• IN THE SUPERIOR COURT OF JUDICATURE
  IN THE HIGH COURT (COMMERCIAL DIVISION)
  ACCRA - A.D 2018
  

HANNAH ASANTE AND FRANCIS ASANTE - (Plaintiff)

vs.

KWADJO ASANTE CONTRACT LIMITED AND OTHERS - (Defendants)

JUDGMENT

---

 

By an originating motion on notice filed on the 7^th June 2017, the applicants herein pray the court for the following reliefs:

 

(i) A declaration that the 1^st respondent company is administering its business and carrying on its affairs in a manner that does not comply with its Regulations and the Companies Act, 1963 (Act 179)

 

(ii) A declaration that the appointment of the 2^nd, 3^rd and 4^th respondents as directors of the

 

1^st respondent company is wrongful and does not comply with the Regulations of the 1^st Respondent and the Companies Act, 1963 (Act 179).

 

(iii) A declaration that the affairs of the 1^st respondent company over the period from 23^rd December, 2010 till date were conducted and are being conducted in breach of sections 99, 124, 125 and 131 of the Companies Act, 1963 (Act 179).

 

(iv) A declaration that the 5^th and 6^th respondents do not have any locus to control and/or manage the affairs of the 1^st respondent company.

 

(v) A declaration that the entry of the names of the 2^nd, 3^rd and 4^th respondents as directors of the 1^st respondent company by the 7^th respondent in its record was unlawful and without any justification whatsoever.

 

(vi) A declaration that the entry of the names of the 2^nd respondent herein as company secretary of the 1^st respondent company by the 7^th respondent in its record was unlawful and without any justification whatsoever.

 

(vii) A declaration that the opening and operation of a new bank account with UT Bank, Koforidua Branch, by the 2^nd, 3^rd and 4^th respondents in the name of the 1^st respondent is unlawful and contrary to the Regulations of the company.

 

(viii) A declaration that the legal personal representatives of the estate of Madam Rosina Austin Asante (Deceased), i.e. the applicants herein are holders of 50% of the shares of the 1^st respondent.

 

(ix) An order of perpetual injunction restraining the 2^nd, 3^rd and 4^th respondents, their assigns and privies, agents, servants, workmen, allotees, grantees and successors in interest, other alienees and relations whatsoever and howsoever described from holding themselves out and acting as directors of the 1^st respondent company.

 

(x) An order of perpetual injunction restraining the 5^th and 6^th respondents, their assigns and privies, agents, servants, workmen allotees, grantees and successors in interest, other alienees and relations whatsoever and howsoever described from taking control and managing the affairs of the 1^st respondent company and especially from going to the quarry site of the 1^st respondent situate at Nankese in the Eastern Region of the Republic of Ghana and collecting money for any reason whatsoever.

 

(xi) An order directed at the 7^th respondent to expunge the names of the 2^nd, 3^rd and 4^th respondents from its records as directors of the 1^st respondent company and to further expunge the name of the 2^nd respondent as company secretary of the 1^st respondent company.

 

(xii) An order for the rectification of records by the 7^th respondent to the effect that the legal personal representatives of Madam Rosina Austin Asante (Deceased) i.e. the applicants herein are 50% shareholders of the 1^st respondent.

 

(xiii) An order for the closure of the bank account opened by the 2^nd respondent with UT Bank, Koforidua branch, in the name of the 1^st respondent.

 

(xiv) An order pursuant to section 162 (1) of the Companies Act, 1963 (Act 179) for the convening of a Board of Directors meeting and thereafter a General Meeting of the members of the 1^st respondent company for the purposes of giving and ratifying of accounts for the years 2010, 2011, 2012, 2013, 2014, 2015 and 2016 and other requisite businesses.

 

(xv) Any other relief or reliefs the Honourable Court may deem meet.

 

 

 

The application is supported by an affidavit as well as a supplementary affidavit. All the respondents, except the 7^th respondent, are opposed to the application as shown by their affidavits in opposition and their supplementary affidavit. The 7^th respondent did not attend court and did not participate in the proceedings. The application is brought under sections 99, 217 and 218 of the Companies Act, 1963, Act 179. From the affidavits filed by the applicants the court finds that the applicants are surviving children and the administratrix and administrator of the estate of one Madam Rosina Austin Asante. This finding is supported by exhibit A which is the letters of administration granted to the applicants to administer the estate of Madam Rosina Asante who died on the 23^rd December 2010 in Accra. It is also important to point out that none of the respondents, concretely, denied that the applicants are the children of Madam Rosina Asante (deceased). Again, there is no positive denial that the applicants hold letters of administration of the estate of Madam Rosina Asante (deceased).

