INTRODUCTION:

What is Company Law?

It is that branch of the law that deals with the formation, regulation and dissolution of
Companies.

What constitutes Company Law has predominantly been shaped by;

(a) Statutory Provisions;
(b) Judicial Decisions; and
(c) Theoretical underpinnings of the Statutory and Judicial decisions.

WHAT IS A COMPANY?
 A Company does not lend itself to a single, simple definition. This is borne out of the fact that
Companies can exist in varied forms and shapes.
 FEATURES OF A COMPANY
i. It is an artificial legal person;
It may own property; enter into contracts; inflict and suffer wrongs; sue and
be sued.
ii. It has a separate existence quite different from its Directors and Members;
- SALOMON V SALOMON –
iii. It has a Common Seal;
iv. It has a (potential) perpetual existence;
 The death or change of members does not affect its continued existence.
v. It is managed by Directors by passing resolutions at Directors meetings.
 TYPES OF COMPANIES:
 Broadly, the Companies Code, 1961 (Act 179) (now referred to as the Companies Act)
has two (2) categories of Companies;
i. Limited Liability Company;
a. Limited by Shares;
b. Limited by Guarantee.
ii. Unlimited Company.

 The Companies Act also makes a distinction between;

i. Private Company; and
ii. Public Company.
 LIMITED LIABILITY COMPANY

 It is also called a Company limited by Shares, and the most common of Companies.
 The Liability of its members is limited to the amount, if any that is unpaid on the Shares
respectively held by them.

 Advantages:

 Provides protection to shareholders against creditors.

 Allows shareholders to diversify holdings and become shareholders in several

companies knowing their liability is limited to the investment.

 Reduces risk involved in separation of ownership and control

 Disadvantages

 Unfavourable to creditors

 Encourages irresponsible investments; shareholders abandon insolvent company and

form a new company

 Renders Directors and Shareholders liable to Creditors through Guarantees.

LIMITED BY GUARANTEE COMPANY

 The liability of its members is limited to such amounts as the members may respectively
undertake to contribute to the assets of the Company in the event of winding up.
 They are usually non-profit making and mostly concerned with charitable or
educational purposes.
 UNLIMITED COMPANY

 It does not have any limitation on the liability of its member.

 Though it enjoys all the features and advantages of incorporation, its

members are liable to the last pesewa of the Company’s debts.

 PRIVATE COMPANY

 It Regulations imposes the following restrictions and prohibitions;

i. It restricts the right to transfer its Shares, if any;
ii. It limits the total number of its Members and Debenture holders to fifty (50) – in
computing the number, people who presently or previously were in the genuine
employment of the Company, and became Shareholders or Debenture holders while in
the employment are not counted as being part of the number.
 It prohibits the Company from making any invitation to the public to acquire Shares
or hold Debentures of the Company; and
 It prohibits the Company from making any invitation to the public to deposit money
with it either for fixed periods or payable at call, whether bearing interest or not.
 PUBLIC COMPANY

 It is any Company other than a Private Company.

 A key feature is its listing on the Stock Exchange.

Thus by permutation, one can say that there can be six (6) types of Companies under
the Companies Act;

i. Private Company limited by Shares;

ii. Private Company limited by Guarantee;
iii. Unlimited Private Company;
iv. Public Company limited by Shares;
v. Public Company limited by Guarantee; and
vi. Unlimited Public Company.
 OTHER BUSINESS ENTITIES – SOLE PROPRIETORSHIP

 It is an unincorporated business usually owned and managed by one person

 There is no strict requirement to register the business
 Where the business is other than the real name of the sole proprietor, the
name must be registered as a business name – the registration of business
names Act, 1961 (Act 151)

 Features
 It has no separate legal identity
 Unlimited liability
 No separation between ownership and management
 No separate property
Advantages:
 No formalities
 Total control
 No sharing of profits
 No corporate tax
 Ease of ending business

Disadvantages:
 Unlimited liability
 Difficulty in management
 Limited capacity to raise capital
 No perpetual succession or existence
 OTHER BUSINESS ENTITIES - PARTNERSHIP
¶DEFINITION: It is the association of two or more individuals but not more than
twenty (20) carrying on business jointly for the purpose of making profit. – s.3(1)
of the Incorporated Private Partnership Act, 1962 (Act 152).
ᴥ The following are not considered as Partnership by Act 152;
1. Associations & Body Corporates;

