QUAYSON VRS. MATDUSON COMPANY LTD. AND OTHERS (E12/130/2021) [2024] GHAHC 183 (26 April 2024)

IN THE SUPERIOR COURT OF JUDICATURE, IN THE HIGH COURT ‘B’ HELD IN

TEMA IN THE GREATER ACCRA REGION OF THE REPUBLIC OF GHANA BEFORE HER LADYSHIP JUSTICE PATRICIA QUANSAH (JUSTICE OF THE HIGH COURT) ON FRIDAY THE 26TH APRIL 2024. SUIT NO. E12/130/2021 IN THE MATTER OF THE COMPANIES ACT, 2019, ACT 992

AND IN THE MATTER OF AN APPLICATION BY MATTHEW QUAYSON UNDER SECTIONS 217 AND 218 OF THE COMPANIES ACT, 2019, ACT 992

AND IN THE MATTER OF

MATTHEW QUAYSON

APPLICANT VRS 1. MATDUSON COMPANY LTD.

2.

BENJAMIN ARTHUR 3.

EBENEZER ARTHUR

RESPONDENTS MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 1 4.

FRANK KWOFIE ________________

APPLICANT PRESENT

RESPONDENTS ABSENT ________________

JUDGMENT 1.

INTRODUCTION [i] The Applicant herein, per his Counsel, filed an application before this Court under sections 217 and 218 of the Companies Act, 2019, Act 992 and this application was subsequently amended for the following reliefs: i) An order to set aside the transfer of the Applicant's shares in the 1st Respondent company to the 3rd and 4th Respondents as ultra vires and contrary to the constitution of the 1st Respondent company. ii) An order directed at the 1st Respondent to restore the Applicant's 300 ordinary shares in its register of members iii) An order to the Registrar of Companies to restore the Applicant's 300 ordinary shares in the Registrar Generals Department. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 2 iv) A declaration that the appointment of the 2nd (sic) and 4th Respondents as directors of the company without the knowledge and consent of the Applicant is in breach of the Constitution of the 1st Respondent Company and is null and void. [ii] The said sections 217 and 218 of Act 992 provide thus: General saving of existing law relating to officers. 217 The rights, duties and liabilities of officers and agents of companies shall continue to be governed by the rules of the common law and equity relating to principal and agent, and master and servant except in so far as those rules are not inconsistent with the express provisions of this Act. Injunction or

declaration in the event of illegal or irregular activity 218 (1) The Court on the application of a member may by injunction restrain the company, (a) from doing an act or entering into a transaction which is illegal or beyond the power or capacity of the company or which infringes a provision of the constitution of the company, or (b) from acting on a resolution not properly passed in accordance with this Act or the constitution of the company, and may declare that act, transaction or MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 3 resolution already done, entered into, or passed to be void. (2) Subsection (1) does not derogate from the protection afforded by a provision of this Act to a person dealing with the company. (3) In relation to acts beyond the capacity or power of the company, this section is subject to section 19 and does not limit its application. (4) The right afforded to a member to apply to the Court, does not limit the right that member may have to institute proceedings against a director of the company pursuant to section 200 or to apply to the Court under section 219. (5) In proceedings by a member under this section, the Court may order the member to give security for the costs of the company and may direct that the application shall be heard in chambers.

2. THE FACTS IN SUPPORT OF THE APPLICANT’S CASE [iii] Per the Applicant, he is a shareholder and a Director of the 1st Respondent company and he together with the 2nd Respondent incorporated the 1st Respondent. As a result, the Applicant stated he was assigned and held 300 ordinary shares of the 1st Respondent whilst the 2nd Respondent was assigned and held 200 ordinary shares. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 4 The Applicant therefore annexed to his affidavit in support a copy of the Regulations of the 1st Respondent, said to demonstrate the shareholding structure of the 1st Respondent and same was marked as Exhibit I. [iv] Sometime in December 2020 however, the Applicant contended that he suspected that his shares in the 1st Respondent company may have been varied, and so he caused his Solicitors to conduct a search at the Registrar of Companies and a copy of the Applicant’s Solicitor’s letter to the Registrar of Companies was also attached and marked as Exhibit II. The search results were said to have revealed that the Applicant’s ordinary shares had been reduced from 300 to 125. A copy of the Registrar General’s response, as well as a detailed print-out of the share distribution were attached and marked as Exhibits III and IV. [v] The Applicant continued to state that he also became aware of the fact that some of his shares had been transferred to the 3rd and 4th

