or any private company of which he is a director,
without the sanction of the company in general meeting accepts or holds any office of profit
under the company other than that of a managing director or manager or a legal or technical
adviser or a banker; or
6. If he absents himself from three consecutive meeting of the Directors or from all meetings of
the Directors for a continues period of three months, whichever is the longer, without leave of
absent from the Board of Directors; or
7. If he or any firm of which he is a partner or any private company of which he is a director
accepts a loan or guarantee from the company in contravention of section 103; or
8. If he acts in contravention of section - 105.

Procedures of rotation of director
Rotation of Directors
At the first general meeting of the company the whole of the directors shall retire from office,
and at the general meeting in every subsequent year one-third of the directors for the time
being or, if their number is not three or a multiple of three then the number nearest to one-third
shall retire from office.
The Directors to retire in every year shall be those who have been longest in office since their
last election, but as between persons who become directors on the same day those to retire
shall (unless they otherwise agree among themselves) be determined by lottery.
A retiring director shall be eligible for re-election.
The company at the general meeting at which a director retires in manner aforesaid may fill up
the vacated office by electing a person thereto.
The directors shall have power at any time and from time to time, to appoint a person as an
additional director who shall retire from office at the next following ordinary general meeting
but shall be eligible for election by the company at that meeting as an additional director.

Directors loan
Loan of Directors:
Section 103 (1) of CA 1994 states that no company, other than a lending company mentioned
below shall make any loan or give any guaranty or any security in connection with a loan made
by third party to-
a)Any Director of the lending company ;
b) Any firm in which any Director of the lending company is a partner;
c) Any private company of which any Director of the lending company is a Director or Member;
d) Any public company, the Managing agent, Manager or Director where of this accustomed to
act in accordance with the directions of any Director of the lending Company;
However the loan may be given in case of banking company or the loan is approved by the
Board and AGM.

Can a shareholder become director without qualification shares?
Can share warrant form the share qualification for directorship?
Qualification of Directors:
Article of Association of a Company usually fix the minimum number of shares which every
Director must subscribe in order to become a Director. The minimum number which is
determined by the Articles is known as qualified number of shares as contained in Section 97(1)
of CA 1994; every Director shall hold minimum qualified number of shares within 60 days or
within the time as may be specified in the Articles whichever is earlier.
As per Section 97(2), if after the expiration of the period mentioned in sub-section (1) any such
unqualified person acts as a Director of the Company he shall be liable to pay a fine not
exceeding Tk. 200 per day for the period of holding as an unqualified Director under this section.
As per section 92, every person shall not act as a Director unless he has signed and filed with
the Registrar to consent in writing to act as such director and signed the Memorandum for a
number of shares not less than his qualified shares, or taken from the Company and paid or
agreed to pay for his qualification shares.
Share warrant is not taken into consideration for qualification of share of a Director.

Hypothetical company's report from the chairman of the Board of
Directors to the shareholders for the ensuing annual general meeting
Hypothetical report of the Chairman of the Board

It is indeed a great honor and privileges for me to greet you all, once again, to this 10th annual General Meeting of your
Company. It also gives me immense pleasure to place before you the Annual report along with the audited accounts of
your company and auditors report thereon for the year 2006.
Business Condition:
2006 experienced yet another successful year both in terms of sales and profitability despite the volatile political
situation and economy of the country. Your share price has gone up by 100%. We were able to overcome all odds
situation prevailed during the year.
Expansion program:
Some new products were added in the last financial year including introduction of 10 show rooms for enhance the
distribution net work of our product to the customers.
Financial aspects:
Sales revenue was gone up by 50% compared to last year;
Net profit before tax has been increased by 25% compared to last year;
Shareholders equity has gone up to Tk.400 per share;
Fixed assets and investments rose up to Tk.5000 million.
Human resources:
The achievement would not have been possible without the dedication and commitment of our
employees who are the foundation of our company.
Conclusion:
Here I would like to take this opportunity on behalf of the Board of Directors and express my deepest
appreciation to all our valued customers for their confidence in our product, to the employees for their
tireless etc, to the suppliers for their quality goods, to the fellow shareholders and most honored
shareholders for '.heir continuous support and interest for the welfare of the company. We shall
however continue to seek this last support & confidence upon us.
Thank you all.
Chairman of the Board
LOGO
CA
1994

Companies Act 1994
Auditors
LOGO
CA
1994

Appointment of the auditors of a company
There are the following rules as per the Companies Act 1994 dealing with the appointment of
auditor:
 Every company shall appoint auditors at each AGM and the auditor will hold office until the
next AGM. Provided that, no person can be appointed as auditor unless his written consent
has been obtained prior to his appointment or re-appointment.
 Every auditor will inform to the registrar in writing his acceptance or refusal within 30 (thirty)
 days from the date of receipt of appointment.
 A retiring auditor shall have right to be re-appointed at AGM, unless:
 He is not qualified for re-appointment.
 He has given written notice for his unwillingness.
 A resolution has been passed at that meeting appointing somebody instead of him.

Tenure of an auditor duly approved in an AGM of a limited company
Every company shall appoint an auditor or auditors to hold office from the conclusion of annual
general meeting until the next annual general meeting and shall within seven days of the
appointment, give intimation thereof to every auditor so appointed.
Provisions of the section 211 of the Companies Act concerning appointment and
termination of auditors
Special notice shall be required for a resolution at an annual general meeting appointing as
auditor a person other than a retiring auditor, or providing expressly that a retiring auditor shall
not be reappointed.
On receipt of such notice the company shall forthwith send a copy thereof to the retiring auditor.

Auditors’ Appointment and Qualification
Appointment and Remuneration of Auditors:

Auditors are appointed in the Annual General Meeting by the Shareholders;
First Auditors of the Company is appointed by the Directors;
The Directors may appoint Auditors in case of casual vacancy;
The Govt. may appoint an Auditor if the above authorities fail to appoint an Auditor;
Auditor's remuneration is to be fixed by the authority of appointing the Auditor.
Qualification of Auditors:
The auditor shall be a Chartered Accountant as per P.O. 2 of 1973. Following persons are not
eligible for appointment as Auditor of the Company:
 Officers and staff of the Company.
 Any partner, staff or officers of the officers and staff of the Company.
 Any person indebted to the Company for more than Tk.1,000 or indebted by any Guarantee
for the above amount.
 Any Director, Partner, Member of Managing Agent firm
The SEC regulation imposed some additional qualifications for appointment of Auditors.
Rights and duties of Auditor:
The Auditors have right to access any books of accounts, information, voucher, statement as
required to perform the audit work.
The auditors may require any information explanation from any officers, staff of the Company
for the audit.
Auditors’ Duties and Function
Duties and functions of Auditor:
The main duty of an Auditor of a Company is to express an independent opinion on the financial
statements prepared by the company. The auditor should conduct the Audit in accordance with
BSA to obtain a reasonable assurance about whether the financial statements are free from all
material misstatements. The auditor shall inquire into the following.
a) Whether loans and advances made by the company on the basis of security which have been
properly secured and whether the terms on which they have been made are not prejudicial to
the interests of the company or its members.
b) Whether transactions of the company which arc represented merely as book-entries arc
prejudicial to the interests of the company.
c) Where the company is not an investment company or a banking company, whether so much of
the assets of the company as consist of shares, debentures and other securities, have been sold
at a price less than its purchased price by the company.
d) Whether personal expenses have been charged to revenue account.
e) Whether it is stated in the books and paper of the company that any shares have been allotted
for cash, whether cash has actually been received in respect of such allotment and if no cash
has actually been so received, whether the position as stated in the accounts, books and the
balance sheet is correct, regular and not misleading.

Auditors’ Responsibilities
Responsibility of Auditors:
Rights and duties of Auditor, Section-213:

The Auditors have right to access any books of accounts, information, voucher, statement as
required to perform the audit work.
The auditors may require any information explanation from any officers, staff of the Company
for the audit.
They should investigate the followings:
Security given against loan and advances whether it is secured or not and whether the terms
arc
detrimental to the interest of the company.
The transactions, which have been shown in the books of accounts, whether they arc
detrimental to the interest of the company.
Whether or not any assets, shares, debenture or any other securities have been at a price sold
lower than the purchase price (other than banking).
Any loan and advances have duly been or not shown by the company.
Whether or not any personal/unusual expenditure has been shown in the revenue account.
Any share issued in cash whether the cash actually received or not and whether the
presentation in the Balance Sheet for the same is misleading or not.

LOGO
CA
1994

Companies Act 1994
Share Capital
LOGO
CA
1994

How to increase share capital
(1) Where a company having a share capital, has increased its share capital, beyond the
registered capital, it shall file with the Registrar, in the case of an increase of share capital, within
fifteen days after the passing of the resolution authorizing the increase and the Registrar shall
record the increase.
(2) The notice under sub section (1) shall include particulars of the classes of shares, affected
and the conditions, if any, subject to which the new shares are to be issued.

What is reduction of capital and the procedure to reduce capital
Reduction of share capital

The power to reduce capital must be given by the articles. If no such power, the articles may be
changed by a special resolution. According to section 59, the share capital may be reduced by:
a) reducing or extinguishing the liability of members for uncalled share capital; or
b) writing off lost share capital; or
c) paying off share capital which is in excess of the wants of the company; or
d) All these are to be done only by way approve by the court.
Procedure for Reduction of Share Capital

Reduction of capital is possible only by passing a special resolution and confirmation by the
court. The court would inquire into the objections, if any, raised by the creditors. In this respect
the court settles the list of creditors entitled to object and issues public notices (sec. 62). On
hearing the objections, the court may confirm the reduction on such terms and conditions as it
may dam fit (sec. 64).

Requirements for "Return of allotment" u/s 151 of the Companies Act, 1994.
Effects of irregular allotment of shares
Requirements for "Return of allotment" u/s 151 of the Companies Act, 1994.
Features as to allotment
As contained in the Section-151 of CA 1994, a company having share capital makes any allotment of
shares, the company shall within 60 days thereof, file with the Registrar the following documents:
a) A return of allotment, stating the. member, nominal value of shares, names, address,
nationality, amount paid-up in Cash;
b) Amount paid-up other than in cash, any contract, vendor's agreement;
c) Number of shares allotment and its nominal value;
d) Share allotted against any immovable property.
Effects of irregular allotment of shares

(1) An allotment made by a company to an applicant shall be voidable at the instance of the applicant
within one month after the holding of the statutory meeting of the company and not later or, in any case
where the company is not required to hold a statutory meeting or where the allotment is made after the
holding of the statutory meeting, within one month after the date of the allotment and not later, and shall
be so voidable notwithstanding that the company is in the course of being wound up.
(2) If any director of a company knowingly contravenes or permits or authorizes with respect to
allotment, he shall be liable to compensate the company and the allottee for any loss, damages or
costs which the company or the allottee may have sustained or incurred thereby:
Provided that Proceedings to recover any such loss, damages or costs shall not be commenced after
the expiration of two years from the date of the allotment.
Issue of shares at a discount and premium
Following rules relates to the issuance of shares at a Discount:
1.It should be an existing company which has issued share earlier;

2.Court permission must be taken and to be confirmed at Annual General Meeting;
3.Maximum rate would be 107, which is to be confirmed at Annual General Meeting;
4.The Company shall not issue share at a discount within one year from the date of commencement of
business;
5.The shares to be issued within 6 months from the date of the approval of the Court to issue share at a
discount.
Procedures of issuing shares at a premium:
Issuance of a share at a premium

A Company can issue share at a premium having permission from the Securities and Exchange
Commission. A share premium account is to be opened and the amount of premium to be transferred to
the share premium account
Application of premium received on issue of shares:
A share premium account is to be opened which can be used for the following:
i. Un-issued share capital to be issued to the member as fully paid Bonus share.
ii. To write off preliminary expenses.
iii. To write off discount, commission and expenses on issue of share or debenture of the
company.
iv. To pay premium payable on redemption of redeemable preference share or debenture of the
company.
Pre-conditions of reduction of share capital of a
Company
Reduction of share capital:
As contained in section 59 of the companies Act 1994, any company limited by share if it is
authorized by its articles, by passing a special resolution, having approval from the Court can
reduce the share capital as follows:
 By reducing or extinguishing the liability on any shares not paid-up;
 Cancel any paid-up share capital which is lost or not represented on the assets;
 Repay the capital, which is in excess of the wants of the company;
 Reduce the share capital and shares as required by alteration of memorandum.

Pre-emptive rights of shareholders in respect of further
issue of shares
Where the directors decided to increase the subscribed capital of the company by issue of
further shares within the limit of the authorized capital, such further shares shall be offered to the
members in proportion, to the capital paid up on the existing share held by such member,
irrespective of class, at the date of the offer. This is the pre-emptive rights of shareholders to get
such offer.

