2006
SUPREME COURT
GHANA
CORAM
AI Generated Summary
Dr. S.K. Date-Bah, J.S.C., writing for the Supreme Court of Ghana, resolved a corporate law dispute between business partners Dr. Kwame Dufour and Mr. Nicholas Bernard Asare over shareholding, governance, and alleged oppression in Dupaul Wood Treatment (Ghana) Co. Ltd. The two men incorporated the company in 1978, each subscribing for 50,000 shares. A special resolution purported to adopt new Regulations effective 1 May 1980 that altered share classes and reduced Asare’s stake. The High Court upheld dilution, while the Court of Appeal found oppression and ordered entry of Asare’s name in the register. On further appeal, the Supreme Court held the 1980 Regulations void for non-registration, restored the original 50% shareholding each, declared Asare’s removal as director unlawful, rejected the oppression claim and non-payment-of-dividends theory, confirmed entry in the register and arrears of directors’ fees, declined a compulsory buy-out absent section 218 grounds, and allowed the appeal in part with interest under CI 52.
J U D G M E N T
DR. DATE-BAH, J.S.C.: Two business partners related by blood fell out. In the wake of this falling out, the courts have had the responsibility thrust upon them to determine the partners’ respective rights and obligations under the Companies Code 1963 (Act 179).
In August 1978, Dr. Kwame Dufour and Mr. Nicholas Bernard Asare subscribed the Regulations of the first defendant/respondent/appellant, which will subsequently be referred to as the first appellant or the appellant company, and incorporated it by registration at the companies’ registry. By that act, they both became shareholders and members of the appellant company. (See Adehyeman Gardens Ltd. v Assibey [2003-2004] SCGLR 1016). This much is in effect admitted by the appellants’ decision to abandon Ground One in their Notice of Appeal, which had read as follows:
“The Court of Appeal erred by its holding that the Respondent was a member of the Company when at the same time, it accepted the fact that all that the Respondent did amounted to pre incorporation actions which did not bind the Appellants or the Company.”
What remains in issue with regard to the shareholding in the appellant company is the extent of shareholding by the plaintiff/appellant/respondent, who is hereafter referred to in this judgment as the respondent. Did the respondent remain the 50% shareholder he was as a subscriber or did subsequent acts of the company and/or its members dilute his shareholding? This was an issue that had to be determined in order to decide whether to grant the first of the declarations sought by respondent in this case which he had initiated with an originating motion under the Companies Act 1963 for the following declarations:
“That the Applicant is a shareholder and member of the first Respondent Company and holds 50% of its issued share capital.
That the systematic reduction by the Second Respondent in the number of shares held by the Applicant was an unjustified expropriation of the Applicant’s shareholding and a fraud on him.
That the purported removal of the Applicant as a director of the First Respondent Company by the Second Respondent was unlawful and so void as the same was contrary to Section 185(2) of the Companies Code 1963 (Act 179).
That the affairs of the First Respondent Company are being conducted and the powers of the directors are being exercised in a manner oppressive to the Applicant or in disregard of his legitimate interests as a Shareholder of the Company.”