Shareholders’ Rights & Shareholder Activism 2025 Comparisons

The formation, governance and regulation of companies in Bangladesh are primarily governed by the Companies Act, 1994 (the “Act”). The Act provides for the following main types of companies.

• Private limited company – A company which, by its articles:
1. restricts the right to transfer its shares;
2. limits the number of its members to 50 (the minimum number required is two); and
3. prohibits any invitation to the public to subscribe for its shares or debentures.
• Public limited company – A company which is not a private company. A public limited company may offer its shares or debentures to the public and is subject to more extensive disclosure and regulatory requirements. The minimum number of members required to form a public limited company is seven.
• One person company (OPC) – A private company with only one natural Bangladeshi citizen as its member, subject to conditions prescribed under the Act and its attendant rules.
• Companies limited by guarantee/not-for-profit companies – Companies formed for promoting commerce, art, science, religion, charity or any other useful object. They apply their profits, if any, towards promoting their objectives and do not distribute dividends to members.

Foreign investors in Bangladesh predominantly establish private limited companies. This structure is preferred due to its operational flexibility, fewer statutory compliance burdens under the Act, and greater control over management and shareholding arrangements. It allows for efficient structuring of investments, including wholly owned subsidiaries or joint ventures with local partners, subject to foreign exchange regulations and sector-specific foreign investment restrictions.

Where a foreign investor intends to access the capital markets, raise funds from the public, or undertake large-scale operations requiring public visibility, a public limited company may be established. However, this form entails more stringent regulatory obligations and oversight by authorities such as the Bangladesh Securities and Exchange Commission (BSEC).

Companies limited by shares in Bangladesh primarily issue two classes of shares.

• Ordinary (equity) shares – These typically carry:
1. voting rights at general meetings;
2. a right to dividends when declared; and
3. a right to participate in the distribution of surplus assets upon winding up.
• Preference shares – These carry preferential rights as to the payment of a fixed dividend and/or the repayment of capital in a winding up, in priority to ordinary shares, as per their terms of issue.

Subject to the Act, companies may also issue shares with differential rights concerning voting, dividends or otherwise. The fundamental rights attaching to shares are derived from the Act. These statutory rights are supplemented and detailed in the company’s memorandum and articles of association. The articles of association constitute a binding contract between the company and its shareholders.

The rights attached to a class of shares may be varied if such variation is:

• provided for in the company’s articles of association; and
• approved by the holders of a specified majority (typically not less than 75%) of the issued shares of that class, either by written consent or a resolution at a separate class meeting.

If the articles are silent, variation may still be possible unless prohibited by the original terms of issue. The Act also provides protective remedies for dissenting minority shareholders. Holders of not less than 10% of the issued shares of the class who did not consent to the variation may, within 14 days, apply to the court for cancellation of the variation. The variation does not take effect until confirmed by the court, which will assess whether it unfairly prejudices the shareholders of that class.

The Act does not prescribe a general minimum paid-up share capital requirement for incorporating private limited or public limited companies. Companies may be formed with any amount of authorised and paid-up capital.

However, sector-specific minimum capital requirements are imposed by relevant regulators. For example:

• banks and financial institutions must meet minimum capital thresholds set by Bangladesh Bank; and
• insurance companies must comply with capital requirements under the Insurance Act, 2010.

The requirements are as follows.

• A private limited company must have a minimum of two and can have a maximum of 50 shareholders.
• A public limited company must have a minimum of seven shareholders, with no statutory maximum.
• A one person company (OPC) can have only one shareholder, who must be a natural person and a Bangladeshi citizen.

There is no general residency requirement for shareholders of private or public companies. However, there are sector-specific foreign shareholder restrictions as well.

Shareholders’ agreements (SHAs) and joint venture agreements (JVAs) are commonly used for private companies in Bangladesh, especially where there are multiple shareholders, foreign investors or joint venture partners. These agreements govern relationships, rights and obligations beyond the company’s constitutional documents.

Typical provisions in SHAs/JVAs cover:

• shareholding structure and capital contributions;
• board composition, appointment rights and reserved matters requiring specific shareholder/director approval;
• voting arrangements and quorum for board/shareholder meetings;
• transfer restrictions, pre-emption rights, drag-along rights, tag-along rights and put/call options;
• dividend policy and profit distribution;
• non-compete and confidentiality obligations;
• deadlock resolution and exit mechanisms; and
• governing law and dispute resolution (often arbitration).

