Directors Duties under the 2019 Companies Act of Ghana

Kenneth N.O. Ghartey

Senior Lecturer, Law Department
Lancaster University Ghana

Abstract
The scope of directors’ duties forms perhaps the most important part of corporate
governance. This paper considers the trajectory of the regulation of directors’ duties
under Ghanaian company law from the Companies Act, 1963 (Act 179) to the
Companies Act, 2019 (Act 992). Using the 2017 to 2019 financial institutions’
insolvencies in Ghana as a backdrop, it considers whether the scope, formulation and
structure of directors’ duties within the new legislation is capable of promoting
corporately beneficial director behaviour. It also discusses whether the framework is
apt to deal with similar lapses in corporate governance marked by reckless and
opportunistic director behaviour. It discovers that Act 992 places a greater reliance on
specific rules while retaining the largely principles-based regulatory technique adopted
for regulating director conduct under Act 179. The overall tenor of the framework of
directors’ duties under the new Act points to a firmer legislative view of the serious
consequences of reckless director conduct. The paper concludes that the language of
the framework regulating director conduct is capable of promoting corporately
beneficially director behaviour and is also apt to deal with the kind of lapses in
corporate governance which led to mass financial sector insolvencies in Ghana.

Electronic copy available at: https://ssrn.com/abstract=3522178

1. Introduction
The new Companies Act, 2019 (Act 992) of Ghana was passed into law by Parliament
and assented to by the President in August 2019. Act 992 is the culmination of a fifteen-
year process of starts and stops to reconsider the original companies’ legislation drafted
by Professor Laurence Cecil Bartlett Gower in 1961. Gower’s role in that task was as
the Commissioner inquiring into the Working and Administration of Company Law in
Ghana on invitation by the first post-colonial Ghanaian government in 1959. Gower’s
1961 companies’ law draft1 was eventually passed by Parliament with little
modification in 1963 as the Companies Code, 1963 (Act 179)2.
The 1963 Act remained on Ghana’s statute books with little modification over the
course of fifty-six years. The substance of the four amendments to it excepting the last
amendment in 2016 were relatively minor in the context of the whole Act.3.The
amendments were made to bring some of the provisions of Act 179 in line with the
language of the 1992 Constitution of Ghana and other legislative developments. It is a
useful question whether this Act was ahead of its time in such a way that it managed to
meet the exigencies of the many years following its passage. Its very long stay on
Ghana’s statute books may also well be a testament to the achievement of the drafter
and then government’s desire in 1959 to produce a companies’ legislation really suited
to Ghana’s needs. Critics might also suggest that the relatively little change to and the
long life of Act 179 may be indicative of a very slow development of Ghanaian
company law over the six decades following its passage. In spite of these plausible
suggestions, it is still factual that about 80-85% of the 1963 Act still forms the
foundation of the new Companies Act, 2019 (Act 992).4 The 1963 Act therefore shares
a lot in common with its successor.
It is our task now to evaluate the changes to one of the more crucial parts of the new
law to determine how it accords with the need to regulate certain aspects of the modern
Ghanaian business. The area under consideration is the regulation of the conduct of
company directors. This area of company law receives a lot of academic commentary
and is very often the subject of judicial decision-making in the common law world.5
This is because directors are instrumental in the management of companies. They are

1
Appendix 1 – Draft Companies Code Bill to Final Report of the Commission of Enquiry into the
Working and Administration of the Present Company Law of Ghana, April 1961 hereafter Gower’s
Report.
2
Later renamed the Companies Act, 1963 (Act 179).
3
Amended by the Companies Code (Amendment) Act, 1980 (Act 421) itself substituted and repealed
by the 1997 Amendment Act (Act 531), Companies (Amendment) Act, 1994 (Act 474), the
Companies (Amendment) Act, 1997 (Act 531), the Companies (Amendment) Act, 2012 (Act 835) and
the Companies (Amendment) Act, 2016 (Act 920)
4
Author’s estimate.
5
The case law on directors’ duties in Ghana is not as developed as it should be after almost six
decades of the operation of tailored companies’ legislation.

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appointed to direct and administer the business of the company. 6 They form perhaps
the most important constituency in corporate governance. Directors can make and
unmake companies. The regulation of directors’ decision-making via the imposition of
directors’ duties by legislation and case law is a central theme within common law
company law. Corporate Governance has over the last few decades formed a distinct
and important subject matter. The matters composing it have been taken for discussion
outside of general company law itself and treated as a focus of sustained academic
inquiry on its own. To understand whether the 2019 reforms will prove satisfactory in
practice, we examine the state of the law on directors’ duties following the passage of
the new legislation.
This examination is timely when one considers the strong and as yet unrefuted
suggestion by regulators, social commentators, the media and persons within the
Ghanaian government that the mass insolvencies and associated revocation of the
licenses of over three hundred regulated financial institutions in Ghana between 2017
and 2019 are attributable to weak corporate governance and unscrupulous related party
activities.7 Because general data on corporate failures Ghana is very difficult to track
and is not systematically collected8, this highly publicized set of corporate failures in a
systemically important industry is a good backdrop to determine whether the
framework for regulating directors’ duties under Act 992 is able to meet the challenges
of ensuring director conduct aimed at long term business sustainability in a developing
country like Ghana.
The rest of the paper highlights the recent problems in Ghana’s finance sector which
have been attributed to weak corporate governance. This part provides a backdrop to
test the efficacy of the regulatory language to ensure good corporate governance. It
further sets the tone by discussing two of the most well-known regulatory techniques
in corporate law to determine which of these approaches reflect the approach taken
under the Ghanaian framework. In the main, the paper contains a discussion of the
scope of duty and the related standard of the duty of care owed by directors under the
old Companies Act. It then considers the scope of the duty and the design and standard
of the duty of care owed by directors under the 2019 Companies Act. It compares the
rules and principles regulating director conduct under the 2019 Act with those within

6
Companies Act 1963 (Act 179), section 179 and Companies Act 2019 (Act 992), section 170.
7
Business and Financial Times, ‘Poor corporate governance and the collapse of banks’ (B&FTonline,
August 13 2018) <https://thebftonline.com/2018/features/poor-corporate-governance-and-the-collapse-
of-banks/> accessed 16 September, 2018; Joy Business, ‘Poor corporate governance to blame for UT,
Capital bank collapse (Myjoyonline.com, 14 September 2017) <
https://www.myjoyonline.com/business/2017/september-14th/poor-corporate-governance-to-blame-
for-ut-capital-bank-collapse.php> accessed 16 September, 2018.
8
The Registrar-General’s Department, an agency under Ghana’s Ministry of Justice has historically
been responsible for the collection of company incorporation data. Manual databases over the years
and lack of funding and expertise has meant that real-time data on company processes and particularly
insolvencies have been hard to source.

