Ghana Act or statute

Parliament of Ghana

Companies Act, 2019 (ACT 992)

This section says the Act applies to companies formed in the Republic, including companies formed before or after commencement, subject to any other provision that says otherwise. This section say…

administrative penaltiesamendment restrictionsapplication of actassociationbeneficial ownership recordsbusiness alterationcapacitycash paymentcertificate of incorporationclass rightscompany administrationcompany authoritycompany compliancecompany constitutioncompany conversioncompany formationcompany incorporationcompany limited by guaranteecompany membershipcompany namescompany recordscompany registerscompany registrationcompany structurecompany transactionscompany winding upcompensationconstitution subscriptionconstitutional amendmentconstitutional documentsconstitutional restrictionscorporate administrationcorporate compliancecorporate constitutioncorporate filingsCompany lawcorporate name changecorporate powerscorporate proceedingscorporate recordscorporate transactionscourt proceedingsdebenture noticesdirector appointment/removaldirector liabilitydividendsdocument copiesdocument filingentity scopeequityfiling with Registrarfilingsfinancial assistanceformationformation and incidental mattersgeneral meetingsincorporationincorporation certificatesmember contributionmember requestsmembers and officersname change compliancename reservationnon-cash considerationoffences and penaltiespayment for sharespre-incorporation contractspreference sharesprivate companypromoterspublic companyredemptionregister inspectionregister of membersregister rectificationregistered constitutionregistrationregulatory complianceshare acquisitionshare capitalshare certificatesshare classesshare classificationshare issuanceshare issuesshare liabilityshare rightsshare transfershareholder liabilityshareholder resolutionsshareholder rightsshareholder votingshareholder voting rightsshareholder/member rightsshareholdingshareholding recordssharesspecial regulationspecial-purpose companiestransactionstypes of companiesultra vireswinding up

Jurisdiction: Ghana
Structure: 61 provisions
Citation: Act 992
Dates: Undated source snapshot

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Purpose and legislative effect

“This section says the Act applies to companies formed in the Republic, including companies formed before or after commencement, subject to any other provision that says otherwise.”

This section says the Act applies to companies formed in the Republic, including companies formed before or after commencement, subject to any other provision that says otherwise. This section says which chapters apply to which types of companies. A company or association with more than twenty persons must not be formed to run a business aimed at making gain, unless it is registered under this Act or formed under another enactment. This section says the Act does not change legislation for banking, insurance, or other specially regulated companies. Rules of equity and common law for companies keep applying unless they conflict with this Act.

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Application of Act

This section says the Act applies to companies formed in the Republic, including companies formed before or after commencement, subject to any other provision that says otherwise.

Section 1

Certificate of incorporation and winding up l

Section 15 does not stop proceedings to wind up the company under section 274.

Section 16

Registration of consolidated constitution

The Registrar may require a company to file a consolidated constitution, the Board must send the required documents within 28 days, and the Registrar registers the document after payment of the prescribed fee.

Section 31

Return of issues

A company that issues shares must file a return with the Registrar within 28 days, unless the issue is a re-issue of treasury shares.

Section 46

Acquisition by company of its own shares

A company may create and issue redeemable preference shares and convert existing shares into them, subject to sections 62 to 65.

Section 61

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Showing 61 of 61 provisions

Provision 44Offence 9Amendment 5Commencement 3

§ 1Application of ActCommencement

This section says the Act applies to companies formed in the Republic, including companies formed before or after commencement, subject to any other provision that says otherwise.

Section 1—Application of Act (1) Except as otherwise provided, this Act applies to companies formed in the Republic, whether before or after the commencement of this Act. (2) This Act does not affect the validity of anything done before the date when the Act comes into operation.

Section 1Verify source

§ 2Application of particular chaptersProvision

This section says which chapters apply to which types of companies.

Section 2—Application of particular chapters (1) Chapter Two applies to all companies. (2) Chapter Three applies to private companies. (3) Chapter Four applies to public companies. (4) Chapter Five applies to external and non-Ghanaian companies.

Section 2Verify source

§ 3Prohibition of association exceeding twenty membersProvision

A company or association with more than twenty persons must not be formed to run a business aimed at making gain, unless it is registered under this Act or formed under another enactment.

Section 3—Prohibition of association exceeding twenty members A company, or an association consisting of more than twenty persons shall not be formed for the purpose of carrying on a business that has for the object of the company or association, the acquisition of gain by the company or association or by the individual members of the company 44 or association, unless the company or association is registered as a company under this Act or is formed in pursuance of any other enactment.

Section 3Verify source

§ 4Companies formed for special purposesProvision

This section says the Act does not change legislation for banking, insurance, or other specially regulated companies.

Section 4—Companies formed for special purposes This Act does not abrogate or affect legislation relating to companies carrying on the business of banking, insurance or any other business which is subject to special regulation.

Section 4Verify source

§ 5Saving of equity and common law CHAPTER TWO— PROVISIONS APPLICABLE TO ALL COMPANIES Part A: Formation and Incidental MattersProvision

Rules of equity and common law for companies keep applying unless they conflict with this Act.

Section 5—Saving of equity and common law The rules of equity and of common law applicable to companies shall continue in force unless they are inconsistent with a provision of this Act. CHAPTER TWO—PROVISIONS APPLICABLE TO ALL COMPANIES Part A: Formation and Incidental Matters

Section 5Verify source

§ 6Right to form a companyProvision

One or more persons may form an incorporated company under this Act.

Section 6—Right to form a company One or more persons may form an incorporated company under this Act

Section 6Verify source

§ 7Types of companiesProvision

This section sets out the types of companies and rules for when a company may be private or public, including share-registration limits for certain company types.

