Brief Overview of a Company

Introduction:

This note will briefly discuss the meaning of a company, its status as a legal entity, and the primary legislation regulating companies in Ghana.

The meaning of a company:

Per Section 383 of the Companies Act, 2019 (Act 992), a company is “a body formed and registered under this Act [thus, Act 992]." Thus, once a body is duly formed or incorporated under Act 992, it qualifies to be a company.

The Company as a Legal Entity:

Once a company is duly incorporated, it becomes an artificial person and gains a separate existence from the date of incorporation. This is provided for in Section 14(2) of the Companies Act, 2019 (Act 992) , which reads:

From the date of incorporation, the company becomes a body corporate by the name contained in the application for incorporation and, subject to Section 13, is capable of performing the functions of an incorporated company.

This cardinal principle was emphatically recognised in the case of Salomon v. Salomon & Co. Ltd. [1895-9] All ER 33; [1897] AC 22 , where the House of Lords advanced that:

The company is at law a different person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by the Act.

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The company attains maturity on its birth. There is no period of minority—no interval of incapacity.

Also, see the Ghanaian cases of Quartson v. Quartson [2012] 2 SCGLR 1077 , Morkor v. Kuma [1999-2000] 1 GLR 721, Republic v. High Court Accra, Ex parte Appiah & Others [1999/2000] 2 GLR 420 SC , and Owusu v. R.N. Thorne Ltd. [1966] GLR 90.

By virtue of being an artificial person, the company can do several things that natural persons can do. This was advanced in the case of Morkor v. Kuma (supra), where the Supreme Corut of Ghana said:

Save as otherwise restricted by its regulations [constitution], a company, after its registration, has all the powers of a natural person of full capacity to pursue its authorised business. In this capacity a company is a corporate being, which, within the bounds of the Companies Code, 1961 (Act 179) and the regulations of the company, may do everything that a natural person might do. In its own name, it can sue and be sued and it can owe and be owed legal liabilities. A company is, thus, a legal entity with a capacity separate, independent and distinct from the persons constituting it or employed by it. From the time the House of Lords clarified this cardinal principle, more than a century ago, in the celebrated case of Salomon v. Salomon & Co. [1897] AC 22, HL it has, subject to certain exceptions, remained the same in all common law countries and is the foundation on which our Act 179 [now Act 992] is grounded.

Summarily, a company can do the following:

1. Sue and be sued in its own name: See the cases of Foss v. Harbottle (1843) 2 Hare 461 , Bank of West Africa Ltd. v. Appenteng and Another [1972] 1 GLR 153-179 , Soon Boon Seo v. Gateway Worship Centre [2009] SCGLR 281 , and Morkor v. Kuma (supra).
2. Own properties in its own name: See the cases of Soon Boon Seo v. Gateway Worship Centre (supra) and Majdoub & Co., Ltd. v. W. Bartholomew & Co. Ltd. [1962] 1 GLR 122-127 .
3. Can enter into contracts in its own name: See the cases of Morkor v. Kuma (supra) and Lee v. Lee’s Air Farming Ltd. [1960] 3 All ER 420 .
4. Exist even after the death of its founders or members: See the case of Republic v. High Court Accra, Ex parte Appiah & Others (supra) .
5. Incur liability: See the cases of Morkor v. Kuma (supra) , Owusu v. R.N. Thorne Ltd (supra), and Salomon v. Salomon & Co. Ltd. (supra).
6. Can be taxed: See Sections 1(1)(a), 2(2) , 3(1), and 58 of the Income Tax Act, 2015 (Act 896) .

Primary Legislation Regulating Companies in Ghana:

A major source of company law in Ghana is the Companies Act, 2019 (Act 992). This is "AN ACT to amend and consolidate the law relating to companies; to establish the Office of the Registrar of Companies; and to provide for related matters."

Among others, Act 992 makes provisions on the formation, incorporation, capacity, membership, and operation of companies in Ghana.

In Section 384, it also repeals the Companies Act, 1963 (Act 179). Before Act 992, the major source of company law in Ghana was the Companies Act, 1963 (Act 179) and its amendments.