Time limit for registration of transfer of shares
Circumstances can the directors decline a transfer of shares
Completion of share transfer
As per clause 12(2) of listings regulations the Company shall complete share transfer and have
those ready for delivery the share certificates lodged for registration of transfer within 45 days of
the application for such transfer and its registration.
Clause 20(1) of Schedule -I:
The directors may decline to register any transfer of shares not being fully paid up shares, to a
person of whom they do not approve, and may also decline lo register any transfer of shares on
which the company has lien. The directors may suspend the registration of transfer during the
fourteen days immediately preceding the ordinary general meetings in each year. The directors
may decline to recognize any instrument of transfer or refuse to register such transfer, unless –
a) the instrument of transfer is accompanied by the certificate of share to which it relates; and
b) Such evidence as the Directors may reasonably require showing the right of the transferor to
make the transfer has been furnished.
c) Form 117 is duly filled up.

Differences between shareholders and debenture holders
Meaning of Debenture:
Debenture is a security instrument. When the capital of the company is not sufficient
to meet the needs of business of the company, it can raise' fund in the form of issuing
Debenture. Actually Debenture represents loan of the company. Debenture is usually
issued in Bonds by a company and is offered by means of prospectus like issuance of
share.
Shareholders Debenture holders

Owner Yes No
Right to Dividend / Loss Interest
Creditor No Yes
Rights Equity owner Lender
Fixed No fixed dividend Interest is fixed
Profit Dividend is part of profit after tax Interest charged in P&L Accounts

Remedies available to debenture holders
Impact in share of a listed company are not traded
Remedies available o the debenture holder when his debenture is in "jeopardy"
Any of the following measures can be taken by the Debenture holder:
i. He may file a suit for the recovery of the money by sale of the assets which were charged for
the payment of the money;
ii. He may file an application for appointment of a receiver to the court;
iii. He may present petition to the court for winding up of the company; and
iv. He may sale the charged properties as per the terms of the debenture.
Impact in share of a listed company are not traded
Where no trading took place in the Exchange of the securities of a listed Company for a
continuous period of 180 days, the Exchange, if it is satisfied that the prices quoted are not in
accordance with the market realities, the Exchange may declare it as not traded or as an inactive
stock, until such time as a subsequent trade takes place and a price is ascertained.

Price Sensitive Information of a listed Stock in a Stock Exchange
Price Sensitive Information:

It means any such information which, if published may influence market price of the concerned
security and includes the following information:
i. Report in respect of financial condition of the company or any basic information in respect
thereof;
ii. Information relating to dividend;
iii. decision of giving right, bonus shares to the shareholders;
iv. decision of buying or selling any immoveable asset;
v. decision of BMRE, New unit of the Company;
vi. Basic change of activities of the company;
vii. Any others as determined by the Commission.

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CA
1994

Labor Code 2006 (Amended in 2013)
LOGO
Labor
Code

Condition of Employment
Conditions of employment : (1) In every establishment employment of workers and other

matters incidental thereto shall be regulated in accordance with the provisions of this chapter:
Provided that any establishment may have its own rules regulating employment of workers, but no
such rules shall be less favorable to any worker than the provisions of this chapter.
(2) The service rules in any establishment as mentioned in the proviso to sub-section (1) shall be
submitted for approval by the employer of such establishment to the chief inspector who shall,
within six months of the receipt thereof make such order therein as he deems fit.
(3) No service rules as mentioned in sub-section (2) shall be put into effect except with the approval
of the chief Inspector.
(4) Any person aggrieved by the order of the chief Inspector may, within thirty days of the receipt
of the order, may prefer appeal to the Government and the order of the Government on such appeal
shall be final.
(5) Nothing provided in sub-section (2) shall apply to an establishment which is owned by or under
management or control the Government.
Letter of Appointment and Identity Card : No employer shall employ any worker without
giving such worker a letter of appointment and every such employed worker shall be provided with
an identity card with photograph.
Service book : (1) Every employer shall, at his own cost, provide a service book for every
worker employed by him.
(2) Such service book shall be kept in the custody of the employer.
(3) Before employing a worker, the employer shall require from him the previous service book if
the worker claims that he has been previously in employment under any other employer.
(4) If such worker has any service book, it shall be handed over to the new employer by him and
shall be kept in the custody of the employer, for which a receipt shall be given to him.
(5) If such worker has no service book, a service book shall be provided under sub-section (1)
(6) If the worker desires to keep and maintain a duplicate copy of his service book, he may do it at his own
cost.
(7) The employer shall hand over the service book to the worker on the termination of the workers’ service with
him.
(8) If the service book handed over to the worker or the duplicate thereof maintained by him is lost
by the worker, the employer shall provide him with a duplicate service book at the cost of the worker.
(9) Nothing in this section shall apply to an apprentice, badli or casual worker.”
Form of service Book : (1) The service book shall be of such size and in such form as may be
prescribed and photograph of the worker shall be affixed to it.
(2) The service book shall contain the following particulars, namely:
(a) name of the worker, name of mother and father and address of the worker,
(in appropriate case name of husband/ wife shall be written)
(b) date of birth,
(c) particulars necessary for identification,
(d) name and address of the employer under whom previously employed, if any,
(e) period of employment,
(f) occupation or designation,
(g) wages and allowance, if any,
(h) leave availed, and
(i) conduct of the worker.
Register of workers and supply of tickets and cards: (1) The employer of every establishment
shall maintain a register of workers, to be available to the Inspector at all times during working
hours.
(2) The register of workers shall contain the following:
(a) the name and date of birth of each worker in the establishment;
(b) date of appointment;
(c) the nature of his work;
(d) the periods of work fixed for him;
(e) the intervals for rest and meals to which he is entitled;
(f) the days of rest to which he is entitled;
(g) the group, if any, in which he is included;
(h) where his group works on shifts, the relay to which he is allotted; and
(i) such other particulars as may be prescribed by rules;

Register of workers and supply of tickets and cards: (1) The employer of every establishment
shall maintain a register of workers, to be available to the Inspector at all times during working
hours.
(2) The register of workers shall contain the following:
(a) the name and date of birth of each worker in the establishment;
(b) date of appointment;
(c) the nature of his work;
(d) the periods of work fixed for him;
(e) the intervals for rest and meals to which he is entitled;
(f) the days of rest to which he is entitled;
(g) the group, if any, in which he is included;
(h) where his group works on shifts, the relay to which he is allotted; and
(i) such other particulars as may be prescribed by rules;

Procedure for leave :

(1) A worker who desires to obtain leave of absence shall apply to the employer for the same in writing stating
his leave address therein.
(2) The employer or his authoresses officer shall issue orders on the application whthin seen days of the
application or two days prior to the commencement of leave applied for, whichever is earlier; Provided that if
due to urgent reasons the leave applied for is to commence on the date of application or within three days
thereof the order shall be given on the same day.
(3) If the leave asked for is granted, a leave pass shall be issued to the worker.
(4) If the leave asked for is refused or postponed the fact of such refusal or postponement, and the reasons
thereof shall be communicated to the worker before the date on which the leave was expected to be
commenced and shall also be recorded in a register to be maintained by the employer for the purpose.
(5) If the worker, after convincing of leave, desires an extension thereof, he shall, if such leave is due to him,
apply sufficiently in advance before the expiry of the leave to the employer who shall, as far as practicable send
a written reply either granting or refusing extension of leave to the worker to his leave-address.
Payment of wages for unveiled leave: If the services of a worker, to whom any annual leave is
due, is dispensed with whether as a result of retrenchment, discharge, removal, dismissal, termination,
retirement or by reason of his resignation before he has availed of any such leave, the employer shall pay his
wages in lieu of the unveiled leave at the rate he is entitled to the payment of wages during the period of leave
in accordance with the provisions of this Act.

