Question

1a) Mrs. Luiz is one of the Directors of Oak Ridge Limited. The Company wants to appoint a
Company Secretary. The position has been vacant since incorporation of Oak Ridge
Limited is obliged to appoint a Company Secretary and also what the duties of the
Company Secretary are and by whom this company officer should be appointed. Advise
Mrs. Luiz on these questions in writing [15 marks]
A company or organisational entity, be it private or public, or a statutory body, is a
legal fiction. It is a person defined as such by law. Once formed, a company becomes a
corporate citizen and enjoys independent existence from its owners. Section 169 (2) of the
Companies Act [Chapter 24:03] states that “every company shall have at least one
secretary ordinarily resident in Zimbabwe”. It therefore implies that companies and other
business entities such as listed companies and or unlisted companies, holding companies,
subsidiary companies, and even companies formed to be special purpose vehicles, joint
venture companies, whether a company is formed as a result of a merger or acquisition, or
even a small to medium enterprises, all business entities are required by law to have at least
one secretary ordinarily resident in Zimbabwe. Oak Ridge limited in obliged to appoint a
Company Secretary.

With the increasing focus in the recent years on corporate governance, the role of the
company secretary has grown in importance. The company secretary has an important
responsibility in the company administration and he or she therefore plays a three-fold role
as a senior statutory officer, coordinator and as an administrator. All directors should have
access to advice and services of the Company Secretary, who is responsible to the Board for
ensuring that
1. Board procedures are followed
2. Applicable rules and regulations are complied with, help ensure that the company obeys
the law and its own constitutional rules; and • prepare and maintain the associated
company documents
3. Carry out the directors’ instructions

As one of the organisation’s principal officers, the company secretary is responsible for the
strict compliance with various provisions of the Companies Act and best practices on
corporate governance and leadership. A corporate secretary also holds a high
administrative position in the company and it is his or her duty to ensure that the policies
and decisions of the board are effectively implemented. The Board chairperson and the
board will look to the company secretary for guidance on what their responsibilities are
under the rules and regulations to which they are subject and on how these responsibilities
should be discharged.

Some of the Administrative roles the Company Secretary will likely include:
1. A maintaining the company’s registers including those of the members, the directors
and secretaries and the interests of the directors and secretaries;
 2. Arranging annual and extraordinary general meetings of the company and
circulating members with the documents for those meetings;
3. Ensuring the security of the company’s legal documents, including for example, the
certificate of incorporation and memorandum and articles of association
4. Arranging meetings of the directors and the shareholders. This responsibility will
involve the issue of proper notices of meetings, preparation of agenda, circulation of
relevant papers and taking and producing minutes to record the business transacted
at the meetings and the decisions taken;
5. Making the company’s registers, minute book and other similar documents available
for inspection by the board and the public;
6. Sending updated information and documents on time to the Companies Registration
Office and to other bodies;
7. Publishing legal notices in the media;
8. Keeping custody of the company seal; and
9. Providing the directors with legal and administrative support

The Company Secretary Legal duties include:

1. The company secretary must, together with one or more directors:
2. Complete, sign and send the company’s annual return to ZIMRA
3. Certify that the financial statements attached to the annual return are true copies of the
originals
4. Verify the statement of the company’s assets and liabilities if the company is in
liquidation or receivership.

Appointment of Company Secretary

The first company secretary must give their written consent to act as secretary. Usually, the
directors appoint and ensure replacement of company secretaries. A director will often act as
company secretary
Question
2a) What is a pre incorporation contract [5 marks]
Prior to incorporation (that is registration with the Companies Registration Offices), a company
does not exist and it cannot perform juristic acts. In, addition no one can act as the company’s
agent, because an agent cannot act for a non-existent principal. However, the legislature has
foreseen that it may be necessary from a business perspective for a person to conclude a
contract for a company that is not in existence yet.
Section 47 of the Companies Ac states that: “Any contract made in writing by a person
professing to act as agent or trustee for a company not yet formed, incorporated or
registered shall be capable of being ratified or adopted by or otherwise made binding upon
and enforceable by such company after it has been duly registered as if it had been duly
formed, incorporated and registered at the time when the contract was made if…...”,
therefore a pre-incorporation contract is entered into by the corporate promoters, who form
the company by filing its Articles of Incorporation. Since the corporation has not been formed
yet, it cannot be a party to the agreement. If the corporation is not formed or if it fails to adopt
the agreement, the promoters can be held personally liable for any breach of the agreement.
Persons who wish to form a company will have to give thought to the assets that are to be
acquired by the company and the methods that are to be adopted to vest rights to those assets
in the new company. In practice, companies not yet in existence often experience the need to
acquire certain rights and liabilities before incorporation (such as securing a lease contract or
purchasing property/offices) to ensure that the company will effectively be able to commence
business after its incorporation.
 The problem that arises for unincorporated companies is that they do not yet have legal
personality – as a result of their non-existence – and thus they cannot enter into any
agreements themselves in an attempt to secure certain benefits. The most apparent solution
would be for the company’s promoters or agents to contract in the company’s name or on
behalf of the company in order to incur rights and liabilities for the company during the period
before incorporation or registration

Question
b) Why would a company’s Promoter want to enter into a pre-incorporation contract [10
marks]