Respondents, who had also been appointed as Directors of the 1st Respondent contrary to its constitution. The Applicant added that he had neither personally transferred any portion of his shares, nor had he consented for any part of his shares to be transferred to anyone; and yet there had been a transfer of 175 of his ordinary shares to the 3rd and 4th Respondents without the knowledge and/or consent of the Applicant herein. Further, the transfer of the Applicant’s shares was contrary to the 1st Respondent’s constitution. [vi] The Applicant also filed a supplementary affidavit in support of his application, reiterating that he had never authorised or signed any documents MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 5 for the restructuring of shareholders of the 1st Respondent; and all payments made to the 3rd and 4th Respondents were not as a result of they being Directors and/or shareholders but they were payments made for the services the 3rd and 4th Respondents had rendered to the 1st Respondent. The Applicant concluded by averring that the transfer of 175 of his shares to the 3rd and 4th Respondents without his knowledge or consent was fraudulent and illegal and thus void and ought to be set aside by this Court.

3.

AFFIDAVIT IN OPPOSITION [vii] The 2nd Respondent filed an affidavit in opposition for himself and for and on behalf of all the other Respondents, contending also that he was indeed a Director and a shareholder of the 1st Respondent company. He further confirmed that in or around 2010, the 1st Respondent was incorporated in partnership with the Applicant herein and the Applicant herein indeed held 300 shares whilst the 2nd Respondent stated he held 200 shares in the 1st Respondent company. [viii] The 2nd Respondent continued to state that the 1st Respondent was setup primarily to undertake engineering jobs, but it was unable to secure any contract for about the first two (2) years of its existence. Subsequently, in or around 2012, the 4th Respondent, who was then working with a Company called Capitol Engineering Ltd facilitated the procurement of an engineering job for the 1st Respondent. [ix] It was then that the Applicant and the 2nd Respondent were said to have agreed that in order to encourage the 4th Respondent to facilitate the procurement of more contracts for the 1st Respondent Company, the 4th Respondent should be MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 6 offered some shares in the 1st Respondent. Both the Applicant and the 2nd Respondent thus offered the 4th Respondent 125 shares in the 1st Respondent for the 4th Respondent’s role in securing jobs for the 1st

Respondent. Subsequently, in August 2017, an amount of Gh¢30,000.00, presumably proceeds from a contract procured, was also said to have been equally shared among the Applicant, the 2nd and the 4th Respondents. [x] The 2nd Respondent continued to state that in the same year 2017, the 4th Respondent again secured a contract for the 1st Respondent, but that contract required a specific skill to execute and which said skill neither the Applicant nor the 2nd and the 4th Respondents possessed. The 3rd Respondent, who was ordinarily resident in Burkina Faso but had come to Ghana at the time, and who was said by the 2nd Respondent to possess the requisite skill was therefore invited by the Applicant and the 2nd Respondent, to assist in the execution of the contract. [xi] Per the 2nd Respondent, the 3rd Respondent accepted to assist the 1st Respondent and even made available to the 1st Respondent a pickup truck and some equipment the 3rd Respondent personally owned for the execution of the contract. Thereafter, the agreement said to have been reached between the 3rd Respondent on the one hand and the Applicant, the 1st and 2nd Respondents on the other hand was that the 3rd Respondent would lower his salary demands, and in return, receive equity in the 1st Respondent. As a result, the 2nd Respondent contended that the Applicant and himself again allotted 125 shares in the 1st Respondent