 

It is necessary to place on record that the applicants herein are not claiming, in their own rights, to be members of the 1^st respondent company. In the opinion of the court, but for the provision in section 99(4) of the Companies Act, 1963, Act 179, the applicants would have lacked capacity to invoke the jurisdiction of the court in the instant matter under section 217 and 218 of the Companies Act since only members of a company may file applications under section 217 of the Act; whereas members and debentureholders may file to invoke the jurisdiction of the court under section 218 of the Act.

 

 

 

Section 99(4) grants some privileges to personal representatives of deceased members of companies in order to enable them to enjoy certain benefits and advantages otherwise reserve for members of the company.

 

It states that:

 

(4) A person on whom the ownership of a share or debenture devolves by reason of that person being the legal personal representative, receiver, or trustee in bankruptcy of the holder, or by operation of law shall, prior to registration of that person or a transferee, be entitled to the same dividends, interest and other advantages as if that person were the registered holder and, in the case of a share, to the same rights and remedies as if that person were a member of the company, but that person shall not, before being registered as a member in respect of the share, be entitled to attend and vote at a meeting of the company.

 

 

 

It is on the strength of the above quoted section that the applicants have brought the instant application, which, as already pointed out, may be made by the members and or the debentureholders of the company. By reliefs (i) and (iii) the applicants seek a declaration that the 1^st respondent company is administering its business and carrying on its affairs in a manner that does not comply with the company’s regulations as well as the Companies Act and that the affairs of the 1^st respondent company over the period from 23^rd December 2010 till date were conducted and are being conducted in breach of sections 124, 125 and 131 of the Companies Act. The court has examined the affidavit in support of the instant application and the court finds no evidence in the said affidavit to support the allegation that the business and the affairs of the 1^st respondent is being conducted in a manner contrary to the provisions of the regulations of the 1^st respondent and also contrariwise to the provisions of the Companies Act.

 

 

 

Even then, the allegation made is not a relief that could be obtained under section 217 of the Act which enables a member to obtain an injunction to restrain a company from doing an act or entering into a transaction which is illegal or which is beyond the power or capacity of the company or which infringes a provision of the company’s regulations among others. The court holds that where a member seeks an injunctive relief under section 217, that member is under a legal obligation to lead evidence in his affidavit to prove the allegations which may enable him obtain relief under section 217. Under section 218, a member or debentureholder is obliged to lead evidence of oppressive conduct, among others, by the company or its directors against the members. The applicants herein do not anchor their claim on an allegation that the affairs of the 1^st respondent company are being conducted in a manner which is oppressive or burdensome of them or any member of the 1^st respondent company. In Pinamang vs. Abrokwa [1991] 2 GLR 384, the court pointed out that:

 

 

 

on the authorities, in order to bring a successful application under section 218 of the Companies Code,1963 (Act 179), (i) the petition must be made with the genuine object of obtaining the relief claimed and not for exerting pressure in order to achieve a collateral purpose; (ii) the matters complained of must affect the person or persons alleged to have been oppressed in his or their character as a member or members of the company and not in any other capacity; and (iii) the applicant must adduce evidence seeking to show a chain of events and occurrences of harsh and burdensome conduct which continued up to the date of presentation of the petition. The court was, however, precluded from inquiring into matters of internal management or, at the instance of a shareholder, interfering with transactions which though prima facie irregular and detrimental to the company, were capable of being rectified by an ordinary resolution of the company in general meeting. Failure by the applicant to bring his complaint as well as himself within any of the categories would be fatal to his application because it would be incompetent and misconceived.

