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MEMBERSHIP OF COMPANIES

Section 8: Every company shall have at least one member. If there is no member for 6 months, there are legal consequences. For a
company registered with shares, we talk of shareholders and for a company limited by guarantee we talk about members. A
member is a shareholder but not every member is a shareholder.

WHO IS QUALIFIED TO BE A MEMBER OF A COMPANY?

A citizen or non-citizen resident in Ghana can become a shareholder. However external residents need the approval of the Minister
of Finance before one can become a shareholder. Almost invariably, the application is granted as a matter of course. Under the
Bank of Ghana Regulations external residents cannot hold more than 74% of the shares i.e. listed shares of a company.

CAN MINORS AND PERSONS OF UNSOUND MIND BECOME MEMBERS?

They cannot be subscribers. In effect, shares cannot be transferred to them. See Section 95(3): a company can refuse a transfer of
shares to minors or persons of unsound mind. Corporate bodies can be shareholders. A company under certain conditions can be a
member of itself, i.e. it buys treasury shares.

WHO IS A MEMBER?
There are 4 ways in which membership is created:
 Subscribers to the regulations
  By agreement with the company
 By transfer of shares from an existing member
 By operation of the law

SUBSCRIBERS TO THE REGULATIONS

See sections 18 (1) (2). Section 18 (2) says each subscriber shall write opposite their names the number of shares and the money
paid or to be paid for those shares. Section 18 (1):
“The regulations of any company registered after the commencement of this Code shall be signed by one or more subscribers in
the presence of, and shall be attested by, one witness at least”.
Section 18 (2): “In the case of regulations of a company with shares, the subscribers, or each subscriber if more than one, shall
write opposite to his name the number of shares he takes and the cash price payable therefore, and shall take at least one share”.

The key provision is section 30 (1): “The subscribers to the regulations shall be deemed to be members of the company and on its
registration shall be entered as members in the register of members referred to in section 32 of this code”.

So long as a person is a subscriber (to the regulations) the person is deemed to be a member. On the registration of the company
the name of the subscribers shall be entered in the Register of members. (See Nicol’s case 1885 29 Ch 421). Thus for subscribers
to the regulation, registration on their names in the company’s register of names is not a precondition to membership. There were
several transactions involved in that case. Initially it involved a case of 2 subscribers. Then subsequently shares were allotted but
there was no evidence that any payment had been made. The sum total of Nicol’s case did not involve a lot of subscribers.
See EVAN’S CASE (it was applied in LUGUTERAH V. NORTHERN ENGINEERING CO LTD [1979] GLR 477. See the
judgment of Fry LJ in Nicol’s case @ 445. He said: “although the Act makes the entry obligatory, it does not make it a condition
precedent”..

Subscribers and the formation of a company are intertwined, they go with each other. See ALEXANDER V. AUTOMATIC
TELEPHONE [1900] 2 Ch 56, 63. This case is authority for the proposition that one can be a subscriber or member without
paying for the shares. See also LUGUTERAH V. NORTHERN ENGINEERING. It discusses section 30(1): “The subscribers to
the Regulations shall be deemed to be members of the company and on its registration shall be entered as members in the register
of members referred to in section 32 of this Code”.

AGREEMENT WITH COMPANIES

See section 30(2) of the Code: “Every other person who agrees with the company to become a member of the company and whose
name is entered in the register of members shall be a member of the company”. There are two elements here:
 Any person who AGREES WITH THE COMPANY to become a member.
 The name must be entered in the Register of members.