(a) Association of members of a Company;

(b) Company, body corporate or unincorporated association;

(c) Body corporate formed under a foreign law

(d) Joint venture without a firm name

2. Family or co-ownership of property;

3. Remuneration by a servant or Agent by a share of the profits of a business

 ¶ FORMATION OF PARTNERSHIPS
 A Partnership can be of two types;
(a) Trading Partnership;
(b) Non-Trading Partnership.
 A Partnership is formed by registration with the Registrar General of the
Partnership Agreement.
 The Partnership Agreement must contain the following;
(a) The name of the Partnership;
(b) The general nature of business;
(c) The Address and Principal place of business;
(d) Names, Address and occupations of the Partners;
(e) Date of commencement of the Partnership;
(f) Particulars of any charges over assets of the partnership requiring registration
ᴥ Basis of refusal to register a Partnership by the Registrar
The Registrar would refuse to register a Partnership on the following grounds;
(a) it consists of more than twenty (20) partners or has a body corporate as a
member;
(b) carrying out unlawful business;
(c) misleading or undesirable name;
(d) a member lacks capacity – infant, unsound mind, bankrupt, guilty of fraud or
dishonesty.
(e) incomplete, irregular, or inaccurate information on registration form.
ᴥ once the Registrar is satisfied that all requirements have been complied with, he
issues a certificate, which is renewable yearly.
 ᴥ Effects of Registration
(a) Firm becomes a body corporate capable of exercising the powers of a natural
person.
(b) Each partner is jointly and severally liable with the firm and other partners for
the debts and obligations of the firm, while he remains a partner.
(c) Each partner is entitled to an indemnity from the firm and contribution from
co-partners.
(d) The Firm must carry out business under the registered name only.

(e) It must have a name plate indicate the names of the partners.

(f) It must exhibit its registration certificate

 ¶Implied Powers of Partnerships (Trading)
(1) Buy or sell goods for the purpose of the business;

(2) To give legally binding receipts;

(3) Employ and dismiss employees

(4) To draw Cheques on behalf of the Firm

(5) Pledge goods and assets of the partnership as collateral

¶Implied Powers of Partnership (Non -Trading)

(1) To contract and pay debts on behalf of the firm;

(2) Draw, accept or discount bills of exchange or other negotiable instruments;

(3) Borrow money on the firm’s behalf

 ¶ TYPES OF PARTNERS
(1) General Partner: he is a general agent of the partnership and has authority to bind the
firm in transactions and;
(a) takes active part in managing the partnership;
(b) has authority to draw Cheques, borrow and pledge security;
(c) contributes his share of capital
(d) jointly and severally liable with other partners for liabilities of the partnership.
(2) Quasi or Nominal Partner:
(3) Dormant Partner
(4) Salaried Partner: paid a salary as compared to share in the profit
(5) Incoming Partner: admitted into the partnership
(6) Outgoing Partner: leaving the partnership
 ¶Acts that bind the Firm:
(1) Acts authorised expressly or impliedly or subsequently ratified by other partners.
(2) Acts done in the usual way of business of the firm, unless partner acted without
authority, and known by the other party.
(3) Acts unconnected to the Firm’s business are not binding on the Firm unless partners
authorised or acts ratified.
(4) Acts done in contravention of restrictions imposed on a partner are not binding in the
Firm if the other party knew of the restriction.
(5) Any act done or instrument executed that relates to the business of the firm or shows
an intention to bind the firm by a person authorised to do so is binding on the firm.
 ¶Nature of liability of the firm and partners
(1) Every Partner is jointly and severally liable with the firm and other partners for debt whilst he
is a partner.
(2) Incoming partner not liable for existing debts

(3) Outgoing partner is liable for debts incurred whilst a member until discharged