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the 1963 Act by highlighting changes to and elaborations in the language adopted and
provides an opinion on what consequences these can or should have on promoting
positive director conduct in practice. Lastly, the paper provides a conclusion on
whether or not the language of the 2019 Act is capable of preventing the recurrence of
some of the recent lapses in corporate governance exemplified by the opportunistic
conduct by directors especially in systemically important Ghanaian businesses.

2.Weak Corporate Governance – a recent Ghanaian example

Starting from 2015, Ghana started experiencing bad business performance in its
financial industry. This was marked by incredible stories of bad director conduct,
reckless business decision-making and unscrupulous related party activity.
The first two casualties were the collapse of UT Bank and Capital Bank in August of
2017. In August of 2018, the licences of five more failed banks9 were withdrawn and
their viable assets consolidated by a ‘Purchase and Assumption’ Agreement under
which the deposits and selected viable assets and liabilities of the failed banks were
acquired and assumed by a newly formed bank, Consolidated Bank of Ghana Limited,
wholly owned by the Government of Ghana.10 This was in order to ensure continuity
and to protect depositors’ funds which were to be augmented by a Central Government
rescue fund. In this same period, the licenses of over three hundred other financial
institutions including microfinance and savings and loans companies were also
revoked.

The official account from the Central Bank, the Bank of Ghana, which is the regulator
of banking and other specialized deposit-taking business in Ghana11 is that problems
in the banking industry were founded on “supervisory weaknesses, regulatory
breaches, corporate governance failures, insider dealings, and accounting and financial
improprieties, among others”12 (author’s emphasis). Beyond the identified supervisory
weaknesses that were internal to the regulator, the other issues were all internal to the
banks. They were matters that could have and should have been prevented by proper
director conduct and effective managerial control. These are all therefore matters for
corporate governance, one way or another. This is amply demonstrated by the
interventions by the Central Bank in issuing new directives to banks and other financial

9
uniBank Ghana Limited, The Royal Bank Limited, Beige Bank Limited, Sovereign Bank Limited,
and Construction Bank Limited.
10
Bank of Ghana, Press Release: Bank of Ghana Establishes Ethics and Internal Investigations Unit to
Strengthen Good Governance Within The Bank <https://www.bog.gov.gh/notice/press-release-bank-
of-ghana-establishes-ethics-internal-investigations-unit/>, last accessed May 5, 2020
11
Section 4(d), Bank of Ghana Act, 2002 (Act 620) as amended and section 3(1), Banks and other
Specialised Deposit-Taking Institutions Act, 2016 (Act 930)
12
(n 10)

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institutions regarding corporate governance, risk management and the capital base of
banks among other things. Noteworthy among the directives issued by the Bank of
Ghana are a Corporate Governance Directive13 and a Fit and Proper Persons Directive14
which acknowledge the unscrupulous human element in the banks’ failures.

Many of the corporate governance lapses and regulatory breaches were underpinned
by unscrupulous related party activities.15 In one of the more egregious examples of a
total lack of director discretion and responsibility, the Official Administrator appointed
for one of the failed banks alleged in June 2018 that advances by the company’s
directors and management to shareholders and related parties totaled a little over 1.1
Billion US Dollars16 representing three quarters of that bank’s total assets. It was said
that many of these loans had no verifiable or incomplete origination documents and
checks.17 This was a recurring theme in the allegations which were made against the
directors of the seven main failed banks between 2017 and 2018.

While these banks and other specialized deposit-taking institutions are specially
regulated companies and therefore subject to further regulation beyond general
company law, the recent lapses in corporate governance within them provide a good
context within which to examine wider concerns about director conduct in general
Ghanaian company law. The health of all companies is relevant to the desired economic
growth within the country and this can be influenced to a large extent by directors doing
everything in their power to promote the interests of the company of which they are
directors. This can be influenced to a large extent by the nature and language of the
regulatory framework affecting directors’ duties and the proper enforcement of those
rules.

13
Bank of Ghana, ‘The Banking Business – Corporate Governance Directive 2018 - For Banks,
Savings and Loans Companies, Finance Houses and Financial Holding Companies’, December 2018 <
https://www.bog.gov.gh/notice/the-banking-business-corporate-governance-directive-2018/>, accessed
May 5, 2020.
14
Bank of Ghana, ‘Fit and Proper Persons Directive - For Banks, Savings and Loans Companies,
Finance Houses
and Financial Holding Companies, July 2019 < https://www.bog.gov.gh/wp-
content/uploads/2019/09/FIT-AND-PROPER-PERSONS-DIRECTIVE-2019.pdf>, accessed May 5,
2020.
15
Kenneth NO Ghartey, Regulating Related Party Activities in Ghanaian Banking, 1 August, 2018
<https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3522198> accessed May 05, 2020
16
5.3 Billion Ghana Cedis at a June 2018 conservative exchange rate of GHS 4.8 to 1 USD.
17
Bank of Ghana, Bank of Ghana, Press Release: ‘Government Establishes New Indigenous bank,
Bank of Ghana Revokes Licenses of Five Banks and Appoints Receiver in respects of their Assets and
Liabilities’, 1 August 2018 <https://www.bog.gov.gh/wp-content/uploads/2019/07/PRESS-RELEASE-
Grand-Final-August-2018.pdf> accessed May 7, 2020.

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3. Regulatory Techniques in Corporate Law
Traditionally, regulation of behaviour in corporate law has taken the form of either or
both of two alternatives. Regulation is primarily focused on corporate insiders like
shareholders, directors, and management. Obligations of conduct are imposed on
directors and may be prescribed by way of specific rules. Here, the rules prescribe
precisely what directors are or are not permitted to do. This is what is called rule-based
regulation. Obligations of conduct may also be set in more general terms by way of
principles or standards. The formulation of these principles or standards will then
accommodate a host of decision-making that may fall within the scope of a principle.
This is called standards-based or principle-based regulation.18
These two regulatory approaches come with their own advantages and disadvantages.19
While specific rules can clearly demarcate the scope of the conduct that is prescribed
and/or proscribed, specific rules, by their very nature, cover only limited circumstances
and are inflexible to accommodate future changes or new circumstances. Principles or
standards are set in broader terms. As such, principles are better able to accommodate
new situations within the legitimate scope of their formulation. This is considered
suitable for regulation in an uncertain future and new and changing sets of facts.20
There may however be legitimate circumstances, even if rare, when it may be unclear
whether particular behaviour is regulated by the language of a principle or standard of
behaviour. These ambiguities may be resolved by the courts by way of statutory
interpretation or less frequently a regulator’s statement of clarification.
Director conduct is regulated by both specific rules and also by standards and
principles. The preference in national general legislation appears to favour broad
standards and principles. These standards and principles may then be clarified or
elaborated by case law. It is by this means that behavioural expectations are set and
subsequent actions of directors are evaluated for conformity. The individual
constitutions of companies may also provide additional principles and specific rules
regulating behaviour. Under Ghanaian law as well, directors’ duties are regulated by
specific rules and by principles and standards informing expected standards of
behaviour.
The choice between standards and principles on one end and specific rules on the other
hand in regulating conduct during law reform may reflect a movement towards limiting
the judicial right to elaborate or clarify standards or to respond to specific instances of
delict.

