‎company law

Course Details

  • Course Title: Company Law

  • Course Code: UGBS 401

  • Lecturer: Nathaniel Hegbor

  • Contact: nkhegbor@gmail.com | 0244528297

What is Company Law?

  • Company Law governs the formation, regulation, and dissolution of companies.

  • Shaped by:

    • Statutory Provisions

    • Judicial Decisions

    • Theoretical Underpinnings

Definition of a Company

  • A company is not easily defined due to its various forms and shapes.

  • Key characteristics of a company:

    • Artificial Legal Person: Legal entity capable of owning property and entering contracts.

    • Separate Existence: Distinct from directors and members; as established by the case Salomon v. Salomon.

    • Common Seal: A formal signature used by the company.

    • Potential Perpetual Existence: Continues even after changes in membership.

    • Management by Directors: Resolutions passed at board meetings.

Types of Companies

  • Companies Act, 2019 (Act 992) identifies three categories:

    1. Limited Liability Company

      • Limited by Shares

      • Limited by Guarantee

      • Unlimited Company

      • External Company

    2. Private Company

    3. Public Company

Limited Liability Company

  • Common type of company, liability limited to unpaid shares.

  • Advantages:

    1. Protection against creditors for shareholders.

    2. Allows diversification of investments.

    3. Reduces risks of ownership separation.

  • Disadvantages:

    1. Unfavorable to creditors.

    2. May lead to irresponsible investments.

    3. Directors and shareholders may still be liable via guarantees.

Unlimited Company

  • Members' liabilities are not limited; responsible for all debts.

  • Typically non-profit organizations focused on charitable or educational purposes.

External Company

  • Formed outside Ghana but operates within the country.

  • Must register specific documents with the Registrar within a month of establishing a business presence.

    • Documents Required:

      • Incorporation documents.

      • Notarized statement detailing business nature and local manager.

      • Statement regarding beneficial owners including PEP status.

Private Company

  • Restricted share transfer and limited membership (up to 50).

  • Cannot invite the public to acquire shares or deposit money.

Public Company

  • Any company that is not a private company, typically listed on the stock exchange.

Sole Proprietorship

  • Owned and managed by a single person without strict registration requirements.

Partnership

  • Formed by two to twenty individuals conducting business for profit.

    • Not considered a partnership: Companies, body corporates, family co-ownerships, etc.

Formation of Partnerships

  • Must have a partnership agreement that includes:

    • Name of the Partnership

    • Nature of Business

    • Principal Place of Business

    • Partner details and charges over assets.

Types of Partners

  1. General Partner: Active management and personally liable for liabilities.

  2. Quasi/Nominal Partner

  3. Dormant Partner

  4. Salaried Partner

  5. Incoming Partner

  6. Outgoing Partner

Rights & Duties of Partners

  • Fiduciary relationship: Duty to co-partners and the firm.

  • Equal sharing: In profits, capital, and losses.

  • Right to access company books.

Termination of Partnership Membership

  • Can cease due to:

    • Valid share transfer

    • Death or insolvency

Company Winding Up

  • May occur voluntarily or through court action.

  • If unable to pay debts, creditors initiate proceedings.

Company Formation

  • Promoters: Individuals involved in establishing a company, owe fiduciary duties.

Pre-incorporation Contracts

  • Contracts made before formal incorporation can be ratified after incorporation.

Articles of Association

  • Defines company internal governance structure.

Corporate Veil

  • The separation between company and members/directors; can be pierced in certain conditions to hold individuals accountable.

Limits of Authority (Ultra Vires)

  • Courts may intervene in excess of constitutional powers which usually render actions void.

Presumptions of Regularity

  • Assumptions about incorporation and authority can be made by third parties upon dealing with a company.

Members' Rights

  1. Right to attend meetings.

  2. Vote on resolutions.

  3. Receive dividends.

  4. Inspect company registers.

  5. Rights limited by internal regulations.

Members' Liability

  • Members liable for unpaid amounts on shares if the company is wound up.

Register of Members

  • Companies must maintain a register detailing member particulars;

    • Members have the right to inspect.

Company Meetings

  • Types:

    • General Meetings (Annual and Extra-ordinary)

  • Notices: Minimum notice required is twenty-one days for regular meetings.

  • Quorum Requirements: Defined minimum presence is necessary for meetings.