Plaintiff claims the following endorsement on its writ issued against the Defendants jointly and severally

a. Gh¢200,000.00 being the principal amount Plaintiff invested in the 1^st Defendant company

b. Gh¢31,912.33 being the agreed return on the investment or interest up to August 29, 2015

c. Interest on Gh¢200,000.00 from August 30^th 2015 till date of final payment at 32% per annum.

d. Interest on Gh¢31,912.33 from 30^th August 2015 till date of final payment at 32% per annum.

e. Cost inclusive of legal fees.

The plaintiff provides the basis of her claim to the reliefs she seeks in the amended statement of claim that accompanied the writ. Plaintiff who styles herself as a business executive and a lawyer by profession describes 1^st Defendant as a company with 2^nd to 4^th Defendants being the directors of the 1^st Defendant. That by virtue of an investment agreement on the 28^th of February, 2015 between herself and the 1^st Defendant, she invested an amount of Gh¢200,000.00 into the 1^st Defendant company with a tenure of 182 days subject to renewal upon expiration with an interest rate of 32% per annum. Plaintiff states that it was agreed between the parties that an amount of GH¢31,912.33 was to be the total interest with the maturity date being August, 29, 2015. That on due date 1^st Defendant failed to pay the interest and neither was her principal amount refunded to her. She claim that 2^nd Defendant pleaded for more time to pay the monies by the 30^th of November, 2015 but has failed to do same.

With the persistent failure of the Defendants to refund her monies, she asseverates that she was compelled to conduct searches at the Registrar General’s on 1^st Defendant Company and also notified Bank of Ghana of the failure of Defendants to refund her investment to her. To Plaintiff the response of the Registrar General showed that the 1^st Defendant was incorporated on 2^nd April, 2014 but had not been issued with a commencement certificate with its stated capital being Gh¢1,000,000.00. Plaintiff avers that 2^nd, 3^rd and 4^th Defendants knowingly used 1^st Defendant to transact business when they knew that it had not been issued with a certificate to commence business. She further avers that 2^nd, 3^rd and 4^th Defendants violated the minimum paid up capital and liquidity requirement of the Bank of Ghana regulations for Microfinance institutions by taking an amount of Gh¢200,000.00 when the stated capital of the 1^st Defendant was Gh¢100,000.000.00. And that 2^nd, 3^rd and 4^th Defendants as directors have misled her by taking her money and refused to refund same. She therefore prays the court for the lifting of the corporate veil of 1^st Defendant for the 2^nd, 3^rd and 4^th Defendants to be reached for redress.

With 1^st and 2^nd Defendants failing to enter appearance and file a defence within the stipulated period granted by the rules of Court, judgment in default of appearance was entered against 1^st and 2^nd Defendants. Upon an application by the 2^nd Defendant the judgment entered against 2^nd Defendant was set aside and leave was granted him to defend the action. As the judgment entered against 1^st Defendant has not been set aside, the statement of defence on record are those of 2^nd Defendant. The 3^rd and 4^th Defendants filed a joint amended statement of defence.

AMENDED STATEMENT OF DEFENCE OF 2^nd DEFENDANT

Save the fact that Plaintiff entered into an agreement with 1^st Defendant as a corporate entity 2^nd

Defendant has denied the essential averments made by the Plaintiff against him claiming that 1^st Defendant is a separate legal entity for which he was just an executive director and never acted in his personal capacity. 2^nd Defendant claim further that 1^st Defendant informed its investors of its financial difficulties and 2^nd Defendant never gave any personal guarantee to any investor. And that at all material times he acted as a director on behalf of 1^st Defendant and if there was any claim of Plaintiff at all it should be against 1^st Defendant.

