Question Tag: Companies Act 2019

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  • 10 Marks

AA – May 2021 – L2 – Q2c – Regulatory Framework and Audit Responsibilities

Explain the appointment, remuneration, and resignation of auditors for limited liability companies.

Auditor appointment, dismissal, and remuneration is regulated by Companies Act 2019 (Act 992).

Required:
i) How are auditors of Limited Liability companies:

  • Appointed (3 marks)
  • Remunerated (2 marks)

ii) What may cause auditors to resign from their appointments? (5 marks)

i) Per the Companies Act 2019 (Act 992), auditors are appointed by the following process:

  • The first auditors of companies are appointed by the directors, who also fill in casual vacancies.
  • When a company has no auditor for a continuous period of three months, the Registrar General may appoint an auditor for the company.
  • By shareholders at an Annual General Meeting when the appointment of the existing auditor ceases.
    (3 points @ 1 mark each = 3 marks)

Per the Companies Act 2019 (Act 992), auditors are remunerated by the following process:

  • When directors appoint an auditor, the directors fix the fees for the period expiring at the next AGM.
  • When the Registrar General appoints an auditor, the fees are fixed by the Registrar General.
  • By an ordinary resolution of the company or in a manner by which the company may direct by an ordinary resolution.
    (2 points @ 1 mark each = 2 marks)

ii) Reasons why an auditor may resign:

  • In relation to fee matters.
  • When the management of the auditee and those charged with governance demonstrate a lack of integrity.
  • When audit firms can no longer maintain independence.
  • Irreconcilable differences between the client and the auditor.
  • When the client changes in size and nature, and the auditor no longer has the competency to perform.
  • When the client is engaging in illegal activities.
    (Any 5 points @ 1 mark each = 5 marks)
  • 5 Marks

BCL – Apr 2022 – L1 – Q5c – Company meetings and resolutions

Distinguish between Annual General Meeting and Extraordinary General Meeting of a company, detailing requirements and procedures for each.

c) Distinguish between Annual General Meeting and Extraordinary General Meeting of a company.

(5 marks)

Annual General Meeting vs Extraordinary General Meeting

Annual General Meeting A company shall in each year hold an annual general meeting of the company in addition to any other meetings in that year. Annual General Meetings are to be held each year by every company and the meeting is to be held not more than 15 months between the dates of an earlier general meeting. Where a company hold its first annual general meeting within 18 months of its incorporation, it need not hold an Annual General Meeting in the year of its incorporation or in the following year.

Extraordinary General Meeting An extraordinary general meeting of a private company may be requisitioned in accordance with section 299 and an extraordinary general meeting of a public company may be requisitioned in accordance with section 324.

Under section 299, the persons identified to convene an extraordinary general meeting were the directors and where the directors in Ghana are not to form a quorum, a director may convene a meeting. Extraordinary general meetings may be convened by the directors whenever they think fit. The section provides that the directors of a private company, despite a provision in its Constitution, shall duly convene an extraordinary general meeting of the company on the requisition of two or more members of the company or a single member holding not less one- tenth of the shares of the company or in the case of a company limited by guarantee, one-tenth of the total voting rights of the members of the company.

Per section 324 of Act 992, the directors of a public company, despite anything in its constitution, shall, on the requisition of members of the company holding not less one-twentieth of the shares of the company or in the case of a company limited by guarantee, members of the company representing not less than one-twentieth of the total voting rights of all the members of the company, forthwith proceed duly to convene an extraordinary general meeting of the company. (5 marks)

  • 12 Marks

BCL – Apr 2022 – L1 – Q4a – Company directors and other officers

Outline qualification requirements for company secretaries and disqualifying offenses for company directors under the Companies Act, 2019 (Act 992).

a) One of the key officers of a company who keeps the books and records, is the company secretary. The Companies Act, 2019 (Act 992) compels the appointment of a company secretary on certain qualifications.

Required:

i) State THREE (3) qualification requirement for the appointment of company secretary as stipulated in the Companies Act, 2019 (Act 992). (6 marks)

ii) List THREE (3) offences and related legal wrongs that automatically disqualifies a fraudulent person from appointment as a director of a company. (6 marks)

i) Section 211(3) Companies Act, 2019 Act 992 provides that directors shall appoint a person as a Company Secretary who possesses the following qualifications: Has obtained a professional qualification or tertiary level qualification (with an offering in company law practice and administration) that enables that person to have the requisite knowledge and experience to perform the functions of a Company Secretary. Has held office, before the appointment, as a Company Secretary trainee or has been articled under the supervision of a qualified Company Secretary for a period of at least three years. Is a member in good standing of; o The Institute of Chartered Secretaries and Administrators or o Institute of Chartered Accountants, Ghana Having been enrolled to practice, is in good standing as a barrister or solicitor in the Republic or By virtue of an academic qualification, or as a member of a professional body, appears to the directors as capable of performing the functions of a secretary of the company. (3 points @ 2 marks each = 6 marks)

ii) Under section 177 Companies Act, 2019 Act 992 a fraudulent person is restrained from appointment as a director of a company where: A person is convicted, whether in the Republic or elsewhere of an offence involving fraud or dishonesty an offence in connection with the promotion, formation or management of a body corporate, an offence involving insider dealing or any other criminal offence which is not a misdemeanor A person is adjudged bankrupt whether in the Republic or elsewhere A person has been culpable of a criminal offence, whether convicted or not, in relation to a body corporate or of fraud or breach of duty in relation to a body corporate It appears a person is debarred by a competent authority from being a member of a recognized professional body as a result of a disciplinary inquiry; or There is an ongoing investigation by a criminal investigation body or by the Registrar of Companies or the equivalent in a foreign jurisdiction regarding (above) A person is automatically disqualified of a period of 5 years if that person; Has been convicted within the last five years of an offence involving fraud or dishonesty or relating to the promotion, formation or running of a company Has been a director or senior executive of a company that has become insolvent within the last five years on account of or partly as a result of culpable activities of that director or Has been disqualified to act as company secretary, receiver, manager or liquidator of a company. (Any 3 points @ 2 marks each = 6 marks)

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