Section 7—Types of companies (1) An incorporated company may be (a) a company limited by shares; (b) a company limited by guarantee; (c) an unlimited company; or (d) an external company. (2) For the purposes of subsection (1), (a) a company limited by shares is a company which has the liability of its members limited to the amount unpaid on the shares respectively held by them; (b) a company limited by guarantee is a company which has the liability of its members limited to an amount that the members may respectively undertake to contribute to the assets of the company in the event of its being wound up; (c) an unlimited company is a company which does not have a limit on the liability of its members; or (d) an external company is a company as defined in section 329. (3) A company limited by shares and an unlimited company shall for the purposes of incorporation be registered with shares. (4) A company of a type specified in subsection (1), may be a private company or a public company. (5) A private company, other than a company limited by guarantee, is a company which by virtue of its constitution (a) restricts the right to transfer the shares of the company, if any, 45 (b) limits the total number of the members and debenture holders to fifty, not including (i) persons who are genuinely in the employment of the company, and (ii) persons who, having been formerly in the employment of the company, were while in that employment, and have continued after the determination of that employment to be members or debenture holders of the company; (c) prohibits the company from making an invitation to the public to acquire shares or debentures of the company; and (d) prohibits the company from making an invitation to the public to deposit money for fixed periods or payable at call, whether bearing or not bearing interest. (6) Where two or more persons hold one or more shares or debentures jointly, they shall, for the purposes of subsection (3) be treated as a single member or debenture holder. (7) A company which is not a private company is a public company except a company limited by guarantee which has a membership of fifty or less. (8) A company limited by guarantee shall not for the purposes of incorporation be registered with shares and shall not create or issue shares.

Section 7Verify source

§ 8Companies limited by guaranteeOffence

Companies limited by guarantee cannot be set up to make profits, and if they carry on profit-making business the responsible officers and members can be liable for debts and penalties.

Section 8—Companies limited by guarantee (1) A company limited by guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits other than making profits for the furtherance of its objects. (2) Where a company limited by guarantee carries on business for the purpose of making profits, other than for the furtherance of the objects of the company, the officers and members of that company who are cognisant of the fact that the company is so carrying on business are jointly and severally liable for the payment and discharge of the debts and liabilities of the company incurred in carrying on that business, and the company and those officers and members are each liable to pay to the Registrar, an administrative penalty of twenty-five penalty units for each day during which the company carries on chat business. (3) The total liability of the members of a company limited by guarantee to contribute to the assets of the company in the event of the company being wound up shall not at any time be less than the amount of money specified in the application required for incorporation. (4) Where in breach of subsection (3), the total liability of the members of a company limited by guarantee is at any time, less than the amount specified in the application required for incorporation, every director and member of the company who is cognisant of the breach is liable to pay to the Registrar an administrative penalty of five hundred penalty units.

Section 8Verify source

§ 9Conversion of company limited by shares to company limited by guaranteeProvision

A company limited by shares may convert to a company limited by guarantee if listed conditions are met.

Section 9—Conversion of company limited by shares to company limited by guarantee (1) A company limited by shares may be converted into a company limited by guarantee if, (a) the liability on any of its shares is fully paid; (b) all the members agree in writing to the conversion and to the voluntary surrender to the company for cancellation of the shares held by them immediately before the conversion; 46 (c) a new constitution, appropriate to a company limited by guarantee, is adopted by the company pursuant to section 30; and (d) a member agrees or the members agree in writing to contribute to the assets of the company, in the event of the company being wound up, to an amount of money not less than that prescribed by subsection (3) of section 8. (2) On delivery to the Registrar for registration of a statutory declaration by a director and the Company Secretary confirming that the conditions of subsection (1) have been complied with, the Registrar shall issue a new certificate of incorporation to the effect that the company is limited by guarantee. (3) From the date stated in the certificate (a) the company is converted into a company limited by guarantee, (b) the shares in the company shall be validly surrendered and cancelled despite the provisions of section 58, and (c) the members of the company who have not agreed to contribute to the assets of the company in the event of the company being wound up cease to be members of the company. (4) Except in accordance with subsection (4) of section 21, the company shall not change the name under which the company was registered before the conversion. (5) The omission of words (a) "(plc) Public Liability Company", or (b) "(ltd) Private Company Limited" as the last words of the name of the company after conversion shall not be regarded as a change of name. (6) If the Registrar is of the opinion that the name under which the company is registered will be misleading or undesirable on its conversion to a company limited by guarantee, the Registrar shall in accordance with subsection (6) of section 21, direct the company to change its name and shall not issue a new certificate of incorporation until the direction has been complied with or cancelled in accordance with that subsection. (7) Until a new certificate of incorporation is issued under subsection (2), neither the surrender of the shares of the company nor the agreement to contribute to the assets of the company in the event of the company being wound up shall take effect. (8) The conversion of a company, pursuant to this section shall not (a) affect the rights or obligations of the company except as mentioned in this section; or (b) render defective any legal proceedings by or against the company.

Section 9Verify source

§ 10Duties of promotersProvision

Promoters of a company must act in good faith and as fiduciaries, account for certain property or profits, and can face rescission of transactions unless disclosure and ratification requirements are met.

Section 10—Duties of promoters (1) A person who is or has been engaged or interested in the formation of a company is a promoter of that company. 47 (2) A person acting in a professional capacity for persons engaged in procuring the formation of a company is not a promoter of that company. (3) The promoter shall, until the formation of a company is complete and the working capital of the company has been raised, (a) stand in a fiduciary relationship to the company; (b) observe utmost good faith towards the company in a transaction with the company or on behalf of the company; and (c) compensate the company for any loss suffered by the company by reason of the failure of the promoter to observe utmost good faith. (4) A promoter that acquires property or information in circumstances in which it was the duty of the promoter as a fiduciary to acquire the property or information on behalf of the company, shall account to the company for the property or information and for the profit which the promoter may have made from the use of that property or information. (5) A transaction between a promoter and the company may be rescinded by the company unless, after full disclosure of the material facts known to the promoter, the transaction has been entered into or ratified on behalf of the company, (a) by the board of directors of the company, if all the directors of the company are independent of the promoter; (b) by all the members of the company; or (c) by the company at a general meeting at which neither the promoter nor the holders of the shares in which the promoter is beneficially interested have voted on the resolution to enter into or ratify that transaction. (6) A period of limitation shall not apply to proceedings brought by a company to enforce a right under this section. (7) In proceedings under subsection (6), the Court may relieve a promoter in whole or in part and on the terms that the Court considers fit from liability if in the circumstances, including lapse of time, the Court considers it equitable so to do.

Section 10Verify source

§ 11Pre-incorporation contracts Part B: Incorporation of CompaniesProvision

A company may ratify a pre-formation contract or transaction within 18 months after formation.

