Mr. Justice Sheikh Hassan Arif and Mr. Justice Mohammad Ullah of the High Court Division of the Supreme Court of Bangladesh, in the Writ Petition No. 6572 of 2012 held that a shareholder of a company is not a necessary party in the Artha Rin Suit, in view of the provision of sub-section (5) of Section 6 of the Ain, 2003.
Their Lordship further stated that a company incorporated under the Companies Act is a juristic person. A shareholder is not the owner of the company or its assets. The company itself owns its property. A share-holder is only entitled to the dividends, if declared. On winding up, however, after payment of its debts, he is entitled to participate in the distribution of its assets. It is no doubt, the liability of a share-holder, whether he is the Chairman of the Board of Directors, or a director, is only to the extent of the face value of the shares he holds, nothing more than that. But a share-holder of a company is not a necessary party in the Artha Rin Suit. The chairman or the directors or any other guarantor who executed the charge document in respect of payment of loan are liable and are necessary parties in the Artha Rin Suit for the purpose of effectual adjudication of the matter between the loanee- company and the financial institutions. Chairman or director, if he did not execute any charge document, he or she shall not be liable for the loan save and except their liability to the extent of the face value of the shares he/she holds.
The aforesaid judgment was reported in the 6 SCOB [2016] HCD 102.
One Response
Great article! I appreciate the clear and insightful perspective you’ve shared. It’s fascinating to see how this topic is developing. For those interested in diving deeper, I found an excellent resource that expands on these ideas: check it out here. Looking forward to hearing others’ thoughts and continuing the discussion!