18
David Kershaw, Company Law in Context: Text and Materials (2nd edn, Oxford 2012) 312.
19
ibid.
20
ibid.

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4. Directors’ Duties under the Companies Act, 1963 (Act 179)

Under the old Companies Act, 1963 (Act 179), at the core, a director had a duty of
good faith to the company with an additional obligation to exhibit competence and
exercise care in the performance of that director’s duties to the company. Under the
1963 Act, a director was constituted a fiduciary with an expected requirement to
‘observe the utmost good faith towards the company in a transaction with it or on its
behalf’.21 This is the foundation of the duty of care directors owed to the company. In
practice, the common law courts have held that a director constituted under law as a
fiduciary may not make a secret profit or advantage in a transaction on behalf of the
company. This is even the case where this may be mutually beneficial to both the
company and the director.22 A director cannot as a fiduciary have a personal interest
that conflicts with the interests of the company in matters conducted on behalf of the
company.23 Additionally, the director’s duty of good faith towards the company has
been declared by the courts to mean that a director cannot engage in unethical or illegal
conduct such as taking bribes.24 A host of other expectations of good conduct also flow
from the recognition of the director as a fiduciary.

4.1 The scope of the duty of care owed by directors under Act 179
Act 179 enjoined a director to ‘act at all times in what the director believes to be in the
best interests of the company so as to preserve its assets, further its business, and
promote the purposes for which it was formed, and in the manner that a faithful,
diligent, careful and ordinarily skilful director would act in the circumstances.’25 This
is the foundation on which the rest of the framework of the regulation of directors’
conduct on behalf of and towards the company is built. Let us call it the behavioural
benchmark.
What was the benchmark of care under Act 179? Is this behavioural benchmark marked
against an objective or subjective standard? The question of the threshold of skill
required to be a competent director under Act 179 is in one part an objective one i.e. in
the manner that a faithful, diligent, careful and ordinarily skilful director would act in
the circumstances. Here, the director whose conduct is being evaluated is compared

21
Companies Act 1963 (Act 179), s. 203 (1).
22
Boardman v Phipps [1967] 2 AC 46; unless done with the consent of the company under rules
provided under legislation or within a corporate constitution not at odds with the mandatory language
of legislation.
23
Commodore v Fruit Supply (Ghana) Limited [1977] 1 GLR 241, CA
24
Boston Deep Sea Fishing Co v Ansell (1888) 39 ChD 339.
25
Act 179, s. 203 (2).

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not to herself alone but to any other ordinarily skillful director in the circumstances.
This director need not be a superwoman and is not expected to be a highly intelligent
corporate law and business strategy expert. That director however cannot be a wholly
incompetent fool. She must be ordinarily skillful. This involves asking the right
questions and seeking the right information to decide on behalf of or in the name of the
company.
However, while the skill required is objectively evaluated, the formulation of the
behavioral benchmark permits a director to take a subjective view of what is in the best
interests of the company.26 In taking a decision, a director was required to ‘act at all
times in what the director believes to be in the best interests of the company as a
whole…’.27 The director is allowed room, in light of their own views, to take a decision
which to them will inure to the company’s benefit while also satisfying the law. In this
way, the independence of the director in decision-making is enhanced by negating the
tendency of a director to go along with other directors for the fear that her views may
be thought of as out of the ordinary and perhaps therefore unreasonable or less diligent
in the circumstances. This minimizes the tendency for herd behaviour. A requirement
to exercise independent judgment was implied in the language used to formulate the
behavioural benchmark.
The formulation of the scope of the duty of care owed by a director under section 203(2)
of the 1963 Act permitted the director to exercise judgment in a particular way among
a set of legitimate options. Except where the option chosen would not or could not have
been reasonably chosen by a commonly faithful, diligent, careful and ordinarily skilful
director, the decision taken should ordinarily be considered reasonable without more.
The design of the duty of care in the way that it was formulated under Act 179 is that
it has both subjective and objective elements in guiding the director on what they ought
to do in the best interests of the company as a whole.
The primary behavioural benchmark is supported by a few additional principles.
Directors are enjoined to act in the best interests of the company as a whole. But in
considering ‘whether a particular transaction or course of action is in the best interests
of the company as a whole a director may consider the interests of the employees, as
well as the members of the company, and when appointed, or as representative of, a
special class of members, employees, or creditors may give special, but not exclusive,
consideration to the interests of that class.’28 In spite of the fact that a director may give
consideration to interests of these identified classes, the director’s duty is owed
primarily to the company and in favour of the interests of the company as a whole. The
best interests of the company as a whole has been interpreted to mean what inures to

26
ibid.
27
ibid
28
Act 179, s. 203(3).

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the benefit of members/shareholders considered as a whole and not special class
interests alone.29 Indeed the Act indicates that an act by a director should preserve the
company’s assets, further its business and to promote the purpose for which it was
formed.30 This will ordinarily involve maintaining the capital and increasing profits of
the business. Under Act 179, unlike Act 992, there were no specific statements of what
factors the director may have regard to in considering what is or should be in the best
interests of the company as a whole.
Corporate decision-making at board level can be a complex business. A number of
interests often compete for place in the minds of directors. A legitimate choice on a
string of options available to individual directors in board level decision-making is one
where the directors avert their mind to what in their opinion within the circumstances
would best satisfy the greatest number of shareholders while preserving the company’s
assets, furthering its business and promoting the purposes for which it was formed. We
say the greatest number of shareholders because rarely will a corporate decision taken
at board level satisfy all the wishes and sometimes idiosyncratic and bespoke desires
of all individual shareholders. The likelihood of satisfying all shareholders at the same
time, all the time, is perhaps only remotely possible in the smallest of private companies
where management and shareholding is fused in the same small circle of individuals.
It is much more difficult in the context of large widely-held public companies where
typically the desires of shareholders except the largest or most influential ones is
neither known nor actively consulted by the board and/or management.