AMENDED STATEMENT OF DEFENCE OF 3^RD AND 4^TH DEFENDANTS

The 3^rd and 4^th Defendants claim that though they are directors of 1^st Defendant company but they are not involved in the day to day running of the entity and therefore Plaintiff was unknown to them. And that 2^nd Defendant has never accounted to them in respect of the transaction of Plaintiff and are not even aware if 2^nd Defendant lodged the monies of Plaintiff into the accounts of 1^st Defendant. 3^rd and 4^th Defendants further avers that by law the acts of 1^st Defendant are not their acts as directors and did not act on behalf of 1^st Defendant in the transaction of Plaintiff in issue. To 3^rd and 4^th Defendants the 1^st Defendant was issued with a certificate to commence business on the 15^th of January, 2015 with a change of name from G-Life Financial Services Ltd to G Life Microfinance Ltd. They categorically deny having personally used the money of Plaintiff or presided over its disbursement. That with no allegation of fraud against them by Plaintiff and with 1^st Defendant being a legal person, it ought to be allowed to settle its just debt as they have not used the company to engage in any improper business. To them it would be a miscarriage of justice for the corporate veil of 1^st Defendant to be lifted.

REPLY

Plaintiff joined issues with the Defendants in her reply contending that the incorporation of 1^st

Defendant brought into being a new and a different company and 1^st Defendant cannot claim to use the certificate of incorporation of a different company.

ISSUES FOR TRIAL

With the pretrial hearing failing to amicably resolve the issues the following three issues were arrived at as the issues for determination for the court:

i. Whether or not the 2^nd, 3^rd and 4^th Defendants violated the liquidity requirements of the Bank of Ghana regulations for Microfinance institutions.

ii. Whether or not the 2^nd, 3^rd and 4^th Defendants are liable to the claim of Plaintiff

iii. Any other issue(s) arising from the pleadings.

THE EVIDENCE

Plaintiff testified in person and did not call any witness. She tendered the following exhibits in line with her pleadings before the court:

Exhibit ‘A’ – The investment agreement signed between Plaintiff and 1^st Defendant company where an amount of GH¢200.000 was invested by Plaintiff.

Exhibit ‘B’ – A letter of demand dated 18^th December, 2015 from Plaintiff to 2^nd Defendant requesting for her money invested together with interest.

Ex ‘C’ – A letter of complaint to the Financial Stability Department of the Bank of Ghana.

Ex ‘D’ – A Letter from Registrar General’s Department providing the company profile of 1^st Defendant.

Ex ‘E’ – Another letter from Registrar General’s Department notifying Plaintiff that 1^st Defendant did not have a certificate to commence business.

Ex ‘F’ – Extract of a newspaper advertisement of the liquidity requirement expected of Microfinance companies from Bank of Ghana.

Ex ‘G’ – Another response from Registrar General’s Department of the company profile of 1^st Defendant.

Ex ‘H’- Further results of searches showing that 1^st Defendant had never been issued with commencement certificate.

On the other hand 2^nd Defendant testified in person and tendered the following as exhibits:

Certificate of Incorporation of 1^st Defendant as Ex ‘1’

Certificate of incorporation of a company by name G-Life Financial Services Ltd as Ex ‘2’.

A certificate to commence business issued to a company called G-Life Financial Services Ltd as Ex ‘3’.

3^rd Defendant also testified on his own behalf and that of 4^th Defendant contending that it had little involvement in the running of the 1^st Defendant and knows little about the monies paid by Plaintiff. 3^rd Defendant also tendered a Bank of Ghana notice issued to Banks, Non – Bank Financial institutions and the general public as Ex 4’.

With judgment having been entered against the 1^st Defendant company as far back as 26^th of April, 2016 for all the reliefs endorsed on the writ, and examining the issues set down and those arising from the pleadings, it appears that the germane issues are whether the corporate veil shrouding the 1^st Defendant should be pierced in order to make the 2^nd, 3^rd and 4^th Defendants as directors severally and personally liable for the debts and acts of 1^st Defendant. I think it is under this broad issue that the allegation of whether there was a breach of the Bank of Ghana minimum liquidity requirement for microfinance institutions would be examined.

EVALUATION OF THE EVIDENCE

In her amended statement of claim Plaintiff claim in paragraphs 17, 18 and 19 that the 2^nd to 4^th Defendants have used the 1^st Defendant to engage in improper business conduct and prays for the lifting of the corporate veil to hold them personally liable. She moves further to state in her testimony in the form of the witness statement at paragraph 26 that the 2^nd to 4^th Defendants used 1^st Defendant to transact business when they knew well that 1^st Defendant had not been issued with a certificate to commence business. And by so doing had used the company to engage in improper business conduct. This plus the claim of the breach of the liquidity requirement is what has compelled Plaintiff to demand the lifting of the corporate veil. 2^nd Defendant answer to the call by Plaintiff to the lifting of the corporate veil in the evidence before the court is as follows: that the claim of Plaintiff should be against the 1^st Defendant, which is a legal entity as the directors of the company did not give any personal guarantee to be liable for the debts of the Plaintiff. 2^nd Defendant claim that the 1^st Defendant had a certificate to commence business issued in 2010 and there was nothing untoward. 3^rd Defendant in fact corroborates the claim of 2^nd

Defendant that 1^st Defendant incorporated as G-Life Financial Services was given certificate to commence business.

