IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT(COMMERCIAL DIVISION)
ACCRA - A.D 2016
INVESTPRO LIMITED - (Plaintiff)
MANDUMO INVESTMENT HOLDINGS (PTY) LIMITED, PROTEA COIN GROUP AND PROTEA COIN GROUP GHANA LIMITED - (Defendants)
DATE: 12TH FEBRUARY, 2016
SUIT NO: MISC 21/2013
JUDGES: SAMUEL K. A. ASIEDU, JUSTICE OF THE HIGH COURT
MR. ELLIS ARTHUR FOR MR. KIZITO BEYUO FOR THE APPLICANT
MR. JOSEPH K. KONADU FOR DANIEL A ASIEDU FOR THE 1ST AND 2ND RESPONDENTS
The 3rd respondent is an incorporated company in Ghana which offers security services to various companies and institutions in the country. In May 2013, the applicant, a limited liability company, which holds thirty percent (30%) of the shares of the 3rd respondent filed an originating motion for reliefs under section 218 of the Companies Act, 1963 Act 179.
The said motion sought reliefs against the 1st and the 2nd respondents herein who together hold seventy percent (70%) of the shares in the 3rd respondent company. In the course of the proceedings, the parties agreed that they could no longer work together and that the 3rd respondent should therefore be valued in order that one party buys out the shares of the other. The court therefore appointed KPMG to value the 3rd respondent. The valuation was accordingly done and a report, dated October 2015, was submitted to the court.
The applicant and the respondents have both expressed an interest to buy the shares of the other party. Again, one question that cropped up was the value of the company at which the shares should be purchased. Subsequently, counsel were ordered to file their addresses on the issues for the court’s determination. They both filed their addresses on the 28th January, 2016.
It is clear from the addresses filed on behalf of the applicant that the applicant has now softened its earlier stand to buy the shares of the respondents. The applicant holds thirty percent of the shares in the 3rd respondent company. The respondents together hold seventy percent of the shares in the 3rd respondent company. It is clear therefore from the shareholding structure that the applicant is the minority shareholder whilst the respondents are the majority shareholders. Again, it is the applicant who complains of oppression by the majority and hence its inability to continue to work with the majority shareholders. It therefore stands to reason that if there is the need for one of the parties to bow out of the company in order that the company can continue to run smoothly and without acrimony then it must be the applicant and not the respondents. In the circumstance the court agrees with counsel for the respondents when he submitted in his addresses that “in the event of a shareholder fall-out, in the first instance, it is the majority shareholder who should be given the option of buying out the minority especially when the fall-out is as a result of a complaining minority. In such a case, the complaining minority is the one who should be bought out at a fair value unless the majority opts to be bought out and the minority is willing and able to.” Indeed, the court adopts the principle of law enunciated in the case of Fedorovitch vs. St. Aubins Pty Ltd  NSWSC 776 that “the proper order under such circumstances was for the oppressor to purchase the shares of the oppressed’.
This, certainly, does not mean that there could never arise a situation where an order could be made for the minority shareholder to buy out the shares of the majority shareholder. For, as stated in the Australian case of Fexuto Pty Limited vs. Bosnjak Holdings Pty Limited and Others  NSWCA that
“It is only a systematic course of improper conduct on the part of the majority that would justify an order that the minority [be entitled to] acquire, by compulsion of the court, the shares of the majority”
Nonetheless, as already pointed out, the applicant who is the minority shareholder has backed down from its earlier position to acquire the shares of the respondents who have the majority of the shares of the 3rd respondent. Accordingly, the court makes an order for the shares of the applicant to be acquired by the respondents in order that the 3rd respondent could run without any tension and acrimony among the shareholders.
The next issue for determination is the value of the 3rd respondent company against which the shares of the applicant should be purchased. From the addresses filed by or on behalf of the respondents it does not appear that this issue was discussed. Counsel for the applicant however dwelt on this issue in his addresses.
The value of the 3rd respondent company has been stated by the Valuers- KPMG in their final report signed and dated the 30th day of October, 2015. Two values have been given by the Valuers; first the present value stated as GH₵3,718,560 and second, the equity value given as GH₵2,800,000. From the records it is clear that the equity value was arrived at by deducting an amount of GH₵1, 100,496 representing debt from the present value and then adding a cash amount of GH₵181,939.
The discretion given to the court under section 218 of the Companies Act, 1963 (Act 179) under which the originating process was commenced extends also to the determination of the value of the company at which the shares of the complaining shareholder shall be purchased. This is clearly recognized and explained in the case of In re Bird Precision Bellows Limited  Ch. 658 where the court stated among others that
“It seems to me that the whole framework of the section and of such of the authorities… is to confer on the court a very wide discretion to do what is considered fair and equitable in all the circumstances of the case…and I find myself quite unable to accept that that discretion in some way stops short when it comes to the terms of the order for purchase in the manner in which the price is to be assessed”.
In the opinion of this court there is little difference between the sale of the applicant’s shares in the 3rd respondent company and a sale of a company’s shares on the open market or the stock exchange to be precise. Where shares are sold on the stock exchange, the vendor is not made to carry the burden of debts in the company as part of the value of his shares.
Again it is without debate that the 3rd respondent company is not being wound up for which reason the value of its assets should be knocked against its liabilities before shareholders take what remains of it. The 3rd respondent is a going concern and it is not going to halt its operations at the departure of the applicant.
Moreover, a study of the Revised Forecast of the Income of the 3rd respondent, as shown in the report submitted by the Valuers, shows a steady growth of projected profit from the current year of 2016 through to 2019. The potential of the 3rd respondent therefore is very great and there is no doubt that the 3rd respondent can make profit and so pay its just debt. There is therefore no cogent reason to saddle the shares of the departing applicant with the debts of the company.
In the circumstances therefore the court holds that the value of the 3rd respondent company against which the shares of the applicant must be purchased by the 1st and 2nd respondents must be the present value of the company otherwise described as the enterprise value which is assessed at GH₵3,718,560.