(4) A person who deals with a retired partner with the belief that he still is a partner is entitled to
so treat him until he has notice of retirement.
(5) A person who deals with a firm prior to retirement of a partner is not deemed to have notice of
the retirement unless he has actual notice.
(6) The estate of a deceased partner is not liable for debts of the firm incurred after his death. Same
as one declared bankrupt or retired.
ᴥ Holding Out – Quasi Partner
ᴥ Revocation of continuing Guarantee –upon change in composition, Guarantee revoked as to
future commitments unless partners agree to the contrary.
ᴥ Judgment against the firm or a partner seperately
 ¶Relation of Partners with each other (Rights & Duties)
(1) Fiduciary relationship – to firm and co partners
(2) Disclosure of full information to all partners
(3) Account for secret benefits for use of firm’s name and or property
(4) Account for and pay for profit from competing business
(5) Equality – profits, capital and losses
(6) Paying more than agreed capital, entitles partner to 5% interest per annum on excess
contribution; after determination of profits
(7) Indemnity by the firm to partners for acts done in the ordinary course of business of the firm or
for preservation of business property.
(8) Every partner may be part of management but without remuneration
(9) New partners join with the consent of existing partners
(10) Decisions are by majority vote, except to change the nature of business which must be
unanimous.
(11) Access to partnership books of accounts
 ¶Cessation by a Partner
(a) Death

(b) Alien enemy at a time of war

(c) Insolvency

(d) By a Court Order

(i) Permanently of unsound mind;

(ii) Permanently incapable of performing his part of the partnership Agreement

(iii) Guilty of conduct considered bad for the nature of business of the firm

(iv) Willful and consistent breach of partnership Agreement

(v) Circumstances render it just and equitable for a person to cease to be a partner

(e) Retirement

(f) Resignation
 ¶Action by continuing partners when a partner ceases to be a Member
 Where a upon the cessation of a person being a partner, the partnership is left with
only one partner, the continuing partner must within 6 months;
(a) Admit another member or member to the firm or
(b) Commence winding up proceedings – voluntarily or through Court.

Where the continuing partners are more than two (2), then they must within six (6) months;
(a) Admit into partnership persons who have acquired the interest of the former partner(s)

(b) Purchase the interest of the former partner at a valuation;

(c) Commence winding up proceedings

ᴥ Apportionment of premium: - paid upon entering. To be repaid upon winding up, save where
winding up due to misconduct of payee, or cessation is by agreement without provision for
repayment.
 ¶Winding up of a firm
(1) Voluntary liquidation;
(2) Order of the Court;
(3) Insolvency proceedings.

ᴥ Voluntary Winding up
(1) Unanimous Agreement of Partners followed by a notification to the Registrar.

(2) Authority of partners to bind the firm continues so as to complete transaction started but not
finished before the commencement of the winding up process.
(3) If a Partners realises that the firm cannot pay its debt in full within 6 months from
commencement of winding up, notice must be given to the Registrar, which will be registered
and published in the gazette.
(4) Twenty-one (21) days after expiration of 6 months from commencement, a statement as to
whether all debts have been paid in full must be submitted to the Registrar for publication in
the gazette. – failure may lead to imprisonment for 6 months.
 ᴥ Winding up under a Court Order
 A partnership may be wound up under an order of the court, on the application of;
(1) A Partner;
(2) A former Partner or his representative upon an amount owed the former partner
by the firm
(3) Registrar, before Insolvency proceedings have been commenced against all the
Partners.
ᴥ Winding up by Insolvency Proceedings
This is usually at the instance of Creditors of the Firm, to whom the firm has failed to pay
its debts. The proceedings may be commenced on the following grounds;
(1) The Creditor is owed a minimum of GHC1,000.00
(2) The firm has given notice it is suspending or about to suspend payment of its debt
(3) The firm’s property has been attached in execution of a judgment (sold or retained for
21 days)
(4) Any of the firm’s creditors is entitled to go into execution as a result of a judgment
obtained within the past 7 days to the application.
 ¶Effects of an Insolvency Order
 It makes all the Partners bankrupt whether they are solvent or not.
 The joint estate is applied in the first instance to pay joint debts; any surplus is apportioned
according to extent of interest in the joint estate.
 The separate estate is applied in the first instance to pay separate debts; any surplus is applied to
pay joint debts as part of the joint estate.
 Losses (other than deficiency in capital) are paid out of profit, then out of capital, and then
individually based on how profits are shared.
ᴥ Application of Assets of the firm
(1) To pay debts and liabilities owed to third parties;
 FORMATION OF A COMPANY
i. Who may form a Company?
Any one or more persons may form an incorporated Company by
complying with the Companies Act.