to the 3rd Respondent, in view of the technical expertise the 3rd Respondent would bring to the 1st Respondent. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 7 [xii] The 2nd Respondent further averred that based on the above agreement, he was tasked to ensure that all the changes to the shareholding and Directorship of the 1st Respondent were effected at the Registrar of Companies and all the changes were discussed in a whatsapp conversation between the Applicant and all the Respondents. The 2nd Respondent thus attached the whatsapp chats to his affidavit in opposition as Exhibit BA1. [xiii] The 2nd Respondent thus continued to state that he purchased the forms required to effect the changes, and the Applicant, the 2nd, 3rd and 4th Respondents all duly completed and signed the documents to effect the requisite changes in order to make the 3rd and 4th Respondents, shareholders and Directors of the 1st Respondent. [xiv] It was thereafter that the Applicant assumed the running of the 1st Respondent, but per the 2nd Respondent, the Applicant mismanaged the 1st Respondent and could not account for the proceeds of a contract that the 1st Respondent obtained, resulting in the 1st Respondent consistently losing money. In the light of these losses therefore, the 2nd Respondent averred that the Applicant, the 2nd, 3rd and 4th Respondents all agreed and decided to wind up the 1st Respondent

and sell all its assets, but the Applicant refused to hand over the pickup truck belonging to the 1st Respondent and in the Applicant’s possession. [xv] The 2nd Respondent further filed a supplementary affidavit in opposition and contended that in October 2018, December 2018 and even in January 2019, the 1st Respondent received some proceeds and same were equally distributed MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 8 among all the four Directors/shareholders, i.e. the Applicant, the 2nd, 3rd and 4th Respondents; without any objection from the Applicant herein. [xvi] The present application has thus been brought in bad faith by the Applicant, who knew and participated in the restructuring of the shareholding of the 1st Respondent Company; and having so participated in the restructuring to allow the 3rd and 4th Respondents to become shareholders, and also, having benefitted from the expertise and networking of the 3rd and 4th Respondents, the Applicant cannot now come and seek to set aside the restructuring and so the present application ought to be dismissed.

4.

INTERVENING MATTERS [xvii] The Respondents, per their Counsel, then made an application to the Court to have a subpoena ad testificandum and duces tecum served on the Registrar General, for an officer to appear before the Court to testify to the alteration of the shareholding structure and Directorship of the 1st Respondent; and to bring documents in support and the Court granted the application. One Theophilus Kodjo thus appeared before the Court for and on behalf of the Registrar General and he stated he was a principal Company Inspector. He tendered in evidence Exhibit 1 series, made up of the certificate of incorporation of Matduson Construction Limited and the certificate to commence business dated the 21st of June 2010 and the 22nd of June 2010 respectively. He also tendered in evidence all documents pertaining to the 1st Respondent and said to be in the records of the Registrar General’s Department. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 9 [xviii] The witness further tendered in evidence Exhibits 1C and 1E, also dated 21st June 2010; and the said Exhibits purportedly reflected the Directors and the shareholding structure of the 1st Respondent as at June 2010. Exhibits 1C and 1E nonetheless had four names of four Directors of the 1st Respondent and their signatures, (said to be that of the Applicant, the 2nd, 3rd and 4th Respondents) when at the time the 1st Respondent