Enforceability and Public Nature of Agreements

SHAs/JVAs are enforceable as contracts between the signatory parties under the Bangladesh Contract Act, 1872. However, to bind the company or alter statutory rights, relevant provisions must be embedded in the articles of association. These agreements are private and confidential documents. They are not required to be filed with the Registrar of Joint Stock Companies (RJSC) or made public.

Parties to the agreements often prefer to reflect certain terms from the agreement in the articles of association of the company through an amendment.

Every company must hold an AGM. The first AGM must be held within 18 months from the date of incorporation and subsequent AGMs must be held within 15 months from the date of the last AGM. At least 21 days’ written notice must be given to all members, directors and auditors. This notice period can be shortened with the written consent of all members entitled to vote.

The ordinary business of an AGM typically includes:

• consideration of audited financial statements and reports of the directors and auditors;
• declaration of dividends;
• appointment/re-appointment of directors retiring by rotation; and
• appointment/re-appointment of auditors and fixation of their remuneration.

Any meeting other than an AGM is an EGM. EGMs are convened to transact special or urgent business that cannot wait until the next AGM.

The Bangladesh Companies Act, 1994 also mandates that certain decisions must be taken through a special or extraordinary resolution and for such matters a general meeting must be called.

For any general meeting (AGM or EGM), a minimum of 21 days’ notice is required. This notice period can be shortened for an AGM with the consent of all members entitled to vote, and for an EGM with the consent of members holding not less than 95% of the voting power.

General meetings can be called as follows.

• By the board – The board of directors has the primary authority to convene general meetings.
• By shareholders – Shareholders holding not less than one tenth (10%) of the paid-up share capital carrying voting rights may requisition the board to call an EGM. The requisition must state the meeting’s objectives. If the directors fail to convene the meeting within 21 days, the requisitionists may themselves convene it within 45 days.
• By the court – The court may, on its own motion or on the application of a director or member, order a meeting to be called if it is impracticable to do so in the usual manner.

Shareholders have the following rights in relation to meeting information and documents.

• Notice – All shareholders entitled to attend and vote must receive notice of a general meeting with a clearly defined agenda.
• Information rights – Shareholders have the right to receive the audited financial statements, directors’ report and auditors’ report before the AGM. For listed companies, the BSEC Corporate Governance Code, 2018 mandates enhanced disclosures in the directors’ report.
• Inspection rights – Shareholders have the statutory right to inspect the register of members, minutes of general meetings, and certain other statutory registers at the company’s registered office during business hours.

General meetings are traditionally held physically. However, meetings may be held virtually or through electronic means if expressly permitted by the company’s articles of association.

For listed companies, as per Bangladesh Securities and Exchange Commission Directive No BSEC/CMRRCD/2009-193/08 dated 10 March 2021, shareholder meetings or general meetings (AGM/EGM) must be conducted via a hybrid system (physical + digital). This means that shareholders must be notified of the physical address of the meeting venue and the web-link for joining/e-voting, with intimation to Bangladesh Securities and Exchange Commission and the stock exchanges. The Directive lays down the following guidelines.

• The companies must provide for both physical/paper ballot at the venue and electronic/e-voting via a digital platform.
• The voting system must have pre-registration for attendance and voting, and maintain a log register.
• Proxy forms must be sent to shareholders in hard/soft/online form, specifying the right to vote for/against each agenda.
• Online/e-voting must open at least 24 hours before the meeting (but not more than 72 hours) and remain open until the meeting closes.
• One-way live streaming/webcast of the proceedings must be provided.
• Platform service must be provided by an independent service provider appointed by the company from among the listed service providers.
• Stock exchanges may send an observer.
• Voting results must be authenticated by the stock exchange(s) or an independent scrutiniser (Chartered Accountant/Secretary) and submitted to Bangladesh Securities and Exchange Commission within 48 hours of the meeting.

The quorum for a general meeting is as follows.

• For a private company – Two members personally present, if the number of members does not exceed six; otherwise, three members personally present.
• For a public company – Five members personally present.

