All the companies registered in Bangladesh are bound to keep a 'register of members' from the date of the registration. Such register shall be kept at the registered office of the company and allowed for inspection by the members free of cost during business hours. In case, a person's name is without any sufficient cause entered in or omitted from the register of members of a company, section 43 of the Companies Act, 1994 provides such person a remedy to resort to court for rectification. The provision, therefore, also covers scenarios arising from the company's refusal to register transfer of shares under section 38 of the Act. Court's power to rectify register under this provision is wide one, and it has the authority to decide any matter relating to the rectification of register of members of a company.

The Act accords a wide range of individual locus standi to apply for rectification. Accordingly, any person aggrieved or any member of the company or the company itself may apply to the court for rectification of the register. However, in applying for the rectification of the register, neither the directors of a company nor proper parties are necessary (A. Ahad v S.M. Anwaruddin (1966) 8 DLR 109). The same rule applies to the agents or servants of a company as well. It is only the corporation or the company that needs to be sued in its corporate name and is a necessary party.

The court may either refuse the application or may order for the rectification of the register under section 43(1)(a) of the Act. Moreover, the court has power to order the company to pay for any damages sustained by any party thereby and to make any order as to costs as it deems appropriate. While entertaining an application for rectification, the court keeps the authority to decide any question as to title of any person who is a party to the application to have his name entered in or omitted from the register. It also has the general power to decide any question necessary or expedient to be decided for rectification of the register and decide any issue involving the question of law.

In two situations the court has power to interfere to rectify the register. First, the power of court to order for rectification under the clause 'without sufficient cause' is very wide and even accords the court to allow an application for rectification if the name of a person is entered in or omitted from the register by a board not duly constituted or by a resolution of an invalid meeting of the board either for want of proper notice or otherwise (Bangladesh Jute Mills Corporation v Shilpa Pratisthan Ltd. And others10 BLC (AD) 83).

In the second situation, the court has the power to rectify when default is made or unnecessary delay takes place in entering on the register the fact of any person having become, or ceased to be, a member. What "unnecessary delay" is in entering on the register the fact of any person becoming or ceasing to become a memberis a question of fact and will mostly depend on the prescribed limitation for rectification of the of the register by the company as provided in its Articles of Association. Section 43(1) (b) of the Act mandates the court to rectify register when the company has not sent the notice of refusal to register within the time prescribed in its Articles of Association (Matiur Rahman (Md) v Dhaka Stock Exchange Ltd. And another MLR 1999 (HCD) 193).

Although, under the Act, the court has wide discretionary power to allow application for rectification share register, at times, such power may be curtailed by the Articles of Association of a company and other special laws. For example, in case of a company which also happens to be a trade organisation, court's power to rectify the register of members of such entity is subject to exhaustion of referring the matter to the Arbitration Council constituted for that purpose (Section 12 of the Trade Organisation Ordinance 1961). Similar provisions can be kept under the Articles of Association as well, and in that case court will not entertain the application unless the condition of the matter being referred to the Arbitration Council is exhausted (Ibrahim Cotton Mills Ltd. And Others v The Chittagong Chamber of Commerce and Industry and Others 1999 19 BLD 372). However, such curtailment under the Articles of Association must not be arbitrary and unreasonable. In general, directors may also have the power to refuse registration of transfer of share, but the Act contemplates such power to be predicated on judicial discretion and reasonableness (Shoaib (Md) v Uttara Banl Ltd and another 43 DLR (1991) 39). Another scenario wherein the courts are reluctant to allow application for the rectification of register is when two prayers – one being made for the winding up of the company, and the other, for the rectification of the register of the members – are made in the same application (Ellal Textile Mills Ltd. v Md. Abdul Awal 38 DLR (AD) 26).

THE WRITER IS AN INTERN RESEARCHER, THE A.S. & ASSOCIATES.