Let me tell you a story.
Few months back, one of our clients wanted to start two different businesses. So, we incorporated two different companies for the client. Except for the object clause, both companies have nearly identical Articles of Association. Businesses were good and soon our client had some new shareholders in those two companies. They needed some restructuring. They also needed to amend the Articles of the two companies.
After few rounds of emails, we finalized the draft, held an extra ordinary general meeting, passed the resolution and adopted the new articles. We submitted all the documents with the Registrar of Joint Stock Companies and Firms (hereinafter “RJSC”) as the Companies Act 1994 required. We were waiting to close the deal.
Then something strange happened. RJSC approved and issued certified copies for one company. But they refused to accept the documents of another company. According to the dealing officer of RJSC, we did not follow the Companies Act properly. We prepared identical documents for the both companies and documents for one company were accepted without any question. But the officer responsible for the second company did not move. He did not care what the other officer did. We had to redraft the documents according to his wish.
It caused lots of trouble for us, for our client and other parties involved in those deals. We were a bit embarrassed, but the client understood the situation.
I was not surprised by this action of RJSC. I (I mean our paralegal) deal with them regularly. And this kind of situation is not uncommon. In fact it has become a practice of the officials of RJSC to dictate which documents can be filed and which cannot. Also, sometimes they accept the documents and do nothing. In their words, the document is not “passed” i.e. not approved. So it is quite possible that you file your return, RJSC accepts it. But, you will never get the certified copy unless they “pass” it.
The question is can RJSC do this? Can RJSC make our life this difficult?
The question was raised in Bangladesh Chemical Industries Corporation vs. RJSC, (39 DLR (H.C.), 1). In this case, RJSC did not accept a return for annual general meeting. Mustafa Kamal, J. asked the counsel of RJSC to explain whether the Companies Act 1913 (now replaced with Companies Act 1994) allows the Registrar to reject documents, as they did in the case. The counsel of the RJSC was failed to show any provision in the Companies Act which allows the Registrar to do so.
The present act, the Companies Act, 1994, also does not allow RJSC to withhold, delay or refuse acceptance of any return.
In the same case, the Mustafa Kamal, J. opines that the law does not authorize the Registrar to act as a mini-court. He further indicates that if the Registrar thinks that a company violates any provision of the law, s/he can initiate appropriate legal proceedings.
So, the case is closed, right? I guess not, unfortunately.
RJSC cannot arbitrarily reject any return. However, the officials of RJSC, as a public official, cannot turn a blind eye to any act which s/he thinks might be illegal and not right. The officials of RJSC must exercise some discretion in performing his/her duties.
In Mousel and Co. (Chittagong) Ltd. vs. RJSC, (8 DLR 202), the High Court Division stats that RJSC, in the matter of recording resolutions or amendments of the Article of Association, a certain amount of discretion. The extent of such discretion will depend upon the nature of each case.
Finally, in simple words, RJSC cannot refuse to accept any document unless there is apparent fraud or forgery or illegality.