Question Tag: Shareholders’ Rights

i) Chances of Success in Court Action:

Section 219 of the Companies Act, 2019 (Act 992) provides a remedy against oppression. A member or debenture holder of a company may apply to the court for an order under this section on the ground that:

• The affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or debenture holders or in disregard of the proper interests of those members, shareholders, officers, or debenture holders of the company; or
• An act of the company has been done or is threatened, or a resolution of the members, debenture holders, or a class of them has been passed or is proposed, which unfairly discriminates against, or is otherwise unfairly prejudicial to, one or more of the members or debenture holders.

The issue is whether Kofi Ameyaw and Salia Sule can proceed as minority members on oppression. Section 219 of Act 992 is applicable to the scenario.

The complaint of Kofi Ameyaw and Salia Sule is that the properties of the company had been misapplied and wasted, and that mortgages were improperly secured as guarantees with the company’s properties. Furthermore, they claim that the company gave negligent advice which resulted in personal economic loss.

The two are likely to succeed pursuant to section 219, which provision gives the two members the right to action even though they may be in the minority.

(9 marks)

ii) Four Entities or Organs Through Which a Company Acts:

According to section 144 (1) of the Companies Act, 2019 (Act 992), a company shall act through the following entities or organs:

• Board of Directors: The Board is the heart of the company. It decides on policy initiatives, ensures the declaration of dividends, and generally oversees the management of the company.
• Managing Director: The Managing Director is responsible for running the company. He spearheads the implementation of the Board’s policy decisions and has the power to bind the company and take various decisions on its behalf.
• Annual General Meeting (AGM): The AGM is a gathering of shareholders where they approve or disapprove the actions and business of the company, such as the declaration of dividends, election of directors, and approval of auditors’ reports.
• Shareholders/Members: Shareholders are the owners of the company. Through their participation in meetings and other corporate actions, they influence the company’s operations.

(4 points @ 1.5 marks each = 6 marks)