was incorporated in 2010, there were only supposed to be two Directors, the Applicant and the 2nd Respondent herein. In support of the above, the witness gave the answers below under cross- examination: Q: You submitted Exhibit ‘1’, (certificate to commence business), in series. A: Yes, my Lord. Q: The third document of Exhibit ‘1’, on that third document certain persons are mentioned. A: Yes, my Lord. Q: All these persons in Exhibit ‘1 C’ signed before a Commissioner of Oaths A: Yes, my Lord. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 10 Q: How many signatures are there? A: Four. Q: In Exhibit ‘1E’, the shareholders are indicated. A: Yes, my Lord. Q: And indeed, the number of shares are indicated for each person. A: Yes, my Lord. Q: And the amount payable for the shares for each person is also indicated. A: Yes, my Lord. Q: In fact, each shareholder has signed on top of his name. A: Yes, my Lord. Q: And the shareholders are (names are mentioned). A: Yes, my Lord. [xix] After cross-examination by both Counsel for the Applicant and the Respondents, the witness was discharged. Both Counsel were also ordered to file their respective written submissions and they did. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 11 5.

EVALUATION OF THE EVIDENCE ADDUCED [xx] The entirety of the application before this Court deals with the transfer of shares. Section 98 of the new Companies Act, 2019, Act 992 on the Transfer of Shares and Debentures provide: Restrictions on transferability of shares 98. (1) Except as expressly provided in the registered constitution of a company, shares are transferable without restriction by a written transfer in common form. (2) Subject to section 322, the registered constitution of a company may impose restrictions on the transferability of shares, including power for the directors to refuse to register a transfer and provisions for compulsory acquisition or rights of first refusal in favour of other members or officers of the company. (3) A restriction shall not be imposed under subsection (2) on the transferability of any shares after the shares have been issued unless the holders of the shares consent in writing to the transfer. [xxi] Then section 101 (3) of 992 also provides: (3) Despite anything contained in the constitution of a company or in a contract, that company shall not register a transfer of shares or debentures unless a proper MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 12 instrument of transfer duly stamped, if chargeable to stamp duty, has been delivered to the company. [xxii] From the evidence of Theophilus Cudjoe and the exhibits attached to the application

and the affidavit in opposition, it is obvious that the 1st Defendant company was first incorporated on the 21st of June 2010, with the Applicant and the 2nd Respondent as the only Directors. The Applicant therefore attached Exhibit 1, a copy of the Regulations 8 to 82 of the Companies Act, and therein, the Applicant and the 2nd Respondent were indeed listed as the First Directors of Matduson Construction Ltd, a company authorised to carry on the business of building construction and marine wood works. Rightly also, on Exhibit 1, the Applicant had 300 shares and the 2nd Respondent, 200 shares. [xxiii] It was later in 2018 that the change in Directorship and shareholding was said to have been effected to include the 3rd and 4th Respondents. The Respondents, per the 2nd Respondent, contended that the change in Directors and the shareholding was agreed upon by all the parties and attached to the affidavit in opposition was Exhibit BA1, said to be whatsapp communication between all the parties herein. Exhibit BA1 indeed shows some conversation alleged to have gone on among the parties; and at the latter part, there is a purported message from the 2nd Respondent, suggesting that the “change and allotment in shareholding details for two shareholders will cost GH¢300 adding up to make a total Gh1,680;” but there is unfortunately no details stated therein to demonstrate to the

Court the specific changes and the specific shares to be reassigned, purportedly. [xxxix] Moreover, the “change in directors details” as shown in the alleged whatsapp conversation is too vague, in my candid opinion, to enable this Court arrive at MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 13 the reasonable conclusion that the Applicant and indeed all the parties agreed to any specific change in the Directorship and shareholding of the 1st Defendant. Again, I find that irrespective of the agreement reached among the parties, there ought to have been a written document to confirm the seemingly oral agreement reached by all the parties in accordance with the Companies Act; but I find no written authorisation and/or written confirmation of the said agreement, contrary to the Constitution of the 1st Respondent and the Companies Act. [xl] I also cannot place much weight on the Exhibit BA1 tendered in evidence because it is a document which has been merely printed out and the source appears unknown to me. Moreover, I find that the officer subpoenaed from the Registrar General’s Department tendered in evidence the re-registration documents and as noted by the Applicant’s Counsel, all the documents appear to be dated in 2010; when the reg-registration and changes in the Directors and shareholding did in fact take place in 2018. Indeed, all the alleged conversations in Exhibit BA1 clearly

