In the simplest form, the shareholders are the “owners” of the company while the directors are the “operators” of the company. While it may look like there is a stark distinction between “shareholders” and “directors” and they need to be two separate individuals, in most companies they are the same persons. In Bangladesh, it is usual to include a provision for “qualification” shares in the Articles of Association and in order to be a director, one needs to hold at least the qualification shares in the company. However, while all the directors are also likely to be shareholders of the company (in most scenarios), not all the shareholders are directors of the company. So, for example, if A,B, and C together form a company whereby C remains abroad most of the time, only A and B may choose to be directors. In such case, the company will have 3 shareholders and 2 directors only.
The directors constitute the Board of Directors of the company and the meeting between them is called “Board meeting”. In order to be compliant under the Bangladeshi law, there has to be at least 4(Four) Board Meetings in a year.
On the other hand, the meetings between the shareholders are called the “General Meeting”. Note that, law mandates that each year there has to be one “Annual General Meeting”. Any meeting of shareholder other than the Annual General Meeting is known as “Extra Ordinary General Meeting”.
At the operational stage, by law there are a number of decisions which have to be taken by the shareholders i.e. in a general meeting and except these matters, the Board of Directors is entitled to take decisions on all other issues.
Practically, it is the Managing Director who has the power to manage the day to day functions of the company and he acts by means of a delegation of power from the board of directors. In matters where the Managing Director is not empowered, the Board must meet to make a decision on it.