i. Promoters – S. 12 (1)
 Any Person who is or has been engaged or interested in the formation of
a Company.
 This however does not include a person who is acting in a professional
capacity for the persons who are interested in forming the Company.
i. Duties of the Promoters – S. 12 (2) & (3)
Until the complete formation of a Company, a Promoter owes the
following duties to the yet to be formed Company;
a. He is to stand in fiduciary relationship to the Company;
b. He must observe utmost good faith towards the Company;
c. He must compensate the Company for any losses suffered due to his
failure to perform his duties;
d. Account for profits for properties where the acquisition should have
been for the Company and not for the Promoter.
 Pre-incorporation Contracts – S. 13
 A contract or transaction that purports to be entered into before the incorporation
or a contract or transaction by any person on behalf of a Company prior to its
formation.
 A Company may ratify a pre-incorporation contract or transaction. If so ratified
the Company shall become bound, and shall equally benefit therefrom.
 Prior to ratification by the Company, the person who purports to act on behalf of
the Company in the absence of an express agreement to the contrary shall be
personally bound and also be entitled to any benefit of the pre-incorporation
contract.

KELNER V BAXTER
 REMEDIES AVAILABLE TO THE COMPANY
 Ratification
 Company must have been incorporated
 There must be full disclosure of all material facts known to the Promoter
 Actual ratification by the appropriate organ(s) of the Company
-Panagiotopoulos v Plastico / Jadbranska Slobodna v Oysa Limited

 Novation

 Rescission

 Compensation
 The Formation Procedure
In order to form a Company, the Promoters must deliver to the Registrar of Companies for
registration a copy of the proposed Regulations of the Company.
 Unless the Registrar is of the opinion that;
i. The Regulations do not comply with the Companies Act; or
ii. The Company is being formed for an illegal purpose; or
iii. Any of the signatories is an infant or of unsound mind; or
iv. Any of the Directors is incompetent to act as such,