Section 11—Pre-incorporation contracts (1) A contract or any other transaction purporting to be entered into by a company before the formation of the company, or by a person on behalf of the company before its formation, may be ratified by the company within eighteen months after the formation of the company. (2) On ratification under subsection (1), the company shall become bound by, and entitled to the benefit of, that contract or that transaction as if the company has been in existence at the date of that contract or other transaction and had been a party to the contract or other transaction. (3) Before ratification by a company, the person who purported to act in the name or on behalf of the company is, in the absence of express agreement to the contrary, personally bound by the contract or other transaction and is entitled to the benefit of the contract or other transaction. 48 Part B: Incorporation of Companies

Section 11Verify source

§ 12Right to apply for incorporationProvision

A person who is 18 or older may apply to incorporate a company, subject to the Act.

Section 12—Right to apply for incorporation Subject to this Act, a person of the age of eighteen years and above may apply for the incorporation of a company under this Act.

Section 12Verify source

§ 13Application for incorporationOffence

An incorporation application must be filed in the prescribed form and include specified company, shareholder, director, auditor, and ownership details.

Section 13—Application for incorporation (1) An application for incorporation shall be made in the prescribed form and delivered to the Registrar. (2) The application shall include (a) the name of the company as required by section 21; (b) an indication of the type of proposed company; (c) the nature of the proposed business in the case of a company registered with an object; (d) the address of the proposed registered office and principal place of business of the company in the Republic, the telephone number and the post office box, private mail bag or digital address of the registered office of the company; (e) the electronic mail address and website of the company, if available; (f) the following particulars of each subscriber: (i) the date and place of birth; (ii) the present full name and any former name; (iii) the residential, occupational, postal and electronic mail addresses and telephone contact; and (iv) the nationality; (g) the following particulars of each proposed director of the proposed company: (i) the present full name and any former name; (ii) the particulars of any business occupation and other directorships held by the director as provided by section 215; and (iii) the residential, occupational, postal and electronic mail addresses and telephone contact; (h) a statutory declaration by each proposed director of the proposed company indicating that within the preceding five years, that proposed director has not been (i) charged with or convicted of a criminal offence involving fraud or dishonesty; (ii) charged with or convicted of a criminal offence relating to the promotion, incorporation or management of a company; or (iii) declared insolvent or if that proposed director has been insolvent, the date of the insolvency and the particulars of that company; (i) the consent of each proposed director; 49 (j) the following particulars of the proposed Company Secretary of the proposed company: (i) the present full name and any former name; (ii) the usual postal, occupational and electronic mail address; (iii) the residential address in the case of an individual; and (iv) the business occupation as provided by section 215; (k) the following particulars of the proposed auditor of the proposed company: (i) the present full name and any former name; (ii) the postal and electronic mail addresses and telephone number; (iii) the residential address in the case of an individual; and (iv) the consent of the auditor; (1) the following particulars of each subscriber for a proposed company with shares: (i) the full name and any former or other name; (ii) the date and place of birth; (iii) the telephone number; (iv) the nationality and proof of identity; (v) the residential, postal or email address, if any; (vi) place of work and position held; (m) the following particulars in respect of each beneficial owner of the proposed company: (i) the full name and any former or other name; (ii) the date and place of birth; (iii) the telephone number; (iv) the nationality, national identity number, passport number or other appropriate identification and proof of identity; (v) the residential, postal or email address, if any; (vi) place of work and position held; (vii) the nature of the interest including the details of the legal, financial, security, debenture or informal arrangement giving rise to the beneficial ownership; and (viii) confirmation as to whether the beneficial owner is a politically exposed person; (n) the following details in the case of a company that has shares: (i) the amount of proposed seated capital, as defined in section 68; (ii) the number of authorised shares of the company for each class; and 50 (o) in the case of a proposed company limited by guarantee the specified amount up to which the member undertakes to contribute to the assets of the company, in the event of the company being wound up while that person is a member or within a stipulated period after ceasing to be a member, for payment of the costs, charges and expenses of winding up, and the adjustments of the rights amongst members. (3) The application shall be signed by the subscriber or each subscriber if more than one, for shares of the company by writing opposite the name of the subscriber, the number of shares the subscriber takes and the cash price payable for the shares and the subscriber shall take at least one share. (4) The provisions of subsection (3) shall apply to an application for incorporation of a company that proposes to register a constitution. (5) The application for incorporation may be effected by (a) the delivery of the completed application form as required by subsection (2); or (b) the delivery of the completed application form as required by subsection (2) accompanied with a proposed constitution. (6) Without limiting the provisions of subsection (2), the applicant shall furnish the Registrar with appropriate evidence of the identity and place of residence of the applicant at the time of the delivery of the completed application form for incorporation.

Section 13Verify source

§ 14IncorporationProvision

The Registrar must certify a company as incorporated if the application complies with the Act and the prescribed fee is paid.

Section 14—Incorporation (1) Where the Registrar is satisfied that the application for incorporation of a company complies with this Act, the Registrar shall, after payment of the prescribed fee, certify under the seal of the Registrar that the company is incorporated and in the case of a limited liability company, that the liability of the members is limited. (2) From the date of incorporation, the company becomes a body corporate by the name contained in the application for incorporation and, subject to section 13, is capable of performing the functions of an incorporated company.

Section 14Verify source

§ 15Certificate of incorporationProvision

A certificate of incorporation, or a certified copy of it, is conclusive evidence that the company was duly incorporated under the Act, and court proceedings to cancel or annul the incorporation are not allowed.

Section 15—Certificate of incorporation The certificate of incorporation, or a copy of that certificate, certified as correct by the Registrar, is conclusive evidence that the company has been duly incorporated under this Act and proceedings shall not be brought in a Court to cancel or annul the incorporation.

Section 15Verify source

§ 16Certificate of incorporation and winding up lProvision

Section 15 does not stop proceedings to wind up the company under section 274.

Section 16—Certificate of incorporation and winding up Section 15 does not preclude the institution of proceedings to wind up the company in accordance with section 274.

Section 16Verify source

§ 17Section 17Offence

If a document delivered to the Registrar under section 13 contains an error or omission, the company and each signatory may be liable to pay an administrative penalty of 150 penalty units.