If indeed it is true that 1^st Defendant carried on business without a certificate to commence business having been issued by the Registrar General, then that can be a ground for the lifting of the corporate veil and hold the directors responsible for such a conduct personally liable for violations of the Companies Act, Act 179 and the consequences of their actions that has resulted in losses to the Plaintiff. Exhibit ‘E’ being a letter from the Registrar General dated the 30^th of December, 2015 states emphatically that:

“Reference your letter dated the 22^nd December on the above subject matter… the company has not been issued with a ‘commencement certificate’.

Further light is thrown by the Registrar General in Ex ‘H’ as to why the certificate to commence business had not been issued to the 1^st Defendant in the following:

“Search conducted on record revealed that the commencement certificate for the above company was not issued. There was an application for the commencement certificate on 5^th December, 2014. The Registrar-General’s Department requested for the license from the Bank of Ghana to enable us issue the certificate to Commence Business but they were unable to furnish us with that, hence our inability to issue them with a certificate to Commence Business to date”.

If it is true as the Defendants contend that it did not need another certificate to commence business upon incorporation of 1^st Defendant, why then did it write to the Registrar in December, 2014, as the Registrar indicates for certificate to commence business? This evidence has however been contradicted by the defendants. When 2^nd Defendant came under cross examination on the 11^th of July, 2017 this is what transpired:

Q: Your company, G-Life Microfinance Ltd, the 1^st Defendant did not have a certificate to commence business

A: My Lord, the 1^st Defendant had a certificate to commence business

Q: I am putting it to you that the 1^st Defendant did not have a certificate to commence business

A: My Lord the 1^st Defendant had a certificate to commence business”.

What the 2^nd, 3^rd and 4^th Defendants claim to be a certificate to commence business issued to 1^st Defendant is Ex ‘3’. Indeed Ex ‘3’ is a certificate to commence business issued on the 15^th of January, 2010 to a company by name G –Life Financial Services Ltd. This company is not the same as 1^st Defendant company, I so find and hold. The 2^nd to 4^th Defendants have argued that what happened was just a change of name and therefore the certificate to commence business issued in the name of G Life Financial Services Ltd could appropriately be used by G Life Microfinance Ltd. 2^nd to 4^th Defendants are gravely mistaken. Certificate of incorporation issued by the Registrar General for 1^st Defendant was supposed to have been followed up by certificate to commence business as the objects of a Microfinance company is not the same as the provision of financial services. Exhibit D1 which is part of 1^st Defendant’s profile at the Registrar-General clearly shows that 1^st Defendant was incorporated on the 2^nd of April, 2014 and a company that came into existence on that date could not have used a certificate to commence business issued in 2010. I therefore find as fact that 1^st Defendant conducted business when it had not legitimately been issued by the Registrar General with a certificate to commence business. A company limited by shares requires a certificate to commence business and that certificate could only be issued after the company has satisfied the Registrar of Companies the requirements spelt out under sections 27 and 28 of Act 179. It is some of these requirements that the Registrar notes in Ex ‘H’ that it requested 1^st Defendant to provide it and 1^st Defendant failed to provide. What then happens when a company conducts business without a certificate to commence business not having been issued to such a company? The penalties for such breaches have been listed in section 29 of the Act. And they include a fine, the rights of the company under any contract cannot be enforced, etc. The penalties dovetail into lifting the corporate veil which I will deal with shortly after I have tackled the allegation of a breach of the liquidity requirement of Bank of Ghana.