The Act recognises the following resolutions.

• Ordinary resolution – Passed by a simple majority (more than 50%) of votes cast by members entitled to vote and present in person or by proxy.
• Special resolution – Requires a majority of not less than 75% of votes cast. At least 21 days’ notice specifying the intention to propose a special resolution is required.
• Extraordinary resolution – Also requires a 75% majority, but can be passed on shorter notice if specified in the notice.

The Act mandates the type of resolution required for specific matters. A company’s articles may impose stricter requirements but cannot dilute statutory thresholds.

Matters typically requiring shareholder approval include the following.

• Ordinary resolution –
1. declaration of dividend;
2. appointment/removal of directors (unless under specific provisions);
3. appointment of auditors; and
4. approval of certain contracts.
• Special resolution –
1. alteration of memorandum or articles;
2. change of company name;
3. reduction of share capital;
4. voluntary winding up; and
5. variation of class rights.       

The following requirements apply for passing resolutions.

• Methods – Voting can be by a show of hands (one vote per member present) or by a poll (votes weighted according to shareholding). A poll can be demanded by the chairman, by at least five members or by members holding at least 10% of the voting shares.
• Proxy voting – A shareholder entitled to attend and vote may appoint a proxy (who need not be a member) to attend and vote on their behalf.
• Electronic voting – The Act does not expressly provide for electronic voting. However, if permitted by the articles, it may be implemented, provided sector-specific directives may be applicable.
• Weighted voting rights – Differential voting rights are permissible if clearly provided for in the articles and terms of issue, subject to compliance with the Act.

Shareholders cannot raise new business not included in the meeting’s agenda. However, shareholders holding 10% of the voting shares can requisition an EGM to discuss specific issues (as outlined in 2.3 Procedure and Criteria for Calling a General Meeting).

A shareholder can challenge a resolution passed at a general meeting if it was passed in contravention of the Act or the articles, or if the procedures (notice, quorum, voting) were not properly followed. A resolution may also be challenged on grounds of oppression of minority shareholders under Section 233 of the Act. The burden of proof lies on the challenger. Applications to challenge a resolution or for relief from oppression are made to the court.

Institutional investors (mutual funds, insurance companies, banks) monitor companies through statutory rights to information and by exercising their voting power. They influence corporate governance by engaging directly with management, proposing resolutions at meetings and, in some cases, requisitioning EGMs. Through these mechanisms, they are able to influence board composition, corporate strategy and governance practices. Their growing engagement is shaping better governance practices, particularly in listed companies.

The Act does not recognise the holding of shares through nominees. The company’s register of members is definitive. Only the registered holder of the shares is recognised by the company as the shareholder with the right to receive notices and to vote. The beneficial owner’s rights are exercised indirectly through the nominee, based on their private contractual arrangements. The company has no obligation to recognise or communicate directly with the beneficial owner.

The Act does not provide for shareholders to pass resolutions by unanimous written consent without holding a meeting. All resolutions must be passed at a duly convened general meeting (AGM or EGM).

Existing shareholders generally have pre-emption rights (rights of first refusal) on the issuance of new shares. New shares must be offered to existing shareholders in proportion to their existing holdings before being offered to outsiders, unless:

• the articles of association provide otherwise; or
• the shareholders waive this right by passing a special resolution.

The following rules apply.

• Private companies – The right to transfer of shares must be restricted in their articles, often requiring board approval and offering shares to existing members first.
• Public companies – Shares are generally freely transferable.
• Regulatory approvals – Transfers in regulated sectors (banking, insurance, telecom) may require prior approval from the relevant regulator (eg, Bangladesh Bank, BTRC). Transfers involving non-residents must comply with foreign exchange regulations.

Shareholders may grant security interests (eg, pledges, charges or hypothecations) over their shares, subject to:

• any restrictions in the articles of association (common in private companies);
• proper documentation and stamping; and
• in some cases, regulatory approvals (eg, for shares in financial institutions).

Shareholders are required to disclose their interests in listed companies in Bangladesh once specific thresholds are met. The disclosure obligations are governed by the following.

Securities and Exchange Commission (Acquisition and Takeover of Significant Number of Shares) Rules, 2002

Any person holding more than 10% of the shares in a listed company must disclose their total shareholding to:

• the Stock Exchange where the shares are listed;
• Bangladesh Securities and Exchange Commission (BSEC); and
• the company itself.