Section 17—Error or omission in document (1) Where there is an error or omission in a document containing particulars delivered to the Registrar under section 13, the company and every signatory of the document is without limiting section 346, liable to pay to the Registrar an administrative penalty of one hundred and fifty penalty units. 51 Part C: Capacity of Companies

Section 17Verify source

§ 18Powers of companiesProvision

A company has full capacity to carry on business, do acts, enter transactions, and deal with deeds, mortgages, and other instruments, subject to this Act and other enactments.

Section 18—Powers of companies (1) Subject to this Act and to any other enactment, a company shall have (a) full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction; and (b) full rights, powers and privileges for the purposes of paragraph (a). (2) Without limiting subsection (1), and despite the provisions of any other enactment, a company shall be capable of giving and entering into and being bound by and claiming all rights under a deed or mortgage or other instrument. (3) The registered constitution of a company may contain a provision regarding the capacity, rights, powers or privileges of the company if the provision restricts the capacity of the company or those rights, powers and privileges.

Section 18Verify source

§ 19Limits of authority of companyProvision

A company’s constitution can restrict its business, and the Court may stop acts or property transfers that breach that restriction.

Section 19—Limits of authority of company (1) Where the registered constitution of a company sets out the nature of business or objects of the company, there is deemed to be a restriction in the registered constitution on the business or activities in which the company may engage, unless the registered constitution expressly provides otherwise. (2) Where the registered constitution of a company provides for any restriction on the business or activities in which the company may engage (a) the capacity and powers of the company shall not be affected by that restriction; and (b) an act of the company, a contract or other obligation entered into by the company and a transfer of property to or by the company shall not be invalid by reason only of the fact that it was done in contravention of that restriction. (3) Subsection (1) shall not affect the application of the provisions of subsection (5) and sections 200, 219 and 275. (4) Despite subsection (1), an act of a company and a conveyance or transfer of property to, or by, a company is not invalid by reason of the fact that the act, conveyance or transfer was not done or made for the furtherance of any of the authorised businesses or that the company was otherwise exceeding its objects or powers. (5) On the application of— (a) a member of the company, or (b) the holder of a debenture secured by a floating charge over all or any of the property of the company or by the trustee for the holders of those debentures, the Court may prohibit, by injunction, the doing of an act or the conveyance or transfer of a property in breach of subsection (1). 52 (6) Where the transactions sought to be prohibited in proceedings under subsection (5) are being, or are to be, performed or made in accordance with a contract to which the company is a party, the Court may, (a) if the Court considers it equitable and if all the parties to the contract are parties to the proceedings, set aside and prohibit the performance of the contract, and (b) allow for the payment of compensation to the company or to the other parties to the contract for the loss or damage sustained by the company or the other parties by reason of the setting aside or prohibition of the performance of the contract, but not compensation for loss of anticipated profits to be derived from the performance of the contract. (7) The capacity of the company to do an act shall not be affected by the fact that the act is not, or would not be, in the best interests of a company.

Section 19Verify source

§ 20Alteration of objects or businessOffence

A company may change its business or objects by special resolution, but it must notify debenture holders and their trustees within 28 days; failure triggers a 50 penalty unit administrative penalty.

Section 20—Attention of objects or business (1) Where applicable, a company may change the business for which the company was incorporated to carry on, or in the case of a company not formed for the purpose of carrying on a business, the objects of the company by special resolution. (2) Within twenty-eight days of the passing of the special resolution under subsection (1), notice of the resolution shall be given in the prescribed form to the holders of the debentures secured by a floating charge over any of the property of the company and to the trustees for the debenture holders. (3) Where a company defaults in giving a notice as required by this section, the company and every officer of that company that is in default is liable to pay to the Registrar an administrative penalty of fifty penalty units.

Section 20Verify source

§ 21Names of companiesCommencement

Companies must use the correct ending for their type, and they cannot be registered under misleading, undesirable, or recently dissolved names.

Section 21—Names of companies (1) The last words of the name of a— (a) private company limited by shares shall be "Limited Company" or the abbreviation "LTD"; (b) public company limited by shares shall be "Public Limited Company" or the abbreviation "PLC"; (c) company limited by guarantee shall be "Limited by Guarantee" or the abbreviation "LBG"; and (d) private company unlimited by shares shall be "Private Unlimited Company" or the abbreviation 'PRUC' (e) public company unlimited by shares shall be "Public Unlimited Company" or the abbreviation "PUC". (2) A company shall not be registered by a name which, in the opinion of the Registrar, is misleading or undesirable. (3) A company shall not be registered with a name of a company that has been dissolved within the preceding five years of the intended registration. 53 (4) A company may in writing change its name by special resolution and with the written approval of the Registrar. (5) Where, through inadvertence or otherwise, a company on first registration or on registration by a new name is registered by a name which, in the opinion of the Registrar, is misleading or undesirable, the company shall change the name of the company with the approval of the Registrar. (6) Where the Registrar so directs within six months of the company being registered by that name, the company shall change the name within a period of six weeks from the date of the direction. (7) Where the Registrar is of the opinion that by reason of a change in the objects of, or the nature of the business carried on by a company, the name under which the company is registered is misleading or undesirable, the Registrar may direct the company to change the name and the company shall change that name within six weeks of the direction, unless within that time the company has lodged an appeal to the Court against the direction. (8) The Court shall cancel or confirm the direction and if the direction is confirmed, the company shall change the name within six weeks of the confirmation. (9) Where a company defaults in complying with a direction under subsection (6), (7), or (8) the Registrar shall change the name of the company in the Register. (10) Where a company defaults in complying with a direction under subsection (5), (6), (7) or (8), the company and any of the directors of the company that are cognisant of the default are liable to pay to the Registrar, an administrative penalty of twenty-five penalty units and a further penalty of fifty penalty units for each day that the default continues. (11) Where a company changes the name of the company under this section, the Registrar shall record the new name in place of the former name, and shall issue a certificate of incorporation that indicates the change of name. (12) Pursuant to subsection (11), the Registrar shall advertise the change in the Companies Bulletin, the website of the Office of the Registrar of Companies and in one daily newspaper published in the Republic and circulating in the district in which the registered office of the company is situated. (13) A certificate or an advertisement in the Companies Bulletin under this section is conclusive evidence of the change to which the change of name relates. (14) A change of name by a company shall not affect the rights or obligations of the company or render defective legal proceedings by or against the company, and legal proceedings that might have been continued or commenced against the company under the former name may be continued or commenced against the company under the new name. (15) A company limited by shares existing at the commencement of this Act has six months within which to comply with paragraphs (b) and (c) of subsection (1).