Stoppage of work : (1) The employer may, at any time, in the event of fire, catastrophe, breakdown of machinery,
or stoppage of power supply, epidemics, civil commotion or any other cause beyond his control, stop any section or
sections of the establishment, wholly or partly for such period as the cause for such stoppage continues to exist.
(2) In the event of such stoppage occurring at any time beyond working hours, the employer shall notify the
workers affected, by notice posted on the notice board in the section or department concerned or at a conspicuous
place in such establishment before the work is due to begin next.
(3) In the notice mentioned in sub-section (2) direction shall be given indication as to when the work will be
resumed and whether such workers are to remain at their place of work at any time before the actual resumption.
(4) In the event of such stoppage occurring at any time during working hours, the workers affected shall be notified,
as soon as practicable, in the manner specified in sub-section (2) indicating as to when the work will be resumed
and whether such workers are to leave or remain at their place of work.
(5) In the case where workers have been directed to stay at their place of work following such stoppage, the
workers so detained may not be paid for the period of such detention if it does not exceed one hour, and the
workers so detained shall be paid wages for the whole period of such detention if it exceeds one hour.
(6) If the period of stoppage of work does not exceed one working day, a worker, unless entitled to wages under
sub-section (5), may not be paid any wages.
(7) If the period of stoppage of work continues for more than a working day, a worker affected, other than a casual
or badli worker, shall be paid wages for day or day by which it will exceed one working day.
(8) If the period of stoppage of work extends beyond three working days, the workers may be laidoff in accordance
with the provisions of section 16.
(9) A lay-off mentioned in sub-section (8) shall be effective from the day of stoppage of work and any wage paid to
a worker for the first three days may be adjusted against the compensation payable for such subsequent layoff.
(10) For the piece-rate workers affected, their average daily earning in the previous month shall be taken to be the
daily wage for the purpose of the sub-section.
Closure of establishment : (1) The employer may, in the event of an illegal strike by any section or department of
any establishment, close down either wholly or partly such section or department and the workers participated in
the illegal strike hall not be paid any wages for such closure.
(2) Where by reason of closing down of any section or department of any establishment under subsection
(1) any other section or department is so affected that it is not possible to keep that section or department open,
that section or department may also be closed down and the workers affected thereby shall be paid wages as in
the case of lay-off for a period of three days and thereafter they may not be paid any wages for such closure.
(3) The fact of such closure shall be notified by the employer, as soon as practicable, by notice posted on the
notice board in the section or department concerned or at a conspicuous place in the establishment and the fact of
resumption of work, following such closure, shall likewise be notified.
Calculation of ‘One year’, ‘six months’ and ‘wages’ in certain cases : (1) For the purpose of this chapter, a
worker who, during the preceding twelve calendar months, has actually worked in an establishment for not less
than two hundred and forty days and one under and twenty days as the case may be shall be deemed to have
completed ‘one year’ or ‘six months’ respectively of continuous service in the establishment.
(2) For the purpose of calculation of the number of days on which a worker actually worked in an establishment as
mentioned in sub-section (1) the days on which-
(a) the day during which he has been laid-off;
(b) he has been on leave with or without wages due to sickness or accident;
(c) he has been on legal strike or out of work due to illegal lock-out;
(d) in the case of female worker, she has been on maternity leave not exceeding sixteen weeks; shall be conted.
(3) For the purplse of calculation of compensation under section 19,20,or 23 or wages under section 22, 23, 26, or
27 ‘wages’ shall mean the average of the basic wages and dearness allowance and adhoc or interim pay, if any,
paid to the worker during the period of twelve months immediately preceding the date of his retrenchment,
dismissal, removal, discharge, retirement or termination of employment, as the case may be.
Death benefit : If a worker dies while in service after a continuous service of not less than three years, his
nominee or in the absence of an nominee, his dependant shall be paid by the employer a compensation at the
rate of thirty days wages for every completed year of service, or for any part thereof in excess of six months or
gratuity, if any, whichever is higher, in addition to any other benefit to which the deceased worker would have
been entitled had he retired from service:
Provided that if such worker is covered by any compulsory insurance scheme of the establishment, or, if any
compensation is payable for such death under chapter XII, the worker shall be entitled to whichever is higher.
Retrenchment : (1) A worker employed in an establishment may be retrenched from service on the ground of
redundancy.
(2) No worker who has been in continuous service for not less than one year under an employer shall be
retrenched by the employer unless-
(a) The worker has been given one month’s notice in writing, indicating the reasons for retrenchment, or the
worker has been paid in lieu of such notice, wages for the period of notice;
(b) a copy of the notice is sent to the chief Inspector or any other officer authorized by him and also to the
collective bargaining agent in the establishment, if any; and
(c) he has been paid, compensation which shall be equivalent to thirty days wages or gratuity for every
completed year of service if any, whichever is higher.
(3) Notwithstanding anything contained in sub-section (2), in the case of retrenchment of a worker under
section 16(7), no notice as mentioned in sub-section (2) (a) shall be necessary; but the worker so retrenched,
shall be paid fifteen days wages in addition to the compensation or gratuity, as the case may be, which may be
payable to him under sub-section (2) (c).
(4) Where any worker belonging to a particular category of workers is to be retrenched, the
employer shall, in the absence of any agreement between him and the worker in this behalf, retrench
the worker who was the last person to be employed in that category.
Re-employment of retrenched workers : where any number of workers are retrenched, and the employer proposes
to take into his employ any worker within a period of one year from the date of such retrenchment, he shall give an
opportunity to the retrenched workers belonging to the particular category concerned by sending a notice to their last
known addresses, to offer themselves for employment, and the retrenched workers who so offer themselves for re-
employment shall have preference over other retrenched workers, each having priority according to the length of his
service under the employer.
Discharge from service : (1) A worker may be discharged from service for reasons of physical or mental incapacity or
continued ill-health certified by a registered medical practitioner.
(2) If a worker who has completed not less than one year of continuous service is so discharged, he shall be paid by
the employer compensation at the rate of thirty days wages for every completed year of service, or gratuity, if any
whichever is higher.
Punishment for conviction and misconduct : (1) Notwithstanding anything regarding lay-off,
retrenchment, discharge and termination of service as provided elsewhere in this Act, a worker may be dismissed
without prior notice or pay in lieu thereof if he is-
(a) convicted for any criminal offence ; or
(b) he is found guilty of misconduct under section 24.
(2) Any worker found guilty of misconduct may, instead of being dismissed under sub-section (1), in consideration of
any extenuating circumstances, be awarded any of the following punishments, namely:
(a) Removal;
(b) Reduction to a lower post, grade or scale of pay for a period not exceeding one year;
(c) Stoppage of promotion for a period not exceeding one year;
(d) Withholding of increment for a period not exceeding one year;
(e) fine;
(f) suspension without wages and subsistence allowance for a period not exceeding seven days;
(g) censure or warning.
(3) A worker who is dismissed under sub-section (1) or removed as a measure of punishment under
sub-section (2) (a) shall, if his continuous service is not less than one year, be paid by the employer
compensation at the rate of fourteen days wages for every completed year of service, or gratuity, if
any, whichever is higher;
Provided that no compensation shall be payable if the worker is dismissed for misconduct as
specified in sub-section (4) (b)
(4) The following acts and omissions shall be treated as misconduct -
(a) willful insubordination or disobedience, whether alone or in combination with others to any
lawful or reasonable order of a superior;
(b) theft, fraud or dishonesty in connection with the employer’s business or property;
(c) taking for giving bribe in connection with his or any other worker’s employment under the
employer;
(d) habitual late attendance;
(f) habitual breach of any law or rule or regulation applicable to the establishment;
(g) riotous or disorderly behavior in the establishment, or any act subversive of discipline;
(h) habitual negligence work;
(i) habitual breach of any rule of employment, including conduct or discipline, approved by the
chief Inspector;
(j) falsifying, tampering with, damaging or causing loss of employers official records.
(5) If a worker who is dismissed from service under sub-section (1) (a), is acquitted on an appeal, he
will be reinstated to his original post without back wages or to any new post suitable to him; and if
such reinstatement is not possible, he shall be paid compensation at the rate payable to a person on
discharge excluding the compensation already paid to him for his dismissal.
Termination of employment by employers otherwise than by dismissal, etc. : (i) The employment of a
permanent worker may be terminated by the employer, otherwise, than in the manner provided else-where in
this chapter, by giving to him in writing-
(a) one hundred and twenty days’ notice, if he is a monthly rated worker;
(b) sixty days’ notice, in case of other worker.
(2) The employment of a temporary worker may be terminated by the employer, otherwise than in
the manner provided elsewhere in this chapter, and if it is not due to the completion, cessation, abolition or
discontinuance of the temporary work for which he was appointed, by giving to him in writing-
(a) thirty day’s notice, if he is a monthly rated worker;
(b) fourteen days notice, in case of other worker.
(3) Where an employer intends to terminate the employment of a worker without any notice, he may do so by
paying to the worker, wages in lieu of the notice, which is enquired to be given under subsection (1) or (2), as
the case may be.
(4) Where the employment of a permanent worker is terminated under this section, he shall be paid by the
employer compensation at the rate of thirty day’s wages for every completed year of service or gratuity, if any,
whichever is higher, in addition to any other benefit to which he may be entitled under this Act.
Termination of employment by workers : (1) A permanent worker may resign from his service by giving to
the employer in writing sixty day’s notice
(2) A temporary worker may resign from his service by giving to the employer in writing-
(a) thirty days notice, if he is a monthly rated worker;
(b) fourteen days notice in case of other worker.
(3) Where a worker intends to resigns from his service without any notic, he may do so by paying to the
employer wages in lieu of the notice which is required to be given under sub-section (1) or (2), as the case may
be.
Termination of employment by employers otherwise than by dismissal, etc. : (i) The employment of a
permanent worker may be terminated by the employer, otherwise, than in the manner provided else-where in
this chapter, by giving to him in writing-
(a) one hundred and twenty days’ notice, if he is a monthly rated worker;
(b) sixty days’ notice, in case of other worker.
(2) The employment of a temporary worker may be terminated by the employer, otherwise than in
the manner provided elsewhere in this chapter, and if it is not due to the completion, cessation, abolition or
discontinuance of the temporary work for which he was appointed, by giving to him in writing-
(a) thirty day’s notice, if he is a monthly rated worker;
(b) fourteen days notice, in case of other worker.
(3) Where an employer intends to terminate the employment of a worker without any notice, he may do so by
paying to the worker, wages in lieu of the notice, which is enquired to be given under subsection (1) or (2), as
the case may be.
(4) Where the employment of a permanent worker is terminated under this section, he shall be paid by the
employer compensation at the rate of thirty day’s wages for every completed year of service or gratuity, if any,
whichever is higher, in addition to any other benefit to which he may be entitled under this Act.
Termination of employment by workers : (1) A permanent worker may resign from his service by giving to
the employer in writing sixty day’s notice
(2) A temporary worker may resign from his service by giving to the employer in writing-
(a) thirty days notice, if he is a monthly rated worker;
(b) fourteen days notice in case of other worker.
(3) Where a worker intends to resigns from his service without any notic, he may do so by paying to the
employer wages in lieu of the notice which is required to be given under sub-section (1) or (2), as the case may
be.
(4) Where a permanent worker resigns from his service under this section, he shall be paid by the
employer compensation-
(a) at the rate of fourteen days wages for every completed year of service, it he has completed five
years of continuous service or more but less than ten years;
(b) at the rate of thirty days wages for every completed year of service if he has completed ten years
of continuous service or more;
or gratuity, if any, whichever is higher, in addition to any other benefit to which he may be entitled
under this Act.
Retirement of worker : (1) A worker employed in any establishment shall, notwithstanding anything contained
elsewhere in this chapter, retire from employment ipso facto on the completion of the fifty-seventh year of his
age.
(2) For the purpose of counting age of the worker under this section the date of birth recoded in the service
book of the concerned worker shall be the conclusive proof.
(3) Every retiring worker under the provisions of section 26(4) or under own service rule of the establishment,
shall be paid his benefits due to him.
(4) Appropriate authority, if thinks proper, may afterwards, employ the retiring worker under contract
Payment of provident Fund : No worker, who is a member of any provident Fund, shall be deprived due to
retrenchment, dismissal, removal, discharge or termination of service of the benefit of the provident Fund
including the employer’s contribution thereto, if he is entitled to it under the rules of that Fund.
Time limit of final payment of worker : Where the employment of a worker has been ceased due to a
retirement, discharge, retrenchment, dismissal and termination etc. all amounts due to him shall be paid within
maximum thirty working days by the employer.
Certificate of service : Every worker other than a casual or badli worker shall be entitled to a certificate of
service from his employer at the time of his retrenchment, discharge dismissal, removal, retirement or
termination of service.
Eviction from residential accommodation : (1) A worker occupying a residential accommodation provided by
his employer, whose service has been ceased by any means, shall vacate such residential accommodation
within a period of sixty days from the date of cessation of employment.
(2) On default of a worker in vacating the residential accommodation within such time, the employer may lodge
a complain to the Labour court
(3) The Court, on hearing the parties, may, summarily decide the case and direct the worker to vacate the
residential accommodation within reasonable time.
(4) The Court may also pass an order directing a police officer to evict such a worker, if necessary, by force, in
case he fails to quit residential accommodation within the specified time.
(5) The police officer, while acting under an order of the court under sub-section (4), shall notify the occupants
of the premises in question the contents of the court’s order and his intention to enter into such premises and
shall allow at least six hours’ time to the occupants to vacate the premises and shall give all reasonable
facilities to the children before applying any force for taking over the possession of such premises.
Grievance procedure : (1) Any worker, including a worker who has been laid-off, retrenched, discharged,
dismissed, removed, or otherwise removed from employment, who has grievance in respect of any matter
covered under this chapter, and intends to seek redress thereof under this section, shall submit his grievance to
his employer, in writing, by registered post within thirty days of being informed of the cause of such grievance.
Provided that if the employer acknowledges receipt of the grievance, in that case the service by registered post
shall not be essential.
(2) The employer shall within fifteen days of receipt of such grievance, enquire into the matter, give the worker
an opportunity of being heard and communicate his decision, in writing to him.
(3) If the employer fails to give a decision under sub-section (2) or if the worker is dissatisfied with such
decision, he may make a complain in writing to the Labour court within thirty days from the last date under sub-
section (2) or within thirty days from the date of the decision, as the case may be.
(4) The Labour court shall, on receipt of the complaint hear the parties after giving notice to them and make
such orders as it may deem just and proper.
(5) The Labour court, may amongst other relief, direct reinstatement of the complainant in service, either with or
without back wages and convert the order of dismissal, removal or discharge to any other Lesser punishment
specified in section 23(2).
(6) Any person aggrieved by an order of the Labour court, may, within thirty days of the order, prefer an appeal
to the tribunal, and the decision of the Tribunal on such appeal shall be final.
(7) No court-fees shall be payable for lodging complaint or appeal under this section.
(8) No complaint under this section shall amount to prosecution under this Act.
(9) Notwithstanding anything contained in this section, no complaint shall lie against an order of termination of
employment of a worker under section 26, unless such order is alleged to have been made for his trade union
activities or passed motivated or unless the worker concerned has been deprived of the benefits specified in
that section.

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Labor
Code

SAFETY (Sections 61-78)
61. Safety of building and machinery : (1) If it appears to the Inspector that any building or
part of a building or any part of the ways, machinery or plant in an establishment is in such a
conditions that it is dangerous to human life or safety, he may serve on the employer of the
establishment an order in writing specifying the measures which, in his opinion, should be
adopted, and requiring them to be carried out before a specified date.
(2) If it appears to the Inspector that the use of any building or part of a building or of any part of
the ways, machinery or plant in the establishment involves imminent danger to human life or
safety, he may serve on the employer of the establishment an order in writing prohibiting its use
until it has been properly repaired or altered.
62. Precaution in case of fire : (1) Every establishment shall be provided with at least one
alternative connection stairway with each floor and such means of escape in case of fire and
firefighting apparatus, as may be prescribed by rules.
(2) If it appears to the inspector that any establishment is not provided with the means of escape
prescribed under sub-section (1) he may serve on the employer of the establishment an order in
writing specifying the measures which in his opinion, should be adopted before a date specified
in the order.
(3) In every establishment the doors affording exit from any room shall not be locked or fastened
so that they can be easily and immediately opened from inside while any person is within the
room and all such doors, unless they are of the sliding type, shall be constructed to open
outwards or where the door is between two rooms, and all such doors, unless they are of the
sliding type, shall be constructed to open outwards or where the door is between two rooms, in
the direction of the nearest exit from the building and no such door shall be locked or obstructed
while work is being carried on in the room.
(4) In every establishment every window, or other exit affording means of escape in case of fire,
other than the means of exit in ordinary use, shall be distinctively marked in Bangla and in red
letters of adequate size or by some other effective and clearly understood sign.
(5) In every establishment every window, door, or other exit affording means of escape in case
of fire to every person employed therein.
(6) A free passage-way giving access to each means of escape in case of fire shall be
maintained for the use of all workers in every room of the establishment.
(7) In every establishment wherein more than ten workers are ordinarily employed in any place
above the ground floor, or explosive or highly inflammable materials are used or stored,
effective measures shall be taken to ensure that all the workers are familiar with the means of
escape in case of fire and have been adequately trained in the routine to be followed in such
case.
(8) In factories wherein fifty or more workers and employees are employed shall arrange at least
once in a year a mock fire-fighting and the employer shall maintain a book of records in this
regards.
63. Fencing of machinery. – (1) In every establishment the following shall be securely fenced
by the safeguards of substantial construction which shall be kept in position while the part of
machinery required to be fenced are in mention or in use, namely-
(a) every moving part of a prime mover, and every fly wheel connected to a prime mover;
(b) the head-race and tail-race of every water wheel and water turbine;
(c) any part of a stock-bar which projects beyond the head stock of a lathe; and
(d) unless they are in such position or of such construction as to be as safe to every person
employed in the establishment as they would be if they were securely fenced-
(i) every part of an electric generator,- a motor or rotary converter,
(ii) every part of transmission machinery, and
Syed Mehedi Hasan, ACMA, A-1094 Page 1