For the 1st element above, see IN RE NUNEATON BOROUGH ASSOCIATION FOOTBALL CLUB [1989] BCLC 454. In this
case a football club was in financial difficulty. A well known supporter agreed to support the club with 10,000 Pounds. He was
given shares worth that amount. He was appointed a vice chairman of the Board. Shares were allotted to him and the issue arose as
to whether he agreed to become a member. (NB! Under the relevant legislation in England, it said “any person who agrees to be a
member of a company and whose name is entered in its register of members..”). Our Ghanaian law says “any person who agrees
with the company to become a member”.
It was decided in IN RE NUNEATON (SUPRA) that the phrase “agrees to become a member” is satisfied when the person agrees
or consents to become a member and that it does not require that there be a binding contract between the person and the company.
See also CONTE V. KPEGLO [1964] GLR 111. In this case Kpeglo claimed he was allotted 10,000 shares in a company free of
charge for his services to the company and the evidence he produced was the minutes book of the company and a letter from the
appellant. In this case it was held that Kpeglo was not a member and it was explained that allotment of shares is an appropriation
by the Directors to a particular person. It may take the form of an offer of shares to the allotee or an acceptance of an application
for shares by the allotee, but an allotment by itself does not create the status of membership. This case shows that there must be a
bilateral act between the person and the company before he can become a member. Under Ghanaian law, payment for shares must
be by valuable consideration. (See also section 42 of the Code: 42 (1): “Except on a capitalization issue pursuant to subsection 1
of section 74 of this Code, shares shall not be issued otherwise than for valuable consideration paid or payable to the company
and unless otherwise agreed shares shall be paid for in cash”.

Under Ghanaian law, there must be the requirement of entry of the person’s name in the register of members. (section 30 (2) of the
Code). Mere agreement with the company is necessary but not sufficient. The person must have his name entered in the register of
members.
TRANSFER OF SHARES FROM AN EXISTING MEMBER
A non member may become a member of a company if there is a transfer of shares from an existing member subject to all the
prescribed conditions. A person may purchase the shares of a member or may receive it as a gift. In either case, the person’s name
must be registered in the Register of Members. Sections 95 and 98 of the Code talk about transfer from members.
WHAT AMOUNTS TO AN EFFECTIVE TRANSFER?
There should be no restrictions on the right to transfer shares. Any such restriction will not be valid or binding until the holder or
member agrees in writing. See section 22(h) and 95 of the Code. Where there is no restriction, then transfer under section 95 is by
a written transfer in common form. Section 98 (2) goes a bit further, saying that it shall not be lawful for the company to register a
transfer unless a proper instrument of transfer has been delivered to the company. Generally speaking, under our law, the
instrument in question could be a deed of transfer. (NB! There is no particular form for the transfer of shares in Ghana).

Section 98(3) says “unless otherwise provided in the company’s regulations or the terms of the debenture, the company may
refuse to register any transfer unless it is accompanied by the appropriate share certificate, debenture, or debenture stock
certificate, or the company is bound to issue a renewal or copy thereof in accordance with subsection 2 of section 53 or 82 of this
Code”.
Section 98 (4) says the transfer of the document may be lodged by either the transferee or the transferor.
Section 98(5) provides remedies for a refusal of a company to register the transfer. It says that if a company refuses to register a
transfer, the company shall within two months after the date on which the transfer is lodged with the company, send to the
transferee and transferor notice of the refusal.

For transfer of shares see IN RE A COMPANY [1986] BCLC 391. Here, 4 people (i.e. F and 3 others) set up a company. There
was the understanding that all 4 would play a major role in the company. F asked that his wife become the shareholder and
Director on his behalf (nominee). F became an employee of the company. Subsequently F was dismissed as an employee of the
company and his wife was removed as the Director. The question was whether F had the locus standi to bring an action against the
company. This case is important because there was the understanding that F’s wife would eventually transfer the shares to F.
However the action was brought by F before the shares could be transferred. It was held that F could not bring an action since he
was neither registered as a member nor a person in whose favour a proper instrument of transfer had been executed. (See
Hoffmann J@ 393 of the Report): “In my judgment, the word ‘transfer’ requires at least that a proper instrument of transfer
should have been executed and transferred to the transferee or the company in respect of the shares. It is not sufficient that there
should be an agreement for the transfer”.