Section 21Verify source

§ 22Reservation of name 2Provision

An application to reserve a company name may be sent to the Registrar in an approved form; the Registrar may reserve the name on payment of the prescribed fee, but the reservation cannot last more than two months and may be renewed for another two months. A company cannot be registered under a reserved or similar name.

Section 22—Reservation of name 54 (1) An application for reservation of the name of a company may be sent or delivered to the Registrar, and shall be in a form approved by the Registrar. (2) The Registrar may, after receipt of the application and on payment of the prescribed fee, reserve a name pending registration of a company or a change of name by a company. (3) A reservation under subsection (2) shall not exceed two months and may be renewed for a further period of two months. (4) A company shall not be registered under a reserved name or under any other name which in the opinion of the Registrar is similar to the reserved name. Part D: Constitution of the Company

Section 22Verify source

§ 23Option to have a registered constitutionProvision

A company may choose to have a registered constitution.

Section 23—Option to have a registered constitution (1) A company has the option to have a registered constitution. (2) Where a company opts to have a registered constitution, the document that represents the constitution shall be (a) signed by one or more subscribers or the Company Secretary, and (b) delivered to the Registrar by the subscriber or an authorised representative before incorporation; or (c) delivered to the Registrar by the Company Secretary, director or an authorised representative after incorporation.

Section 23Verify source

§ 24Effect of Act on company that has lodged a registered constitutionProvision

A company’s rights, powers, duties, and obligations take effect under the relevant Schedule once its registered constitution has been delivered, unless the constitution changes them.

Section 24—Effect of Act on company that has lodged a registered constitution (1) Where a private company has delivered to the Registrar its document intended to be the registered constitution, the rights, powers, duties and obligations of the company, the Board, each director and each shareholder of the company shall have effect as provided in the Second Schedule, unless they are restricted, limited or modified by the registered constitution. (2) Where a public company has duly delivered the registered constitution of the company, the rights, powers, duties and obligations of the company, the Board, each director and each shareholder of the company shall have effect as provided in the Third Schedule, unless they are restricted, limited or modified by the registered constitution of the company duly delivered in accordance with this Act. (3) Where a company limited by guarantee has duly delivered the registered constitution of the company, the rights, powers, duties and obligations of the company, the Board, each director and each shareholder of the company shall have effect as provided in the Fourth Schedule, unless they are restricted, limited or modified by the registered constitution of the company duly delivered in accordance with this Act.

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§ 25Effect of Act on company without a registered constitutionProvision

If a company has no registered constitution, its rights, powers, duties, and obligations follow the relevant Schedule unless later restricted, limited, or modified by a duly delivered registered constitution.

Section 25—Effect of Act on company without a registered constitution (1) Where a private company does not have a registered constitution, the rights, powers, duties and obligations of the company, the Board, each director and each shareholder of the company shall be as provided in the Second Schedule and be deemed accordingly to be the constitution 55 of that company, unless they are restricted, limited or modified by a registered constitution of the company duly delivered after incorporation in accordance with this Act. (2) Where a public company does not have a registered constitution, the rights, powers, duties and obligations of the company, the Board, each director and each shareholder of the company shall be as provided in the Third Schedule, and be deemed accordingly to be the constitution of that company, unless they are restricted, limited or modified by the registered constitution of the company duly delivered after incorporation in accordance with this Act. (3) Where a company limited by guarantee does not have a registered constitution, the rights, powers, duties and obligations of the company, the Board, each director and each member of the company shall be as provided in the Fourth Schedule and be deemed accordingly to be the constitution of that company, unless they are restricted, limited or modified by the registered constitution of the company duly delivered after incorporation in accordance with this Act.

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§ 26Contents of registered constitutionProvision

A company that uses a registered constitution must include certain details in it and, if it later adopts one, deliver the constitution and a special resolution to the Registrar.

Section 26—Contents of registered constitution (1) Where at incorporation, a company opts to have a registered constitution, the registered constitution of that company shall state, (a) the name of the company, with the last words of the name as required by subsection (1) of section 21; (b) the names of the first directors of the company; and (c) that the powers of the directors are limited in accordance with section 189. (2) Where a company has been incorporated in accordance with this Act and subsequently opts to have a registered constitution, it (a) may state the nature of the business in that constitution which the company is authorised to carry on, or if the company is not formed for the purpose of carrying on a business, the nature of the objects for which the company is incorporated; and (b) shall deliver to the Registrar (i) the constitution, and (ii) a special resolution of the company to indicate the intention to have the registered constitution. (3) In the case of a company having shares, the registered constitution shall also state the number of shares with which the company is to be registered. (4) A registered constitution may contain any other lawful provisions relating to the structure and administration of the company. (5) In the case of a company that does not have a registered constitution, the company shall be deemed to have as part of the constitution under section 25 the matters with respect to the (a) name of the company, (b) names of its first directors, (c) number of shares with which the company is registered, and 56 (d) number of shares subscribed by each shareholder on the incorporation of the company and the consideration to be respectively paid for those shares as are respectively stated in the application for incorporation under section 13.

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§ 27Form of constitutionProvision

An unlimited company may have a registered constitution, and registered constitutions must include specified matters and follow the relevant Schedule form requirements.

