Condonation of Delay in Company Matters

Bangladesh’s Corporate / Company litigation legal framework is governed primarily by the Companies Act, 1994, which outlines the legal procedures for the incorporation, operation, and dissolution of companies. However, when disputes arise or corporate compliance needs to be rectified through judicial channels, parties must rely on specific sections of this Act and supplementary laws depending on the situation.

At Kazi Law Chamber, we provide end-to-end Corporate litigation support in matters related to company law, drawing upon decades of experience in representing both corporate entities and shareholders before the Company Bench of the Hon’ble High Court Division of the Supreme Court of Bangladesh.

Common Areas of Company Law Litigation

Our firm routinely handles applications, disputes, and compliance corrections, including but not limited to the following areas:

• Alteration of the Objects Clause in the Memorandum of Association

• Rectification of the Share Register

• Reduction of Share Capital 

• Condonation of delay in holding the AGM

• Condonation of delay in filing the Return of Allotment 

• Condonation of delay in registering Mortgages or Charges

• Mergers, Demergers, and Corporate Restructuring

• Mergers & Acquisition

• Protection of Minority Shareholders

• Judicial Winding-Up of Companies

Condonation of Delay in Holding the Annual General Meeting (AGM)

Under Section 81(2) of the Companies Act, 1994, every company is required to hold its Annual General Meeting (AGM) within the calendar year, typically by 31st December. The AGM is a statutory requirement where the company places its financial statements, appoints or reappoints directors and auditors, and allows shareholders to review and participate in governance matters. However, if a company fails to hold its AGM within this timeframe, it may approach the Court for condonation of delay.

Section 81(2) enables the Court, upon application by any member of the company, to either call or direct the calling of a general meeting. In doing so, the Court may also give any ancillary or consequential directions that it deems necessary to facilitate the holding of the AGM in a lawful manner.

Further guidance is found in Section 85(3) of the Act, which provides for circumstances where it becomes impracticable to call a meeting using the regular procedure. In such cases, the Court may, either on its motion or on application by a director or any member entitled to vote, order that the meeting be held in a manner it thinks fit. The law allows wide discretion to the Court to adapt procedures where strict compliance with the Articles of Association or the Act becomes infeasible. Once such an order is passed, any meeting held in accordance with that order is deemed legally valid and binding for all statutory purposes.

The procedure for obtaining such relief follows the usual course, i.e. the applicant issues a legal notice, followed by submission of a court application under Section 81(2) or 85(3). If the Court admits the application, it directs publication of notice in two national dailies, one in Bangla and one in English, providing stakeholders with the opportunity to object. An affidavit of compliance must be filed verifying the completion of publication and all preliminary requirements. The Court, upon hearing, considers whether the delay was justified, and if so, may pass an order allowing the AGM to be conducted either retroactively or in the near future, with instructions on procedure, quorum, and documentation.

Once the meeting is held as per the Court’s directions, the minutes and resolutions passed must be submitted to the RJSC within the statutory deadline. The company is expected to regularise its filings, including Form X for AGM notices, auditor reappointment forms, and any amendment or approval resolutions that were passed at the AGM. 

Condonation of Delay in Filing the Return of Allotment of Shares

Under Section 151, read with Section 396 of the Companies Act, 1994, it is mandatory for a limited company to submit a report of share allotments to the Registrar of Joint Stock Companies and Firms (RJSC) within 60 days from the date of allotment. The report must detail the number and value of shares allotted, the identity of the allottees, and the nature of consideration received, whether in cash, kind, or otherwise.

Non-compliance with this requirement leads to serious consequences. The law imposes a daily fine of up to one thousand taka for each day the violation continues, on every officer of the company who knowingly and wilfully participated in the default. This includes directors, managers, and company secretaries.

However, delays often result from administrative oversights, internal miscommunication, or procedural bottlenecks. To address such issues, Section 396 offers relief by allowing the responsible company personnel to file an application before the Company Bench of the High Court Division seeking condonation of the delay.

The Court has discretionary powers to grant relief if it is satisfied that the delay was unintentional, caused by oversight, or attributable to other just and fair reasons. Upon approval, the Court may pass an order extending the time allowed for filing the return of allotment. This ensures that the company can cure its default without incurring ongoing penalties, thereby restoring compliance with statutory obligations.

Such applications may be initiated by company directors, managers, or officers, provided they are authorised by the Board of Directors through a properly adopted board resolution. The process mirrors that used for other corporate filings under judicial supervision.

After passing the board resolution, the authorised officer files an application before the High Court, stating the reasons for the delay, supported by relevant documents such as board meeting minutes, auditor statements, and draft Forms IX/X. Upon admission of the petition, the Court may require publication of notice in two national daily newspapers to give notice to any interested party. Once this is done, an affidavit-in-compliance is filed. After the hearing, if satisfied, the Court may allow the delayed filing, usually directing the applicant to make a nominal donation to charity. The judgment must then be submitted to the RJSC, along with the overdue Forms and supporting records, for final registration.

Condonation of Delay in Registering Mortgages or Charges

Under Section 159, read with Section 171 of the Companies Act, 1994, any company that creates a mortgage or charge over its assets must register the same with the RJSC within 21 days from the date of creation. The types of charges requiring registration include those related to securing debentures, mortgages on property or receivables, pledges on uncalled share capital, and other security arrangements.

Failure to register the charge within the statutory period results in severe legal consequences. The mortgage or charge becomes invalid against the liquidator and any creditor in the event of winding up. This means that although the obligation to repay the underlying loan or liability remains enforceable, the secured creditor loses the benefit of the security interest, and the debt becomes immediately payable.

Importantly, if the mortgage or charge is registered correctly, it serves as constructive notice to the public. Anyone acquiring the company’s property is deemed to be aware of the encumbrance. Thus, timely registration protects both the company and its secured creditors from future legal complications.

However, where the company fails to register the charge within the 21-day window, or where there has been a clerical error or oversight, the High Court Division may grant relief. This relief is contingent upon the applicant demonstrating that the failure was due to accidental omission, inadvertence, or other just cause. The Court must also be satisfied that the interests of creditors and shareholders are not adversely affected.

Upon a successful petition, the Court may grant an extension of time or permit the omission to be corrected. The order may be subject to the payment of costs or compliance with additional conditions. However, the law is clear that such an order shall not prejudice the rights of third parties who may have acquired interests in the subject property before the actual registration.

Applications for such relief are generally filed by the company itself, represented by the Managing Director or any other officer authorised by board resolution. The application must include the original mortgage or charge instrument, draft Form XVIII, proof of non-registration, and an explanation for the delay. As with other company law applications, notice of the petition is published in two national newspapers, followed by submission of an affidavit-in-compliance. The Court then hears the matter and, if satisfied, allows the extension.

Once the Court order is obtained, the company must submit it, along with all relevant mortgage or charge documents and Form XVIII, to the RJSC for completion of registration. Failure to comply within the revised timeframe may result in the relief lapsing and the original default being reinstated.

Kazi Law Chamber regularly assists companies and stakeholders in preparing comprehensive petitions, resolving procedural barriers, and representing clients in securing timely judicial approval. Our corporate lawyers have extensive experience handling a wide range of matters before the Company Bench of the High Court Division, including alteration of the objects clause in the Memorandum of Association, rectification of the share register, reduction of share capital, condonation of delay in holding the AGM or filing the return of allotment, and registration delays involving mortgages or charges. We also advise on complex proceedings involving mergers, demergers, corporate restructuring, minority shareholder protection, and judicial winding-up of companies, offering strategic legal solutions tailored to each client’s business objectives.