‘Review some provisions of new Company Act’

A legal practitioner, Seth Asante has called for a review of some provisions of the new Company Act to ensure smooth implementation of the law.

According to him, some clauses of the law were confusing and unsatisfactory and would be difficult to be enforced.

Speaking at a sensitisation programme organised by the Ghana Stock Exchange for listed companies on the Companies Act, 2019 (Act 992), Mr Asante who is a Partner, Financial Institutions and Capital Markets of Bentsi-EnchillLetsa and Ankomah  law firm,  mentioned some of the provisions as the appointment of directors, use of company information, payment of unclaimed dividend and mergers.

He said the new act stipulated that a person who was appointed as a director of a company should swore to a statutory declaration to be filed with the Registrar of Companies that he or she had not within the preceding five years of the application for incorporation been charged with or convicted of a criminal offence involving fraud.

In addition,he said a person who was appointed as a director should swore to a statutory declaration that that he or she had not been involved in an insolvent company, stressing that if anybody swore to any of the above he or she could not be appointed a director.

“This section of the law must be amended because it is confusing,” Mr Asante said, stressing that a company can be insolvent but still operating and that a director of an insolvent company could be blamed for the insolvency of the company.

Mr Asante observed that the new company law stipulated that the board of a company can authorise a member to use the company’s information if its use would not affect the company.

He said the above stated provision could be a recipe for disaster since such information could be used wrongly.

Mr Asante said a member of a board of directors of a company had fiduciary relationship with the company and should not be allowed to disclose privilege information he or she was privy to any person or entity.

Furthermore, he said that new law stipulated that 50 per cent of unclaimed dividends after some years should be paid to the consolidated fund and the remaining used for research and other activities.

According to Mr Asante companies should be allowed plough back unclaimed dividend back in the company instead of being paid to the consolidated fund.

The Partner for Financial Institutions and Capital Markets also said the provision on merger in the new Company Act would make it difficult for mergers to be executed going forward.

Mr Asante said the new law required shareholders and creditors to approve a merger before it could be executed, saying this “is onerous because it is difficult to organise of creditors to get them approve a transaction”.

The Managing Director of the GSE, Mr Ekow Afedzie said the programme was to sensitise the listed companies on the new Company Act.

Particularly, he said the programme was to shed light on the law that relate to the capital market and the role of a company secretary.

Mr Afedzie observed that the role of a company secretary was very important in terms of organising annual general meetings and emergency meetings for shareholders.

By KINGSLEY ASARE