he will register the Company and issue it with a certificate of incorporation, and gazette
the registration.
 The Regulations
 It is the fundamental document that governs the activities of the Company. In a sense it
can be said to be the Constitution of the Company or its Charter.
 The Regulations of the Company serves the following functions;
i. It sets out the purpose of the Company.
ii. It defines the limitations of the powers of the Company.
iii. It sets out the organs and defines the duties, rights and powers of the organs and the
members of the Company.
iv. It defines the inter-relationship between the organs, members, officers and the
Company.
v. It spells out how the Company’s internal affairs may be changed from time to time.
 In some jurisdictions, what we call the Regulations in Ghana is split into two (2)
documents;
i. Memorandum of Association; and
ii. Articles of Association.
 The Regulations of the Company (MEMO OF ASSOC) must contain the following;
i. The name of the Company with “Limited” as the last word for a Company limited by shares;
ii. The nature of authorized business;
iii. A statement that the Company has all the powers of a natural person with full capacity;
iv. The names of the first Directors of the Company;
v. A statement that the powers of the Directors are limited by Section 202 of the Companies
Act;
vi. In the case of a limited liability company, a statement that the liability of its members is
limited;
vii.For companies with shares, the number of shares with which the Company is to be
registered;
viii.In the case of a Company limited by Guarantee, a Declaration by the Directors that the
income of the Company will be applied solely towards the promotion of the objectives of the
Company;
ix. Any other lawful provision relating to the Constitution and Administration of the Company.
i. Effect of Registration of the Regulations – S. 21
 The Company’s Regulations upon registration has three (3) effects;
i. It constitutes a contract under seal between;
a. The Company and its members;
b. The Company and its officers;
c. The members and the officers of the Company;
d. The members of the Company inter se (among themselves);
e. The officers of the Company inter se.
ii. It vests power in any person stated by the Regulations to appoint or remove any Director or Officer of the
Company, regardless whether such person is a member or not. This power is usually conferred on
Debenture holders or their Trustees.
iii. Any suit by a member or officer for a breach of the Regulations should be brought in a representative
capacity on behalf of oneself and the member or officer who may be affected. This is to prevent
multiplicity of actions.
i. Alteration of the Regulations – S. 22
 The Regulations of a Company are not cast in stone and can be changed by members by adding, deleting
and replacing the Regulations through a Special Resolution (75%).
 Though a Special Resolution is always required, in certain instances there are additional requirements;
o Company’s Name: - this requires the consent of the Registrar.
o Number of Shares:-
o Company’s business or objects: - this requires prior notice to Debenture holders secured by a
floating charge. Recourse may also be had to the Court for approval regarding an arrangement or
amalgamation of the Company.
o Classes of Shares: - changing the rights attached to any different classes of shares requires the prior
written consent of at least seventy-five percent (75%) of the holders of shares of that class.
o Regulations itself:- where the Regulations restrict or excludes the Company’s power to alter or add
to the Regulations of the Company or imposes conditions for the alteration or addition thereto, the
Regulations can be altered or added to only on arrangement or amalgamation.
i. Limitation Regarding the alteration of Regulations
 No alteration shall conflict with the Court’s order to providing remedy against
oppression.
 The altered Regulations shall contain the statements and Regulations required to be
contained in Regulations (S.16).
 Unless a member agrees in writing to do otherwise, a member shall not be bound by an
alteration that is made after the he became a member which seeks for the member to;
i. Take more shares;
ii. Increase his liability to pay more money to the Company;
iii. Increase or impose restrictions on the right of the members to transfer his shares.
 No alteration shall have the effects of;
i. Converting an Unlimited Company to a Limited Liability Company;
ii. Converting a Company limited by Guarantee to a Company limited by shares.
 The Court can restrain or cancel an alteration for illegal or irregular activity or provide
a remedy against oppression.
 THE CONCEPT OF A CORPORATE ENTITY
 A Company once incorporated by the registration of its Regulations and the subsequent
issue of a Certificate of Incorporation becomes an entity separate and distinct from its
members and Directors. It assumes a separate and artificial legal person status.
SALOMON V SALOMON

i. CORPORATE VEIL
 The fact that the Company upon incorporation assumes an independent and separate
personality has given rise to the concept of the existence the existence of a Corporate
Veil that “stands” in between the Company and its members and Directors.
 This Veil separates the Company from its members and Directors. In effect, the deeds of
the Company are its, and not that of the members and Directors.
 LIFTING OR PIERCING THE CORPORATE VEIL
 There are instances where the “Corporate Veil” is done away with to hold the Directors and
Members personally liable for the acts of the Company. In such instances, the Corporate Veil
is said to be lifted or pierced, and this can happen under any of the following instances;
i. Violations of the Companies Act:
a. Where a Company carries on business for more than six (6) months without at least one
(1) member, the Directors become personally liable for all debts incurred by the
Company during that period – S. 38
b. Where a Company carries on business for more than four (4) weeks after the number of
its Directors fall below two (2), there shall be a penal liability and any Director or
Member in default shall be liable to a fine. Also, for every debt incurred during the
period, the Directors and Members shall be jointly and severally liable. CONTINUE…
a. Where a Company fails to affix its name at its offices, engrave its name
on its seal, or have its name accurately mentioned on all of its stationery,
publications and negotiable instruments as required under the Code, the
Company and every officer in default shall be liable to a fine – S. 121 (2)
b.Where the Seal which does not have the Company’s name engraved on it
is used, the officer who used it shall be liable to a fine – S. 121(1) c & S.
121(4)
c. Where a Company does not have its name on its negotiable instrument
and same is endorse, the officer who endorsed it shall be liable to a fine.
a. Where the Company fails to file its returns prior to transacting business –
S. 29(a)

a. When the Company breaches its Minimum Capital Requirement, the

Company and every officer in default becomes liable to a fine for each
day of the default – the Directors and members shall be jointly and
severally be liable for all debts and liabilities of the Company.