(iii) every dangerous part of any machinery:
Provided that, for the purpose of determining whether any part of machinery is safe as
aforesaid, account shall not be taken of any occasion when it being necessary to make an
examination of the machinery while it is in motion, such examination or operation is made or
carried in accordance with the provisions of section 64.
(2) without prejudice to any other provision of this Act relation to the fencing o machinery, every
set screw, bolt and key on any revolving shaft, spindle wheel or pinion and all spur, worm and
other toothed or friction gearing in motion with which such worker would otherwise be liable to
come into contact, shall be securely fenced, to prevent such contact.
64. Work on or near machinery in motion : (1) Where in any establishment it becomes
necessary to examine any part of machinery referred to in section 61 while the machinery is in
motion or as a result on such examination to carry out any mounting or shipping of belts,
Lubrication or other adjusting operation while the machinery is in motion such examination or
operation shall be made or carried out only by a specially trained adult male worker wearing
tight-fitting clothing whose name has been recorded in the register prescribed in this behalf and
while he so engaged such worker shall not handle a belt at a moving pulley unless the belt is
less than fifteen centimeters in width and unless the belt-joint is either laced or flush with the
belt.
(2) The Government may, by notification in the official Gazette, prohibit, in any specified
establishment, the cleaning, lubricating, or adjusting by any person of specified part of
machinery when those parts are in motion.
65. Striking gear and devices for cutting off power : (1) In every establishment-
(a) suitable striking gear or other efficient mechanical appliance shall be provided and
maintained and used to move driving belts to and from fast and loose pulleys which from part of
the transmission machinery, and such gear or appliances shall be so constructed, placed and
maintained as to prevent the belt from cropping back on the first pulleys;
(b) driving belts when not in use shall not be allowed to rest or ride upon shafting in motion.
(2) In every establishment suitable devices for cutting off power in emergencies from running
machinery shall be provided and maintained in every work-room.
66. Self-action machines : No traversing part of a self-acting machine in any establishment
and no material carried thereon shall, if the space over which it runs is a space over which any
person is liable to pass whether in the course of his employment or other distance of forty five
centimeters from any fixed structure which is not part of the machine:
Provided that the chief Inspector may permit the continued use of a machine installed before the
commencement of this Act which does not comply with the requirements of this section on such
conditions for ensuring safety as he may think fit to impose.
67. Casing of new machinery : In all machinery driven by power and installed in any
establishment after the commencement of this Act-
(a) every set screw, belt or key or any revolving shaft, spindle wheel or pinion shall be so,
sunk, encased or otherwise effectively guarded to prevent danger; and
(b) all spur, worm and other toothed or friction gearing which does not require frequent
adjustment while in motion shall be completely encased unless it is so situated as to be as safe
it would be if it were be if were completely encased.
68. Cranes and other lifting machinery : The following provisions shall apply in-
(a) every part thereof, including the working gear, whether fixed or movable, ropes and chains
and anchoring and fixing appliances shall be-
(i) of good construction, sound material and adequate strength,
(ii) properly maintained,
(iii) thoroughly examined by a competent person at least once in every period of twelve months
and a register shall be kept containing the prescribed particulars of every such examination;
(b) no such machinery shall be loaded beyond the safe working load which shall be plainly

marked thereon; and
(c) while any person is employed or working on or near the wheel-tract of a traveling crane in
any place, where he would be liable to be struck by the crane, effective measures shall be taken
to ensure that crane does not approach within six meter of that place.
69. Hoists and lifts : (i) In every establishment every hoist and lift shall be-
(a) of good mechanical construction, sound material and adequate strength,
(b) properly maintained,
(c) shall be thoroughly examined by competent person at least once in every period of six
months, and a register shall be kept containing the prescribed particulars of every such
examination;
(2) every hoist way and lift way shall be sufficiently protected by an enclosure fitted with gates,
and the hoist or sift and every such enclosure shall be so constructed as to prevent any person
or thing from being trapped between any part of the hoist or lift and any fixed structure or
moving part;
(3) the maximum safe working load shall be plainly marked on every hoist or lift and no load
greater than such load shall be carried thereon;
(4) the cage of every hoist or lift used for carrying persons shall be fitted with a gate on each
side from which access is afforded to a landing;
(5) every gate referred to in subsection (2) or (4) shall be fitted with interlocking or other efficient
device to secure that the gate cannot be opened except when the cage is at the landing and
that the cage cannot be moved unless the gate is closed.
(6) The following additional requirements shall apply to hoists and lifts used for carrying persons
and installed or reconstructed in an establishment after the commencement of this Act, namely-
(a) Where the cage is supported by rope or chain there shall be at least two ropes or chains
separately connected with its attachments shall be capable of carrying the whole weight of the
cage together with its maximum load;
(b) Efficient devices shall be provided and maintained capable of supporting the cage
together with its maximum load in the event of breakage of the ropes, chains or attachments;
(c) an efficient automatic device shall be provided and maintained to prevent the cage from
over-running.
(7) The chief Inspector may permit the continued use of a hoist or lift installed in an
establishment before the commencement of this Act which does not fully comply with the
provisions of subsection
(1), (2), (3), (4) and (5) upon such conditions for ensuring safety as he may think fit to
impose.
70. Revolving machinery: (i) In every room in an establishment in which the process of
grinding is carried on, there shall be permanently affixed to, or placed near, each machine in
use a notice indicating the following-
(a) maximum safe working peripheral speed of every grind stone or abrasive wheel:
(b) the speed of the shaft or spindle upon which the wheel is mounted;
(c) the diameter of the pulley upon such shaft or spindle necessary to secure such safe working
peripheral speed.
(2) The speeds indicated in notices under sub-section (1) shall not be exceeded.
(3) Effective measures shall be taken in every revolving vessel, cage, basket, flywheel, pulley
dice or similar appliance driven by power is not exceeded.
71. Pressure plant : If in any establishment any part of the plant or machinery used in
manufacturing process is operated at a pressure above atmospheric pressure, effective
measures shall be taken to ensure that the safe working pressure of such part is not exceeded.
72. Floors, stairs and means of access : In every establishment –

(a) all floors, stairs, passages and gangways shall be of sound construction and properly
maintained and where it is necessary to ensure safety steps, stairs, passages and gangways
shall be provided with substantial handrails;
(b) there shall, so far as is reasonably practicable, be provided and maintained safe means of
access to every place at which any person is, at any time, required to work; and
(c) all floors, ways and stairways shall be clean, wide and clear of all obstructions.
73. Pits, sumps, opening in floors, etc. : (1) In every establishment, every fixed vessel, sump,
tank, pit or opening in the ground or in a floor which, by reason of its depth, situation,
construction or contents is or may be a source of danger, shall be either securely covered or
securely fenced.
74. Excessive weights: No person shall be employed in any establishment to lift, carry or move
any load so heavy as to be likely to cause him injury.
75. Protection of eyes : The Government may, in respect of any manufacturing process carried
on in any establishment, by rules, require that effective screens of suitable goggles shall be
provided for the protection of persons employed on, or in the immediate vicinity of a process
which involves-
(a) risk of injury to the eyes from particles or fragments thrown off in the course of the
process, or
(b) risk to the eyes by reason of exposure to excessive light or heat.
76. Powers to require specifications of defective parts or tests of stability : If it appears to
the inspector that any building or part of a building or any part of the ways, machinery or plant in
an establishment, is in such a condition that it may be danger us to human life or safety, he may
serve on the employer of the establishment an order in writing, requiring him before a specified
date-
(a) to furnish such drawings, specifications and other particulars as may be necessary to
determine whether such building, ways, machinery or plant can e used with safety, or
(b) to carry out such tests as may be necessary to determine the strength or quality or any
specified parts and to inform the Inspector of the result thereof.
77. Precautions against dangerous fumes : (1) In any establishment no person shall enter or
be permitted to enter any chamber, tank, vat pit, pipe, flue or other confined space in which
dangerous fumes are likely to be present to such an extent as to involve risks of persons being
overcome thereby, unless it is provided with a manhole of such size, as may be prescribed or
other effective means of egress.
(2) No portable electric light of voltage exceeding twenty-four volts shall be permitted in any
establishment for use inside any confined space such as is referred to in sub-section (1) and
where the fumes present are likely to be permitted to be used in such confined space.
(3) No person in any establishment shall enter or be permitted to enter any such confined space
until all practicable means have been taken to remove any fumes which may be present and to
prevent any ingress of fume and unless either-
(a) a certificate in writing has been given by a competent person, based on a test carried out
by himself, that the space is from dangerous fumes and fit for persons to enter, or
(b) the worker is wearing suitable breathing apparatus and a belt securely attached to a rope,
the free end of which is held by a person standing outside the confined space.
(4) Suitable breathing apparatus, reviving apparatus and belts and ropes shall, in every
establishment, be kept ready for instant use beside any such confined space. As aforesaid
which any person as entered, and all such apparatus shall be periodically examined and
certified by a competent person to be fit for use; and a sufficient number of persons employed in
every establishment shall be trained and practiced in the use of all such apparatus and in the
method of restoring respiration.
(5) No person shall be permitted to enter in any establishment, any boiler furnace, boiler, flue

chamber, tank, at, pipe or other confined space for the purpose of working or making any
examination therein until it has been sufficiently cooled by ventilation or otherwise to be safe for
persons to enter.
78. Explosive or inflammable dust, gas, etc. : (1) where in any establishment any
manufacturing process produces dust, gas, fume or vapour of such character and to such extent
as to be likely to explode on ignition, all practicable measures shall be taken to prevent any
such explosion by-
(a) effective enclosure of the plant or machinery used in the process;
(b) removal or prevention of the accumulation of such dust, gas, fume or vapour;
(c) exclusion or effective enclosure of all possible sources of ignition.
(2) Where in any establishment the plant or machinery used in a process is not so constructed
as to withstand the probable pressure which such an explosion as aforesaid would produce, all
practicable measure shall be taken to restrict the spread and effects of the explosion by the
provision in the plant or machinery of chokes,
(3) Where any part of the plant or machinery in an establishment contains any explosive or
inflammable gas or vapour under pressure greater than atmospheric pressure, that part shall
not be opened except in accordance with the following provisions, namely-
(a) before the fastening of any joint of any pipe connected with the part of the fastening of
the cover of any opening into the part is loosened, any flow of the gas or vapour into the part or
any such pipe shall be effectively stopped by a stop-valve or other means;
(b) Before any such fastening as aforesaid is removed, all practicable measures shall be
taken to reduce to pressure of the gas or vapour in the part or pipe to atmospheric pressure;
(c) where any such fastening, as aforesaid, has been loosened or removed, effective measures
shall be taken to prevent any explosive or inflammable gas or vapour from entering the part or
pipe until the fastening has been secured; or as the case may be, securely
replaced:
Provided that the provisions of this sub-section shall not apply in the case of plant or machinery
installed in the open air.
(4) No plant, tank or vessel which contains or has contained any explosive or inflammable
substance shall be subjected in any establishment to any welding, brazing, soldering or cutting
operation which involves the application of heat unless adequate measures have been first
taken to remove such substance and any fumes arising there from o to render such substance
shall be allowed to enter such plant, tank or vessel after any such operation until the mental has
cooled sufficiently to prevent any risk of igniting the substance.