This disclosure must be made within two months of the notification of the Rules.

Securities and Exchange Ordinance, 1969 (Section 12)

Directors, officers and beneficial owners holding more than 10% of any class of listed equity securities must submit returns regarding their beneficial ownership to the BSEC in the prescribed manner.

Listed companies are required to adopt appropriate by-laws to implement these disclosure requirements and submit disclosed shareholding details to the Stock Exchange and BSEC. The Stock Exchange must then promptly disseminate this information to the public, including through online publication. The primary legal obligation for disclosure rests with the BSEC and the Stock Exchange. However, a company may require disclosure of interests:

• where permitted by its articles of association;
• to ensure compliance with BSEC or Stock Exchange regulations;
• for proper administration, conflict prevention or maintenance of statutory registers; and
• provided such requirements do not contravene applicable laws.

Listed companies must embed these obligations in their by-laws and internal compliance mechanisms and may request necessary information from shareholders, directors and officers to meet regulatory requirements.

Shares cannot be arbitrarily cancelled after issue. Cancellation can only occur through specific statutory mechanisms:

• forfeiture of shares for non-payment of calls (if authorised by the articles);
• reduction of share capital sanctioned by the court;
• redemption of redeemable preference shares as per their terms and the Act; or
• rectification of share register by court on application by a person or the company to correct the register of members if a name is wrongly entered or omitted, or if there is delay in recording membership changes.

The Act is based on the principle of capital maintenance. Consequently, a company is generally prohibited from buying back its own shares. Limited exceptions exist:

• redemption of redeemable preference shares as per their terms; and
• acquisition of shares as part of a court-sanctioned reduction of capital.

There is no general share buyback regime akin to that in some other jurisdictions.

The following apply in relation to dividend payments.

• Declaration – Dividends are declared by shareholders at an AGM (or an EGM) upon the recommendation of the board of directors.
• Source – Dividends can only be paid out of profits (current or accumulated) or distributable reserves. The board must ensure payment does not impair the company’s capital or its ability to pay debts.
• Payment – Dividends must be paid equally among shares of the same class. Shareholders cannot increase the dividend amount beyond what the board recommends.

Directors are appointed by shareholders in a general meeting. In public companies, a proportion of directors retire by rotation each year and may be re-appointed at the AGM. Shareholders may remove a director (other than a director appointed to represent a specific class of shares, etc) by passing an ordinary resolution at a general meeting, after giving special notice to the company.

Furthermore, under the Companies Act, a director’s office can become vacant upon the occurrence of several disqualifying events. These include:

• failure to obtain or hold required qualification shares;
• being declared of unsound mind or insolvent by a competent court; or
• failing to pay share calls within six months.

The position also becomes vacant if the director:

• accepts an office of profit under the company without general meeting sanction;
• is absent from board meetings beyond the prescribed limit without leave;
• accepts a loan or guarantee in contravention of the law; or
• acts in contravention of statutory restrictions.

Additionally, a company’s articles may prescribe further grounds for vacation of office beyond those specified in the Act.

Shareholders cannot generally interfere with the board’s management powers. However, they can challenge directors’ decisions if they:

• are ultra vires (beyond the company’s or directors’ powers);
• are in breach of fiduciary duties; or
• constitute oppression or mismanagement under Section 233 of the Act. Affected shareholders (holding at least 10% of the issued shares singly or jointly) may apply to the court for appropriate relief.

Shareholders appoint auditors at each AGM to hold office until the next AGM. Shareholders may remove an auditor before the expiry of their term by passing an ordinary resolution at a general meeting and appointing another auditor in their place.

For listed companies, the BSEC Corporate Governance Code, 2018 imposes a duty on directors to report extensively on corporate governance arrangements. This includes detailed disclosures in the annual report regarding board composition, committees, director remuneration and internal controls. For other companies, the statutory directors’ report under the Act contains basic governance information.

Bangladeshi law does not explicitly impose direct fiduciary duties on a controlling (holding) company towards the minority shareholders of its subsidiary. However, its conduct is constrained by:

• the general prohibition on oppressive conduct under Section 233 of the Act;
• rules against fraudulent trading and misuse of the subsidiary’s corporate veil; and
• in listed groups, requirements for consolidated reporting and disclosures to protect investor interests.