 

 

 

Sections 124, 125 and 131 under which the 3^rd relief is couched deals with the preparation of the profit and loss accounts of the company annually and the manner in which such accounts and the balance sheet of the company shall be circulated to the members of the company. Surely, this is not a relief that one may obtain under sections 217 and 218 of the Companies Act such as the applicants have sought to do before this court by virtue of the application under consideration. The applicants also seek a declaration under relief (ii) that the appointment of 2^nd, 3^rd and 4^th respondents as directors of the 1^st respondent company is wrongful and contrary to the company’s regulations and that under (iv) the 5^th and 6^th respondents have no locus to control and or manage the company, that is, the 1^st respondent herein. By relief (v) and (vi) the applicants say that it is unlawful for the 7^th respondent to enter the names of the 2^nd, 3^rd, and 4^th respondents as directors and also the 2^nd respondent as secretary of the company. As a result of the reliefs which the applicants have set out in the motion paper, they pray the court under paragraphs (ix), (x) and (xi) for an order of perpetual injunction to restrain the 2^nd, 3^rd, and 4^th respondents from holding themselves out and acting as directors of the 1^st respondent company and also for the names of the 2^nd, 3^rd, and the 4^th respondents to be expunged from the records of the 7^th respondent as directors. The applicants also want an injunction to restrain the 5^th and 6^th respondents from taking control and managing the affairs of the 1^st respondent and also to prohibit them from visiting the quarry site of the 1^st respondent.

 

 

 

There is no doubt that all that the applicants seek by these reliefs is an order for the removal of the 2^nd, 3^rd, 4^th 5^th and 6^th respondents as directors of the company in addition to the removal of the 2^nd respondent as secretary to the 1^st respondent company. The court holds however that the removal of persons from directorship of companies is not one of the reliefs that could be obtained under section 217 and 218 of the Companies Act. In Pinamang vs. Abrokwa (supra), the court pointed out, among others, that:

 

The High Court had no jurisdiction under section 218 of Act 179 to hear and determine the relief seeking to remove the appellant as director and chairman because section 185 of Act 179 specifically provided for the procedure and mode for the removal of the director of a limited liability company. And it was only after an unsuccessful exercise pursuant to section 185 that resort to section 218 of Act 179 could be justified. Since there was no evidence to show that the respondents had unsuccessfully attempted to remove the appellant pursuant to section 185, that complaint should have been refused and dismissed in limine by the trial judge.

 

 

 

Under paragraph (viii) the applicants seek a declaration that being the legal personal representatives of Madam Rosina Austin Asante; they are holders of 50% of the shares of the 1^st respondent company. The applicants have exhibited exhibit B which shows that the 1^st respondent company was first incorporated in August 1977. Exhibit D is the result of a search conducted at the Registrar General Department on 12^th May 2015. It shows that the 1^st respondent had, as its first directors, one Paul Kwadjo Asante and Rosina Austin who were also the only shareholders of the company with one share each at its inception. Indeed, Rosina Austin also doubled as the secretary to the company as shown by exhibit D. Later, by a special resolution, the stated capital of the 1^st respondent was increased from ₵2,000 to ₵100,000 on the 17^th June 1985. Again, exhibit C shows that Paul Kwadjo Asante and Rosina Asante held the shares of the 1^st respondent equally. Exhibit A shows that Madam

 

Rosina Austin Asante died on the 23^rd December 2010. The respondents have not produced any document to contradict exhibit A filed by the applicants.

 

 

 

The respondents have denied that Madam Rosina Asante was a shareholder of the 1^st respondent company. Exhibit E, the result of a search conducted at the Registrar General’s Department also shows that Paul Kwadjo (spelt Kojo) Asante transferred a number of shares to Partenag Investments Limited on the 15^th January 2017.

 

By exhibit J attached to a supplementary affidavit in support of an application for interlocutory injunction, the Registrar General’s Department has pointed out that there appears to be fraud perpetrated on the 1^st respondent company by way of the shareholding structure of the company as well as the shareholders of the company and that the signature of Paul Asante seems to have been forged. The court is therefore left in no doubt that some form of fraud seem to have been perpetrated which ought to be thoroughly investigated to find the culprits so they could be dealt with and also to find the true position regarding the shares of the company. There is evidence to the effect that the matter is before the police and is being investigated. Thus, clearly, the allegation of fraud made by the applicants herein cannot, in the view of the court, be properly and thoroughly dealt with on the strength of the affidavit evidence before the court. The issuance of a writ in this regard would afford the court a greater opportunity to investigate the matter completely. The court holds the view that the relief sought by the applicants in paragraph (viii) is not one of the reliefs that members of a company could seek under section 217 or 218 of the Companies Act. Indeed, as a follow up to the relief stated in (viii), the applicants pray for an order for the rectification of records by the 7^th respondent to the effect that the applicants are 50% shareholders of the 1^st respondent company.

