Company Law


Company Law Article Index Company Law Commencement of Business: Section 39(1)) Section 9(3) of the Companies Code All Pages

Companies Code, 1963 (Act 179) Report of the Commission of Enquiry into the Working and Administration of Company Law in Ghana (1961) (Gowers Report) Paul Davies, Gowers Principles of Company Law (6th Edition) Robert R. Pennington, Penningtons Company Law (8th Edition) J.H. Farrar & B.M. Hannigan, Farrars Company Law (4th Edition) History of Company Law Gower, Chaps 2 & 3 J.E.A Mills, Ghanaian Courts and the Companies Code [1987-88] Vol XVI RGL Sources of Company Law Companies Code, section 3(1) Common Law & Equity, section 7, section 216 Gowers Report?Purposes & Consequences of Incorporation Legal requirement, section 5 Legal personality, section 24; Section 210

Limited liability, section 9 PropertyLegal action, section 263 Perpetual existence/succession Transferability of interest, section 294 Tax considerations Internal Revenue Act, 2000 (Act 592), sections 44, 45 and 83 Inequitable results? Lifting the Veil Legislative Inroads Judicial Inroads Promoters Definition: Section 12(1) Duties: section 12(2) Fiduciary Relationship: Section 12(2)(a) Utmost Good Faith: section 12(2)(b) Duty of Skill, Care & Diligence Use of Insider Information Validity of disclosure: section 12(4) Remedies Pre-Incorporation Contracts Definition: Section 13(1) Common Law Position Ghanaian Position: section 13 (1) & (2) Types of Companies

Company Limited by Shares Company Limited by Guarantee Conversion of Company Limited by Shares into a Guarantee Company, Unlimited Company: Public and Private Companies Differences External Company: Non-Ghanaian Company: Holding & Subsidiary Companies Associated Company: Other Forms of Business Organisation Sole Proprietorship Partnerships Voluntary Associations Statutory Corporations Cooperative Societies Building Societies Unit Trusts Joint Venture Franchise Agreements Mechanics of Incorporation Name of a Company: sections 15 and 121(1) Functions and Status of the Regulations:

13 Ultra Vires Doctrine: Remedies InjunctionAction for Breach of Directors DutiesOppression, section 218 Ultra Vires acts, Winding Up Avoiding Ultra Vires Transactions 14. Membership of Companies Definition: The Subscribers Other Members How Membership Ceases Rights of Members, sections 31 and 210 15. General Meetings Annual General Meeting Extraordinary General Meeting Notice, Quorum Proxies, Conduct, Resolutions, Ordinary Resolution Special Resolution Written Resolution: Voting, 16. Directors, Secretaries and Auditors Who are Directors Nature of office De facto and Shadow Directors Number of Directors (): Private v Public Companies Appointment Casual Vacancy Competence (Infants Share Qualification (section 183) Vacation of Office (section 184) Removal, sections 21(2), 185, 194 and 272 Types and Classifications of Directors Substitute Director (section 187) Alternate Directors (s.188) Executive Directors (section 192) Managing Director (s.193) and s.138(b), Presence of Directors in Ghana (section 189) Remuneration (sections 194 & 196) Meetings (sections 200-201)

Duties of Directors (sections 203-208) Duty to shareholders?. Duty to Creditors? Duty to employees? Conflict of Duty and Interest Sections 205-207 Remedies for breach of Directors Duties (sections 209 -210) Auditors Appointment- Companies Code, Section 134, Section 270 and 296 Role and Status- First Schedule of the Companies Code Duties and Powers- Companies Code, section 136 Removal, Section 135 Secretaries Companies Code, sections 190-192 17. Distribution of Power between Shareholders and Directors Limitations on Powers of Directors (sections 137, 202,203 and 204) Default powers of shareholders Section 137(5) 18. Majority Rule and Minority Protection The majority rules (The Rule in Foss v, Harbottle) Foss v. Harbottle (1843) 67 Exceptions

Illegality, Section 217 Oppression (section 218(1)(a)) Unfair Prejudice (section 218(1)(b)) Capacity and Interests Affected 19. Shares No Par Value, section 40 Issue of shares, section 22, 41 and 74 Payment for shares, sections 41 and 42 Classes, section 46 Preference Shares, section 48 Preferential Dividend, section 51(a) & (b) Cumulative Preferential Dividend, section 51 Non-Cumulative Dividend Preferential Capital Convertible Preference Shares