SPECIAL PROVISIONS RELATING TO HEALTH HYGIENE AND SAFETY (Sec 79-
88)
79. Dangerous operations : Where the Government is satisfied that any operation carried on
in an establishment exposes any person employed in it to a serious risk of bodily injury,
poisoning, or disease, it may make rules applicable to such establishment or class of
establishments in which such operation is carried on-
(a) specifying the operation and declaring it to be hazardous;
(b) prohibiting or restricting the employment of women, adolescents or children in the operation;
(c) providing for the periodical medical examination of persons employed in the operation and
prohibiting the employment of persons not certified as fit for such employment;
(d) providing for the protection of all persons employed in the operation or in the vicinity of
the places where it is carried on and the use of any specified materials or processes in
connection with the operation; and
(e) notice specifying use and precautions regarding use of any corrosive chemicals.
80. Notice to be given of accidents : (1) When any accident occurs in an establishment
causing loss of life or bodily injury, or when an accidental explosion, ignition, outbreak of fire or
irruption, outbreak of fire or irruption of water or fumes occurs in an establishment, the employer
of the establishment shall give notice of the occurrence to the Inspector within two working
days.
(2) Where an accident mentioned in sub-section (1) causes bodily injury resulting in the
compulsory absence from work of the person injured for a period exceeding forty eight hours it
shall be entered in a register in the prescribed from.
(3) A copy of the entries in the register referred to in sub-section (2) shall be sent by the
employer of the establishment, within fifteen days after the 30th day of june and the 31st day of
December in each year, to the chief Inspector.
81. Notice of certain dangerous occurrences : Where in an establishment, any dangerous
occurrence of such nature as may be prescribed, occurs, whether causing any bodily injury or
not, the employer of the establishment shall send notice thereof the Inspector within three
working days.
82. Notice of certain disease : (1) Where any working in an establishment contacts any
disease specified in the second schedule, the employer or the worker concerned or any person
authorized by him in this behalf shall send notice thereof to the Inspector in such prescribed
form and within such time as may be prescribed by Rules.
(2) If any registered medical practitioner attends on a person who is, or has been employed
in an establishment and who is, or is believed by such medical practitioner to be, suffering from
any disease specified in the second Schedule, the medical practitioner shall, without delay,
send a report in writing to the chief Inspector stating-
(a) the name and postal address of the patient;
(b) the disease from which he believes the patient to be suffering;
(c) the name and address of the establishment in which the patient is or was last employed.
(d) the Government may add to or subtract from the Second Schedule any disease by
(e) notification in the official Gazette.
83. Power to direct enquiry into cases of accident or disease : (1) When any accidental
explosion, ignition, outbreak of fire or irruption of water or other accident has occurred in any
establishment or when any disease specified in the second schedule has been or suspected ot
have contracted in any establishment, the government, if it is of opinion that a formal enquiry
into the cases, of, and circumstance attending, the accident or disease ought to be held, may
appoint a competent person to holding the enquiry.
(2) The person appointed to hold any such enquiry shall have all the power of a Civil Court

under the Code of Civil Procedure,1908 for the purpose of enforcing the attendance of
witnesses and compelling the production of documents and material objects; and every person
required by such person as aforesaid to furnish any information shall be deemed to be legally
bound to do so within the meaning of section 176 of the penal code.
(3) Any person holding an enquiry under this section may exercise such of the powers of an
Inspector under this Act as he may think it necessary or expedient to exercise for the purposes
of the enquiry.
(4) The person-holding enquiry shall make a report to the Government stating the causes of the
accident and its circumstances, and adding any observations, which he and any of the
assessors may think fit to make.
(5) The Government may, cause report to be punished at such time and in such manner as it
may think fit.
84. Power to take samples: (1) An Inspector may, at any time during the normal working
hours, informing the employer of an establishment, take, in the manner hereinafter provided, a
sufficient sample of any substance used or intended to be used in the establishment such use
being, in the opinion of the Inspector in contravention of the provisions of this Act or of
the rules, or likely to cause bodily injury to or injury to the health of, workers in establishment.
(2) Where the Inspector takes such sample, he shall, in the presence of the employer, unless
he willfully absents himself, divide the sample into three portions and effectively seal and
suitable mark them shall permit the employer to add his own seal and mark thereon.
(3) The employer shall, if the Inspector so requires, provide the appliances for dividing, sealing
and marking the sample taken under this section.
(4) The Inspector shall forthwith give one portion of the sample to the employer, send the
second portion to a Government Analyst for analysis and report thereon and retain the third
portion for production to the court before which proceedings, if any are instituted in respect of
the substance.
(5) Any document, purporting to be a report under the hand of any Government analyst upon
any substance submitted to him for analysis and report under this section, may be used as
evidence in any proceedings instituted in respect of the substance.
85. Powers of Inspector in case of certain danger : (1) If, in respect of any matter for which
no express provision is made by or under this Act, it appears to the Inspector that any
establishment or any part thereof or any matter, thing or practice in or connected with the
establishment or with the control, management or direction thereof, is dangerous to human life
or safety or thereof, is dangerous to human life or safety or defective so as to threaten, or tend,
to the bodily injury of any person, he may give notice in writing thereof to the employer of the
establishment, and shall state in the notice the particulars in respect of which he considers the
establishment, or part thereof, or the matter, thing or practice, to be dangerous or defective and
require the same to be remedied within such time and in such manner as he may specify in the
notice.
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the
Inspector may, by order in writing direct the employer prohibiting the extraction or reduction of
pillars in any part of such establishment if, in his opinion, such operation is likely to cause the
crushing of pillars or the premature collapse of any part of the workings or otherwise endanger
the establishment,
(3) If the Inspector is of opinion that there is urgent and immediate danger to the life or safety of
any person employed in any establishment or part thereof, he may, by an order in writing
containing a statement of the grounds of his opinion, prohibit, the employer concerned, until he
is satisfied that the danger is removed, the employment in or about the establishment or part
thereof of any person whose employment is not, in his opinion, reasonably necessary for the
purpose of removing the danger.

(4) The employer, if is aggrieved by the order under sub-section (3) may, within ten days of the
receipt of the order, appeal against the same to the chief Inspector who may confirm modify or
cancel the order.
(5) The Inspector making an order under sub-section (1) or (3), shall forthwith report the same
to the Government and shall inform the employer concerned that such report has been so
made.
(6) The chief Inspector, shall forthwith report to the Government any order, except the order of
cancellation passed by him under sub-section (4), and shall also inform the employer concerned
that such report has been so made.
(7) Any employer, if has any objection against any order made under sub-section (1), or (4) may
inform the Government within 20 days of receipt of the order in Writing with cause thereof and
the Government shall sent it to a committee for decision.
(8) The employer shall comply with the order against which objection has been made until such
decision of the committee is received. Provided that on application made by the employer the
order passed under sub-section (1) may be suspended, till pending decision of the committee.
86. Information about dangerous building and machinery : (1) Where any worker finds that
any machinery or building used by the workers in any establishment in which he is employed is
in such a dangerous condition that it is likely to cause physical injury to any worker at any time
he shall inform the employer of it in writing immediately after it has come to his notice.
(2) if the employer fails to take appropriate action on such information within three days and any
injury is caused to any worker because of the use of such equipment, machinery or building, he
shall be liable to pay compensation to the worker injured at a rate which may be double the rate
of compensation payable for such injury under chapter XII.
87. Restriction of employment of women in certain work : The provisions of sections 39, 40
and 42 shall apply to a woman worker as they apply to an adolescent worker.
88. Power to make rules to supplement this chapter : The Government may make rules
requiring that-
(a) in any establishment such further devices and measures for securing the safety of the
persons employed therein, shall be adopted;
(b) work on a manufacturing process carried on with the aid of power, shall not be begun, in any
building or part of a building in an establishment until a certificate of stability in the prescribed
form has been received by the chief Inspector.

Contract Act 1872
LOGO
Con. Act
1872

What is contract ? What are the elements of contract?
Contract:
An agreement enforceable by law is called a contract. Therefore in a contract, there must be‐
1. An agreement;
2. The agreement must be enforceable by law.
There some agreements like an agreement to play cards or go to cinema, which cannot be
enforced through the courts of law, are not contract. So agreements, which can't be enforced
through the courts of law, aren't contract.
Elements of a Contract
1. Offer & Acceptance;
2. Intention to create legal relationship;
3. Lawful consideration;
4. Capacity of the parties;
5. Free Consent;
6. Legality of the object;
7. Certainty;
8. Possibility of performance;
9. Void agreement;
10. Writing, registration and legal formalities.

What is Proposal and Offer ? When communication of proposal and
acceptance complete is completed?
Proposal: when one person signifies to another his willingness to do or to abstain from doing
anything with a view to obtaining the assent of that other to such act or abstinence, he is said to
make a proposal.
Offer: a proposal is also called an offer. The promisor or the person making of the offer is called
offer. The person to whom the offer is made is called the offeree.
Communication of proposal and acceptance complete

The communication of the proposal is complete when it comes to the knowledge of the person to
whom it is made.

How and when a proposal and acceptance can be revoked?
Revocation of Proposal:
When the following conditions are met individually or aggregate:

1. by notice;
2. by lapse of time;
3. after expiry of reasonable time;
4. by failure of reasonable time;
5. by failure of condition precedent;
6. by death of insanity;
7. counter offer;
8. by refusal.
Revocation of Acceptance:
An acceptance can be revoked any time before the acceptance comes to the knowledge of the
proposer but not afterwards.

Consideration, Type of consideration, Good consideration,
Characteristics or Essential factors of consideration
Consideration
Consideration is an essential element in a contract. Something which receives and gives by each
party to an
agreement is called consideration.
Types of a consideration
Three types:
1. Past, 2. Present, and 3. Future.
Good consideration
It must be:
1. Real
2. Reasonable;
3. Not illegal, immoral or opposed to public policy;
4. Present, past or future;
Characteristics/Rules/Essential factors of Consideration
1. Desire;
2. Public duty;
3. Promise to stranger;
4. It must be real;
5. not illegal, immoral or opposed to public policy;
6. It may be present, past and future;
7. It may move from promisee or from other person.
Why a consideration is needed or must for a contract?
"No consideration no contract"‐ exceptions to the rule.
Consideration is must for a contract:

1. The consideration must have some value in the eye of law. It must not be sham or illusory
2. The impossible acts and illusory or non‐existing goods cannot support a contract. Therefore,
real consideration comes from good consideration.
3. A contribution to charity is without consideration. Therefore, it is not real consideration.
"No consideration no contract"

Consideration is essential for validity of a contract. A promise without consideration cannot create
a legal obligation. So consideration is essential for a contract.
But there are exceptional cases where a contract is enforceable even though there is no
consideration.
They are as follows:
1. Natural love and affection;
2. Voluntary compensation;
3. Time bared debt;
4. Agency;
5. Completed gift.

LOGO
Con. Act
1872

Contract Act 1872
LOGO
Con. Act
1872

Is silence treated as fraudulent ?
Difference between Void and Voidable contract.
Silence be fraudulent?
1. Mere silence is not fraud.
2. Silence can be fraudulent in circumstances.
3. Silence is fraud where silence is in itself equivalent to speech.
Void Vs Voidable contract
Point of view Void Contract Voidable Contract
Definition An agreement not enforceable by law is An agreement which is enforceable by law

said to be void. at the opinion of one or more of the
parties thereto, but not at all the opinion of
the other or others is a voidable contract.
Right and obligation A void agreement confers no right on But in case of voidable agreement the
any person and creates no obligations. rights and obligations of the parties
concerned are present unless it becomes
void.
Declaration for voiding As a void agreement is void from the But in case of voidable agreement the
beginning it is not necessary for the effected party needs to call the agreement
effected party to declare the agreement void.
void.
Refund In case of void agreement the party is But in case of voidable agreement party
not bound to refund the benefit received may refund the benefit to the other party,
to other party. if the agreement becomes void later on.

In which cases a Contract can void? Or
When is an agreement said to be void?
An agreement is said to be void because of mistake, lack of consideration, want of capacity etc.
A list of reasons for void agreements is given below:
1. Lack of capacity;
2. Mutual mistake of fact;
3. Unlawful consideration or object;
4. Consideration or object partly
5. Agreements without consideration;
6. Agreements in restraint of trade;
7. Agreements is restraint of legal proceedings;
8. Uncertain agreement;
9. Agreements by way of wager;
10. Impossible acts;
11. Agreements contingent on impossible event;
12. Reciprocal promises where there are void promises.