Upon insolvency, the rights of shareholders are subordinated to the claims of creditors. Shareholders have a right to:

• receive any residual surplus after all debts, liabilities and preferential claims are paid in full;
• vote on certain matters in a voluntary winding-up (eg, appointment of liquidator); and
• receive reports from the liquidator.

They bear the risk of loss up to their share capital contribution.

Shareholders possess several legal remedies under Bangladeshi law to protect their interests and seek redress against the company. These remedies include the following.

• Court-ordered meetings – Where for any reason it is impracticable to call or conduct a meeting of the company in the manner prescribed by its articles or the Companies Act, the court may, either on its own motion or upon the application of any director or any member entitled to vote at the meeting, order a meeting to be called, held and conducted in such manner as the court thinks fit. Any meeting so ordered shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.
• Oppression and mismanagement (Section 233) – Shareholders holding at least 10% of the issued shares may apply to the court for relief if the company’s affairs are being conducted in a manner oppressive to any member or prejudicial to the interests of the company.
• Derivative action – Shareholders may initiate derivative actions to seek redress for wrongs done to the company (eg, where directors have breached their fiduciary duties). This remedy allows shareholders to sue on behalf of the company where the company itself fails to act.
• Winding-up petition – Shareholders may petition the court for the winding up of the company on just and equitable grounds, for instance, where there is a deadlock in management or a complete breakdown of trust and confidence between partners in a quasi-partnership company.

In Bangladesh, shareholders have legal remedies against the company’s directors and officers under the Companies Act, 1994 and, in the case of listed companies, the BSEC Corporate Governance Code, 2018. Shareholders may initiate derivative actions on behalf of the company where directors or officers have:

• committed breaches of fiduciary duties;
• engaged in mismanagement, fraud or oppression; or
• acted ultra vires the company’s constitutional documents.

In addition, minority shareholders holding at least 10% of the issued share capital may petition the court where the conduct of the directors is oppressive, prejudicial or detrimental to the interests of the company.

For listed companies, the Corporate Governance Code, 2018 further reinforces directors’ obligations:

• to act with integrity, due care and accountability; and
• to ensure transparency and protection of shareholders’ interests.

Failure to comply with these duties may expose directors and officers to regulatory action and judicial remedies sought by shareholders, where appropriate.

Although the Companies Act, 1994 does not expressly codify derivative actions, Bangladeshi courts recognise the principle under general company law. Accordingly, shareholders may, in appropriate circumstances, bring a derivative action on behalf of the company where the company itself fails to act against directors or controlling shareholders who have committed a wrong against the company, such as:

• fraud;
• misappropriation of company assets;
• breach of fiduciary duties; or
• other acts prejudicial to the company’s interests.

Such actions are typically permitted where those in control of the company are the alleged wrongdoers and it would be unjust to leave the wrongdoing unremedied.

There is no standalone law governing shareholder activism. However, activism is facilitated by tools under general corporate law.

• Companies Act, 1994 – Rights to requisition meetings (Section 85), propose resolutions, inspect records and apply for relief from oppression (Section 233).
• BSEC Corporate Governance Code, 2018 – Enhances transparency and disclosure for listed companies, empowering shareholders with information.
• Contractual rights – Shareholder agreements can provide additional activist levers.

The key aims of activist shareholders in the Bangladeshi market are multifaceted, reflecting the evolving corporate governance landscape and the need to balance promoter control with minority protection. Their primary objectives typically include the following.