MEMBERSHIP BY OPERATION OF THE LAW

See section 99 of the Code.
DEATH
Who is entitled to be registered following the death of a member? Where shares are jointly held by 2 persons and one dies, the
other takes all the shares.
WHAT HAPPENS WHEN A SHAREHOLDER DIES TESTATE?
The duly appointed successor by the will shall be deemed to have acquired the deceased’s shares on the presentation of the probate
to the company.
THE REGISTER OF MEMBERS
Section 32 of the Code: every company is required to keep a register of members in which the ff details must be recorded:
 Names and addresses of members
 For a company registered with shares, the number of shares held by each member
 The amount paid for the shares or payable for them
  The date of entry in the register of each member
 Date of cessation of membership.

There is a requirement that the record should be available for 6 years before they are expunged. Also, information relating to the
name, address and number of shares should be entered within 28 days in the register of members.
Similarly in the case of a person who ceases to be a member the details should be available in 28 days.
NB! Under section 36, the Register of members is prima facie evidence of any matters that are entered therein (in the register).
Apart from the subscribers to regulations, entry in the register of members is a condition precedent to membership! The register of
members is available for inspection and must be kept in the registered head office or main place of business of the company. A
member may inspect the register without charge. A member can apply to have the register rectified if there are any names that
should not be in the register or vice versa. The company may also do so.

SHARE CERTIFICATES
See sections 53 and 54 of the Code. Every company shall within 2 months after the issue of shares or registration of transfer
deliver to the certificate holder a certificate under the common seal of the company. The certificate should state the number and
class of shares and each certificate should have a definite number. It also should state the amount paid and the amount payable.
See section 53(2). It says “If a share certificate is defaced, lost or destroyed the company, at the request of the registered holder of
the shares, shall renew the same on payment of a fee not exceeding two shillings and sixpence and on such terms as to evidence
and indemnity and the payment of the company’s out-of-pocket expenses of investigating evidence as the company may reasonably
require”.
THE EFFECT OF THE SHARE CERTIFICATE
It is prima facie evidence of any matters contained therein and is not conclusive. Under section 54(2), if any person should change
his position to his detriment IN RELIANCE IN GOOD FAITH on the continuing accuracy then the company shall be estopped
from denying such accuracy. In such a case, the company shall compensate him. See SERBEH YIADOM V. STANBIC BANK.
SEE ALSO GOWER’S BOOK @ 344. it says when there is any conflict between the Register of members and the share
certificate, the Register of members should prevail because it is a stronger prima facie evidence of ownership.

TERMINATION OF MEMBERSHIP
Section 30(5) of the Code gives 4 instances in which membership terminates:
 If a member transfers ALL his shares then following the registration of the transferee membership shall cease.
 Where shares are transferred by operation of law, membership shall cease.
 Forfeiture for non-payment
 Where there is death of a member

See section 30 (6). ( termination of membership in companies limited by guarantee).

o When a member dies
o When a person validly retires
o Where a person is excluded from membership

GENERAL MEETINGS
IMPORTANCE
  Section 137: members in general meeting constitute an organ of the company. (Bousiako v. Cocoa Marketing Board). This
case reinforces section 137. Outside general meetings, no member or members acting alone may bind the company.
 General meetings are necessary because certain decisions relating to the management of the company have to be taken
through certain resolutions. (section 202). Except in the case of written resolutions or the application of the DUOMATIC
PRINCIPLE (SEE RE DUOMATIC). SEE ALSO ASAFU ADJEI V. AGYEKUM. NB! This case is only suitable for
companies with small or few members.
 Meetings are necessary because membership rights include speaking, attending meetings, the right to vote, etc. however the
right to speak cannot be guaranteed.
 According to Farrar’s book (p 308) general meetings allow members to hold Directors to account. [ESHUN V. POKU
[1989-90] 2 GLR 572.
 Auditors and arguably directors can only be removed at a general meeting. Written resolutions will not apply.

COMPANY MEETINGS
Broadly speaking there are two types:
1. General meetings
2. Class meetings (section 22). See also section 47 and 48 on this.