Section 27—Form of constitution (1) An unlimited company may have a registered constitution and the form of the constitution shall be in accordance with the form set out in the— (a) Second Schedule, if a private company unlimited by shares, or (b) Third Schedule, if a public company unlimited by shares, or as near to those with the necessary modifications, but with a statement that the liability of the members is unlimited. (2) The registered constitution of a company may adopt any of the provisions of the appropriate Schedule and subject to subsection (3), in so far as the constitution does not exclude or modify those provisions they shall, so far as applicable, be part of the registered constitution of the company. (3) The registered constitution of every company shall contain the matters set out in (a) subsection (1) of section 26, and (b) paragraphs (i) 3 and 12 of the Second Schedule in the case of a private company, (ii) l and 2 of the Third Schedule in the case of a public company, and (iii) 1, 4, 5, 6 and 7 of the Fourth Schedule in the case of a company limited by guarantee. (4) The registered constitution shall be printed, type written, handwritten or be in any other legible form acceptable to the Registrar.

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§ 28Subscription to constitutionProvision

A company constitution must be signed by one or more subscribers, and a witness must be present and attest to the signing.

Section 28—Subscription to constitution The constitution of a company shall be signed by one or more subscribers in the presence of a witness, who shall attest to the signing.

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§ 29Effect of company constitutionAmendment

A company constitution can operate like a contract between the company and its members or officers, and members or officers must observe and perform its functions as amended. A person given power by the constitution can enforce an appointment or removal power, a constitution that conflicts with the Act is void to that extent, and a registered constitution is not subject to stamp duty.

Section 29—Effect of company constitution (1) Subject to this Act, the constitution bas the effect of a contract under seal (a) between the company and each member or officer; and (b) between the members or officers themselves by which they agree to observe and perform the functions contained in the constitution as amended from time to time, in so far as they relate to the company, the members or the officers. (2) Where the constitution empowers a person to appoint or remove a director or any other officer of the company, chat power is enforceable by that person although that person is not a member or officer of the company. (3) In an action by a member or an officer to enforce an obligation owed under the constitution to that member or officer and any other member or officer, that member or officer shall, if any other member or officer is affected by the alleged breach of the obligation, sue in a 57 representative capacity on behalf of that member or officer and all other members or officers who may be affected other than any who are defendants and the provisions of section 205 shall apply. (4) The registered constitution of a company shall be void to the extent that it contravenes or is inconsistent with this Act. (5) A registered constitution shall not be subject to a stamp duty.

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§ 30Adoption, alteration, amendment and revocation of constitutionAmendment

Shareholders or members may adopt, alter, or revoke a company constitution by special resolution, but several amendments are restricted or need consent.

Section 30—Adoption, alteration, amendment and revocation of constitution (1) The shareholders or members of a company may, by special resolution (a) adopt a registered constitution where a company does not have a registered constitution; or (b) alter or revoke the constitution of the company subject to this Act. (2) For the purposes of subsection (1) (b), (a) the name of the company shall not be altered except with the consent of the Registrar in accordance with section 21; (b) the number of the shares of the company may be altered in accordance with sections 9, 59 to 65, 78 to 82, 219, or 239 but not otherwise; (c) the businesses for which the company is incorporated to carry on or, if the company is not formed for the purpose of carrying on a business, the objects for which the company is incorporated may be amended in accordance with section 15 or 239 but not otherwise where the business or object is indicated at incorporation; (d) an amendment shall not be made which shall conflict with an order of the Court made under section 219; (e) if at any time the shares of the company are divided into different classes, the rights attached to a class may be amended in accordance with section 50 or 239 but not otherwise; (f) the constitution may restrict or exclude the power of the company to amend all or any of the provisions of the constitution or to add to the provisions of the constitution, or may impose conditions for the amendment of the constitution, in which event the constitution shall not be amended except in accordance with the provisions of the constitution or section 239; (g) the constitution as amended shall be in accordance with this Act and shall contain the requirements under section 26; (h) except in accordance with section 239, a member of the company is not bound by an amendment made in the constitution after the date on which that person became a member, where the amendment (i) requires that member to take more shares than the number held by that member on the date on which the amendment is made, (ii) in any way increases the liability of that member as at that date to pay money to the company, or 58 (iii) increases or imposes restrictions on the right to transfer the shares held by that member at the date of the amendment, unless that member agrees in writing, before or after the amendment is made, to be bound by the amendment; (i) an amendment shall not be made which would have the effect of converting an unlimited company into a limited company or a company limited by guarantee into a company limited by shares; and (j) an amendment may be restrained or revoked by the Court in accordance with section 218 or 219.

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§ 31Registration of consolidated constitutionAmendment

Section 31—Registration of consolidated constitution (1) Where the Registrar is of the opinion that, due to the numerous amendments to the registered constitution of a company, the amendments should be consolidated in a single document, the Registrar may by notice in writing require a company to deliver to the Registrar a single document that incorporates the registered constitution of the company as amended. (2) The Board shall within twenty-eight days after receipt by the company of the notice, cause to be delivered to the Registrar (a) the document for registration; (b) a certificate signed by a director or Company Secretary authorised by the Board to the effect that the document referred to in paragraph (a) complies with subsection (1) or (2), as the case may be. (3) On receipt of the document referred to in subsection (2), the Registrar shall register the document upon the payment of a prescribed fee.

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§ 32Copies of registered constitution Part E: Membership of CompaniesAmendment

A company must send a member a copy of its registered constitution on request and payment of the company’s prescribed fee.

Section 32—Copies of registered constitution (1) A company shall, upon request of a member, send to that member a copy of its registered constitution on payment of the fee prescribed by the company. (2) Where an amendment is made to the registered constitution, each copy of the constitution issued after the date of the amendment and whether to a member or to any other person, shall be in accordance with the amendment. (3) Where a company defaults in complying with this section, the company and every officer of the company that is in default commits an offence and is liable on summary conviction for each offence to a fine of not less than twenty-five penalty units and not more than fifty penalty units. Pan E: Membership of Companies

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§ 33Members of a companyProvision

This section says who counts as a company member, when membership starts, the minimum share holding for companies with shares, and when membership ends.

Section 33—Members of a company (1) The subscribers to the documents for the incorporation of a company are members of the company and upon incorporation shall be entered as members in the register of members referred to in section 35. (2) Any other person who agrees with the company to become a member of the company and whose name is entered in the register of members is a member of the company. 59 (3) A member has the rights, duties and liabilities that are by this Act and where applicable, by the registered constitution of the company conferred and imposed on the members. (4) In the case of a company with shares, each member is a shareholder of the company and shall hold at least one share. (5) A holder of a share is a member of the company. (6) Membership of a company with shares continues until (a) a valid transfer of the shares held by the member is registered by the company; (b) the shares are transmitted by operation of law to another person, or forfeited for non- payment of calls; or (c) the member of the company dies. (7) Membership of a company limited by guarantee continues until the member dies, or validly retires or is excluded from membership.