4.2 The standard of the duty of care under Act 179

In all of this, the director must take care in the way that a faithful, diligent, careful and
ordinary skillful director would. Kershaw provides three helpful attributes in what
taking care in the company context involves.31 First, a faithful and diligent director
must obtain relevant information. This helps the director to take an informed but
perhaps, on hindsight, not necessarily beneficial decision. Secondly, a director must
also be able to understand the information which she receives to inform her decision as
a director. Finally, the director must then take time to consider the information before
making the decision. What is enough time will depend on the complexity and long-
term effects and prospects of the decision.
If these proposed attributes of taking care is followed, not all corporate decision-
making by the board will still appear to be correct for all observers. It is therefore
important in evaluating whether a director has taken care in a particular decision to

29
Greenhalgh v Ardene Cinemas Ltd [1951] Ch 286, at (291) (Lord Evershed MR).
30
Act 179, s. 203 (2)
31
Kershaw (n 18) 345-346, 419

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avoid what has been called the hindsight bias problem.32 It is often easier to see the
weaknesses of a decision after the effects of the decision have played out. It is not
always possible to understand or account for every possible effect of a corporate
decision in which the director is involved. Directors are not therefore expected to be
magicians in satisfying the duty to take care. The skill required is that of an ordinarily
skilful director. The courts confirm this threshold.33 In considering the standard of
diligence and knowledge required of a director in a case in which directors were
accused of gross negligence for still proceeding with the purchase of very expensive
business assets when it had come to light that some of the information influencing the
decision were false, Neville J remarked that:
I have to consider what is the extent of the duty and obligation of directors
towards their company. It has been laid down that so long as they act honestly
they cannot be made responsible in damages unless guilty of gross negligence.
… In truth, one cannot say whether a man has been guilty of negligence, gross
or otherwise, unless one can determine what is the extent of the duty which he
is alleged to have neglected. A director's duty has been laid down as requiring
him to act with such care as is reasonably to be expected from him, having
regard to his knowledge and experience. He is, I think, not bound to bring any
special qualifications to his office. He may undertake the management of a
rubber company in complete ignorance of everything connected with rubber,
without incurring responsibility for the mistakes which may result from such
ignorance; while if he is acquainted with the rubber business he must give the
company the advantage of his knowledge when transacting the company's
business. He is not, I think, bound to take any definite part in the conduct of the
company's business, but so far as he does undertake it he must use reasonable
care in its dispatch.34 [Author’s emphasis]
Although the director is not required to bring a special qualification to the office, the
director in taking a decision must bring to the decision reasonable care. This test earlier
formulated in Overend & Gurney Co v Gibb35 was accepted by Neville J in re Brazilian
Rubber Plantations and Estates Limited.36 The test is this: that directors ought to be
‘cognisant of circumstances of such a character, so plain, so manifest and so simple of
appreciation, that no men with an ordinary degree of prudence, acting on their own
behalf, would have entered into such a transaction as they entered into’37 The especial

32
ibid, 419.
33
In re Brazilian Rubber Plantations and Estates Limited [1911] 1 Ch. 425,
34
In re Brazilian Rubber Plantations and Estates Limited [1911] 1 Ch. 425, 436-437.
35
(1872) LR 5 HL 480.
36
In re Brazilian Rubber Plantations and Estates Limited [1911] 1 Ch. 425.
37
Also discussed In Re City Equitable Fire [1925] Ch 407.

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ignorance of a particular director however true is not therefore one to absolve that
director of her responsibilities to the company.

4.3 Other aspects of directors’ duties under Act 179

Under the repealed Act 179, although a director was permitted to exercise a measure
of subjective judgment in corporate decision making, directors were proscribed,
without the approval of a resolution to exceed the powers granted under the Act and
the corporate constitution although they may believe the exercise to be in the best
interests of the company. 38 The director’s obligation further extends to a duty to avoid
conflict between the director’s personal interest or duties to other persons and her duty
to the company.39 The existence or the possibility of such conflict may be overcome
by the director seeking the consent of the company but only after a full disclosure of
all material facts, including the nature and extent of the interest of that director.
Additionally, the transaction should have been specifically authorized by an ordinary
resolution of the company.40 This approval is given by the vote of members which
should exclude the votes of the director (as a shareholder) and those of her nominees
who have a right to vote. A director who is materially interested in a contract or
proposed contract ought to declare the nature and extent of her interest in that
transaction at a meeting of the directors of the company.41 All these rules are aimed at
ensuring fidelity by the director to the company.

Directors were however permitted to act either personally or by the firm of that director
in a professional capacity for the company except as an auditor for the company; for
obvious reasons. In that case, the director or her firm is entitled to receive proper
remuneration for those professional services in spite of the fact that that director is a
director of the company.42At first glance, this may appear to be inviting possible abuse
by setting high remuneration for services provided by a company’s directors in a
professional capacity to the company. The risk cannot be discounted. There is however
value in allowing directors to act in a professional capacity to the company despite this
risk. The company can take advantage of more competitive prices for professional
services. Confidentially and economically sensitive corporate information that may
have to be provided as part of receiving professional services will also be shared with
a smaller number of insiders where the directors also act for the company
professionally.

38
Act 179, s. 204.
39
ibid s. 205.
40
ibid s. 206 (1).
41
ibid s. 207 (2).
42
ibid s. 208

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4.4 Consequences for breach of director’s duties under Act 179
All regulation aimed at influencing behaviour will be ineffectual unless there are
consequences for breach. In line with this reality, Act 179 provided for civil liabilities
for the breach of a director’s duty of good faith towards the company and the related
obligations to demonstrate competence, give due care to decision-making and to avoid
conflicts of interests. The remedies available to the company are against the director
and any other person who knowingly participated in the breach. The first of these is for
the director to compensate the company for the loss it suffers as a result of the breach.43
Secondly, a director can be compelled to account to the company for a profit made by
the director as a result of the breach.44 Equitable rules of tracing may further be called
upon in addition to the statutory sanction to trace company funds and other property
transferred unlawfully into the hands of outsiders to the company. The company was
also given a right to rescind a contract or other transaction entered into between the
director and the company which involved a breach of the duties owed by directors to
the company.45
Proceedings to enforce the liabilities granted under the Act for both actual and
threatened breaches of a director’s duties may be instituted by the company itself or by
a member of the company.46 These proceedings may also be instituted by the company
on the authority of the board of directors or of a receiver and manager or liquidator of
the company or by an ordinary resolution of the members. This is a widening of what
is oft-called the proper plaintiff rule which asserts that the company is the proper
plaintiff in a suit to remedy a wrong done to the company.47 Typically the company
brings the action on the directions of or under the authority of the Board. Yet, it is also
acknowledged that sometimes the Board which has the responsibility to bring the
action in the name of the company are the very ones occasioning the wrong to the
company.48 Since it is far-fetched that the directors will bring a potentially punitive
action against themselves, the right to bring the action in the name of the company is,
in a host of special cases, was extended to members, receivers, managers and
liquidators to ensure that there are more avenues to enforce the liabilities resulting from
the breach of directors’ duties.49 Under Act 179, this was limited to specially identified