There are two main general meetings: (a) Annual General Meetings (AGM) (b) Extraordinary General Meeting (EGM). The main
difference the 2 is that the AGM is MANDATORY whereas the EGM is not.
ANNUAL GENERAL MEETING
Section 149 of the Code: It says every company must hold at least one general meeting in each year with intervals not more than
15 months. Section 149 provides that if the first AGM is held within 18 months of incorporation then the AGM need not be held
the following year. The AGM here is taken to be held for the 1st and 2nd year. The question is whether it refers to calendar year or
not. (SEE GIBSON V. BARTON). This case suggests the common law position which refers to a calendar year.

Annual General Meetings usually discuss the financial report of the company for the year. Section 149 (3) provides the situation
where the company may dispense with a general meeting for a particular year. For that particular year, all the members entitled to
vote together with the auditors must agree that the meeting be dispensed with.

SECTION 150: EXTRAORDINARY GENERAL MEETINGS (EGMS)

It is any members’ meeting other than the AGM. It may be called at ANY TIME and for ANY PURPOSE. Section 150 says the
directors may convene the EGM WHEN THEY THINK FIT. The Code allows members to requisition that the EGM be held.

WHO MAY CONVENE GENERAL MEETINGS

Directors as part of their management functions.
In LUGUTERAH V. NORTHERN ENGINEERING the letter was signed by the secretary to the board. However there was no
evidence that she was acting under the directive of the Directors, so the notice was held invalid since she could not as secretary
convene a meeting. NB! In respect of AGMs persons OTHER THAN DIRECTORS may convene meetings.
REGISTRAR-GENERAL of Companies. Since AGMs are mandatory, the law allows the REGISTRAR-GENERAL to act on his
own motion and call an AGM without any prompting. He may also call the AGM at the instance of a member or officer of the
company. The Registrar-General may also give directions regarding the calling, holding and conducting of the meeting.

THE POWER OF THE COURTS TO CALL A MEETING UNDER SECTION 162 OF THE CODE
The Courts will intervene where it is impracticable to call or conduct a meeting in the manner described. The court may intervene
on the application of the Registrar or on the application of a member. Again, the court can give directions regarding the calling,
holding and conducting of meetings. (HARMAN V. BML GROUP [1994] 2 BCLC 674. SEE ALSO RE EL SOMBRERO [1958]
3 AER 1 ; (1958) CH 900. In this case, the company had 3 shareholders. The majority shareholder held 90% of the shares.

See also ROSS V. TELFORD [1998] 1 BCLC 82. Here, the courts refused to intervene because there were 2 shareholders holding
equal shares. See also RE BRITISH UNION FOR THE ABOLITON OF VIVISECTION [1995] 2 BCLC 1.

WHO CAN CONVENE EGMs?

THE DIRECTORS- (Section 150). This is discretionary. Under section 150(2), if there is only 1 director in Ghana, that director
can convene the EGM. Section 271 (private companies). It says any two or more members can requisition an EGM. In the case of
a single member, he should hold not less than 10% of the voting rights in the company.
Section 271 provides that if within 7 days after receiving the requisition the directors DO NOT PROCEED to convene the actual
meeting within 28 days , the requisitionists will be entitled to convene the meeting themselves and the cost will be deducted from
the director’s remuneration. (NB! This applies to private companies).
Section 297 governs public companies. It provides that EGMs can be requisitioned by members not holding less than 5% of voting
rights. If the directors fail to convene the meeting within 28 days, the requisitioners may hold the meeting and deduct the cost from
the director’s remuneration.

NOTICES.
The Code contains a lot of detailed provisions on notices and meetings. According to Gower, it is to ensure uniformity.
NOTICES AND MEETINGS
Section 152 of the Code: This says meetings shall be convened by notice in writing to all who are entitled to receive notices under
section 154.

