Level (SQ): Level 1
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- 10 Marks
Discuss legal mechanisms for companies to raise capital and investor rights.
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- 20 Marks
State limitations on directors' powers and ways a director’s appointment can be terminated under Companies Act 2019.
Question
In accordance with the Companies Act, 2019 (Act 992), the directors shall not, without the approval of an ordinary resolution of the company, exceed the powers conferred on them.
Required:
(a) State THREE (3) limitations on the powers of directors.
(b) Explain THREE (3) ways in which a director’s appointment can be terminated.
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- Tags: Companies Act, Corporate Governance, Directors powers, Limitations, Termination
- Level: Level 1
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- 20 Marks
Explain governance issues and director disqualification factors in a case involving fraud at a company.
Question
In 2015, KWEKU LTD, which carries on the business of exporting cassava and mangoes from Ghana to Europe, opened an account with Zenith Bank at the Tema Branch. In 2016, the Finance Manager, who is the sole accounts officer of the company, forged the signature of the Managing Director (who was also the sole signatory to the bank account of the company) and made several withdrawals from the company to the tune of GH₵550,000. The bank in that same year requested that the Managing Director should, within two weeks of the letter, confirm the credit balance on the account, which at the time stood at GH₵2,200,000. The Managing Director, without any further checks, signed the document, thus confirming the credit balance presented by the bank. In 2017, the auditors raised queries on some of the fictitious withdrawals. The Chairman of the Board ordered the Human Resource Manager to dismiss both the Managing Director and the Finance Manager with immediate effect.
Required:
(a) Explain FOUR (4) issues in the case relating to governance and duties of directors. (10 marks)
(b) Explain THREE (3) factors that disqualify a person from being appointed as a director. (10 marks)
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- 20 Marks
Explain reasons for refusing partnership registration, modes of winding up, asset application, and partner liability.
Question
SUNDRY ISSUES
(a) What may account for the Registrar refusing to register a partnership agreement?
(b) State three modes of winding up of a firm and indicate who can initiate each.
(c) State how assets of a partnership are applied after winding up.
(d) State briefly the nature of a partner’s liability.
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- 20 Marks
Analyze issues in a partnership agreement and list items to verify for a valid partnership involving an employee and family members.
Question
KOFI
Kofi was employed as a senior wholesale manager by AB Limited, a limited liability company owned 100% by Mr. Adu. Kofi’s monthly salary is $30,000 and has been so for the last five years. To prevent Kofi from leaving the company, Mr. Adu went into agreement with him whereby AB Limited, Kofi and twenty family members of Mr. Adu formed a partnership. Kofi will get $40,000 as monthly salary and 10% of gross profit as bonus as and when Mr. Adu deem it fit. Kofi must give six months’ notice for resignation but could be fired without notice by Mr. Adu. Kofi has no role in management, control or in carrying out the partnership business. Kofi is happy with his new salary but thinks all is not right.
(a) What is not right?
(b) State five other items Kofi must verify in a partnership agreement.
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- 20 Marks
Advise on company registration refusal, corporate veil lifting, and pre-incorporation contract issues for a company formed in Ghana.
Question
LINA
(a) Under what circumstances will the Registrar refuse to register constitution of a Company?
(6 marks)
(b) Explain the circumstances under which the corporate veil could be lifted or pierced.
(c) Lina lives in the United Kingdom (UK) and asked her long-time friend, Esi to register a company for her in Ghana. Esi spent $10,000 on documentation, filling and processing, (with the issuance of receipts being Esi’s name) all covered with receipts in her name. Upon the request of Lina, Esi rented an office premises for one year at GH₵20,000 with the receipt in the name of the newly formed company. Lina just returned from UK to start operations. Lina discovered that the rental agent gave GH₵2,000 to Esi as inducement for the office deal. Lina appointed Esi as head of operations and refused to pay the registration expenses on the basis that Esi’s monthly salary as head of operations is more than GH₵10,000 and those expenses should be borne from the secret profits Esi had earlier enjoyed.
Required:
Based on your knowledge in pre-incorporation contracts, advise the parties.
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- 20 Marks
Recommend whether Hajia Amina’s business should remain a sole proprietorship or convert to a private limited company.
Question
Your mother trades in locally made fruit juice in a container at the front of the house at Adiembra-Zongo. The booming business is putting pressure on her working capital. But she plans to open two new retail branches and a semi-wholesale by the end of the year using sale proceeds of her private car which will not be enough. A bank manager working on her personal loan application advised her to convert the sole proprietorship into a private limited liability company, but your mother thinks that will reduce her power and influence. She adores the business name registration certificate with her name boldly engraved ‘HAJIA AMINA SIEDU ENTERPRISE’.
(a) Which of the options will you recommend?
(b). Discuss why you would support your mother’s position or that of the bank manager.
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- 20 Marks
Explain the difference between private and public companies with examples from Ghana.
Question
(a). Explain the main difference between a private and a public company. Give an example of each from Ghana.
(b). Discuss four duties of a promoter.
(c). Explain six items that must be in the constitution of a company for registration.
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