Notes
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Brief Overview of a Company
This note will briefly discuss the meaning of a company, its status as a legal entity, and the primary legislation regulating companies in Ghana.
Changes Introduced by the Companies Act, 2019 (Act 992): Modifications of Companies Act, 1963 (Act 179)
This is the first in a two-part series on the changes introduced by Act 992, focusing on how it modifies provisions under Act 179. Key changes include renaming a company’s governing document from "regulations" to "constitution," revising age qualifications, and reducing the processes involved in the formation of a company, among other modifications.
Changes Introduced by the Companies Act, 2019 (Act 992): Additions to Companies Act, 1963 (Act 179)
This note will discuss the new enactments introduced by the Companies Act, 2019 (Act 992). By “new enactments,” we refer to provisions that did not exist under the Companies Act, 1963, (Act 179) but forms part of Act 992. The major ones to be discussed include the introduction of new suffixes for all types of companies, the regulation of major transactions, provisions on buy-out for minority shareholders, establishment of the office of the Registrar of Companies, and introduction of an interest register, among others.
Incorporation of a Company in Ghana
This note will discuss the formation of a company in terms of when it becomes necessary to incorporate a company, who can apply for the incorporation of a company, the number of persons required to form a company, the types of company that can be formed under Act 992, the processes involved in the formation of a company, and incorporation.
Introduction to Types of Companies in Ghana
Different types of companies can be formed for different purposes. In this note, we highlight the types of companies that can be formed.
Company Limited by Shares
This note will discuss a company limited by shares as one of the types of companies in Ghana. The note will also discuss the two types of companies limited by shares, peculiar details that are provided during the registration of a company limited by shares, and the names of companies limited by shares.
Company Limited by Guarantee
This note will discuss a company limited by guarantee as one of the types of companies in Ghana. The note will also discuss limits placed on a company limited by guarantee, the two types of companies limited by guarantee, peculiar details that are provided during the registration of a company limited by guarantee, and the names of companies limited by guarantee.
Unlimited Company
This note will discuss an unlimited company as one of the types of companies in Ghana. The note will also discuss the two types of unlimited companies, peculiar details that are provided during the registration of an unlimited company, and the names of unlimited companies.
Introduction to the Constitution of the Company
This note will discuss the meaning of the constitution of a company, its effects, and highlight the types of constitution recognised under the Companies Act, 2019 (Act 992).
The Registered Constitution
In a previous note, we highlighted that a company can have or registered constitution or use the default constitution provided for it under the Companies Act, 2019 (Act 992). In this note, we will discuss the meaning of a registered constitution, when a company can have a registered constitution, the content of the registered constitution, the form of the registered constitution, and what a registered constitution may be used to achieve.
Foreign Participation in Enterprises
This note will discuss the regulation of foreign participation in enterprises under the Ghana Investment Promotion Centre Act, 2013 (Act 865).
Introduction to Corporate Governance
This note will discuss the meaning of corporate governance, the need for corporate governance, the key principles that underpin good corporate governance, and the legal and regulatory framework of corporate governance in Ghana.
Distribution of Corporate Power
This note will briefly highlight the entities through whom a company acts. The entities to be highlighted are the board of directors, members in a general meeting, and officers.
Introduction to Directors of Companies in Ghana
This note will discuss the meaning of directors and highlight them as one of the most important organs of a company. In addition, the note will discuss two persons (shadow director and de facto director) who have the duties and liabilities of directors but are not (to be) considered directors.
Alternate and Substitute Directors
This note will discuss the meaning of alternate directors and substitute directors, how they are appointed, and limits imposed on them.
Appointment of Directors
This note will discuss the minimum and maximum number of persons that must be appointed as directors, who may be appointed as a director, who can appoint a director, and the requirements to fulfill before appointing a director.
Duties of Directors
This note will discuss the duties imposed on directors under the Companies Act, 2019 (Act 992). The note begins with an examination of directors as fiduciaries and the requirement that they observe utmost good faith towards the company. The note then discusses the duty to act in the best interests of the company, to act in accordance with the constitution, to exercise independent judgment, and to avoid placing oneself in a position where personal interests conflict with one’s duties.
Civil Liabilities of Directors for Breach of Duty
When directors breach any of their duties, the Companies Act, 2019 (Act 992) imposes three main liabilities on them. These are compensation, accounting for profits, and rescission of contract.
Common Law Position on Enforcement of Liabilities of Directors and the Rights of Members—the Proper Plaintiff Rule and the Majority Rule
Directors have duties, and members have rights. Upon a breach of duty by a director, the Companies Act, 2019 (Act 992), imposes various liabilities. How are these liabilities enforced? Also, what happens if the rights of a member of the company are violated? This note will discuss the general rule under the common law and the exceptions under the common law on who should sue to enforce the liabilities and rights of the company. In a subsequent note, we will examine the Ghanaian position on the topic and the extent to which it is consistent with the common law position discussed in this note.
Ghanaian Position on Enforcement of Liabilities of Directors and the Rights of Members
Directors have duties, and members have rights. Upon a breach of duty by a director, the Companies Act, 2019 (Act 992), imposes various liabilities. How are these liabilities enforced? Also, what happens if the rights of a member of the company are violated? This note will then examine the Ghanaian position on the topic and the extent to which it is consistent with the common law position discussed in the preceding note.
Meetings of Directors
This note will discuss the statutory requirements for directors of the company to hold meetings and the mechanics for such meetings under Section 188 of the Companies Act, 2019 (Act 992).
Vacation of Office of Directors
This note will discuss the various ways by which directors of a company, properly so called, will cease to be directors of a company. The ways to be discussed are provided for in Section 175 of the Companies Act, 2019 (Act 992).
Removal of Directors from Office
This note will discuss the processes involved in the removal of a director of a company. In doing so, the note will discuss the removal process under Section 176 of the Companies Act, 2019 (Act 992) and the possibility of the removal of a director under the common law. In discussing the removal process under Act 992, the note will focus on the following: who can remove a director, a general meeting as the forum for removal of a director, and prerequisites to satisfy before removing a director at a general meeting.
Members of a Company
This note will discuss who are members of a company and the various ways in which a person can become a member of a company.
Introduction to General Meetings
This note will discuss the meaning of general meetings, their essence, and the two types of general meetings.
Mechanics for Convening and Conducting a General Meeting
This note will discuss the allowable place for the conduct of a general meeting, who can convene one, the requirement of giving notice for a general meeting, the content of such notice, proxies, voting at general meetings, adjournment of general meetings, and quorum for general meetings.
Resolutions
This note will discuss the meaning of resolutions and the various resolutions that may be passed by the members of a company. The resolutions to be discussed are ordinary resolution, special resolution, and written resolution. The note will also discuss when decisions, known as informal decisions, may be taken by the company without the use of resolutions.
Company Secretary
This note will highlight the meaning of Company Secretary and discuss the requirement that all companies must have a secretary, the types of persons that can be Company Secretary, who appoints the Company Secretary and the qualifications a person must possess before he can be appointed, the statutory duties and powers of the Company Secretary, how the Company Secretary can be removed, and whether the Company Secretary can still be described as a mere servant of the company as was previously so described.
Auditors
This note will discuss who an auditor is, the requirement that every company should have an auditor, the relationship between the auditor and the company, how an auditor is appointed, the qualifications of an auditor, his functions, duties, and rights and entitlements, remuneration, and removal.