THE INDEPENDENT EXAMINATION BOARD

GHANA SCHOOL OF LAW

FINAL EXAMINATION JUNE, 2016
TH EE OF (OUKSE: PROFESSIONAL LAW EXAMINATION - PART I
H I LE OF PAPER: COMPANY LAW AND PRACTICE
DATE: 22 JUNE 2016
TIME ALLOWED: Tl ll<i;i; (3) I lOURS 10.00 am - LOO pm

INSTRIK I IONS rO ( ANDIDA I ES :

1. Read llie instriietioii.s very eareriilly Ix-loie beginning to answer your questions. Be concise

and endeavour lo answer the required number ol'questions.

2. Answer Question 1 (which is compulsory) and 3 other qiie.stions from Sections B and C.

3. Students are required to answer at least one question each from Sections B and C.

4. Do not write your name on your Answer Booklet. Only write your your Index Number.

5. Adhere strictly to the instructions on the front cover of your Answer Booklet.

SECTION A

Question I (This is a compulsory question and carries 40 marks)

1. In January 1999, Asamoah set up in business as a sole proprietor supplying cakes and desserts
to local restaurants from Iqased premises. In January 2000, he formed Just Desserts Ltd and in

consideration of the transfer of the business and its assets, including the leased premises, to the

company, he was issued with GHCIO,000 equity shares in Just Deserts Limited. Asamoah was the

sole shareholder and one of two directors of the company .He signed a contract of employment

with the company and drew a salary. In December 2004, Asamoah made a loan to the company of

GHC25,00() l o buy new equipment. I'he Loan was secured by a Iloating charge over the

company's assets. In July 2006,Asamoah was injured in an explosion while at work

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and the building was badly damaged. Asamoah's insurance policy on the building and contents

was taken out in his name in January 1999.

In 2007,although the business was trading profitably, Asamoah decided that, in view of his

injuries, he would retire and dissolve the company.

Advise Asamoah on the following:

6. the validity of a one man company

7. His right to claim under the insurance policy for the fire damage to the property J

8. His claim against the company for compensation for his injuries

9. His right to claim as a secured creditor in respect of his floating charge and for arrears of

salary.

[40 marks]

SECTION B [Answer at least one question from this section]

2. GHP Ltd. was incorporated in June 1983 by Dr.Osei Otoo and George Odartey who were

the only shareholders and directors of the company. The company was registered with

5,000 equity shares of which 2,850 were held by Dr. Otoo who was also the Managing

Director. The other 2,150 shares were held by Odartey. In October 1986 Dr. Otoo died in

Germany. On 17 October 1986, Odartey, the surviving shareholder/director, held a

meeting of the company with the secretary in attciulancc and appointed Mr. Y Adjei as a

director of tiie company and transferred to him one of his, (Odartey) siiares. No notiees

were issued for the nieeUng and'there was no quorum at the meeting as reciuii eii by the

company's regulations. Between Oetoiier and Deeemher l'kS6, Odartey unilaterally

increased the company's shares ami had his own holding ineieaseil from 2,150 to 5,999.

He al.so issued 741 shares to Mr Y Adjei. In late November or December of 1986, the

family of the late Dr. ()too ohlaineil letters of administration to administer the estate of

Dr. Otoo. Advise the family of the late Dr. Otoo as to their rights?

(20 marks)

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 10. With the view of expanding their business, Gyegye Limited at the last Board meeting

decided that the east side of their factory should be pulled down in order to expand the

factory. Three construction companies including KYX Builders Ltd came up for

consideration at the meeting but the Board made no definitive decision. The Chairman

and the accountant who had been at the Board meeting knew how urgent the factory

expansion project was, proceeded to sign the construction contract with KYX Builders

Ltd. KYX Builders Ltd began work on the iactory prcmi.ses. Ms. Akipo who is a director

and shareholder of CJyegye Limited found out that the Board Chairman was a member of

KYX Builder^ Ltd. Ms. Akijio is unsure what to do as her complaint to the board of

Gyegye rdmited has yielded no results. Meanwhile, she has requested KYX Builders Ltd

to stop work. Advise Ms. Akipo.

(20 marks)

11. (a) Kwadwo and Kwesi are friends who recently graduated from the University of Ghana

and decided to set up a fashion design business. I laving considered their options, they

have decided to set up a limited liability company to conduct the business. They are

considering calling their business either 'F U Fashion' Limited or 'Great University

Trends' Limited

Advise Kwadwo and Kwesi on the process of incorporation and commencement of

business under the Companies Act, 1963(Act 179)

(10 marks)

(b) How, if at all, "does the Companies Act, 1963(Act 179) protect the general public, and in

particular investors in and creditors of companies?

(10 marks) [20 marks in

total]

SECTION C [Answer at least one question from this section]

5. Mellish L..I in MacDougall v. Gardiner (187.5-76) L.K. U N Dl i a( p .'^

stated thus; "In my opinion, if llic thing complained of is a thing which in

substance the majority of the company arc entitled lo di), il simicthing has

l'agc3or4
 been done irregularly which the majority of the company are entitled to do

regularly, or if something has been done illegally which the majority of the

company are entitled to do legally, there can be no use in having a litigation

about it, the ultimate end of which is only that a meeting has to be called, and

then ultimately the majority gets its wishes........................"

Discuss the above dictum of Mellish L.J. having regard to decided cases and relevant

laws.

(20 marks)

6. 'Salomon is in the shadow. It is still alive but no longer occupies the centre of the

corporate stage (SchmitoffC.M 'Salomon in the shadow' [1976] JBl 305) 'The veil of

incorporation is as opaque and impassable as an iron curtain' (Samuel, A, Lifting the veil

[1964] JBL 218)

Which statement more accurately reflects the current law on lifting the veil of

incorporation and why?

(20 marks)

7. Distinguish between:

12. Alternate directors and Substitute Directors

13. Allotment of Shares and Issue of Shares

14. Rights Issue and Capitalisation Issue

15. Private Liquidation and Official Liquidation

"* (20 marks)

8. Discuss how power is shared between the Board of Directors and "fhe''general meeting

under the Companies Act, 1963 (Act 179).

(20 marks)

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