Administrator in Private Companies

October 26, 2012 in Publication

Private companies registered under the existing Companies Act 1994 is an artificial person having all the legal character of a Person under the meaning of being a Citizen of the country and as per the Constitution of the Peoples Republic of Bangladesh it has the same constitutional rights guaranteed under the Constitution called as Fundamental Rights specifically Article 42. In a general case a person suppose Mr. Karim doing business and someone invested in his business accruing some legal rights in benefits of the business can only go to the court in case of any fraud or illegal activities done by Mr. Karim but the Government has no right to interfere with the business as everyone has the fandamental rights to do business as well as protect his property. In the year 1994 the Companies Act ( Act XVIII of 1994 ) has been enacted and it was an amended form of the previous Company Act 1913 and very resonably in the earstwhile act or present act there is/was no such provision allowing any third party like Government to make interference in to the affairs of the companies though with the permission of the Court some sort of measures could have been taken but not directly. In the recent days an amendment in the Companies Act 1994 has been approved by the Cabinet which is yet to be enacted has already raised a huge protest from almost all concerned except some vested quarters and the undergoing amendment to

After Section 202 of Companies Act 1994, Section 202Ka will be inserted as follows:

202 (Ka) Appointment of an administrator by the government: (1) Whatever is said in this law or any other law, the government will have the authority to abolish any board of directors of any company registered under this law and appoint one or more administrators for a certain period through gazette notification, specifying the causes in writing, if it seems to the government that

(Ka) (I) the business of the company is being run to cheat its lenders, shareholders or any other person, or its administrative activities are being run for fraud or an illegal aim or to harass any member, or the company has been formed with the aim of cheating or running illegal activities; or

(II) The persons involved with the formation of the company or managing it have been accused of fraud, committing illegal activities, or misconduct to any other member;

(Kha) It is necessary to protect public interest or interest of the shareholders or lenders.

(2) No administrator can be appointed under sub-clause (1) without giving scope to the board of directors to explain the activities of the company.

(3) The qualifications, tenure, scope of work, and removal of the administrator/s will be set on a case-to-case basis through a gazette notification by the government.

(4) The appointed administrator/deputy administrator/assistant administrator will be considered as a public servant under section 21 of Code of Criminal Procedure of 1860.

(5) If anybody is affected by any activity done with good intentions by an administrator or any official or an employee or anybody empowered by him under this law, or there is any such possibility, it will not be cognizable under any existing law of the land.(Translated by The Daily Star).

In a plain reading of the amendment it is apparent that the amendment is not proposed or framed for only the MLM companies like DESTINY but applicable to all companies which is not only unconstitutional but malafide too as proposed subsection (5) clearly gives indemnity to all activities of the Administrator appointed by the Government. In the present Act there are somany safeguards enumerated in the law and almost all those can be availed with the Court’s permission so it is at all not necessary to set the new amendments. In all over the world directly or indirectly the governments controling the businesses a little or wide but those country are in a good reputation where the peoples doing their business without uncalled for interferences but by attempting the new amendments the Bangladesh Government is trying to take a free license for controling the business as well as wealth of the private sector which is absolutely against the basic structure of democracy. Sections 195-221 or 233 of the Companies Act and even in some special circumstances the Government through the Registrar could have interfered in the affairs of the company then it is needless to say that the attempting amendments are not justified as the same is violation of fundamental rights as well as the constitution.