ISSUANCE OF NO OBJECTION FOR THE CHANGE OF DIRECTORSHIP A/C Company 1.

Mr. Z

Address….

Dear Sir,

Re:      ISSUANCE OF NO OBJECTION FOR THE CHANGE OF DIRECTORSHIP A/C Company 1.

We refer to your letter dated 26.04.2007 referred to us on the above subject.

Form perusal of your letter it appears that Company 2 (“Company 2”) has provided a lease facility of Tk. 1,45,40,000.00 only (“the Loan”) to Company 1. (“Company 1”). The present outstanding is Tk. 72,51,407.00 and so far  their payment of instalments are regular.

Now, Company 1 has proposed a change in the Board of Directors whereby Mr. X shall retire from the post of Director and transfer his shares in Company 1 to his daughter and wife. After the transfer, the daughter being Ms. A shall be elected as a Director of Company 1.

Company 1 applied for the change of the Board of Directors to the Registrar of Joint Stock Companies and Firms (“RJSC”) and RJSC has asked Company 1 to obtain a No Objection Certificate from Company 2.

In these circumstances, you have approached us to give our legal opinion as to whether it will be in the interest of Company 2 to provide the No Objection Certificate for the change of directorship of Company 1 during the subsistence of the Loan.

OUR OPINION:

We are of the opinion that, whether or not Company 2 shall provide the No Objection Certificate, for the change of directorship of Company 1 during the subsistence of the Loan, is a commercial decision to be decided by Company 2. However, Company 2 should only give the said certificate if doing so will not diminish Company 2’s ability to realise the Loan.

What is important is – whether Mr. X has executed personal guarantee in favour of Company 2 in connection with the Loan. If so, then the decision as to whether or not to release him from his personal guarantee is more important as this will reduce Company 2’s chances of recovery. Therefore, Company 2 should consider the issue of personal guarantee more seriously.

If you have any further inquiries please do not hesitate to contact us.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”