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§ 34Right of member to attend and vote at general meetingProvision

A member has the right to attend a company general meeting and speak and vote on resolutions, subject to section 52 and a possible constitution rule requiring payment of calls or other sums due on shares.

Section 34—Right of member to attend and vote ac general meeting (1) Subject to subsection (2), and section 52, a member has the right to attend a general meeting of the company and to speak and vote on a resolution before the meeting. (2) Despite subsection (1), a registered constitution of a company may provide that a member is not entitled to attend and vote at a general meeting unless the calls or any other sums of money presently payable by that member in respect of shares in the company have been paid.

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§ 35Register of membersOffence

Companies must keep a register of members in the country and record prescribed details about members and beneficial owners.

Section 35—Register of members (1) Subject to the Central Securities Depository Act, 2007 (Act 733) and any other enactment, a company shall keep in the country a register of the members and shall enter in the register (a) in respect of members of the company (i) the names and addresses of the members and, in the case of a company having shares, a statement of the shares held by each member, and of the amount paid, or agreed to be considered as paid, on the shares of each member, and of the amount remaining payable on the shares; (ii) the date at which a person was entered in the register as a member; (iii) the nature of the interest of each member; and (iv) the date at which a person ceased to be a member; and (b) in respect of each beneficial owner of the company (i) the full name and any former or other name of the beneficial owner; (ii) the date and place of birth; (iii) the telephone number; (iv) the nationality, national identity number, passport number or other appropriate identification, and proof of identity; 60 (v) residential, postal and email address, if any; (vi) place of work and position held; (vii) the nature of the interest including the details of the legal, financial, security, debenture or informal arrangement giving rise to the beneficial ownership; and (viii) a confirmation as to whether the beneficial owner is a politically exposed person. (2) For the purpose of paragraph (b) of subsection (1), where a member of a company is not the beneficial owner, that member shall (a) provide the company with the particulars of the beneficial owner at the time of becoming a member as set out in paragraph (bi, and (b) update the company within twenty-eight days of a change in the particulars submitted under paragraph (a). (3) The entry required under subparagraphs (i) and (iii) of paragraph (a) of subsection (1) shall be made within twenty-eight days of the conclusion of the agreement with the person to become a member. (4) The entry required under subparagraph (iv) of paragraph (a) of subsection (1) shall be made within twenty-eight days of the date when the person concerned ceased to be a member, or, if that person ceased to be a member otherwise than as a result of an action by the company, within twenty-eight days of production to the company of evidence satisfactory to the company of the occurrence of the event by which that person ceased to be a member. (5) The entry required under paragraph (b) of subsection (1) shall be made within twenty-eight days of receipt of the necessary particulars under subsection (2). (6) A company shall, within twenty-eight days of making an entry required under paragraph (b) of subsection (1) and subsection (5), submit particulars of the entry to the Registrar for registration and indicate the members or beneficial owners who are politically exposed persons. (7) The entries relating to a person who has ceased to be a member may be deleted from the register after the expiration of six years from the date when the person ceased to be a member. (8) Where a company has more than fifty members, the register shall contain an index of the names of the members and the names of beneficial owners in a form that enables the account of each member to be readily found. (9) An existing company shall, within twenty-eight days of a change in the place at which the register of members is kept, send notice of the change to the Registrar. (10) A company is not bound to send notice where the register has, since the company came into existence, been kept at the registered office of the company. (11) An existing company shall, within two months after the coming into force of this Act, submit the information required under paragraph (b) of subsection (1) to the Registrar for registration. (12) The company may arrange with any other person, to be known as the registration officer, for the making up of the register to be undertaken on behalf of the company by the registration 61 officer at the office of that officer, and if by reason of a default of the registration officer the company defaults in complying with this section or with section 36, the registration officer is liable to the same penalties as if the registration officer were an officer of the company. (13) The power of the Court under subsection (6) of section 36 shall extend to the making of orders against the registration officer and the officers and employees of the registration officer. (14) A person who (a) fails to provide the information required under subsection (2), or (b) provides false or misleading information to the Registrar commits an offence and is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than two hundred and fifty penalty units or to a term of imprisonment of not less than one year and not more than two years or to both. (15) Where a company defaults in complying with this section, the company and every officer of the company that is in default is liable to pay to the Registrar, an administrative penalty of twenty-five penalty units for each day during which the default continues.

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§ 36Inspection of registerOffence

The company must keep its register and related indexes open for inspection during business hours, and members may inspect it for free while others may inspect it for a company-set fee.

Section 36—Inspection of register (1) Except when the register of members is closed in accordance with section 37, the register, the index of the names of the members of the company and the index of the names of beneficial owners of the company shall, during business hours, and subject to reasonable restrictions that the company may impose, be open for the inspection of (a) a member without charge, and (b) any other person on payment of a reasonable fee prescribed by the company, for each inspection. (2) Not less than two hours each day, other than a Saturday, Sunday or a public holiday, shall be allowed for inspection under subsection (1). (3) A member or any other person may require a copy of the register or a part of the register on payment of a fee prescribed by the company. (4) The company shall send the copy so required by a person to that person within a period of ten days commencing on the day next after the day on which the requirement is received by the company. (5) Where an inspection required under this section is refused, or where a copy required under this section is not sent within the proper period, the company and every officer of the company that is in default, is liable in respect of each default to pay to the Registrar, an administrative penalty of twenty-five penalty units for each day during which the default continues. (6) In the case of a refusal or default, the Court may order the immediate production of the register for inspection or direct that the copies required be sent to the person requiring them.

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§ 37Power to close registerProvision

A company may close its register of members, or the part for a class of members, for up to 30 days in a year if it gives reasonable notice by newspaper advertisement and electronic means.

Section 37—Power to dose register 62 A company may close the register of members or that part of the register relating to a class of members for any time or times of not more than a total period of thirty days in each year on giving reasonable notice by (a) advertisement in a daily newspaper of national circulation in which the registered office of the company is situated; and (b) electronic means.