 

 

 

The mode and manner in which legal personal representatives may be registered as shareholders of a limited liability company is set out under section 99 (2) of the Act.

 

(2) A person on whom the ownership of a share or debenture devolves by reason of that person being the legal personal representative, receiver, or trustee in bankruptcy of the holder, or by operation of law may, on that evidence being produced as the company may properly require, be registered personally as the holder of the share or debenture or transfer the same to some other person and the transfer shall be as valid as if that person had been registered as a holder at the time of execution of the transfer.

 

 

 

Thus, under section 99(2) of Act 179, where a person is a legal personal representative of a deceased shareholder, it is incumbent on the said legal personal representative, where he desires to be registered as the holder of the shares of the deceased person, to first produce the evidence of his representativeness to the company concerned and then apply to the company to be registered personally as the holder of the shares of the deceased person. It is significant to point out that under section 99(3) of Act 179; the company has no right to refuse to register the legal personal representative as the holder of the shares of the deceased shareholder. Under that section, the company may refuse to register a share transfer by the legal personal representative but the company lacks the right to refuse to register the legal personal representative as a holder of the shares in his own right. It is only where evidence of the representativeness had been produced and the company has refused to register the legal personal representative as the holder of the shares that an action may be brought by the legal personal representative to compel the company to register the shares in his name. For, as was pointed out in the case of Boyefio vs NTHC Properties Ltd [1997-1998] 1 GLR 768 that

 

The law was clear that where an enactment had prescribed a special procedure by which something was to be done, it was that procedure alone that was to be followed.

 

 

 

In the instant matter, the applicants have not shown that they have furnished the 1^st respondent with evidence that they are the legal personal representative of Madam Rosina Austin Asante. There is no evidence that the 1^st respondent has refused to register the applicants as the holder of the shares originally held by Madam Rosina Austin Asante. Hence, it is premature for the applicants to pray the court for the declarations which they seek that the legal personal representatives of Madam Rosina Austin Asante (deceased) are the holders of 50% of the shares of the 1^st respondent. In the same manner, it is premature for the applicants to pray the court to order rectification of the records of the 7^th respondent to the effect that the legal personal representatives of Madam Rosina Austin Asante (deceased) are 50% shareholders of the 1^st respondent. In addition to the above, it is the opinion of the court that the reliefs stated in paragraphs (viii) and (xii) are not the kind of reliefs that members of a company may obtain under section 217 and 218 of the Companies Act, 1963, Act 179 as the applicants have sought to do. Applicants seek a declaration also that the opening and operation of a new bank account with UT Bank, Koforidua branch, by the 2^nd, 3^rd and the 4^th respondents, in the name of the 1^st respondent, is unlawful and contrary to the Regulations of the company and for that matter, the applicants pray for an order for the closure of the said bank account.

 

 

 

In the opinion of the court, the opening of a bank account for a limited liability company and the operation of such account is a matter for the decision of the management of the company and it is not for the court to decide in which bank and or at which branch such an account may be opened and operated. And, unless there is evidence that the account has been opened to further a criminal purpose, a court may not intervene in such matters to order the closure of a company’s bank account. In the instant matter, short of a deposition that the 2^nd respondent has opened a bank account in the name of the 1^st respondent, there is no evidence to show that the account was illegally opened or that it is being used for an illegal or unlawful purpose. Besides, the relief sought in this regard cannot be obtained under section 217 and 218 of the Companies Act. Finally, the applicants want an order of the court to compel the board of directors to convene a board of directors meeting and thereafter a general meeting of the members of the 1^st respondent company to consider the accounts of the 1^st respondent. This request is made by the applicants under section 162 of the Companies Act which provides that

 

162.  Power of Court to order meeting

 

(1) If for a good reason it is impracticable to call a meeting of a company in a manner in which meetings of that company may be called, or to conduct the meeting of the company in the manner prescribed by the Regulations or this Act, the Court may, on the application of a director or member of the company, or of the Registrar, order a meeting of the company to be called, held and conducted in the manner directed by the Court; and that order may give any ancillary or consequential directions that it thinks expedient.

