- 20 Marks
BCL – L1 – Q80 – Acts of the Company
Question
(a). What constitute the acts of the company?
(b). Differentiate between ordinary resolution and special resolution.
(c). Kofi Asante is a board member of Rising Ventures Limited, a limited liability company with 10% shareholding by the Ghana Government. Kofi Asante was appointed to the BOD four years ago in accordance with the constitution allowing Dr. Kwame, Founder/Executive Chairman, and majority shareholder of the company to appoint seven of the eleven-member board. Three of board members represent workers groups and the last one comes from government per the constitutions. The Minister of Information just announced the revocation of Kofi Asante’s appointment to the BOD. Dr. Kwame called Kofi Asante to inform him the government’s announcement is null and void and should be ignored.
Who should Kofi Asante believe?
Answer
(a). The primary organs/agents whose actions bind the company are the members in general meeting, the board of directors, or the managing director while carrying. They must be carrying on in the usual way the business of the company. The constitutions shall determine the respective power of the BOD and members at general meeting. The BOD exercising all such powers of the company shall manage the business of the company. The company shall be liable criminally and civilly liable for their actions to the extent of natural person. The company shall not be civilly liable for a transaction if the third person has actual or presumed knowledge at the time of the transaction that these organs had no power to act or acted irregularly. The company shall not escape liability for acts undertaken for a business which it is in fact being carrying on merely because the business in question is not the authorised businesses by its constitutions. Sec 148-Act of officers and agents Their actions are not acts of the company hence not binding unless:
- Any of the primary organs expressly or impliedly authorised the officer/agent to act in the matter.
- Any of the primary organs represented or held out to the third party that the officer or agent has authority to act in the matter, and the third party entered into the transaction with reliance on the representation, unless the third party had actual or presumed knowledge of absence of authority.
- The authority of the agent can be conferred prior to the transaction, ratification or acquiescence by the primary organs.
- The company is vicariously liable for acts of its employees while acting within the scope of their employment.
(b).
- An ordinary resolution refers to a resolution, passed by the members of the company by a bare majority. A special resolution, on the other hand, is the resolution, that is affirmed by the members of the company by three-fourth majority.
- Ordinary Resolution is one wherein simple majority is required to move the resolution at the general meeting. Special Resolution means a resolution in which supermajority is needed to pass the resolution at the general meeting.
- The copy of an ordinary resolution, signed by the officer of the company should be filed with the registrar only in certain cases. As against this, a printed or handwritten copy of a special resolution, containing the signature of the officer of the company must be filed with the Registrar of Companies (ROC) within 30 days.
- Ordinary Resolution is passed to transact ordinary business, however, a special business can be transacted via special resolution or ordinary resolution, as per the requirements of the Companies Act.
(c).
- The constitutions registered is a contract under seal and binds all members, officers and the company until amended. Sec 29 of Act 992 Rising Ventures Ltd constitutions gives Dr Kwame right to appoint five directors including Kofi Asante.
- Kofi Asante’s directorship cannot be revoked by government.
- Government has no sole authority under the constitutions to appoint or remove any BOD member.
- Government’s right over appointment or removal of directors can only be exercised with other shareholders regarding the two slots allocated to them by the constitutions.
- Sec 172 of Act 992 and Rising’s constitutions provide for the appointment of directors which has been complied with.
- Sec 176 provides for removal of directors which excludes announcement by government.
- Kofi Asante can resign, be removed, and vacate his position if he becomes incompetent in any way under the Act (e.g., insane etc.) or under the constitutions (e.g. director’s share qualification, if required).
- Kofi Asante and Dr Kwame can enforce their rights if the government persist-sec 205 of Act 992.
- Kofi Asante should believe Dr Kwame: government announcement is null and void and should be ignored.
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