1. LECTURE NOTES ON NATURE AND SCOPE OF COMPANY LAW BY HOLY KPORTORGBI (SIRHOLY)

2. UNIT 1: NATURE AND SCOPE OF COMPANY LAW
SESSION 1: SUBJECT MATTER OF THE COMPANY LAW SESSION 2: IMPORTANCE OF COMPANY LAW SESSION 3: CONSTITUTIONAL ARRANGEMENT AND COMPANY LAW SESSION 4: FIDUCIARY DUTIES IN COMPANY LAW SESSION 5: FINANCIAL RESPONSIBILITIES IN COMPANY LAW SESSION 6: ACCOUNTS AND AUDITING IN COMPANY LAW
SIRHOLY

3. SESSION 1: SUBJECT MATTER OF THE COMPANY LAW
Features of a corporate Body
A corporate being is considered to be a person in law
As a person, companies have
name
Right to own property and enter into contract
Right to sue and be sued
Suffer liabilities
Pay tax
Prosecuted for criminal liability
SIRHOLY

4. A company is however an artificial entity, a creature of law
Its status is conferred by law, duties defined by law and right and responsibilities prescribed by law
SIRHOLY

5. Subject matter of company law Company law deals with with
Formation of companies
Governance
Financing
Regulation
dissolution
SIRHOLY

6. Session 2:Importance of company law
Why should an accountant study company law?
Company law is important because it is a practical specialised area of law
By studying company law, you are equipped with the following skills
Draft Regulation, comprehend fiduciary duties, conduct meetings, maintain sound secretarial practice, ensure financial responsibility, keep and interpret companies account, know the requirement of audit
SIRHOLY

7. The corporate persona Incorporated companies are artificial
Artificial legal persons are creatures of law
Artificial legal persons have capacity to enter contracts, own property, sue and be sued, permanent sucession (unless formally wounded up)
Companies are not the only artificial persons
Statutory corporations
Incorporated partnerships
Incorporated trusts
The principles of company law, however apply to all artificial legal entities
SIRHOLY

8. Artificial legal persons act through human beings
Company law sets out the duties imposed on the officers, the limit of their business or objects, powers etc
Not that by law, certain businesses can only be conducted by incorporated bodies
Insurance, banking, stockbroking and those those entities that fall under the purview of Ghana investment promotion Act, 1994 (Act 478)
SIRHOLY

9. Session 3: Constitutional arrangement of company law
Constitutional arrangements cover structures, powers, procedures, and check and balances
So too does company law
The Regulation of the company is its constitution
Companies are incorporated to carry specified businesses or objects, have various organs (BOD and general meetings)
It reminds us of importance of check and balances
SIRHOLY

10. Companies account must show directors emolument and allowances
Company law has its counterpart of asset declaration by politicians and high public officers
Declaration of directors holding (shares, debentures, asset buying options etc)
Companies account must show directors emolument and allowances
Retirement and pension benefits must be disclosed
SIRHOLY

11. There is a check against promoters too
Fiduciary duties of utmost good faith, and compensation of the company they form, etc keep promoters in check
Auditors are also kept in check
must be faithful, diligent, careful and act in skillful manner
The registrar and the high courts also provide enomous checks
SIRHOLY

12. Session 4: Fiduciary duties in company law
To act in the best interest of the company
To avoid conflict of interest
To make timely and full disclosure of all material facts
Not make secret profits
To account for his/her stewardship
These fiduciary duties are imposed on director, secretary or employee, receiver and manager, liquidator
SIRHOLY

13. Section 136(2) imposes fiduciary duties on auditors of the company
Section 216 of the act provides that the rights, duties and liabilities of officers and agents of companies shall continue to be governed by rules of the common law, equity relating to principal and agent, master and servant save in so far as such rules are inconsistent with the express provision of the act
Section 136(2) imposes fiduciary duties on auditors of the company
Section 12 provides for the duties of promoters pending formation of companies.
SIRHOLY

14. Duties of the promoters are
To stand in a fiduciary relationship to the company
To observe good faith towards the company
To compensate the company for any loss suffered by reason of any promoters’ failing
To account for property or information in circumstances where acquisition should have been for the company and not for the promotor
SIRHOLY

15. Law and procedures of meeting
Company law also teaches how meetings are organised in company
Quorum and what constitute quorum
Quorum as a basis for adjourning meetings
Materials to be circulated before and during meetings
Who are eligible to attend meetings
Proxy and proxy instruments
SIRHOLY

16. Session 5: Financial responsibility in company law
Company law stresses importance of two financial responsibilities
Minimum capital requirement
Minimum subscription
The minimum capital requirement is intended to ensure that a company is not to transact business, exercise borrowing right, incur any debt if it does not have minimum amount of capital prescribed by law
SIRHOLY

17. All amounts so raised must be returned in 8 days
Minimum subscription
The companies Act provides that if an invitation is made to the public to subscribe for shares in a company or buy debentures, the minimum amount that is required for the project to take effect shall be raised within 28 days after the waiting period or the invitation lapses
All amounts so raised must be returned in 8 days
SIRHOLY

18. The minimum subscription applies to only public companies
There are differences between the minimum capital requirement and minimum subscription
The minimum capital requirement applies to both private and public companies
The minimum subscription applies to only public companies
SIRHOLY

19. Financial responsibility of company law
Company law instills financial responsibility
It teaches when a company pays dividend
After paying the dividend, the company can pay its debts as they fall due
The payment shall not exceed its income surplus
Financial responsibility is reflected in limitations imposed on directors (S202)
Directors shall not dispose off substantially or the whole of the company’s undertaking or assets
Directors shall not make voluntary donation or contributions exceeding greater of 2% of income surplus or a specified amount
Directors shall not issue new new or unissued shares (excluding treasury shares)
SIRHOLY

20. Session 6: Accounts and auditing in company law
SIRHOLY