Difference between Contingent Contract vs. Wagering Agreement.
Describe - Supervening impossibility, Doctrine of Frustration, Counter
offer.
Contingent Contract vs. Wagering Agreement

The distinctions between contingent contract and wagering agreement are given below:
Point of view Contingent Contract Wagering agreement
Validity A contingent contract is valid. A wagering agreement is void.
Dependency It depends on the happening or It is void.

non‐happening of an event, but
the contract is valid.
Reciprocal promises It may not contain reciprocal It consists of certain reciprocal
promises. promises.
Supervening impossibility
When enter into contract it is good but subsequently impossible to perform. The condition is called
supervening impossibility of contract.
Frustration of contract by supervening impossibility

When the common object of a contract can no longer be carried out, the court may declare the contract to be
an end. This is known as the Doctrine of Frustration.
Counter offer
The acceptance shall be unconditional and absolute. If the acceptance is given with any condition changing
any portion of the original offer then it is known as counter offer.
Example: A offer to B to buy his car for Tk. 100,000 but B agrees to pay Tk. 90,000, the offer made by B is a
counter
offer. Syed Mehedi Hasan, ACMA, A 1094
Difference between a contract and an agreement
Describe different type of contracts
Distinguish between a contract and an agreement
Point of view Contract Agreement
Definition An agreement enforceable by Promise or every set of promises

law is Contract. forming the consideration for
each other, is an agreement.
Similarity All contracts are agreements All agreements are not contact.
A offer a reward to whosoever shall return his lost briefcase. B returns the lost briefcase, not knowing
of the advertisement reward. Is A bound to pay the reward to B?
No, A is not bound to pay reward to B. As per contract act an offer must be communicated to the offeree. If
the offeree does any act of acceptance without knowing. It will not crate any legal acceptance or agreement.
Different types of contracts:

Express Contract
An express contract is a legally binding agreement between two parties, where all the essential terms of the
contract are explicitly stated, either orally or in writing.
Implied Contract
An implied contract is an agreement that is formed by nature of the contract or behavior of the parties, rather
than through specific words.

Describe different type of contracts (Cont…)

Quasi Contract
A quasi contract is a contract that exists by order of a court, not by agreement of the parties. Courts create
quasi contracts to avoid the unjust enrichment of a party in a dispute over payment for a good or service. In
some cases a party who has suffered a loss in a business relationship may not be recover for the loss without
evidence of a contract or some legally recognized agreement. To avoid this unjust result, courts create a
fictitious agreement where no legally enforceable agreement exists.
To illustrate, assume that a homebuilder has built a house on Alicia’s property. However, the homebuilder
signed a contract with Bobby, who claimed to be Alicia’s agent but in fact, was not. Although there is no
binding contract between Alicia and the homebuilder, most courts would allow the homebuilder to recover the
cost of the services and materials from Alicia to avoid an unjust result. A court would accomplish this by
creating a fictitious agreement between the homebuilder and Alicia and holding Alicia responsible for the cost
of the builder’s service and materials.
Executed and Executory Contracts
An executed contract is one in which nothing remains to be done by either party and where the transaction is
completed at the moment that the agreement is made,‐ as where an article is sold, and delivered, and
payment therefore is made on the spot.
A. Contracts to sell personal property are executory, while a completed sale by delivery is executed; but the
language used in an agreement about the sale may not always be decisive whether the one or the other is
meant.
B. An executory contract is a contract to do some future act, such as where an agreement is made to build a
house in six months, or to do an act on or before some future day, or to lend money upon a certain interest
payable at a future time.
C. Where the contract is executory, if the agreement be that one party shall do a certain act, or acts for the
performance of which the other party shall pay a sum of money, the performance of the act is a condition
precedent to the payment of the money.

Bilateral Contract
A bilateral contract is a reciprocal arrangement between two parties where each promises to perform an act
in exchange for the other party’s act. Each party is an (a person who is bound to another) to its own promise,
and an oblige (a person to whom another is obligated or bound) on the other party’s promise. A bilateral
contract specifies a duty to act in exchange for another party’s duty to act.
Unilateral Contract
A legally enforceable promise‐between legally competent party to do refrain from doing a specified, legal act
or acts. In a unilateral contract, one party pays the other party to perform a certain duty. If the duty is fulfilled,
the party on the other side of the contract is obligated to transfer the specified funds. Only this party is under
obligation of the contract, whereas the acting party is not legally obliged to perform the duty.
Valid Contract
A contract that complies with all the essentials of a contract and is binding and enforceable with all
associated parties.
Void Contract
Contract that (i) is legally (inherently void) from the moment it is made, (ii) is legal but declared null (having no
legal effect) by the courts because it violates a fundamental principle such as fairness, or is contrary to public
policy, (iii) becomes void due to changes in law or in government policy, or (iv) has been fully performed. Lack
of capacity to contract (being an infant or minor, intoxicated, or insane) automatically makes a contract void.
Contract that is void only in one or few parts may be saved by the process of severance. Not to be confused
with voidable contract.


Voidable Contract
Unlike a void contract, it is a valid contract. At most, one party to the contract is bound. The unbound party
may repudiate the contract, at which time the contract is void.
For example, depending upon jurisdiction, a minor has the right to repudiate certain contracts. Any contract
with a minor is thus a voidable contract. If a minor were to enter into a contract with an adult, the adult would
be bound by the contract, whereas the minor could choose to avoid performing the contract. Therefore, when
entering into contracts with a minor, people often require the co signature of an adult, preferably a parent or
legal guardian.
Illegal Contract
A contract that is prohibited by status (e.g. one between traders providing for minimum resale prices) or is
illegal at common law on the grounds of public policy. An illegal contract is totally void, but neither party
(unless innocent if the illegality) can recover back any money paid or property transferred under it. Related
transactions may also be affected. A related transaction between the same parties (e.g. if X gives Y a
promissory note for money due from him under an illegal contract) is equally tainted with the illegality and is
therefore void. The same is true of a related transaction with a third party (e.g. if Z lends X the money to pay
Y) if the original illegality is known to him. In certain circumstances, illegal contracts may be saved by
severance.

What are the remedies for breach of contract?

Unenforceable Contract
It is a transaction is one that is valid, but which the court will not enforce. Uncorrectable is usually used in
contradistinction to void (or void ab initio) and voidable. If the parties perform the agreement, it will be valid,
but the court will not compel them if they do not.
An example of a transaction which is an uncorrectable contract is a contract for prostitution under English
Law. Prostitution is not actually a crime under English Law, although both soliciting a prostitute and living off
the earnings of prostitution are criminal offences but so long as the contract is fully performed, it remains
valid. However, if either refuses to complete the bargain (either the prostitution after being paid or the payer
after receiving the services), the court will not assist the disappointed party.
To impugn a contract means attacking the integrity of the contract. A way this can be done is by deeming the
contract unenforceable. A contract can be said unenforceable when it goes against the statuses of fraud or
the Statement of Goods Act.
Remedies for breach of contract

1. Rescission of the contract.
2. Suit for damages.
3. Suit upon Quantum Meruit
4. Specific performance of the contract.
5. Injunction.

Ignorance of law is no excuse to avoid a contract" – Discuss.
Can a minor make a contract?
Rules regarding “Offer”.
Ignorance of law is no excuse to avoid a contract"

We all are working and exercising our right and obligation under the law. These laws are unlikely to be known
to all of us. So, the ignorance of law is not a valid reason to avoid contract. In this case, contract should be
performed specifically.
Can a minor make a contract?

As per section 11 of contract act a minor is not competent to a contract. So he/she cannot make a contract. If
any contract is made by the minor, it will be a void agreement.
Rules regarding an offer

1. An offer may be express or may be implied from the circumstances;
2. An offer may be made to a definite person; to some definite class of persons; or to the world at large;
3. Legal relationship is required;
4. The terms of the offer must be certain, definite, unambiguous and not vague;
5. A mere statement of intension is not an offer;
6. An offer must be communicated to the offeree;
7. An offer may be conditional;
8. Printed contracts.

Who can accept an offer?
How an offer to be communicated?
How an acceptance to be communicated?
Who can accept an offer?

An offer can be accepted only by the person or persons for whom the offer is intended which includes the
following:
1. An offer made to a particular person can only be accepted by him because he is the only person to accept.
2. An offer made to a class of persons can be accepted by any member of the class.
3. An offer made to the world at large can be accepted by any person whatsoever.
How an offer to be communicated?

An offer may be communicated to the offeree or offerees by word of mouth, by writing or by conduct.
How an acceptance to be communicated?

An acceptance to be communicated by the following:
1. Offer and Acceptance by post
2. Offer and acceptance through telephone
3. Microphone
4. E‐mail
5. Internet

Rules regarding acceptance of an offer.
What are types of agreements said to be void?
What types of agreements become void?
Rules regarding acceptance of an offer

The acceptance of an offer to be legally effective must satisfy the following requirements:
1. It must be an absolute and unqualified acceptance of all the terms of the offer.
2. Conditional acceptance / Counter offer.
3. Contract subject to condition
4. Clarification
5. the acceptance must be expressed in some usual or reasonable manner
6. Mental acceptance or un‐communicated assent does not result in a contract
7. The mode of acceptance
8. Time of acceptance
9. When acceptance is complete
10. Before offer
11. The acceptance must be made while the offer is in force.
What are types of agreements said to be void?

The following agreements are void from the beginning:
1. An agreement made by a minor;
2. Agreements without consideration;
3. Certain agreements against public policy..
What types of agreements become void?

An agreement, which was legal and enforceable when it was entered into, may subsequently become void
due to impossibility of performance, change of law or other reasons. When it becomes void the agreement
ceases to have legal effect.
What types of agreements are expressly declared void?
What types of agreements are unenforceable by law?
Distinct between void agreement and illegal agreement
What types of agreements are expressly declared void?

There are certain agreements, which are expressly declared to be void, are summarized hereunder:
1. Every agreement in restraint of marriage of any person, other than a minor, is void
2. Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of
any kind, is to that extent void
3. Private individuals cannot by agreement alter or vary their personal law or the statute law
4. Agreements, the meaning of which is not certain, or capable of being made certain, are void
5. Agreement by way of wager are void
6. Agreements to do and act impossible in itself are void
7. Agreements whose objects or considerations are unlawful are void
What types of agreements are unenforceable by law?
An agreement which cannot be enforced in a court of law, one or both of the parties, because of some
technical defect, e.g. want of registration or non‐payment of the requisite stamp duty is unenforceable e by
law.
Distinct between void agreement and illegal agreement
Subject Void agreement Illegal Agreement
Definition An agreement not enforceable by law is An illegal agreement is one, which

said to be void. is
against a law in force.
Nature A void agreement is not necessarily An illegal agreement is also void
illegal.

Under which circumstances a person is incapable of entering into
contracts?
What are the exceptions regarding the rules to minor?
Under which circumstances a person is incapable of entering into contracts?

A person is incapable of entering into contracts under the following circumstances:
1. if he is not attained the age of majority according to the law to which he is subject
2. if he is not of sound mind
3. if he is disqualified from contracting by and any law to which he is subject.
What are the exceptions regarding the rules to minor?

To the minor's rule there are two exceptions which are given below:
1. When a guardian of the minor’s person or property is appointed by a court of law and
2. When a minor’s property is taken over by the Court of Wards for management.
In either case minority continues up to the completion of the 21st year.
What is the test of soundness of mind?

The test of soundness of mind is given hereunder:
1. Capacity to understand the business concerned
2. Ability to form a rational judgment

Coercion, Undue influence, Fiduciary relationship
Coercion
Coercion is the committing or threatening to commit, any act forbidden by penal Code, or unlawful detaining,
or threatening to detain, any property, to the prejudice of any person whatever with the intention of causing
any person to enter into an agreement.
Consequences of coercion
The consequences of coercion are given below:
1. Voidable at the option of the party whose consent was so caused
2. The aggrieved party can have the contract set aside or he can refuse to perform it and take the defense of
coercion if the other party sought to enforce it.
3. The aggrieved party may if he so desires abide by the contract and insist on its performance by the other
party.
Undue influence
A contract is said to be induced by undue influence where –
1. One of the parties is in position to dominate the will of the other.
2. He uses the position to obtain an unfair advantage over the other.
Fiduciary relationship
Fiduciary relationship means a relationship of mutual trust and confidence. Such a relationship is supposed
to exist in
the following cases:
1. father and son
2. guardian and ward
3. solicitor and client
4. doctor and patient
5. preceptor and disciple
6. trustee and beneficiary Syed Mehedi Hasan, ACMA, A 1094
Misinterpretation
What do you mean by misrepresentation?

Misrepresentation arises when the representation made in inaccurate but the inaccuracy is not to any desire
to defraud the other party. There is no intension to deceive.
What are the causes of misrepresentation?

The causes of misrepresentation are –
1. Unwarranted assertion
2. Breach of duty
3. Innocent mistake
What are the consequences of misrepresentation?

The consequences of misrepresentation are –
1. The aggrieved party can avoid the agreement
2. The aggrieved party can insist that the contract be performed and he shall be put in the position is which
he would have been if the representation made had been true.

Fraud
What is fraud?
The term fraud includes all acts committed by a person with a view to deceive another person. To deceive
means to induce a man to believe a thing is true which is false.
What type of acts to be considered as fraud?

1. False statement
2. Active concealment
3. Intentional non‐performance
4. Deception
5. Fraudulent act or omission
What are the consequences of fraud?

