Here I would like to mention four important laws for bankers of Bangladesh which are mostly used in day to day banking operations. Those are:
1. The Companies Act-1994
The Companies Act 1994 (Act XVIII of 1994) has been enacted by the parliament of the People’s Republic of Bangladesh on September 11, 1994 and come into force on January 01, 1995. This act is mainly originated from the Companies Act 1913, which was adopted in Bangladesh in 1971.
The Companies Act- 1994 has eleven parts (404 sections) and twelve schedules.
The companies Act- 1994 defines “Company” by Sec 2(1) that “Company means a company formed and registered under this Act or an existing company”.
Common features of the company are-
a) Artificial Entity
e) Division of Capital
b) Voluntary Organization
f) Limited liability
c) Perpetual Succession
g) Separation of ownership from control
d) Common Seal
h) Transferable share
Types of companies are-
a) Companies limited by shares,
b) Companies limited by guarantee, and
c) Unlimited companies.
Companies limited by share are two types like – public limited company and private limited company. The Companies Act-1994 is one of the most important laws for bankers to know well since they are to deal with different type of companies in their daily business.
Following documents are required to open a bank account of a company along with their Board Resolution and Account Opening Form:
1. Memorandum of Association and Articles of Associations
2. Certificate of Incorporation
3. Certificate of Commencement
2. Contract Act-1872
A significant part of the laws related to banking is the law of contract, the relationship of banker and customer is a contractual one. The law of contract deals with agreements, which can be enforced through court of law. It is the most vital portion of business law since each business dealing begins from an contract among two or more persons.
The contract Act, 1872 identifies a contract as “an agreement enforceable by law. ” Therefore, in a contract there must be two parts such as “an agreement” and “the agreement must be enforceable by law”.
In accordance with Section- 11, following persons are incapable of entering into contract-
a) A minor.
b) Persons of unsound mind.
c) Persons disqualified from contracting by any law of the state.
3. Partnership Act-1932
Before 30th September, 1932, partnership businesses were structured and governed by the Contract Act- 1872. The partnership Act 1932 was in effect from 1st October 1932. The act is segregated into eight chapters and 74 sections.
According to the Partnership Act, “Partnership is the relationship between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all’.
Partnership can be classified as below-
Partnership- at- will: A partnership is referred to as a partnership- at- will while the partnership is not for a fixed period of time and when no provision is made as to when and how the partnership will come to an end. A partnership- at- will can be demolished at any time when any partner decides to do same.
Particular partnership: A particular partnership is one, which is made for a specific venture or a specific undertaking. This kind of partnership is normally demolished upon the completion of the venture or undertaking.
The Partnership Act- 1932 does not demand deed or agreement of partnership to be registered whereas it is optional, but registration makes the process legalized and partners interests become protected.
Minor as a Partner
A minor is incapable of becoming a partner in a firm since he or she is not capable of entering into a contract. Thus, if all the partners being agreed, a minor may only be allowed to get the benefits of an already existing partnership. In that case he/she is not personally liable for the debts of the firm, though his/her share in the firm’s property and profits will be liable. A person of unsound mind is also not eligible to become a partner in a firm.
Additional required documents for opening account in bank along wing their Resolution Letter and Account Opening Form are:
1. Deed of Partnership/ articles of partnership.
2. Certificate of registration of the firm.
3. Mandate/letter of partnership.
4. Negotiable Instrument Act-1881
The Negotiable Instrument Act is an important act to banker to know well. Date of commencement of Negotiable Instrument Act or N I Act is 9th December, 1881 which was promulgated on 1st March, 1882.
According to Section-13 of this Act “a Negotiable Instrument means a Promissory Note, Bill of Exchange or Cheque payable either to order or bearer”.
Demand Promissory Note
According to Section- 4 of N I ACT, a “Promissory Note” is an instrument in writing containing an unconditional undertaking, signed by the maker, to pay [on demand or at a fixed or determinable future time] a certain sum of money only to or to the order of a certain person, or to bearer of the instrument.
Bill of exchange
According to Section- 5, a “Bill of Exchange” is an instrument in writing containing an unconditional order, signed by the maker directing a certain person to pay [on demand or at a fixed or determinable future time] a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.
According to Section 6, a “Cheque” is a bill of exchange drawn on a specified bank and not expressed to be payable otherwise than on demand.
Mentionable that according to Section- 7
“Drawer” is the account holder,
“Drawee” is the Bank, and
“Payee” is the Beneficiary.
Section- 10 of the N I Act, protect the banker by the option of “payment in due course” which means payment in accordance with the “apparent tenor” of the instrument “in good faith” and “without negligence”.
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That’s all for today and i hope this post will be helpful to know needful laws for bankers of Bangladesh.