43
ibid s. 209 (a).
44
ibid s. 209 (b).
45
ibid s. 209 (c).
46
ibid s. 210 (1).
47
Foss v Harbottle (1843) 67 ER 189, (1843) 2 Hare 461
48
Edwards v Halliwell [1950] 2 All ER 1064
49
Legal proceedings by the company or member to enforce the civil liabilities under section 210, Act
179; by a member for an injunction or declaration in the event of illegal or irregular activity under s.
217, Act 179; by a member, debenture holder, the Registrar of Companies for a remedy against
oppression under s.218, Act 179; in representative actions by a member under s. 324, Act 179 and by a

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circumstances. There was no real equivalent of a statutory derivative action under Act
179. The right to sue brought by the shareholders was specifically in respect of the civil
liabilities for breach of directors’ duties and did not encompass other wrongs done to
the company outside of this scope. The closest to a statutory derivative action in Act
179 was the provision for representative actions50 in which a member of shareholders
generally or of a class of shareholders and other stakeholders such as debenture holders
may sue on their own behalf and in a representative capacity on behalf of all other
members of that class in matters concerning them. A representative suit was, of course,
not brought in the name of the company although in limited cases, the option of a
representative suit could achieve the same objects that a statutorily sanctioned
derivative action could provide. The above therefore cover how effect could be given
to the directors’ duties, by way of consequences for breach, under Act 179.

5. Directors’ Duties under the Companies Act, 2019 (Act 992)

The regulation of director conduct continues under the Companies Act, 2019 (Act 992).
Before the passage of Act 992, there was a strong call for the stricter regulation of
director conduct especially in businesses whose collapse can have systemic
consequences.51 Under the new Act also, the regulatory techniques continue as both
rules and principles.
Has anything changed in the scope of directors’ duties under Act 992 from Act 179?
The answer is yes. In a large measure, the framework for regulating director conduct
under both Acts has the same structure.52 The nature of the scope of the duty of the
care53, the formulation of the standard of the duty of care (the behavioural
benchmark)54, consequences for breach55 and the options to bring legal proceedings to
enforce those liabilities56 remain largely the same. There have, however, been
important additions under Act 992 that point to a legislative policy to regulate directors’
duties in a more directed manner by providing specific rules in addition to the principles
and standards carried over from Act 179. These leave little room for doubt as to what
standard of behaviour is expected of the director of a Ghanaian company. In fact, some
of the specific statements may be considered needlessly repetitive statements of settled
law. But in the atmosphere of significant and highly publicized corporate governance

liquidator to recover assets illegally transferred company property by directors, management and
shareholders under the broad powers of the liquidator under ss. 253-255, Act 179.
50
Act 179, s. 324
51
These typically involve insurance companies, banks and other financial institutions which have not
historically only been regulated under general company law but also under specialist legislation for
their industries.
52
Mainly sections 203 to 210, Act 179 and sections 190 to 200, Act 992.
53
Act 992, s. 190 (1).
54
ibid s. 190 (2).
55
ibid s. 199
56
ibid s. 200.

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lapses in Ghana between 2015 and 2019, perhaps government, regulators and other
relevant stakeholders cannot be blamed for being too careful.

5.1 The scope and design of the duty of care owed by directors under Act 992
The director under Act 992 is similarly constituted a fiduciary with the attendant duty
of loyalty to the company expressed as utmost good faith towards the company.57
Towards acting in the best interests of the company, Act 992 retains the subjective
element in allowing the director to act in ‘what [that] director believes to be in the best
interest of the company as a whole so as to preserve the assets, further the company’s
business and to promote the purposes for which it was formed in a manner that a
faithful, diligent, careful and ordinarily skillful director would act in the circumstances
…’.58 The design of the duty of care owed by director in the way in which the principle
was originally expressed in the 1963 Act provided no guidance on what the director
might have regard to in acting in the best interests of the company as a whole. Indeed,
the drafter of the previous law, Professor Gower, himself admits this when in his
comment on the draft clause 203 in the 1961 bill says that
[t]he main difficulty about this formulation is that it gives no guidance on the
extent of the interests to which the directors may have regard. Must the directors
think only of the welfare of the company as an abstract entity? It seems not
(otherwise it might be difficult for directors ever to recommend the paying of a
dividend); as Evershed M.R. said (in Greenhalgh v. Arderne Cinemas [1951]
Ch. at 291): "the phrase, 'the company as a whole' does not ... mean the company
as a commercial entity as distinct from the corporators."59
Gower is however prescient when he states that the best interests of the company as a
whole will with time extend beyond the interests of the corporators alone. He however
concluded in 1961 that ‘ … at present the legal view is that "the company as a whole"
means the long-term interest of members and members alone.’60 This limitation gave
way when Act 992 was passed.
The subjective discretion allowed directors under Act 179 in the competence and duty
of care obligation is significantly focused under Act 992 because the requirement to
act in the best interests of the company has three specific things that a director must
now have regard to under the new Act. It is not enough that the director reasonably

57
ibid s. 190.
58
ibid s. 190 (2).
59
Gower’s Report (n1), 145 - Comment on clause 203
60
ibid, 146 - Comment on clause 203

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believed considering the circumstances that the action would be in the best interests of
the company as a whole. For every decision, a director ought to have regard to:
1. the likely consequence of any decision in the long term,
2. the impact of the operations of the company on the community and the
environment and
3. the desirability of the company maintaining a reputation for high standards of
business conduct.61
This marks a statutory extension of the understanding of the original scope of the phrase
‘in the best interest of the company law as a whole’. A minor but perhaps keen
observation may here be made. Under Act 179, the phrase is rendered as the ‘best
interests’ indicating plural interests of a company. However under Act 992, the phrase
adopted in section 190 is rendered in the singular; ‘best interest’. It is unclear whether
this is a deliberate departure or a minor legislative drafting error. The phrase is typically
rendered in the plural form62 (i.e. best interests) in other commonwealth legislation as
there is almost never one focused interest of the fictional company. By its very nature,
a company involves a necessary amalgamation of differing and sometimes openly
conflicting, irreconcilable interests. This is exemplified by the competing interests such
as directors’ desires for retention or self-entrenchment, managers’ desire to extract the
highest possible value from their role, employee interests, shareholders’ desire to
receive the highest return on their investment as far as is legally and economically
possible and creditors’ apprehensions about the ability of the company to pay what it
owes them among others. It is unclear whether the omission of the crucial ‘s’ in the
phrase was intended to mark a shift in the law. There is no proof in the rest of the
framework of directors’ duties under Act 992 that this was intended to be so. Indeed
elsewhere in the same Act, the phrase is in the usual plural form. 63 It may well be
dismissed as a case of the printer’s devil.
Beyond this ‘singular or plural interest’ distinction in the legislative formulation of the
scope of the duty of care, it is clear that under Act 992 what enhances the shareholders’
interests alone is not enough to constitute the best interests of the company as a whole.
Long-term viability of the company itself, community and environmental impact
considerations and corporate reputational issues are now important criteria in the
estimation of the best interests of the company as a whole under Ghanaian law. This
is not at odds with modern expectations of the company as a social citizen. It follows
closely similar provisions in the English Companies Act of 2006.64 The well-known