took place in 2018; and so the documents covering the purported change in shareholding and Directorship dated in 2010 cannot be relied upon by this Court as proof that the Applicant did indeed consent to this change, I hold. [xli] I am therefore left in doubt as to whether or not the Applicant herein gave his consent for shares to be redistributed and granted to third parties; and this doubt must inure to the benefit of the Applicant herein. Indeed, the gravamen of the Applicant’s case is that his shares were whittled down without his written consent as provided for in the 1st Respondent’s MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 14 Constitution, which had duly been registered at the Registrar General’s Department. Mr Theophilus Kodjo, the witness subpoenaed, confirmed there was no written document to show the change or transfer of shares; even at the Registrar General’s Department; and he gave the answers below to confirm the above: Q: 1st Respondent was incorporated on the 21st of June, 2010 per your records. A: Yes, my Lord. Q: Can you tell this court when this (sic) documents were presented for re- registration particularly exhibit '1'. A: 14th December, 2018. Q: And the form 3 that was presented for re-registration was present on the 21st June, 2010. A: Yes, my Lord. Q: And the regulations also in exhibit '1' which contained the changes in the shareholding structure for

re-registration is also dated 21st June, 2010. A: Yes, this is not change. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 15 Q: The changes in the shareholding structure of the company, tell how they were effected. A: If you register a company you are given particulars of which one will be a regulations and you are also given form 3 and 4. These documents give the first details of the directors as well as the shareholders. So therefore what it means is that you can't alter this historical document. However the law allows you to do an amendment. The amendment is done through an application. So if you are amending the regulations in terms of the shares, you do that by providing us with what we term as deed. This deed is what we work on and certify and give you a copy as proof of transfer of shares. Q: In this case did you go through the procedure by getting copies of the deed, certifying it and giving copies to the shareholders. A: No. We don't have anything on record showing that there has been transfer of shares. Q: Upon what basis did you effect the transfer of shares if you don’t have any as provided by the law? A: No, my Lord, we don’t have any record. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 16 [xlii] In the Respondents’ Counsel’s written submissions, Counsel cited several case law to seek to state that an oral agreement among the parties can be equated to the parties consenting to undertake an act which was within their power to do; and so the change ought to be held as valid. I however find otherwise and I am unable to hold, from the evidence adduced before this Court, that there has been a valid transfer to third parties.

6.

CONCLUSION For the foregoing, I find the Applicant has been able to make a good case for himself and is entitled to the reliefs he seeks. This Court therefore hereby grants: i) An order to set aside the transfer of the Applicant's shares in the 1st Respondent company to the 3rd and 4th Respondents as ultra vires and contrary to the constitution of the 1st Respondent company. ii) An order directed at the 1st Respondent to restore the Applicant's 300 ordinary shares in its register of members. iii) An order to the Registrar of Companies to restore the Applicant's 300 ordinary shares in the Registrar General’s Department. iv) A declaration that the appointment of the 2nd (sic) and 4th Respondents as Directors of the company without the knowledge and consent of the Applicant is in breach of the Constitution of the 1st Respondent Company and is null and void. MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 17 And finally, the transfer of the shares be and is hereby reversed in favour of the Applicant herein with costs of Gh¢20,000.00 in favour of the Applicant herein. SGD.

JUSTICE PATRICIA QUANSAH HIGH COURT ‘B’

TEMA GREATER ACCRA REGION. 26TH APRIL 2024. COUNSEL: PAUL SELORM KPODOVIA ESQ, PRESENT, HOLDING BRIEF FOR SAM KYERE

FOR THE APPLICANT AKUA AMELEY PRESENT, HOLDING BRIEF FOR D. K. AMELEY ESQ. COUNSEL

FOR THE RESPONDENTS MATTHEW QUAYSON V MATDUSON CO LTD & 3 ORS 18