Forcing Company Shareholder to Sell Shares

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Forcing Company Shareholder to Sell Shares in Bangladesh

Unless there is a contractual commitment entitling them to do so, a shareholder cannot normally force another shareholder to sell their shares. For example, if the company’s Articles of Association, Shareholder Agreement, or similar lawful document have a provision allowing such a transaction.

Generally, negotiating with the shareholder whose shares you want to purchase is a more successful approach of obtaining shares. A share sale can be accomplished through a share transfer agreement, in which the shareholders acquire the shares of the other shareholders, or through a business buy-back, in which the shares are returned to the firm.

Section 38 of the Companies Act of 1994 states that

One can transfer or sell shares at his or her discretion.

First, the transferer or transferee must submit an application.
Second, it must be duly stamped, executed, and presented to the transferee together with the corporation.
Third, the corporation will send a notice of refusal to both parties within one month of receiving the share transfer documentation.

However, if the shareholders who want the sale to proceed have a majority shareholding, they may consider proposing a special resolution at the annual general meeting to amend the company’s Articles of Association to include clauses requiring the sale of the shares. This is a sale at fair value, and there is usually a calculation inside the Articles of Association to define how the valuation should be computed.

Another method is to use shareholder agreements. Though this form of arrangement is uncommon in public organizations, it is essential in privately held businesses. This is because minority shareholders can generate significant issues in a small-business context, particularly when they seek to sell or transfer their shares to third-party buyers.

Making a Shareholder Sell His Stock

Generally, a shareholders’ agreement can define certain conditions under which one shareholder must sell shares to fellow owners or back to the corporation to prevent against potentially chaotic scenarios. For example, some corporations grant the company the right of first refusal to purchase shares that descend to an heir upon the death of a shareholder. Other agreements can compel a sale based on different criteria.

Amount of Compensation:

The amount of compensation that the selling shareholders will receive for their shares is frequently specified in the agreement. In some situations, the money received by the selling shareholders will not necessarily reflect the current fair value of the shares, but will reflect a formula agreed upon by all owners when they signed the agreement.

However, these agreements may jeopardize the interests of minority shareholders.

Thus, the statute provides a mechanism for minority shareholders who are compelled and unlawfully pressured to sell their shares or face invisible damages to their interests. As a result, a minority shareholder has the ability to file a lawsuit alleging “unfair prejudice.” A minority shareholder’s unfair prejudice petition is normally made against the other shareholders personally, and they must usually defend such a lawsuit with their own funds.

However, because the alterations to the Articles of Association were considered by a court to have been made in good faith and in the best interests of the firm, the court did not find that the amendments were unfairly adverse to a minority shareholder.

However, if the motivation for modifying the Articles is unlawful and not in the best interests of the firm, the minority shareholder will almost certainly be able to oppose the modification. Even though the modification harms or is intended to harm a minority shareholder, it may still be acceptable if made in good faith and in the best interests of the firm.

legal position in Bangladesh :

The laws are put in place to protect the rights of both parties, but it changes according on the situation to assure the best interests of those who are most affected. The Bangladesh Companies Act 1994, the Bangladesh Securities and Exchange Ordinance 1969 (together with the Bangladesh Securities and Exchange Commission Act 1993 and the rules made thereunder), and the rules of the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE), as well as the Company’s Articles of Association, govern most company matters.


Tahmidur Rahman Remura Wahid provides assistance with the registration, establishment, and other aspects of the company. However, if you require any legal assistance or clarification on the company’s registration, establishment, or other related matters, please contact the top law firm in Bangladesh :

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