Redeemable Preference Shares, sections 56, 59-63 Ordinary shares Deferred Shares Employee shares Variation of Class Rights, sections 46, 47 and 231 Payment for shares, section 40, 42, 43 and 45 Transfer of shares, sections 95 to 102, and 294. 20. Debentures Definition- Section 80 of the Companies Code Kinds of Debentures Sections 84-86 of the Companies Code Fixed Charges Floating Charges Sections 87-90 of the Companies Code Banking Act, 2004 (Act 693) s. 82 Receivers and Managers Sections 88, 236 to 245, Natar v Boye (The Reciever) & Fyne Ltd [1992] 2 GLR 145 Yungdong v Roro [2005-2006]SCGLR 816 Charge over book debts; fixed or floating? Registration of Particulars of Charges Sections 107 to 118 of the Companies Code

Listed Companies 21. Raising of Capital Methods of Raising Capital Invitation to the public Placement, section 202 (1) (b) Rights Issue, section 202 (1) (b) Capitalisation/Bonus Issue/Scrip Issue (See section 74) Invitation to the Public, section 265, 266, 267 The Prospectus and the Statement in lieu of Prospectus Section 274, 275 of the Companies Code, Regulation 50, 51 and 52 of Securities and Exchange Commission Regulations 2003 (LI 1728) Contents: Sixth Schedule and Seventh Schedule of the Companies Code, Fifth Schedule of LI 1728 General or Restricted Invitations, sections 276(1) and 277 Experts (section 278) Registration of Prospectus (section 279). Section 9(j) of Securities Industry Law, 1993(PNDCL 333) Void Subscriptions, section 283 Minimum Subscription, section 284 Liability for Misstatements & Omissions Listing of Securities Role of the Securities and Exchange Commission, Securities Industry Law, 1993 (PNDCL 333), section 9. 22. Capital Maintenance The doctrine of capital maintenance Stated Capital: Companies Code, section 66 Payments, returns or distributions to shareholders Companies Code, section 75(1) Lawful payments, returns or distributions to shareholders Sections, 69, 70, 71,72,73,75,76,77 , 79 292 and 293 Unlawful payments, returns or distributions

Disguised Distributions Consequences of unlawful payments, returns or distributions Sections 71(2), 292 and 293 of the Companies Code Capital Reduction Sections 67, 75, 76, 77, 78 and 79 of the Companies Code Why reduce stated capital? Procedure for confirmation of resolution reducing stated capital. Prohibited Transactions in shares Section 56 of the Companies Code Financial Assistance for the purchase of shares Section 56(1) What constitutes financial assistance, form or substance? Exceptions to rule against financial assistance Section 58 of the Companies Code Purchase by a company of its own shares Section 56(1) (d) of the Companies Code Why buy own shares? Reasons for restriction. Exceptions Sections 59-65 of the Companies Code Voluntary contributions Section 24 and 202(1) of the Companies Code 23. Arrangements and Amalgamations [Mergers and Acquisitions] Sections 202(1) (a); 212 to 214; and 229 to 235 of the Companies Code GSE Takeover Code Securities Industry Law (1993) (PNDCL 333); Securities and Exchange Commission Regulations, 2003 (LI 1728). 24. Winding Up

Section 246 Official Liquidation and Private Liquidation Banking Act, 2004 s. 68 &69 Private Liquidation (sections 247 & 284); s.69 of Act 673 Steps Required: Declaration of Solvency, section 247 Special resolution Registration of Special resolution with Registrar of Companies Liquidator Definition, schedule 1 Appointment (section 250)Remuneration (section 251) Qualification (section 252)Status (sections 253 and 254) Powers (section 255) Duties (sections 256-258) Powers of the Court Stay of Proceedings (section 259) Dissolution (section 260) Dissolution without full winding up (section 261) Official Liquidation, section 1 of Act 180 S. 68 of Banking Act, 2004(Act 673); Act 738 s.26 and s.27 Special Resolution, section 2 of Act 180 Petition to the Registrar, section 3 of Act 180 Petition to the Court, section 4 of Act 180 Billy v. Kuwor (supra) The just and equitable principle Petition by Bank of Ghana, Banking Act 2004 (Act 673)sections 62& 68 Powers of Liquidator, section 9 of Act 180

Duties of Liquidator Section 36 to 42 of Act 180 Conversion of private liquidation to official liquidation