High Court’s Important Judgement on Rectification of Company Share Register: (Section 43 of the Companies Act)
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The observation was made in the judgment delivered in ‘Abu Taber and others vs Newtex Group of Companies and others’. The case, Company Matter No. 191 of 2017, was decided by a single bench of the High Court Division comprising Justice Md. Taufiq Enam on 15 September 2026. The full judgment was published on the Supreme Court website on 1 October 2026.
Background of the Case
The deceased Abul Kasem Babul was a shareholder in four companies. Following his death in 1999, a succession certificate was issued on 16 May 2000 in favour of his wife and children. Subsequently, a suit was filed seeking cancellation of the certificate, and it was cancelled in 2012. A fresh succession certificate was issued in favour of the applicants on 8 February 2012.
The applicants claimed that the deceased Babul’s father, Haji Abul Khayer, was also an heir and that the applicants acquired an interest in the shares through him. They therefore sought inclusion of their names in the shareholders’ registers of the companies.
On the other hand, the companies argued that, on the basis of the 2000 succession certificate, transactions had subsequently been completed through a memorandum of understanding, arbitration proceedings and share transfers. The concerned parties had also paid consideration for those shares.
High Court’s Observations
The High Court observed that although the court has wide powers under Section 43 of the Companies Act to rectify a company’s register of members, this does not mean that every complicated civil dispute relating to a company must be resolved under that provision.
The Court noted that questions of title or ownership may, where necessary, be determined in proceedings for rectification of the register. However, where a dispute involves complicated questions relating to cancellation of earlier agreements, validity of arbitration proceedings, transfer of shares involving minors, fraud, succession, or competing claims of title among several parties, a proper civil proceeding may be necessary for their determination.
Effect of Cancellation of a Succession Certificate
The High Court observed that, under Section 370(2) of the Succession Act, shares in a company are treated as ‘securities’. Sections 381 and 386 of the same Act provide certain legal protections for transactions carried out in good faith on the basis of a succession certificate.
Accordingly, the subsequent cancellation of a succession certificate does not, by itself, render every transaction carried out in good faith during the period when the certificate was operative retrospectively invalid. The applicants would also have to establish that the concerned companies were aware of the defect in the certificate or that the transactions were not carried out in good faith.
Delay Also a Relevant Consideration
The Court observed that although Section 43 of the Companies Act does not prescribe a specific limitation period, prolonged delay cannot be completely disregarded. Particularly where third-party rights have arisen, consideration has been paid, and names have remained in the company’s register for a considerable period, the Court must exercise caution in granting the discretionary remedy of rectification.
In the present case, an application under Section 43 was filed in 2017 challenging transactions dating back to 2001. In the meantime, the applicants became aware of the original succession certificate in 2008, and after its cancellation in 2012, obtained a new succession certificate.
Decision of the Court
The High Court held that the applicants had failed to establish that the names presently appearing in the companies’ registers had been entered “without sufficient cause.” The Court also found that, in 2001, the companies had an operative succession certificate before them and there was insufficient evidence to establish that they were aware of any defect in the certificate or of a superior claim by another person.
Furthermore, granting the relief sought by the applicants would have required determination of several complicated issues, including the memorandum of understanding, arbitration proceedings, transfer of shares, the legal capacity of minors, and the rights of the persons concerned. The Court held that such issues were not appropriately determinable merely through an application for rectification of the company register.
Accordingly, the High Court dismissed the application under Section 43 of the Companies Act, 1994. However, the Court made it clear that the judgment did not finally extinguish any independent substantive right or claim that the applicants might have. They would remain at liberty to pursue an appropriate proceeding in accordance with law.
The Court made no order as to costs and vacated any subsisting interim order, if any.
Legal Significance
The case establishes that although the power to rectify a company’s register under Section 43 of the Companies Act is broad, it is not a substitute for proceedings designed to determine every complex dispute involving title, succession, contracts or arbitration.
A transaction carried out in good faith on the basis of a succession certificate does not automatically become invalid merely because the certificate is subsequently cancelled. However, a party claiming an independent substantive right may pursue an appropriate legal remedy through a separate proceeding.
BD Law Post/Masum