a. Where a Company limited by Guarantee engages in profit making

activities.
ii. Violation of Legislation
 Fraud – during winding up
iii. Decisions of the Court
 Scheme to evade contractual liability
Gilford Motor Co. Ltd v Horne / Jones v Lipman
 Fraud – Amartey v SSB Bank /Morkor v Kuma

 Agency – companies in a group – Kuni v State Gold Mining Company

 Public Policy – Daimler v Continental Tyre

 ULTRA VIRES - S.25
Any purported exercise of a power in excess of that provided in the Regulations or
engaging in an unauthorized business or transaction.
 Generally at law an Ultra Vires act is deemed to be void.
 Under Ghanaian Law however, an act deemed Ultra Vires does not by itself in certain
circumstances render the act invalid or void.
 The following acts though done in excess of the powers would not constitute Ultra Vires;
a. Conveyances and Transfers by the Company.
b. Acts in pursuance of an Ordinary Resolution of members authorizing Directors to
exceed powers.
c. Third party without notice who benefits from an Ultra Vires act.
 The Court may in certain instances intervene to prevent or remedy Ultra-Vires
transactions;
a. Upon the application of a Member, Debenture holder secured by a floating charge grant;
i. An Injunction to prohibit Ultra Vires transaction.
ii.An Order to set aside the performance of a contract.
iii. Compensation to the Company or parties to the Contract for loss or damage
sustained by the setting aside or prohibition of the performance of the Contract.
b. Restrain a threatened breach of duty
c. Order the recovery of property from the Directors of the Company
d. Provide remedy against oppression
e. Order the winding up of the Company
THE RULE IN TURQUAND’S CASE
 This Rule seeks to provide a certain measure of protection to third
parties who deal with the Company vis-a-vis the doctrine of Ultra
Vires.
 The strict adherence or application of the Ultra Vires rule would
mean that any third party, without knowledge that the person
representing the Company were acting Ultra Vires cannot proceed
against the Company, or in other words the Company cannot be
held liable.
ASHBURY RAILWAY CARRIAGE & IRON CO. V RICHIE
 The Rule in Turquand’s case is to the effect that third parties are not
required to inquire to ascertain if all internal processes and
procedures of the Company have been complied with;
 and that where a Company is regulated by an Act of Parliament, and
its Regulations are filed in a designated public office, it is incumbent
on persons dealing with the Company to read the Regulations and the
Act;
 to ascertain whether the proposed transaction is consistent with the
Regulations and the Act;
 but the third party needs not inquire into the regularity of the internal
proceedings, but is entitled to assume that all is being done regularly.
 ROYAL BRITISH BANK V TURQUAND
 The logic of the Rule is to prevent an unnecessary delay or total
stagnation of commercial transactions where for each transaction
third parties would have to inquire, ascertain and satisfy
themselves that indeed all internal rules of the Company have
been complied with.
 To mitigate abuse, the law itself placed some limitations on the
Rule in Turquand’s case as follows;
 i. If a person has notice that the proposed transaction is inconsistent with
the Regulations or registered documents of the Company, he is affected
by the notice and thus cannot come under the Rule.
HOWARD V PATENT IVORY MANUFACTURING
CO.
 A Director cannot rely on the Rule so as to obtain its protection.
 The Rule does not apply where the requisite signatures are forged.
 Where the Director acting for the Company was doing so in his
ostensible authority even though he had no actual authority
LOCKYER V BUCHAREST PROPERTIES LIMITED
 The Rule in Turquand’s case has received statutory recognition in
Ghana in S.202(6) of the Companies Act which stipulates that “ No
person dealing with a Company in good faith or registering any
disposition of, or title to property shall be concerned to see whether
the conditions in S.202(6) have been fulfilled and the provisions of
Sections 139-143 of this Code shall apply to any transaction of the
type referred to in this section notwithstanding that such conditions
have not been fulfilled”
 Section 142 of the Companies Act allows parties dealing with the Company to
make the following assumptions;
 i. That the Company’s Regulations have been complied with.
 ii. That every person described in the Company’s filed Particulars as Director,
Managing Director or Secretary of the Company has been duly appointed and
has authority to exercise all the powers which by custom may be exercised by
the Director, Managing Director or Secretary.
 iii. That the Company’s Secretary, or any other officer who has authority to issue
or certify documents has the authority to warrant the genuineness of such
documents.
 iv. That any document is deemed sealed by the Company if the document bears
what appears or purports to be the Company’s seal attested by the signatures of
two persons who may be taken or assumed to be the Company’s Director and
Secretary.
 BARCLAYS BANK V PERSEVERANCE TRANSPORT SERV. LTD/CHALLERAMS & SONS V HALABI/CUDJOE V
CONTE
 A Company is still liable if the signature is forged or the document
is forged – S.143
 A person shall however not be entitled to any of the assumptions
if;
 That person has actual knowledge or notice to the contrary.

