BCL – L1 – Q60 – Alternative forms and constitutions of business organisations

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.

Answer

(a). Private company’s constitutions:

Restricts the right to transfer the shares of the company, if any,
Limits the total number of the members and debenture holders to fifty (50),
Prohibits the company from making an invitation to the public to acquire shares or debentures of the company; and
Prohibits the company from making an invitation to the public to deposit money for fixed periods or payable at call, whether bearing or not bearing interest.
Any other company is a public company.

Examples:

(b). Duties of promoters:

Formation of the company.
Raising of working capital.
Pre-incorporation contracts—transaction/property acquisition etc.
Fiduciary relationship—full disclosure, avoidance of conflict of interest/self-dealing, no secret profit etc.
Observance of utmost good faith.
Compensate the company for any loss.

(c). Contents of company constitution – Sec 26 of Act 992:

The name of the company, with the last words of the name as required by subsection (1) of section 21.
The names of the first directors of the company.
The nature of the business the company is authorised to carry on, or if not for business, the objects for which the company is incorporated.
The number of shares with which the company is to be registered (for companies with shares).
The number of shares subscribed by each shareholder on incorporation and the consideration to be paid for those shares.
Any other lawful provisions relating to the structure and administration of the company.