A party who has been induced to enter into an agreement by fraud has the following remedies open to him:
1. Avoidance of performance of the contract
2. Insistence of performance of the contract
3. Sue for damage
How can the relief for fraud be obtained?

Relief for fraud can be obtained only if the following conditions are satisfied:
1. Act committed by a party or agent
2. Act must have been done with the intension to deceive and must actually deceive.
3. Consent obtained by the act complained of Silence
4. The remedy of rescinding not available

Uberrimae fidei contracts
What is meant by the Uberrimae fidei contracts?

Uberrimae fidei contracts are contracts where law imposes upon the parties the duty of making a full
disclosure of all
material facts.
What type of contract come within the class of Uberrimae fidei contracts?
The following types of contract come within the class of Uberrimae fidei:
1. Contracts of Insurance
2. Fiduciary relationship
3. Contracts for the sale of immovable property
4. Allotment of shares of companies
5. Family settlement

Mistake in contracts
What do you mean by mistake?

An erroneous belief concerning something is called mistake.
How many classes of mistakes?

1. Mistake of law
2. Mistake as to a law not in force in Bangladesh.
3. Mistake of fact
What is meant by bilateral mistake?

When both the parties of the contract mistake are called bilateral mistakes.
What is meant by unilateral mistake?

When one of the parties of the contract mistakes is called unilateral mistakes.
What are the rules regarding mistake?

1. Mistake of law
2. Mistake of fact
3. Opinion
4. Unilateral mistake

Unlawful consideration and object
Wager agreement
When are the consideration and the object of an agreement unlawful?

The consideration and the object of an agreement are unlawful in the following cases:
1. If it is forbidden by law.
2. If it is of such a nature that, if permitted, it would defeat the provision of any law.
3. If it is fraudulent.
4. If it involves or implies injury to the person or property of another.
5. If the court regards it as immoral.
6. If the court regards it as opposed to public policy.
What do you mean by wager?

A wager is an agreement by which money is payable by one person to another on the happening or non
happening of a future, uncertain event.
What are the characteristics of a wager agreement?
The characteristics of a wager agreement are given below:
1. The consideration for the promise under a wagering agreement is to pay or get money.
2. The money is payable on the happening or the non‐happening of an event.
3. The agreement depends on a future and uncertain event.
4. The essence of gaming and wagering is that one party is to win and the other loses.
5. In wagering agreement no party has control over the event.
6. Commercial transactions are valid, but to pay price differences in a wagering agreement is void.
Which are the transactions not wagers?
a) Shares.
b) Games of skill.
c) A statutory exception.
d) Contract of Insurance.
Contingent contract
Termination of contract
What do you mean by contingent contract?

A contingent contract is a contract to do or not to do something, if some event, collateral to such contract,
does or does not happen.
What are the characteristics of contingent contracts?

1. The performance of such contract depends on a contingency, i.e., on the happening or non happening of
the future event.
2. The event must be collateral i.e., incidental to the contract.
3. The contingency is uncertain.
What are the methods of termination of a contract?

1. By performance of the promise or tender.
2. By mutual consent canceling the agreement or substitute in a new agreement in place of the old.
3. By subsequent impossibility of performance.
4. By lapse of time.
5. By material alteration without the consent of the other parties.
6. By breach made by other parties.

Quasi contract
Contract of indemnity
Describe the cases which are to be deemed to be Quasi Contract.

The cases which are to be deemed to be Quasi Contract are describing below:
1. Necessaries for incapable person.
2. Reimbursement of interested person.
3. Benefit of non‐gratuitous act.
4. Finder of goods.
5. Delivery by mistake or under coercion.
What do you mean by contract of indemnity?

A contract of indemnity is a contract by which one party promises to save the other party from loss caused to
him by the conduct of the promisor himself, or by the conduct of any other person.
What are the characteristics of contracts of indemnity?

The characteristics of contracts of indemnity are given hereunder:
1. A contract of guarantee must satisfy all the essential elements of a contract.
2. The contract may be expressed or implied.
What are the rights of the indemnity holder?

1. All damages which he may be compelled to pay in any suit in respect of any matter to which the promise to
indemnify applies.
2. All costs which he may be compelled to pay in such suits.
3. All sums which he may have paid upon compromise of such suit.

Contract of guarantee
What do you mean by contracts of guarantee?

A contract to perform the promise or discharge the liability, of a third person in case of his default.
How many types of contracts of guarantee?

1. For payment to the creditor to the principal debt or by the guarantor.
2. Payment of price for goods sold.
3. Fidelity guarantee.
What are the essentials of valid guarantee?

1. Must satisfy all the essential elements of a contract.
2. May be oral or written.
3. There must be three parties.
4. The primary liability is that of principal debtor.
5. Minor
6. Consideration
Which are the invalid contracts of guarantee?

1. Misrepresentation.
2. Concealment.
3. Lack of essential elements.
What do you mean by Continuing Guarantee?

A guarantee which extends to a series of transaction is called continuing guarantee.
How is a continuing guarantee revoked?

1. By notice of revocation by the surety.
2. By the death of the surety. Syed Mehedi Hasan, ACMA, A 1094
Bailment
What do you mean by Bailment?

A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they
shall,
when the purpose is accomplished be returned or otherwise disposed of according to the direction of the
person
delivering them.
Who are bailor, bailee?

Bailor: The person delivering the goods is called the bailor.
Bailee: The person to whom they are delivered is called the bailee.
Bailment: The transaction is called Bailment.
What are the characteristics of Bailment?

The characteristics of Bailment are given below:
1. Delivery.
2. Purpose
3. Return.
4. Contract.
5. Movable goods.
6. Possession.

Bailment
What are the kinds of Bailment?

1. Gratuitous Bailment: A gratuitous bailment is one in which neither the bailor, nor the bailee is entitled to
remuneration.
2. Bailment for reward: A bailment for reward is one where either the bailor or the bailee is entitled to
remuneration.
What are the duties of the Bailee?

The duties of the Bailee are given below:
1. Duty of reasonable care.
2. Unauthorized use of goods.
3. Mixture of Bailor’s goods with the Bailee’s.
4. Duty of returning goods.
5. Accretion to the goods bailed.
6. Liabilities of Innkeeper and Hotelkeepers.
7. Liabilities of carrier.
What are the duties of the Bailor?

The duties of the Bailor are given below:
1. Bailor’s duty to disclose faults in goods bailed;
2. Payment of expenses in Gratuitous Bailment;
3. Responsibility for breach of warranty of title;
4. Enforceable of rights;
5. Act inconsistent with the terms;
6. Restoration of goods lent gratuitously.

Sales of goods
Definition of sale:
A contract whereby the seller transfers or agrees to transfer the goods to the buyer for a price
Either transfer of property, or
Agree to transfer
Agreement to Sell:
Where the transfer of property is to take place at a future time or subject to some conditions it is called
Agreement
to Sell. An agreement to sell becomes a sale when‐
Prescribed time has elapsed or
The stipulated conditions has been fulfilled
Sale vs. agreement to sale

Risk: Risk prima facie passes with property. Where there is a sell subsequent losses falls on the buyer, but
not in the case of agreement to sell.
Possession / title: In case of sell property passes to the buyer but in the case of agreement to sell it remains
with seller.
Essential elements:
Two parties: a sale is a bilateral contract i.e., buyer and seller must be separate person. In an exceptional
case a partner may sell goods to his firm and the film may sell goods to partner. The parties of the contract
must be competent.
Movable goods: the act deals only with movable goods excepting actionable claims and money. An
exchange of goods is not a sale, but it exchange is made partly for goods and party for money it would be
considered as sale.
Sales of goods (Continued…)
Formation of a contract: the contract may provide for immediate delivery of goods or immediate payment of
price or both, or for the delivery and payment by installments. A contract of sale may be writing, verbal, or
may be implied from the conduct of the parties.
Terms of contract: essentials terms are called conditions and non‐essentials terms are called warranties.
Other essential elements: the contract must be based on free consent, appropriate consideration and the
object must be lawful.
Contract is void, if
1. Goods unknown to seller
2. Goods have perished or damaged
3. Happening of any event that damages the goods between the times of agreement. to sell and sale
Condition and warranty

A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to
right to treat the contract as repudiated. It also creates of right to get damages.
A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a
claim for damages but not to a right to reject the goods and treat the contract as repudiated.

Breach of condition to be treated as a breach of warranty:

Where contract is not servable and the buyer has accepted the goods or part thereof
Goods or property has lost/missing/damaged
Implied condition:
Condition to title, getting possession
Sale by description‐supplied goods shall be in accordance with mentioned specification
By sample‐supplied goods shall agree with provided sample
Quality & fitness
Implied warranty:
Buyer shall have quiet possession
Goods are free from any charge/encumbrance
The doctrine (principle) of Caveat Emptor

Caveat Emptor is a Latin expression which means “buyers beware”. The doctrine of caveat emptor means that,
ordinarily, a buyer must buy goods after satisfying himself of their quality and fitness. If he makes a bad choice
he cannot blame the seller. The rules probably originated at a time when goods were mostly sold in market overt
(open) and the buyer had to depend upon own skill and judgment.
Exceptions:‐
1. Where the buyer relies upon the skill and judgment of the seller.
2. Where by custom an implied condition of fitness is annexed to a contract of sale (say, juice in the container
should be kept with merchantable quality)
3. Where there is a sale of goods by description there is an implied condition that the goods are fit for sale.
4. Where the seller is guilty of fraud the seller is not protected by the doctrine of caveat.
Passing risk
“RISK PRIMA FACIE PASSES WITH THE PROPERTY”
Risk generally passes with the property; that means goods remains at seller’s risk till property is passed; after
passing it is at buyer’s risk.
Exception: delivery has been delayed by default of Buyer or Seller; risk is of the party in default.
Transfer to Title
No seller of goods can give the buyer of goods a better title than himself has‐Discuss
“MAKIM NEMO DAT QUOD NON HABET”
The general rule is that only the owner of goods can sell the goods. No one can convey to a transferee a better
title than he himself has.
Exception: in the following cases, a person who is not an owner can give to the transferee a valid title to the
goods.
Estoppel:
Under certain circumstances the true owner may be prevented, by his conduct, from denying the seller’s
authority to sell.
X is the owner of certain goods. X acts in such a manner that Y is induced to believe that the goods belongs to
Z. On that belief Y buys the goods from Z. Under these circumstances, the court will not allow X to prove this
ownership.

Rules regarding performance/execution of contract:

1. It is seller’s duty to deliver the goods and of the buyer to accept and pay for it.
2. Delivery and payment are concurrent condition. Unless otherwise..
3. Part delivery‐has the effect of passing as a whole. Unless..
4. In the absence of a contract seller is not bound to deliver until buyer applies for delivery
5. Rules to delivery
Place: place of sale; place of production
Time: stipulated or reasonable time
3rd party possession: to be acknowledged by 3rd party on behalf of buyer
Unless otherwise mentioned expenses relating to delivery to be borne by seller.
6. Delivery of wrong qty: lesser qty, larger qty, mixed qty, the buyer may reject, if accepts he must pay for it
7. In the absence of agreement the buyer is not bound to accept delivery of goods by installment
8. If seller is required by contract to deliver the goods to a carrier, is prima facie delivery to the buyer
9. Buyer right of examination‐ will get reasonable time to examine the delivered goods
10. Liability of buyer to take delivery of goods‐buyer will be liable for loss
Unpaid seller: (S‐45)

Unpaid seller means a seller when,
The whole price has not been paid
Negotiable instrument has not been honored

Right of unpaid seller:

Against the goods:
A lien on the goods for the price
Stoppage in transit
Right to resell under certain condition
Against the buyer:
Suit for price
Damage for non‐acceptance
Breach of contract:
Suit for price: seller may sue the buyer for the price of the goods, when goods are sold, passed to the buyer
Damage for non‐acceptance: seller may sue the buyer for damages……….if the wrongfully refuses/reject
Damage for non‐delivery: buyer may sue for damages for non‐delivery by seller
Specific performance: buyer may sue for specific/described or ascertained performance
Effect of reputation: contract is made, if one party repudiates, other party may keep it alive till to due date
and sue for damages

LOGO
Con. Act
1872

Companies Act 1994
About Company
LOGO
CA
1994

Company formation
Formation of a Company:
2 (two) or more persons (not more than 50) and 7 or more persons (unlimited) may form a Private or a
Public Limited Company respectively by subscribing their signature in the Memorandum of Association.
They may form -
a Company limited by shares;
a Company limited by guarantee;
an unlimited Company.
There are 3 stages for formation of a company -
i. Promotion;
ii. Registration;
iii. Commencement of business.
Promotion stages -
i. Promoters
ii. Clearance of name
iii. Sponsors' equity
iv. Consent of the Directors
v. Selection of objectives.
Registration:
i. Submission of Memorandum & Articles of Association.
ii. Payment of stamp duty & Registration fees.
iii. Obtaining certificate of incorporation.
Commencement of business:
For a Private Limited Company, the business of the Company can be commenced after
getting the registration i.e. certificate of incorporation.
For a Public Limited Company, the Company shall obtain the certificate of
commencement of business from the Registrar.
Conditions are to be fulfilled before a company commences
business
A public company, having a share capital and issuing a prospectus, cannot commence business
until the Registrar issues a certificate known as the "Certificate of Commencement of Business".
This certificate is issued after the following formalities have been complied with:
i. The minimum subscription has been raised.
ii. Every director has paid the money payable on application and an allotment for the shares
taken up by him.
iii. No money is repayable for failure to obtain stock exchange recognition for the shares, where
such recognition was promised.
iv. A duly verified declaration by a director or the secretary has been filed with the Registrar that
the above requirements have been complied with.
However, a public company having share capital but not issuing a prospectus will get the
commencement certificate if the following conditions are fulfilled:
i. A statement in lieu of prospectus has been filed with the Registrar.
ii. The directors have paid the money due from them on account of shares.
iii. A declaration by a director or the secretary has been filed with the registrar stating that
condition (b) has been satisfied.