 Having regard to the person’s position or relationship with the

Company he ought to have known the contrary.
 A person can equally not assume that the functions of a
Committee have been delegated to an individual simply because
the Company’s Regulations permit that.
 ORGANS OF A COMPANY
 A Company upon incorporation attains a separate legal status and is viewed and deemed
by the law as a person, albeit an artificial person. To be able to function as a person, the
Company has to act through others, and it is these entities that we shall refer to as the
organs of the Company.
 A Company acts through;
i. Members – in general meetings
ii. Directors – through the Board of Directors
iii. Officers and Agents – appointed by Members or Directors.

I. MEMBERS
a. Who are Members – S.30
 The Members of a Company comprise;
i. Persons who have subscribed to the Regulations of the Company;
ii. Persons who agree to be members of the Company and whose names are entered in the
Register of members; Shareholders
SUBSCRIBERS
 They are the original or founding members whose names are
contained in the regulations.
 They are there at inception;
 With respect to companies registered with shares, the law requires
that each subscriber takes at least one share; and become shareholders
upon incorporation.
 Payment for shares and entering of names in the register are not
conditions for membership because, “until the company is formed, no
register can be made, and until there are some members the company
cannot be formed”
 A key distinction between subscriber and others is that a subscriber is
a member whether or not his name is entered in the register; others
need to be entered in the register to be members.
MEMBERSHIP BY AGREEMENT
 Membership by Agreement involves three elements depending on
whether the company is registered with shares;
 i. Agreement to become a member
 Compliance with terms of membership
 Simple offer and acceptance suffices

 Letter of allotment

 ii. Directors issue shares

 New or unissued shares
 iii. Entry of name in the register
 Transfers/ Operation of law
EVIDENCE OF MEMBERSHIP
 Regulations

 Register of members
 Entries to be made within 28 days
 Share Certificate
 Applicable to private companies and public companies not listed
 Dematerialisation – Central Securities Depository Act, 2007 (Act
733)
 Permits public company to issue shares or debentures in uncertificated
or dematerialised form; or convert to uncertificated securities
 Prohibits the issue of certificate in respect of a dematerialised security.
 Members Rights
A fully paid up member of a Company has the following enforceable individual rights;
i. To receive notice of general meetings and accompanying statutory reports;
ii. To attend general meetings or to appoint a proxy to represent him;
iii. To speak at general meetings;
iv. To vote on any resolution at general meetings;
v. To have his name and shareholding entered in the members register and to prevent
unauthorized alteration of same;
vi. To receive declared dividends or that shall become due under the Regulations;
vii.To exercise preemption rights;
viii.To have his capital returned to him in proper order of priority upon winding up or
properly authorized capital reduction;
 Members Rights
i. To transfer his shares unless restricted by the Regulations;
ii. Not to have his financial obligations increased without his consent;
iii. To inspect the Companies Register relating to Members, Debentures, Mortgages
and Charges.
iv. To obtain a copy of the Regulations;
v. To recover compensation from Promoters and Directors for misrepresentation;
vi. To obtain a refund of money paid for shares which are not allotted;
vii.To resort to the Court for redress on matters relating to his right as a member of
the Company;
viii.To determine who should manage the affairs of the Company.
 MEMBERS LIABILITY
Members are liable to contribute the balance of the amount payable in
respect of shares prior to winding up.
i. In the event of winding up, past members are liable if winding up occurs
within one (1) year of their ceasing to be members and where the
contributions of present members are insufficient to meet the debts,
liabilities, costs, charges and expenses of winding up.
ii. In any event, for limited liability companies, the contribution by past and
present members is limited to unpaid shares.
 Termination of Membership
A person’s membership of a Company is terminated under any of the
following;
i. Valid transfer of Shares
ii. Operation of law eg. Nationalization, Receivership
iii.Forfeiture of shares for non payment
iv.Death.
 Members Register
Every Company must keep a Register of its members which must contain the particulars of
the members, the number of shares held, remaining amount payable, if any, the date on
which entered as a member and the date on which once ceased to be a member.