 

(2) A meeting called, held and conducted in accordance with an order under subsection (1) shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.

 

 

 

It ought to be pointed out that a member of a company may not resort to the provisions in section 162 of the Companies Act as a point of first instance where the member desires that a meeting of the company be called. Meetings of a company may be called in accordance with the Regulations of the Company and in accordance also with the provisions of the Companies Act. It is only when an applicant can show or prove to the satisfaction of the court that, for good reason, it is not practicable to call a meeting of the company in accordance with the dictates of the company’s Regulations and the Act on how meetings of the company is to be called and conducted that an application may be made under section 162 for an order of the court for such meetings to be called and or conducted. In the instant matter, the applicant had deposed in paragraph 24 of their affidavit in support that:

 

24. That at every material time upon the demise of the 1^st deceased on 23^rd December, 2010, the applicants herein have never been invited for any Annual General Meeting (AGM) nor meeting of Board of Directors and accounts have never been rendered over the period.

 

 

 

It is the view of the court that the above deposition by the applicant does not satisfy the requirements of section 162 of the Companies Act. Indeed, the fact that a member of a company has not been invited to attend an annual general meeting of the company for a number of years is no reason to make an application under section 162. In order to succeed on a section 162 application, the applicant must prove that for good reason, it is not practicable to convene a meeting of the company in accordance with the provisions of the Regulations and the Act. The applicants herein have not shown any good reason why meetings of the company cannot be convened in the usual way or manner. It has been submitted on behalf of the applicants that:

 

It is the case of the Applicants that they have never been invited to any meeting of the 1st Respondent since 2010 even though the 1st Respondent and the 2nd Deceased had notice of the fact that the Applicants are the Personal Legal Representatives … and are therefore entitled to receive notices of both general meetings and extra ordinary meetings, to attend same, speak at such meetings and to vote accordingly.

 

 

 

However, as stated, among others, in section 99(4) of the Companies Act, the legal personal representative, like the applicants “shall, prior to registration of that person or a transferee, be entitled to the same dividends, interest and other advantages as if that person were the registered holder and, in the case of a share, to the same rights and remedies as if that person were a member of the company, but that person shall not, before being registered as a member in respect of the share, be entitled to attend and vote at a meeting of the company.” (The emphasis is mine) The implication of section 99(4), in the opinion of the court is beyond reasonable debate in that, whereas legal personal representatives of deceased shareholders of limited liability companies have the right to enjoy certain advantages such as the right to be paid dividends, interest among others, such persons are excluded from enjoying the privilege of attending meetings of the company and voting at such meetings before they are registered as shareholders in place of the deceased shareholder. In other words, legal personal representatives cannot, in law, attend meetings of the company and vote at such meetings before they are officially registered as shareholders. Thus, the applicants, not having been registered as the holders of the shares of Madam Rosina Austin Asante (deceased), have no right to attend the meetings of the 1^st respondent company and vote thereat. A fortiori, they cannot therefore pray the court for an order “for the convening of a board of directors meeting and thereafter a general meeting of the members of the 1^st respondent company” for any purpose whatsoever. Their prayer in this regard, quite apart from the fact that it cannot be sought, generally, under section 217 and 218 of the Companies Act, can also not be countenanced by the court.

 

 

 

A critical examination of the reliefs sought by the applicants shows that they are, generally, declaratory in nature and essentially are not the kind of reliefs envisaged under section 217 and 218 of the Companies Act and therefore in the candid opinion of the court cannot be properly prosecuted by the mode of originating motion on notice as the applicants have sought to do. See Laryea vs. Macvroom [1991] 1 GLR 190. In Asafu-Adjaye vs Agyekum [1984-1986] 1 GLR 383, C.A., the court pointed out that

 

An application under section 218 (1) (a) of Act 179 seeking a declaration that the affairs of a company were being conducted in a manner oppressive of a director or a shareholder must be by a writ setting out the relief sought in the application itself, otherwise it would disclose no cause of action.

 

 

 

From the foregoing, the court is of the opinion that even though the applicants may have grievances in respect of some of the reliefs they are seeking, the court does not think that the procedure adopted by the applicants by invoking the jurisdiction of the court per originating motion on notice is proper in the circumstances of this case. The application will therefore be dismissed.