CONTENT OF NOTICES
See sections 154, 124, 149. Section 154 says notice of a meeting shall specify the ff:
 THE PLACE OF THE MEETING
 THE DATE OF THE MEETING
 THE HOUR OF THE MEETING
 THE GENERAL BUSINESS OF THE MEETING

Under section 151, all GENERAL MEETINGS must be held in Ghana unless the regulations state otherwise. It may take place
anywhere in Ghana. The notice should specify the place of the meeting.
THE DATE OF THE MEETING
The notice should specify the day of the week as well as the hour. NB! The hour is important for adjournment of meetings. (See
sections 149, 124 of the Code). Section 149 provides that where the meeting is an AGM, if there is a statement that the meeting
would consider the ordinary business, then according to the Code, these matters would be the ordinary business of the meeting:
 To declare dividends- it is only the general meeting that can declare a dividend although the directors may recommend.
 Consideration of the profit and loss account and the balance sheet (section 124). There is also the auditor’s report and the
director’s report.
 Election of directors in place of those retiring. (NB! It is only in public companies that directors are required to retire).
 Fixing of the remuneration of auditors.
 Provided sections 135 for auditors and 185 (for directors) have been satisfied, you can consider the election of directors at
the meeting.

These 5 factors constitute the ordinary business of the meeting. NB! Only members can consider the remuneration of directors.
According to the law, the member can vote by proxy by allowing a person to attend and vote on his behalf. Where the meeting is
to pass a special resolution, there must be notice thereof. See ESHUN V. POKU [1989-90] 2 GLR 572. This case involved the
Ghana Hoteliers Association. In this case, notices were sent without the accounts and the issue was whether the notice was valid.
Because the accounts were not enclosed, the meeting did not consider the matter. See also BAILLIE V. ORIENTAL
TELEPHONES (1915) 1 CH 503.
Section 153 talks about the business contained in the notice. See especially section 153(3). No business may be conducted at a
general meeting unless notice of it has been given. (i.e. the agenda of the notice of the meeting).
LENGTH OF NOTICES
Sections 152, 153 of the Code. SEE ALSO THE LUGUTERAH CASE. Section 152(2) talks about 21 days notice inclusive of the
day of the meeting. At common law, the 21 days mean 21 clear days. However under Ghanaian law the position is different.
Section 152 (3) says a company’s regulations may provide for more days than the 21 days but cannot give a shorter time than the
21 days notice. Section 152 (4) says notice for an AGM may be shorter if ALL MEMBERS ENTITLED TO VOTE AGREE.
For an extraordinary general meeting, not less than 95% of the voting powers should agree to a shorter notice. Section 154 deals
with who is entitled to receive notice of a meeting. According to section 154, the following are entitled:
 Every member. We may interpret every member to include a preference holder. (section 49 (2) ).
 Every person who is either a legal representative, a receiver or a trustee in bankruptcy.
 Every director of a company
 The auditor of the company

Even though every member has the right to attend, there may be some legal reasons why a member may be denied access to the
meeting. This should be governed by the regulations of the company. Right to attend meetings implies right to receive notice of
the meeting.

SERVICE OF NOTICES
Section 155: It talks about the various ways in which notice may be served:
 To the person
 By post
 By leaving it in the care of a person over the age of 16 years in the household of the person.
In Ghana postal service is effective 48 hours after posting. Thus one can assume that the notice is delivered 48 hours after posting.
See BRADMAN V. TRINITY. This case under English law held that the notice after posting should be assumed to be delivered in
24 hours after posting. (see 1989 BCLC).
NB! Where the failure to send notice was accidental, it would not invalidate or stop the meeting from taking place. (section 156 of
the Code). See IN RE WEST CANADIAN COLLERIES [1962] CH 376. Here the company’s agent failed to put the notices in
the post even though they were addressed. It was held to be an accidental omission. See also MUSSEL WHITE V. MUSSEL
WHITE [1962] CH 964. In this case, notices were not given because the Directors thought mistakenly that the member was not
entitled to notice. It was held that the failure was not accidental and therefore the member was entitled to a declaration.