Private Ltd. Company Vs Public Ltd. Company
Private ltd co. Public ltd co.

Members Minimum-02, Maximum-50 Minimum- 07, Maximum ltd by
share
Transfer of share Share can only be transferred among No restriction of transfer of share
person
Invitation of Can not invite to general meeting Can invite to general meeting
subscription
Statutory meeting of Statutory meeting of filling statutory After start of business the
Report report to register of JSC in not company is bound to call statutory
obligation. meeting within 1 to 6 month of
submit statutory report.
Commencement of Can start business only after getting Can start business after getting
business the certificate of incorporation the certificate of commencement
from RJSC
No of Directors At least 2 directors At least 3 directors

Consent of Directors No consent and certificate is to be Consent and certificate is to be
Required required

Company and its essential characteristics
Holding Company and Subsidiary Company
A company in ordinary non-technical sense however, means an association for attaining some common
objectives which may be with or without profit.
Essential characteristic:
1. A company is regarded by law and it has a legal personality;
2. A company has perpetual succession;
3. The liability of the members of a company is limited;
4. A company is required to comply with various statutory obligations regarding management.
Holding Company
When a company acquires controlling interest in the affairs of another company or companies, it is known as
the holding company. The Companies Act in its definition clause at section 2 clarifies, interalia, that the holding
of such controlling interest should take all or one of the following forms:
1. its assets may consist in whole or in part of shares in another company;
2. such shares or other interests may be held either directly or through a nominee.
3. such interest should be in the form of holding more than fifty percent of shares or voting rights
in that other company.
4. such voting right gives power directly or indirectly to appoint the majority of the directors in
that other company otherwise than by virtue of the provision of a trust –deed.
Subsidiary Company
It is a company more than fifty percent of whose issued share capital or voting power is held by another
company or the majority of whose directors can be appointed by another company. A subsidiary company may
be a public or private company or not even be a company at all within the meaning of the Companies Act.
Where the shares of such a company are held as security by a company the ordinary business of which is
lending of money or where the majority of directors can be appointed by a company by virtue of powers
contained in a debenture trust-deed, the former company will not be deemed to be a subsidiary company of the
latter.
Rules relating to conversion of a public company into a private company
According to section 232-
1. A public company, having not more than fifty members at the time of conversion, may be
converted into a private one by passing a special resolution altering its articles so as to exclude
provisions if any, in the articles of association applicable to public company and include therein
provisions applicable to a private company.
2. lf the company has secured creditors, their written consent shall have to be obtained before
passing a resolution as per provision of sub section (l) and the shares enlisted with the Stock
Exchange shall have to be de-listed.

Prospectus and the contents of a prospectus.
A prospectus is an invitation to the public to purchase shares or debenture of a company. In

other words, a prospectus may be defined as any document that includes any notice, circular,
advertisement or other document inviting deposits from the public or inviting offers from the
public for the subscription or purchase of any share in, or debentures of a body corporate.
Prospectus has the following characteristics:
It is a document described or issued as a Prospectus.
It includes any notice, circular, advertisement inviting deposits from the public.
It is an invitation to the Public.
The public is invited to subscribe the shares or debentures of a company.
Contents of the Prospectus

Every prospectus issued by or on behalf of a company shall state the matters specified in Part- I
of schedule 111 of the Companies Act 1994. According to the Part I of Schedule III, the following
items are to be included in the Prospectus:
1. The names, addresses, descriptions and occupations of the signatories to the memorandum
and the number of shares subscribed for them;
2. The number and classes of shares and the nature and extent of interest of holders in the
property and profits of the company;
3. The number of redeemable preference shares intended to be issued with the date of
redemption;
4. The rights in respect of capital and dividend attached to different classes of shares;
5. The number of shares fixed by the articles as the qualification of director;
Prospectus and the contents of a prospectus.
6. Particulars regarding directors, managing agents, manager, secretaries and treasures etc;
7. Remuneration of the directors;
8. The minimum amount of subscription and amount payable on application;
9. Time of opening of subscription list;
10. Preliminary expenses incurred;
11. Particulars regarding purchase of property;
12. Details of any premium or under-writing commissions paid;
13. Particulars of reserves including reserve capital;
14. Nature and extent of interest of every director and promoter;
15. Names and addresses of the auditors of the company;
16. The nature and extent of restrictions upon members at company meetings;
17. Restrictions upon Powers of the directors; and
18. Voting rights, capitalization of reserves and surplus of revaluation.

Do all the companies issue a prospectus?
All the companies do not issue a prospectus. Only the Public Limited Companies having
permission from the Securities and Exchange Commission may issue a prospectus. A public
limited company which does not issue a prospectus, it shall issue a statement in lieu of
prospectus.
As per Scction-141 a Public Limited Company having a share capital and not issuing prospectus
must at least 31 days before the first allotment of shares or debentures, file with the Registrar for
registration a statement in lieu of prospectus. The statement must be in the form prescribed in
schedule - IV of the Companies Act-1994.
In case of untrue and misleading information furnished in the prospectus its promoters and
directors will be held liable. The shareholders may claim to refund the value of shares allotted
and the Shareholders, may claim demurrage for any losses incurred for such misstatement
furnished in the prospectus. But they cannot retain the share and claim the demurrage
simultaneously.

"All listed companies are public companies but not vice-versa"
Listing Companies
As per listing regulations clause 7(1), only the public limited Company can be listed with the
Stock Exchanges. As per Companies Act 1994, Securities of a private limited Company are
prohibited for transfer and it cannot be sold publicly. So, the Stock exchanges deal with those
securities which are transferable. So, no private limited Company is eligible for listing with any
stock exchange but a public limited Company is not mandatory to be listed. It is the discretion of
the shareholder/sponsors public limited company as to whether their Company will be placed to
the Stock Exchanges for listing. So it can be said that "All listed companies are public companies
but not vice-versa."

Convert a Public Ltd. Company into a Private Ltd. Company
Conversion of a public limited company to a private limited company
According to section 232, A public limited company, having not more than 50 member of
members at the time of conversion, may be converted into a private limited company by altering
its articles by passing a special resolution so as to exclude provisions if any, in the articles of
association applicable to public company and include therein provisions applicable to a private
company.
If the company has secured creditors, their written consent shall have to be obtained before
passing such resolutions. If the shares are listed with stock exchange(s), are to be de listed.

Balance Sheet and Profit & Loss A/C to be filed with the
registrar
As per section 190 of the Companies Act, three copies of the balance-sheet and the profit and loss
account or the income and expenditure account shall be filed with the Registrar, within thirty days after
Annual General Meeting.
The balance-sheet and the profit and loss account or the income and expenditure account signed by the
managing director, managing agent, a manger or secretary of the company or if there be none of these,
by a director of the company.
If a company makes default in complying with the requirements of this section, it shall be liable to a fine
not exceeding one hundred taka for every day during which the default continues, and every office of
the company who knowingly and willfully authorizes or permits the default shall be liable to the like
penalty.
Where the annual general meeting of a company for any year has not been held, there shall be filed
with the Registrar within thirty days from the last day on which that meeting should have been held.
If the shareholders do not adopt the Balance Sheet laid before the AGM, a statement of that fact and of
the reasons therefore shall be annexed to the balance-sheet and to the copies thereof required to be
file with the Registrar.

Delisting and suspension of company
The Securities and Exchange Commission Act, Rules and Ordinance, 1969
Delisting and suspension “Section – 31”

A listed Company may be de-listed or suspended for any of the following reasons:
(a) If its securities are quoted below 50% of face value for a continuous period of 3 calendar
years.
(b) Failed to declare dividend or Bonus:
For 5 years from last dividend.
For 5 years from commencement of Business
For 5 years from the date of commercial operation.
(c) Failed to hold Annual General Meeting for a continuous period of 3 years.
(d) Gone into liquidation.
(e) Failed to pay listing fees or Penalty for two years.
(f) Failed to comply any provision of the regulations.

Grounds on which a company may be compulsorily wound up &
Who are authorized to make an application to the court for the winding up of a
company
As per section 241 a company shall be wound up if the company:

i. Passed a special resolution for winding up of the company by court;
ii. Fails to furnish statutory report or fails to hold statutory meeting;
iii. Suspend its business operation for one year or fails to commence business within one year of
its incorporation.
iv. Members reduced to less than 2, 7 for Private &.Public Limited Company respectively.
v. Unable to pay its debt.
vi. Court is satisfied that it is just and equitable to wind-up the company.
According to Section 239, the winding-up of a company may be done in any one of the
following three ways:
i. Compulsory winding up by court;
ii. Voluntary winding up by the members or by creditors; and
iii. Voluntary winding up under the supervision of the court.
In above all cases winding may be made by the application of:

i. Any member of the company with the special resolution;
ii. Any member of the company with the extra-ordinary resolution;
iii. The regulatory authority, in case of default in filing the statutory meeting, statutory report;
iv. Any creditors/members, if the company is unable to pay its debts.

Circumstances in which a company may be wound up by the court
As per section 241, a Company shall be wound up if the Company:

i. Passed a special resolution for winding up of the company by court.
ii. Fails to furnish statutory report or fails to hold statutory meeting.
iii. Suspend its business operation for one year or fails to commence business within
one year of its incorporation.
iv. Members reduced to less than 2 or 7 for Private & Public Limited Company
respectively.
v. Unable to pay its debt.
vi. Court is satisfied that it is just and equitable to wind-up the Company.

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1994

R1 CLASS NOTES BY SIR SYED MEHEDI HASAN ACMA - PDF Version 1

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CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS

PART B: PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE

PART C: PROFESSIONAL ACCOUNTANTS IN BUSINESS

PART D: ADDITIONAL ETHICAL REQUIREMENTS

PART E: SPECIALIZED AREAS OF PRACTICE

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Each of these fundamental principles is discussed in more detail in Sections 110–150.

Threats and Safeguards

100.14 Safeguards created by the profession, legislation or regulation include:

information produced by a professional accountant.

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Communicating with Those Charged with Governance

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130.3 The maintenance of professional competence requires a continuing awareness and an

140.3 A professional accountant shall maintain confidentiality of information disclosed by a prospective

Syed Mehedi Hasan, ACMA, A-1094

140.8 In deciding whether to disclose confidential information, relevant factors to consider

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A professional accountant may be required to resolve a conflict in complying with

Syed Mehedi Hasan, ACMA, A 1094

Where a matter involves a conflict with, or within, an organization, a professional

It may be in the best interests of the professional accountant to document the

If a significant conflict cannot be resolved, a professional accountant may consider

Syed Mehedi Hasan, ACMA, A 1094

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Provided, however, that in case of banks and non-bank financial institutions,

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All companies shall encourage effective representation of independent directors on

(ii) The person should be a Business Leader/Corporate Leader/Bureaucrat/University

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(xxii) In case of the appointment/re-appointment of a director the company shall

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Syed Mehedi Hasan, ACMA, A 1094

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Benefits & Disadvantages of Principal based

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Requirement to Attend Board Meetings

Constitution of the Audit Committee

Chairman of the Audit Committee

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Role of Audit Committee:

Reporting of the Audit Committee

b) Suspected or presumed fraud or irregularity or material defect in the internal

Reporting to the Authorities

Reporting to the Shareholders and General Investors

Syed Mehedi Hasan, ACMA, A 1094

EXTERNAL / STATUTORY AUDITORS

Constitution of Remuneration Committee

Chairman of the Remuneration Committee