Members Meetings
 The Companies Act recognizes two (2) basic meetings of members;
i. General Meetings; and
ii. Class Meetings.
 We shall however limit ourselves to General Meetings.
 There are two (2) types of General Meetings; Annual General Meeting and Extra-
Ordinary General Meeting.
 Annual General Meeting
• It is held every year and not later than fifteen (15) months from the last time it was held.
 Auditors and Members who are eligible to attend and vote may agree in writing to dispense with an
Annual General Meeting.
 The Company shall at least twenty-one (21) days before the Annual General Meeting dispatch the
following documents to Members and Debenture holders; Profit and Loss Account, Balance Sheet, Group
Accounts, if any, Director’s Report, and Auditors Report on the financials.
 The Ordinary Business of the Annual General Meeting comprises;
a. Declaration of Dividends;
b. Consideration of the Company’s Accounts and the Director’s and Auditor’s Reports;
c. Electing Directors to replace those retiring;
d. Fixing the remuneration of Auditors;
e. Removing and Appointing Auditors and Directors.
 Extra-Ordinary General Meeting
 May be convened by Directors when they think fit or by any Director if
there are insufficient Directors in Ghana to form a quorum.
 May be convened by Directors of a Private Company upon the requisition in
writing and signed by any two (2) or more members or a single member
with at least ten percent (10%) shares. Within seven (7) days of receipt, a
meeting date must be fixed for the meeting to be held within twenty-eight
(28) days.
 May be convened by Requisitionists upon failure by the Directors of a
Private Company. Meeting ought to be held within four (4) months. Continue…
 May be convened by Directors of a Public Company upon the requisition in
writing and signed by a Member who holds five percent (5%) of the shares
of the Company. Within twenty-eight (28) days of receipt, a date must be
fixed for a meeting to be held within twenty-eight (28) days.

 May be convened by Requisitionists upon failure by the Directors of a

Public Company. Meeting ought to be held within four (4) months.
i. Who may convene General Meetings ?
 General Meetings may be convened by;
a. Directors.
b. Members.
c. The Registrar – when AGM not held in normal course.
d. Court – where it is impractical to call a meeting.
 Meetings are communicated through notices to all Members for a minimum period of
twenty-one (21) days – S.152.
 However for a Special Resolution to liquidate the Company, Seven (7) days notice is
sufficient.
 The Notice must contain sufficient information as to nature of business to be transacted,
any resolutions, the place and time.
 Quorum
General Meetings may only commence with a quorum, but meetings may still
proceed if quorum is lost thereafter.
 The following shall constitute a quorum in the absence of any by the Regulations;
a. One (1) member, if the Company has only one member.
b. In any other case, two (2) people in person or by proxy.
c. By one (1) member holding more than 50% of the voting rights of all members.
d. At an adjourned meeting, when the previous meeting was adjourned due to lack of
quorum, if a quorum is not attained within half an hour of the stated time, then the
members present shall form a quorum.
 Proxy – S.163
 Proxy has two meanings in the Companies Act; first it refers to the agent of a
member appointed to attend a meeting on his behalf; secondly, it refers to
the document by which the agent is appointed

Voting – S.170
 Voting by members can done in three (3) ways;
a. Show of hands.
b. Polling – demanded by chair; three (3) members or 5% voting right.
c. Postal ballot in lieu of meeting.
 Resolutions – S.168
 There are two (2) types;
a. Ordinary Resolution – Simple Majority

b. Special Resolution – 75% with due notice specifying it as a special

resolution.