61
Act 992, s. 190(2).
62
See Companies Act 2006, Chapter 46 of England (see s. 175(1) and see also Section 279 (3) of the
Companies and Allied Matters Act, Chapter 59, Laws of the Federal Republic of Nigeria, 1990.
63
See section Act 992, s. 190(4), s. 191(4).
64
English Companies Act, 2006, c. 46, s. 172(1). The English Act even includes as part of the
considerations ‘the need to act fairly as between members of the company’, see s. 172(1)(f).

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argument by the economist Milton Friedman in the 1970s criticizing corporate social
responsibility65 as a departure from the real purpose of business may well have lost
some of its appeal.66 For a socially aware customer base, it may not be in a business’s
interests today to argue that the business’ sole purpose is to generate profit for its
shareholders without a consideration of its social and environmental impact. Profits
may well remain the important business consideration in estimating success but it is
certainly not the only consideration these days. By this expansion in the language
therefore, Ghanaian law joins the trends in statutorily-set desirable and mandatory
corporate objectives.
Act 992 also contains the two statements of what is called the ‘Proper Purpose’ Rule
or Doctrine. Directors receive a whole host of powers in order to effectively administer
and manage the affairs of the company. It is well settled in the common law company
law that directors ought to only exercise those powers for the purposes for which the
powers are conferred.67 This statement is repeated in sections 190(3)(b) and 191(1) of
the 2019 Act.
In exercising corporate powers, directors may sometimes be actuated by a
consideration external to the basic purpose(s) for which that power was granted. Within
the proper purpose rule, the question is not whether directors had the right to do what
they did. These powers include the power to approve the issue of shares, vote on
resolutions brought before the board etc but rather whether their exercise of the power
which legally exists was for a purpose not ordinarily contemplated as being the purpose
for the grant of that power. In cases which have come before the courts, this is
particularly exemplified by directors exercising corporate power to prevent take-over
bids or to undermine the use and effectiveness of the shareholder vote.68 Shareholding,
share issues and decisions about membership are intended primarily to raise capital and
facilitate other corporate decision-making. Where the shareholder vote is enhanced or
diluted for any other purpose, it becomes an improper use of legal powers. In both the
1963 and 2019 Acts, it does not matter that the directors individually or indeed
collectively may understand the exercise of their powers in that way to be in the best
interests of the company.69 Now under Act 992, the director is also specifically
mandated to ‘act in accordance with the constitution of a company’70 while exercising
their power for the proper purpose. This goes without saying as directors are expected

65
Which will typically include social and environmental interventions where relevant.
66
Milton Friedman, ‘The Social Responsibility of Business is to Increase its Profits’ The New York
Times Magazine (New York, 13 September 1970). Full text available at <
http://umich.edu/~thecore/doc/Friedman.pdf> last accessed 6 December, 2019.
67
Act 992, s. 190 (3)(b).
68
Kershaw (n 18) 387, 388-395; see the cases Hogg v Cramphorn Ltd [1967] Ch 254 and Howard
Smith Ltd v Ampol Petroleum Ltd [1974] AC 821.
69
Corroborated by sections 204, Act 179 and section 191 (1), Act 992.
70
Act 992, s. 190 (3) (b).

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to act in accordance with the corporate constitution and yet this basic rule of corporate
rule is specifically repeated in the Act, perhaps for emphasis.

5.2 An enhancement of the independent judgment expectation

The subjective element of the director’s competence obligation (i.e. acting ‘in what the
director believes to be in the best interests of the company as a whole’) may be thought
to promote independent judgment by a director. It can help avoid the herd effect when
the director is aware thats exercising independent judgment receives protection under
the law even when it appears reasonably counter intuitive. This subjective element of
the director’s competence obligation was fused with the duty to take care under Act
179. Under Act 992 however, there is an additional, separate and more specific
statement which requires that ‘[a] director shall exercise independent judgment’.71 As
a fiduciary who ought to act in the best interests of the company, the expectation by a
director to exercise independent judgment was not in dispute in the view taken of the
old framework under Act 179. The need to specifically state this rule is further proof
that perhaps the framers felt that the message should be made undoubtedly clear that
the individual director should exercise independent judgment. This discourages herd
behaviour but sufficiently protects the director from the hindsight bias problem in
subsequent corporate litigation or suits brought against the directors whether
collectively or individually.
This admonishing will not be lost at all on keen observers of the alleged causes of the
myriad insolvencies experienced by many financial sector institutions in Ghana
between 2017 and 2019. A thread that runs through all the corporate governance horror
stories which emanated from the banks, savings and loans, microfinance and finance
house insolvencies show that a strong personality, very often also the majority
shareholder, chief executive officer or board chair of the company, acting either alone
or together with nominees or related parties virtually rendered the other members of
the board a mere rubber stamp in sometimes reckless corporate decision-making. These
board members became accustomed to act in accordance with the whims of this strong
personality with little evidence of careful, independent and individual consideration of
the matters brought before the board. The specific and perhaps unnecessary statement
of this basic expectation of a director under Ghanaian law reflects the times within
which the law was passed.

5.3 Other aspects of the director’s duty under Act 992

71
ibid, s. 190 (5).