CLAIM OF VIOLATION OF THE LIQUIDITY REQUIREMENT FOR MICROFINACE COMPANIES BY BANK OF GHANA

Plaintiff has contended as one other ground for the court to lift the corporate veil and hold the directors accountable is the allegation of the violation of the Bank of Ghana liquidity requirement for microfinance companies by taking an amount of Gh¢200.000.00 when its stated capital was only Gh¢1,000.000.00. This point becomes meaningful when a look is taken at Ex ‘F’ which is a Bank of Ghana notice guidelines issued in 2013. On liquidity requirements on amount of deposit transaction, it notes that it shall not exceed 5% of the institution’s paid up capital. Plaintiff claim that the amount paid by her to 1^st Defendant constitutes 20% and is way beyond what 1^st Defendant was expected to have taken from her as one person. I have carefully read the written address of counsel for 2^nd Defendant in which there is a strenuous attempt to claim that the amount of Gh¢200.000.00 paid by Plaintiff was not a deposit but rather an investment. This artificial distinction is misconceived. Black’s Law dictionary, 8^th edition defines deposit as

“The act of giving money or other property to another who promises to preserve it or to use it and return it in kind”.

Various kinds of deposit are spelt out to include demand deposit, direct deposit, fixed deposit, frozen deposit, general deposit, special deposit. It appears therefore that deposit is a general word wide enough to embrace deposit in the nature of investment as evidence in Ex ‘A’ and the claim that the investment made is not covered by Ex ‘F’ restriction is completely misplaced. Again counsel for 2^nd Defendant has submitted that Ex ‘A’ was not stamped and by virtue of section 32(6) of the Stamp Act, 2005 Act 689 that document evidencing the transaction ought to be excluded. The Supreme Court case of LIZORI LTD v EVELYN BOYE J4/8/2012 is also cited in support of this position. Assuming that even counsel is right that the court made a wrong call on the admissibility of that document being Ex ‘A’, does that change anything? 2^nd Defendant in her pleadings, evidence in chief and cross examination did not challenge the claim that an amount of GH¢200.000.00 was deposited or invested by the Plaintiff in 1^st Defendant company. A few examples on record will suffice. On Tuesday, the 11^th of July, 2017 this is what happened between counsel for plaintiff and 2^nd Defendant:

“Q: On the last adjourned date you agreed that G-Life Microfinance Ltd has still not refunded the money that the Plaintiff invested. That is correct

A: My Lord if you could clarify

Q: Let me say the principal

A: The principal has not been paid but the first interest has been paid

Q: The interest which was due for August 29, 2015 has not been paid

A: That is correct.

Q: Again this was also elicited during the cross examination of 2^nd Defendant:

You Mr. Oppong produced the investment agreement that was executed between the 1^st Defendant and the Plaintiff

A: My Lord that is the investment agreement we use for the company, and as an officer of the company I executed as I have been mandated

Q: Based on the agreement the Plaintiff gave you Ghc 200.000 as investment

A: My Lord the Plaintiff did not give me personally. The plaintiff requested for the account of the company and the Plaintiff paid the said amount into the account of the company that we gave her.

Q: So you are telling the court that the Plaintiff herself deposited Ghc200.000 to the account of 1^st Defendant

A: Yes, the Plaintiff paid into the account of the 1^st Defendant”.

All these answers elicited constitutes unequivocal admission of the receipt of an amount of Ghc200.000 by the company. It is a trite principle of law that where a matter alleged by a party is not challenged or admitted by the opponent then no issue is joined on that point to call for further evidence on it. See FOLI v AYIREBI [1966] GLR 627; TAKORADI FLOUR MILLS v SAMIR [2005-2006] SCGLR 882. The claim of receipt of Ghc200.000 by 1^st Defendant was not disputed by the Defendants and was established beyond dispute and the admission of Ex ‘A’ into evidence was only superfluous.

CAN THE CORPORATE VEIL BE LIFTED TO ATTACH THE DIRECTORS?

