- 12 Marks
Question
c) Kum is the Executive Director of Okitimiw Company Limited. Kum ordered that three-fourths of monies received weekly by the Company should be paid into the Company’s account and the remaining into his personal account for his travels, boarding, and lodging within and outside the country. Auditing of the accounts of the Company revealed that the lodging of the monies in the personal account of the executive director was not only unlawful but was done to perpetuate fraud.
On the official winding up of the Company, it was revealed that the business was carried out for fraudulent purpose and the directors and other officers of the Company were aware of what went on.
Required:
i) Identify TWO conditions that can be used to restrain fraudulent persons from managing companies. (6 marks)
ii) State TWO actions the Registrar-General will take where the process of inspection reveals criminal liability of the Executive Director.
(6 marks)
Answer
i) Conditions to Restrain Fraudulent Persons from Managing Companies:
Section – 186 of the Companies Act restrains fraudulent persons from managing companies where:
- A person is convicted on indictment, whether in Ghana or elsewhere, of any offence involving fraud or dishonesty or any offence in connection with the promotion, formation, or management of a body corporate.
- A person is adjudicated bankrupt, whether in Ghana or elsewhere.
- It appears that a person has been guilty of any criminal offence, whether convicted or not, in relation to any body corporate, or of any fraud or breach of duty in relation to a body corporate.
(3 points for 6 marks)
ii) Actions by the Registrar-General:
In the keeping of the books and accounts of a company, where it appears to the Registrar of Companies that there are circumstances suggesting that the business of the company is being conducted for a fraudulent or unlawful purpose among other things (section 219 of ACT 179), the Registrar of Companies, after completion of the process of inspection of the books of accounts, and if it appears to him that a person may have committed an offence for which that person is criminally liable, the Registrar shall refer the matter to the Attorney-General. If the Attorney-General considers that the case is one in which a prosecution ought to be instituted, he shall institute proceedings (section 225 of ACT 179).
(6 marks)
- Tags: Company Directors, Fraudulent Activities, Registrar-General Actions
- Level: Level 1
- Uploader: Dotse