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Beyond the core scope of the language of the director’s duty, there are other aspects
related to the director’s duty to the company aimed at promoting positive director
conduct. Overall, it is not possible to use the corporate constitution to contract out of
the mandatory behavioural prescriptions under both the old and new law. The director
may not be relieved of a duty to act in accordance with the loyalty and competence
prescriptions either contractually or by reprieve afforded by the corporate
constitution.72 Additionally, and even where they are not relieved of the failure to act,
they may also not be relieved of a liability incurred as result of the breach of the
obligations of good faith, taking care and demonstrating competence.73
Apart from the enactment of the proper purpose doctrine in section 190(3)(b) of the
2019 Act, the restriction on exceeding the powers granted directors is carried over from
the 1963 Act. Here again, directors shall not, without the approval of an ordinary
resolution of the company exceed the powers conferred on them by the Act or by the
corporate constitution or to exercise those powers for a purpose different from that for
which those powers were conferred although the directors may believe the exercise of
those powers to be in the best interests of the company.74 That is however where the
similarities between the old and new law end with regard to the additional support
framework to the core directors’ duties provisions. Perhaps in demonstrating the
legislative intention to enhance the seriousness of the obligation placed on the directors
not to exceed their powers, the provision now includes a rule which makes the director
personally liable to pay to the company or any other person, an amount of money lost
to them as a result of the failure to comply whether by act or omission of the director.75
This is separate from both the general civil liability of compensation for loss suffered
for breach of duty under Act 99276 and the power to bring proceedings to recover from
a director property of the company77 which were carried over from Act 179. This
personal liability of the director is for the specific failure to take reasonable steps to
ensure that her powers are exercised within the limits set by the Act, corporate
constitution and the proper purpose doctrine. The liability owed by the directors for
ultra vires acts is to pay to the company or to any other person, the amount of moneys
lost to the company or that other person for damages caused to or suffered by the
‘failure, act or omission of the director’.78

72
Act 179, s. 203 (4), and Act 992, s. 190 (6).
73
ibid.
74
Act 179, s. 204 and Act 992, s. 191 (1).
75
Act 992, s. 191 (2)-(3).
76
ibid s. 199; liabilities for compensation for loss the company suffers as a result of the breach,
accounting for profit made by a director as a result of the breach and the right to have a contract or
other transaction entered into between the director and the company rescinded by the company.
77
ibid. s. 200 (1)(c)
78
ibid s. 191 (2).

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Like it was under Act 179, a director may not place herself in a position in which her
duties as director to the company conflicts or may conflict with her personal interests
or the duties to other persons.79 This limitation may be overcome by seeking the
consent of the company by ordinary resolution at a meeting at which the director or his
affiliates or nominees are not entitled to vote on that particular resolution.80 This affords
the other members of the company to take a decision free from the influence of the
director who is materially interested in a transaction. This rule is pertinent when the
director concerned also has significant voting power, which if not disabled regarding
that specific vote, will cause the approval to be given whether or not the transaction is
good for the company.
Under Act 992 as well, directors are entitled, unless restricted by the corporate
constitution to enter into contracts with the company.81 The permission given the
director to deal personally with the company as an entity throws up one of the
significant problems of corporate law i.e. “agency problems” or “principal-agent”
problems. The agency problem is a term in corporate law borrowed from economics
that describes the ability of one person’s actions and decisions to affect the welfare of
another.82 The director dealing with the company as an insider may take decisions that
inure to the director’s benefit at the expense of the company. Where the director is an
important player in the company, they may well get away with it. The ability of a
company’s managers including its directors to extract value from the company at the
company’s expense (i.e. the managerial agency problem) is recognized as one of three
important agency problems in corporate law.83 The other two being conflicts between
the firm’s owners and its hired managers and conflicts between the owners who possess
the majority or controlling interests, on one hand and the minority or non-controlling
owners. It has been suggested that one of the two general functions of corporate law is
to minimizing the incentive of the agent to act against the principal with respect to these
three agency problems.84 How does Act 992 respond to the managerial agency problem
with respect to directors’ contracts with the company?
Under Act 992, the director who is directly or indirectly interested in a contract or
proposed contract shall declare the nature and extent of the interests at a Board
meeting.85 Both Acts contain a framework regarding how this interest of the director
may be declared. It involves a disclosure of the nature and extent of the interest and
abstention from any decision-making concerning a contract or other transaction in

79
ibid s. 192 (1).
80
ibid s. 193 (1).
81
ibid s. 194 (1).
82
Reinier Kraakman et al, The Anatomy of Corporate Law: A Comparative and Functional Approach
(3rd edn, 2017 Oxford) 29.
83
ibid.
84
ibid.
85
Act 992, s. 194(1)-(2), Act 179, s. 207(1)-(2)

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which the director is directly or indirectly materially interested. 86 Under Act 992
however, a company is required to maintain a separate Interests Register.87 There was
no such requirement under Act 179. When a company comes to consider a proposed
contract in which a director is interested, the director must before the consideration of
the matter, disclose the nature of her interest in this proposed contract at a meeting of
the board or by written notice to the director. The company is then enjoined to register
this interest in the Interests register and the interest ought to be disclosed to the Board.88
Crucially, this Interests Register is open to inspection during business hours subject to
reasonable restrictions set within the corporate constitution.89 This contributes to
transparency of board member dealings with the company and can operate to avoid a
‘scratch-my-back-I-scratch-yours’ attitude among the directors with respect to such
contracts at Board level. Favourable dealings of such nature between the directors can
now be called into question by an examination of the Interests Register by a
stakeholder. The ability to inspect the Interests Register is not limited only to members.
Crucially therefore, regulators, debenture holders and other external stakeholders
interested in the continued viability of the company can examine the Interests Register
in a bid to impugn some insider dealing by the directors among themselves.
Significantly, a failure to maintain an Interests Register opens the company and its
officers to administrative penalties. A court may also compel an immediate inspection
of the register on request.90 Where a director fails to declare an interest, that director
commits an offence and is liable on summary conviction to a fine.91 The provision adds
a measure of needed seriousness to this absolute need for transparency in corporate
governance particularly for state-owned enterprises which have been anecdotally noted
for reciprocal ‘back-scratching’ among directors and management and larger public
companies whose businesses have far reaching consequences for Ghanaian society.
Directors under the new law may continue to act in a professional capacity for the
company either personally or by a firm except as auditor.92 This carry-over provision
is valid for the same reasons and risk as discussed for Act 179.93 In summary, the
company can get cheaper services and limit the sharing of confidential information to
‘outsiders’. One of the specific additions in the 2019 Act is a provision on the use of
company information. The necessity of this provision could be subsumed under the
general rule that constitutes a director into a fiduciary. This is one of the examples of
the movement towards specific rules in addition to the principles and standards

86
Act 992, s. 194, Act 179, s. 207
87
Act 992, s. 196(1).
88
ibid s. 194 (6).
89
ibid s. 196 (4).
90
ibid s. 196 (7).
91
ibid s. 195 (3).
92
ibid s. 197.
93
See section 4.3 Other aspects of directors’ duties under Act 179.

