- 20 Marks
BCL – L1 – Q83 – Corporate Liability
Question
GreenFuture NGO, an incorporated non-governmental organization has been formed with the object of greening the environment and sponsoring deprived children to go to school up to Junior High School level. During operation, the key officers of the company took a decision that the company goes into salt mining without reference to the office of the Registrar-General. Under this new arrangement, huge profits were made, the Board of Directors was reconstituted and unexpected debts were incurred. In doing so, the 17-year-old daughter of the Executive Director known as the whiz-kid in financial matters, became a Board member. The Registrar of Companies has been alerted on the happenings at the company.
Required:
(a). From the legal perspective, analyse the new arrangement and give reasons if any, why the officers and GreenFuture NGO will be liable.
(b). What are the likely actions to be taken by the Registrar-General in the circumstance of this case?
Answer
(a). Reasons the officers and GreenFuture NGO should be punished. Sections 10 and 182 of the Companies Act, 1963 ACT 179 provide the sources for answering the question. The first part of the case is applicable to an incorporated company limited by guarantee. Section 10 of ACT 179 provides that a company limited by guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits. Where a company limited by guarantee carries on business of making profit, the officers and members of the company who are cognizant of the fact that it is so carrying on business are jointly and severally liable for the payment and discharge of the debts and liabilities of the company incurred in carrying on that business and the company and those officers are each liable to a fine. Thus, the company and their key officers will be subject to a fine with the key officers additionally bearing the debts incurred.
(b).
Section 182 of ACT 179 provides for certain categories of persons who are incompetent to serve on Board of incorporated. One of such persons is a minor. Any of such persons caught in violation of the section is liable on conviction to a fine or imprisonment. The 17 years old daughter is a minor under the laws of Ghana. She is therefore, caught under section 182 and is incompetent to serve on the Board. The Registrar of Companies will proceed on criminal matter against the 17-year-old. The company and every director will be also subject to be fined.
- Topic: Registrar-General Actions
- Uploader: Samuel Duah