• Influencing or gaining control over management – A fundamental aim is to assert influence over the strategic direction and operational execution of the company. This ranges from advocating for changes in senior leadership (C-suite) and board composition to, in more assertive campaigns, seeking to install new directors or management teams believed to be better aligned with shareholder value creation.
• Protecting minority shareholders – A core aim is to safeguard minority investors from actions by controlling shareholders or the board that are oppressive, unfairly prejudicial, or that disregard minority interests. This involves challenging decisions that disproportionately benefit the majority at the expense of the company’s overall health or the equitable treatment of all shareholders.
• Enhancing corporate governance and accountability – Activists seek to strengthen the framework of corporate governance by advocating for greater board independence, robust audit and nomination committees, and transparent decision-making processes. A key focus is on improving board accountability to all shareholders, not just the controlling bloc, thereby fostering a culture of integrity and oversight.
• Influencing strategic financial decisions – Activists often target a company’s capital management strategy, pushing for optimal dividend policies that provide fair returns to shareholders and challenging perceived inefficient use of capital – such as misguided acquisitions or excessive cash hoarding – that may destroy shareholder value.
• Scrutinising and challenging related-party transactions – A significant area of focus is the review of transactions between the company and its promoters, directors or their affiliates. Activists aim to ensure such transactions are conducted at arm’s length, on commercial terms, and with full disclosure, challenging those that appear to unfairly transfer value out of the company or lack a clear business rationale.

Collectively, these aims are directed at aligning management and board actions with the long-term interests of the company and the equitable treatment of all shareholders, thereby promoting sustainable value creation and market confidence.

Common strategies employed by activist shareholders in Bangladesh include the following.

• Requisitioning general meetings – Activists use their statutory right to requisition extraordinary general meetings (EGMs) to bring specific governance, operational or strategic issues directly before the broader shareholder base and force a formal vote.
• Legal petitions – Filing applications before the Court under Section 233 of the Companies Act, 1994, seeking remedies for oppressive conduct or mismanagement of the company’s affairs. This is a primary legal tool to challenge controlling shareholders or the board.
• Regulatory engagement – Formally engaging with regulators such as the Bangladesh Securities and Exchange Commission (BSEC) or the Registrar of Joint Stock Companies (RJSC) to highlight perceived breaches of law, governance codes or listing regulations, prompting investigative or enforcement action.
• Public and private engagement – Conducting targeted campaigns through media and direct dialogue with other institutional investors to build consensus, alongside private negotiations with the company’s management and board to advocate for change.

The typical agenda pursued through these strategies centres on influencing or changing corporate management and strategy. Key objectives often include:

• advocating for the appointment of independent directors;
• changes in senior executive leadership (C-suite);
• alterations to capital allocation or dividend policies; and
• challenging transactions perceived as detrimental to minority shareholder value.

In Bangladesh, shareholder activism is still at an early stage compared to more mature markets. Recent activity has been most prominent in the following areas:

• banking and financial services sectors, driven by heightened regulatory oversight;
• insurance and telecommunications, which provide essential public services; and
• listed companies with higher market capitalisation, where shareholder influence and visibility are greater.

In Bangladesh, shareholder activism is most commonly undertaken by certain categories of shareholders rather than specialised activist funds. In particular, institutional investors, retail shareholders and foreign investors tend to be more active in raising governance concerns and engaging with company management. Unlike more developed markets, shareholder activism is generally driven by these traditional investor groups acting to protect their economic and governance interests.

Publicly available data on the outcomes of shareholder activism in Bangladesh is limited, and there is no comprehensive statistical record of activist demands made or resolved in recent years. Based on market practice, however, it appears that a moderate proportion of activist demands, particularly those relating to dividend declarations, disclosure obligations, and board or management accountability, are met either in full or in part. Such outcomes typically occur following regulatory scrutiny by the Bangladesh Securities and Exchange Commission or as a result of judicial intervention, rather than through voluntary compliance alone.

Given that shareholder activism in Bangladesh is still relatively limited, companies can reduce the risk of activist challenges primarily through strong legal compliance, transparency and effective engagement with shareholders. Companies that maintain robust corporate governance practices, make timely and accurate disclosures, and comply with applicable regulatory requirements are generally less vulnerable to activist scrutiny. In particular, listed companies with weak disclosure practices, inconsistent dividend policies or governance shortcomings are more likely to attract activist attention.

In responding to an activist shareholder, a company should adopt a measured and constructive approach. Practical strategies include:

• engaging proactively with the shareholder to understand and address concerns;
• ensuring that board decisions are well documented and defensible;
• seeking legal and regulatory advice where necessary; and
• where appropriate, using general meetings as a forum to address shareholder issues transparently.

Active investor relations, regular communication and adherence to best governance practices remain the most effective tools for minimising the risk and impact of shareholder activism.