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regulating behavior. This is because as a fiduciary, the director cannot use the
company’s information to the company’s detriment subject, of course, to reasonable
and or mandatory requirements within the general law.94 Under section 198 of Act 992,
information gained by the director as a director or employee of the company which is
information that would otherwise not be available to that director is not to be disclosed
or acted upon except under four circumstances, namely for the purposes of the
company, as required by law or as authorized by the constitution or approved via
circulated written resolutions or approved by way of ordinary resolution by
shareholders excluding votes by the director or her nominees. A director may disclose
information to a person whose interests the director represents but only after the
particulars of authorization and the name of the person to whom the information is
disclosed is registered in the Interests Register.95 Here, again, for reasons of
transparency and accountability a permanent record is created of the disclosure for
possible comment and challenge by interested parties. Significantly, and aside the
general civil liabilities for breach of a director’s duty, section 190(5) of Act 992
provides that a monetary gain made by a director from the use of information shall be
accounted for to the company.
Considering that a few specific rules creating penalties and liabilities for breach were
added in the new framework under Act 992, the general civil liabilities for breach of
the director’s fundamental duties of loyalty and care are as they were for Act 179;
namely, to compensate the company for loss suffered as a result of the breach,
accounting to the company for a profit made a result of the breach and the possibility
that a contract or any other transaction entered into between the company and the
director in breach of those duties will be rescinded by the company have been
enhanced.96

5.4 Enforcement of directors’ duties under Act 992

The scope of the provisions relating to proceedings to enforce liabilities resulting from
breach of duty by directors did not undergo a change in Act 992. Proceedings to enforce
the stated liabilities, or to restrain a threatened breach of duty or to recover from a
director a property of the company may be instituted by the company, typically on
authority of the Board or by a member.97 Additional liabilities can be enforced by the
board of directors, a receiver and manager, a liquidator, the members in general
meeting and following an investigation of the affairs of the company, proceedings may

94
Mandatory declarations and in evidence in criminal proceedings
95
Act 992, s. 198(4).
96
ibid s. 199.
97
ibid s. 200(1).

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be instituted in the name of the company by the Registrar of Companies. 98 The scope
of these provisions are further boosted with the statutory recognition of derivative
actions99, slightly modifying the proper plaintiff rule. Under it, a Court may grant
leave, on application by a member or director of a company to bring proceedings in the
name and on behalf of the company or intervene in proceedings to which the company
or any related company is a party for the purpose of continuing, defending or
discontinuing the proceedings on behalf of the company. This is an additional avenue
to ensure proper director conduct especially in those cases where the company (acting
by its directors) is unable or unwilling to bring the suit.
Lastly, it is hoped that with the creation of a dedicated Office of the Registrar of
Companies under the new Act as distinct from the omnibus Registrar-General’s
Department100, the Registrar’s crucial role within the Act will be taken on more
forcefully. A dedicated Registrar of Companies’ office was contemplated under the
1963 Act but it was never separately created. The role was managed by the Registrar-
General together with other statutory responsibilities not relating to companies. It was
evident throughout the old Act that the Registrar’s role was intended to be a very
powerful one indeed. It is with great regret that successive Registrars-General failed to
take advantage of their wide powers to influence the proper running of Ghanaian
companies by issuing orders, making inquiries and the appointing inspectors. Many of
these powers under the 1963 Act have been carried over into the 2019 Act. There is a
requirement under Act 992 for the Office of the Registrar of Companies to be
established within two years of the coming into force of the Act.101 This is a new chance
for the first Registrar of Companies appointed under the new Act to give new meaning
to the role. It will be a refreshing change.

6. Conclusions
The object of this paper was to provide an opinion as to whether or not the recent
reforms relating to the regulation of director conduct within the Companies Act, 2019
(Act 992) are capable of meeting the desired objective of influencing positive director
conduct by minimizing the incentives for opportunistic conduct by the directors to the
detriment of the company.
Overall, we conclude that the Companies Act, 1963 (Act 179) contained broad
principles that if followed should have influenced positive conduct in line with the
expectations of directors under common law corporate law. Despite this, however

98
ibid s. 200(2)-(4).
99
Ibid s. 201
100
An agency Under Ghana’s Ministry of Justice.
101
Act 992, s. 387

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serious lapses occurred in a number of systemically important Ghanaian companies102
leading to a mass of insolvencies between 2017 and 2019. The framework for
regulating directors’ duties under Act 179 was generally fit for purpose. We conclude
that the corporate governance failings experienced could not have been an issue with
the language of the existing law but rather failings in enforcement and other regulatory
responsibility.103 The passage of the Companies Act, 2019 (Act 992) still comes at an
opportune time to allow a new phase in the regulation of director conduct in all types
of Ghanaian businesses while the government cleans up the financial sector. The
importance of this intervention is crucial as the Finance Ministry of Ghana estimates
that about 16.7 Billion Ghana Cedis (3.5 Billion US Dollars) had by January 2020 been
spent by government to save an estimated 4.6 million depositors and investors from
losing funds with the financial institutions.104 Proper director conduct is therefore a
high stakes game.
The overall view we take of the regulation of director conduct under Act 992 is that it
relies more on specific rules in addition to the usual principle-based regulatory
technique adopted for regulating director conduct. It is arguable that some of the
specific statements guiding conduct could well have been extracted from the broad
principles without the need for the specific statement of rules. Those whose preference
for legislative text is for minimalist language that is purposive in scope may argue that
the specific rules are superfluous. The additional and specific statement of basic rules
in addition to the principles carried over from Act 179 however leave little doubt as to
the new legislative intention to arrest reckless corporate behavior especially in
systemically important sectors of the economy. All these indicate that Parliament and
Government took a very serious view of the consequences of director conduct in
passing Act 929. It regulates their conduct with enhanced and unambiguous provisions.
We conclude that the scope, formulation and structure of directors’ duties within the
new legislation is capable of promoting corporately beneficially director behaviour and
also apt to deal with the recent lapses in corporate governance that led to the financial
sector insolvencies. Admittedly, the soundness of the language of the law alone is not
enough. A good law must be supported by pro-active and timely enforcement. State-
sponsored investment in director education on their duties towards the company may
be a useful addition.

102
Especially banks and other financial institutions such as savings and loans companies, microfinance
companies, fund management companies and investment houses.
103
(n 10). This was acknowledged by the Bank of Ghana, the regulator of banking business in Ghana.
The Bank of Ghana established an Ethics and Internal Investigations Unit to strength good governance
within the regulator itself.
104
Ekow Dontoh, Ghana Banking Cleanup Cost Risks Surging to $3.5 Billion, Bloomberg, (January
18, 2020) < https://www.bloomberg.com/news/articles/2020-01-17/ghana-finance-sector-cleanup-cost-
risks-surging-to-3-5-billion> accessed March 14, 2020

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