It is an elementary principle of law that a company has an independent legal personality from its directors or shareholders. Once incorporated it becomes distinct, separate and artificial legal personality. This is the locus classicus established in the case of SALOMON v SALOMON [1895-6] ALL ER 33. This principle was re-echoed in the case of MORKOR v KUMA (EAST COAST FISHERIES CASE) [1998-1999] SCGLR 620 @632 that:

“Save as otherwise restricted by its Regulations, a company after its registration has all the powers of a natural person of full capacity to pursue its authorized business. In this capacity a company is a corporate being which within the bounds of the Companies Act, 1963, Act 179 and the Regulations of the Company may do everything that a natural person might do…. In its own name it can sue and be sued and it can owe and be owed legal liabilities…”

This is the time honoured rule in company law. However like any rule it is not sacrosanct and what is termed as the figurative corporate veil may be pierced. Is the evidence on record enough to justify the court piercing the corporate veil? The corporate veil is not pierced lightly. There must be evidence that the company was set up as a sham and used for the perpetuation of fraud or it never had an independent existence. See ATLAS MARITIME CO SA v AVALON MARITIME LTD [1991] ALL ER 769; MAJDOUB & v W BARTHOLOMEW & CO LTD [1962] 1 GLR 122; OWUSU v THORNE LTD [1966] GLR 90. In law the corporate veil may be lifted by one, the Companies Act, Act 179, or two by some other legislation and three by the court when it is just and fair to lift the corporate veil. The veil could be lifted under the Companies Act, Act 179 in one of the following ways: when a company carries on business for more than six months without a member under section 38 of the Act, second, when a company carry on business for more than four weeks after the number of directors have fallen below two under section 180 of the Act. Three when there is a violation of the following sections of Act 179 – section 121(1)(2) regarding failing to affix its name at a conspicuous place, when there are breaches of sections 27 and 28 as spelt out in section 29 when a company fails to furnish the Registrar in duplicate vital information on the directors and finally when a company breaches the minimum capital requirement.

There are other laws whose breach may invite the lifting of the corporate veil. One is when in the course of official winding up of a company under the Bodies Corporate (Official Liquidation) Act, Act 180, it appears that the companies business had been carried out with intent to defraud creditors of the company and two where there had been massive violations of the Internal Revenue Act, 2000, Act 592. Can there also be the lifting of the veil where the court finds it just and equitable to do? In the MORKOR case supra, Sophia Akuffo JSC (as she was then) noted that the courts will lift the corporate veil if:

“the corporate barrier between the company and the persons who constitutes or run it may be breached only under certain circumstances. These circumstances may generally be characterized as those situations where in the light of the evidence, the dictates of justice, public policy or the Companies Act itself so requires. it is impossible to formulate an exhaustive list of the circumstances that will justify a lifting of the corporate veil. However the authorities indicate that such circumstances include where it is shown that the company was established to further fraudulent activities or to avoid contractual liabilities, the veil will be lifted”

Among some of the factors that will make a court exercise its discretion to lift the corporate will include, among others, where there had been fraud, improper business conduct, deliberate attempt at evasion of legal obligations, wilful misdeeds etc. It is true as learned counsel for 2^nd Defendant claim that Plaintiff has not pleaded fraud and th corporate veil cannot be lifted? Fraud the only ground for the lifting of the corporate veil. Varied grounds as shown supra. I have found as a fact that 1^st Defendant was operated by the three directors without a certificate to commence business. In that scenario the directors cannot claim that the liabilities of the company should be borne by the company. Interest of justice dictates that the court pierce the artificial veil behind which the directors erected to siphon the investment of the Plaintiff and hold them personally liable for the monies.

Besides, I have also found that there was a violation of the liquidity requirements of Bank of Ghana in taking the amount of Ghc200.000 from plaintiff. It will be a tragedy for the court to allow itself to be deluded by such legal sophistry of an artificial entity to be put up when in fact there was no such entity in practice but a conspiracy by the directors to strip innocent persons of their hard earned investment. Plaintiff succeeds in her application for the lifting of the corporate veil. The claim by 3^rd and 4^th Defendants that they were not personally involved in the running of 1^st Defendant cannot hold water as they are also directors of 1^st Defendant. 2^nd, 3^rd and 4^th Defendants, who are all Directors of 1^st defendant company are held by the court to be jointly and severally liable for the amount of Ghc200.000 together with interest which Plaintiff invested in 1^st Defendant and which had accrued in the sum of Ghc31,912.33 and other interest that have subsequently accrued to the Plaintiff.

I will exercise my discretion award cost of GH¢15,000.00 to cover for the cost of prosecuting the suit in the court.