QUORUM
Section 161 of the Code: the general point is that without a quorum no valid resolution can be passed and no business can be
transacted validly. Section 161 (1) says no business shall be transacted at any general meeting unless the quorum was present at
the time the meeting proceeded to discuss that particular business. The proviso however to this is that once the quorum was
present at the commencement of the meeting the meeting may validly proceed with that meeting notwithstanding that a quorum is
not present throughout. See IN RE HARLEY BIRD [1955] CH 143. SEE ALSO PAGE 119 OF GOWER’S REPORT. The
rationale for this is to prevent a minority from walking out and breaking the quorum.

If certain members can only vote in respect of certain matters, then you can only count them as quorum ONLY IN RESPECT OF
CERTAIN MATTERS THAT THEY CAN VOTE ON. This may only apply to preference shareholders. Section 161(2) defines
the ff as quorum for meetings:
If the company has only one member then that that member constitutes a quorum.
In any other case where the company has more than 1 member then 2 members would constitute the quorum. However the company’s
regulations usually decide the quorum.

If there is no quorum at the appointed time of the meeting, (i.e. 30 minutes after the meeting has been called) the meeting shall stand
dissolved. NB! If it is an Annual General Meeting, it would be adjourned to the same time, same day of the following week. If it is
an EGM, it would be dissolved. (see section 161 (3).

PROXIES – SECTON 163

A member is entitled to let another attend meetings and vote on his behalf. The member must sign the proxy form and name the
person as his proxy. The proxy when he attends shall have the same rights as the member so he may speak as well as vote. NB!
Section 163(7) says IF THE PROXY VOTES IN DISOBEDIENCE TO THE MEMBER, THE VOTE IS STILL VALID!

VOTING
See section 170 of the Code. In the first instance, voting is by show of hands. The chairman is entitled to declare the resolution passed
based on the conduct of the members. However a member can ask for a POLL before the resolution is declared or the decision is
declared. The effect of a poll is to make sure that we attach voting power to each person’s voting right. The voting right is
determined by the number of shares one holds.
The chairman or 3 members present in person or by proxy may demand a poll. Also any person(s) holding 5% of the voting power
may demand a poll. Section 171 says the regulations may not exclude the right to demand a poll. If the decision is recorded, it
would be difficult to argue that one still has a right to demand a poll.
See HOLMES V. KEYS [1959] CH 199. This says a poll can be demanded without the formality of voting by show of hands.
NB! ESHUN V. POKU also involved a situation where a person standing unopposed for election had to go through the formality of
voting. The court held that such a person must go through the formalities and get the majority votes. In voting for directors, they
must be voted for individually unless there is a resolution stating that they shall be voted together. ‘
Every company shall keep a minutes book and any such book when signed by the chairman is prima facie evidence of the resolution
or meeting. (See section 177-178). The minutes book must be kept in the registered office of the company.

RESOLUTIONS\
There are 3 different kinds: See section 168 of the Code. Section 161(1) defines an ordinary resolution as a resolution passed by a
simple majority of members who are entitled to vote and actually voting either in person or by proxy.

SPECIAL RESOLUTION
It is a resolution passed by not less than 75% of the members entitled to vote who actually vote either in person or by proxy. NB! A
special resolution may be taken by mere show of hands in the absence of a demand for a poll.

WRITTEN RESOLUTIONS
See section 168: It is a resolution in writing signed by all the members for the time being entitled to attend and vote. If the company
has only 1 member, by that member.
Written resolutions need not be passed at a general meeting.
It shall take effect at the date the last person entitled to sign signs the resolution.
It can be termed “ordinary resolution” or “special resolution”.
It is not suitable or applicable in respect of section 135 (the removal of auditors ) and section 185 (the removal of directors).
REGISTRATION OF REGULATIONS
According to section 176(1) a certified copy of every special resolution must be sent to the Registrar General for registration. It should
be forwarded within 28 days after the resolution.