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§ 38Rectification of registerProvision

Certain people may ask the Court to correct the company register, and the company may also correct its own register entries in some cases.

Section 38—Rectification of register (1) A person aggrieved, a member of the company, or the company, may apply to the Court for rectification of the register where (a) the name of a person is, without sufficient cause, entered in or omitted from the register of members of a company, or (b) default is made in entering on the register any of the particulars which, under section 35, are required to be entered on the register. (2) Where an application is made under subsection (1), the Court may refuse the application or may order rectification of the register and payment by the company of compensation for the loss sustained by the aggrieved party. (3) Where an application is made under subsection (1), the Court may decide a question relating to the entitlement of a person who is a party to the application to have the name of that person entered in or omitted from the register, whether, the question arises (a) between members or alleged members, or (b) between members or alleged members on the one hand and the company on the other hand; and generally the Court may decide a question necessary or expedient to be decided for rectification of the register. (4) A company may, without application to the Court, at any time rectify an error or omission in the register of members, but the rectification shall not adversely affect a person unless that person agrees to the rectification made.

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§ 39Register to be evidenceProvision

The register of members counts as prima facie evidence of matters that the Act says belong in it, except in the stated depository-share situation.

Section 39—Register to be evidence (1) The register of members is prima facie evidence of the matters which by this Act are directed or authorised to be inserted in the register. (2) Subsection (1) shall not where the circumstances admit, apply to shares of a company that are held in a depository under a scheme provided under the Central Securities Depository Act, 2007 (Act 733).

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§ 40Liability of membersCommencement

Members holding shares may have to pay unpaid amounts on their shares, and members or past members may have to contribute on winding up, subject to stated limits and exceptions.

Section 40—Liability of members (1) Before the winding up of a company, a member of the company with shares is liable to contribute the balance of the amount payable in respect of the shares held by that member in accordance with the terms of the agreement under which the shares were issued, or in accordance with a call validly made by the company. 63 (2) Where a contribution has become due and payable in accordance with subsection (1), or where, under the terms of an agreement with the company, a member has undertaken personal liability to make future payments in respect of shares issued to that member, the liability of the member shall continue although the shares held by that member are subsequently transferred or forfeited but the liability of the member shall cease if and when the company receives payment in full of all the moneys in respect of the shares. (3) Subject to subsections (1) and (2), a member or past member is not liable to contribute to the assets of the company except in the event of the company being wound up. (4) In the event of a company being wound up, every present or past member is liable to contribute to the assets of the company an amount sufficient for the payment of the debts and liabilities of the company and for the costs, charges and expenses of the winding up, and for the adjustment of the rights of the members and past members among themselves but subject to the following qualifications: (a) a past member is not liable to contribute if that member has ceased to be a member for a period of not less than one year before the commencement of the winding up; (b) a past member is not liable to contribute unless it appears to the Court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of this section; (c) in the case of a company limited by shares, a contribution shall not be required from a member or past member exceeding the amount of money unpaid on the shares in respect of which that member is liable as a present or past member; (d) in the case of a company limited by guarantee, a contribution shall not be required from a member or past member exceeding the amount of money undertaken to be contributed by that member to the assets of the company in the event of the company being wound up; or (e) a sum of money due from the company to a member or past member, in the character of a member, by way of dividends or otherwise shall not be set-off against the amount of money for which that member is liable to contribute in accordance with this section, but that amount of money shall be taken into account for the purposes of final adjustment of the rights of the members and former members amongst themselves. (5) For the purposes of this section, "past member" includes the estate of a deceased member and where a person dies after becoming liable as a member or past member, the liability is enforceable against the estate of that member. (6) Except as otherwise provided in this section, a member or past member of a company is not liable as a member or past member for any of the debts and liabilities of the company.

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§ 41Companies ceasing to have members Part F: SharesProvision

If a company keeps doing business after it has no members, its directors during that time are jointly and severally liable for the company’s debts and liabilities incurred then.

Section 41—Companies ceasing to have members If at any time a company ceases to have a member and it carries on business without at least one member, every person who is a director of the company during the time that it so carries on business is jointly and severally liable for the payment of all the debts and liabilities of the company incurred during that period. Part F: Shares 64

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§ 42Legal nature of sharesProvision

Shares are movable property, and the number of shares plus the rights and liabilities attached to them depend on the terms of issue.

Section 42—Legal nature of shares (1) The shares of a member in a company are movable property. (2) The number of shares in a company and the rights and liabilities attaching to the shares are dependent on the terms of issue.

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§ 43No par value sharesProvision

Shares created or issued under this Act have no par value.

Section 43—No par value shares The shares created or issued under this Act are shares of no par value.

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§ 44Issue of sharesProvision

A company may issue different classes of shares, subject to its registered constitution, and shareholders may need to pay on terms agreed with the company. On winding up, past and present shareholders are liable to contribute as stated in section 40.

Section 44—Issue of shares (1) Subject to the registered constitution of a company, different classes of shares may be issued in a company at the times and for the consideration that the company shall determine and shall be paid for, at the times that are agreed between the member and the company. (2) On the winding up of the company, every past and present shareholder of the company is liable to contribute to the assets of the company to the extent referred to in section 40.

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§ 45Payment of sharesProvision

Shares must be issued for value, and if non-cash payment is accepted the company must file the agreement or prescribed particulars with the Registrar within 28 days after allotment.

Section 45—Payment of shares (1) Except on a capitalisation issue pursuant to subsection (1) of section 77, shares shall not be issued otherwise than for valuable consideration paid or payable to the company and unless otherwise agreed, shares shall be paid for in cash. (2) Where a company agrees to accept payment for shares otherwise than wholly in cash, the company shall, within twenty-eight days after the allotment of the shares, deliver to the Registrar for registration a contract in writing duly stamped evidencing the terms of the agreement and the true value of the consideration or, if the agreement has not been reduced to writing, particulars in the prescribed form of the agreement duly stamped, as if it were a written agreement. (3) The particulars referred to in subsection (2) shall not be required on a capitalisation issue of shares pursuant to subsection (1) of section 77. (4) The statement in the agreement of the value of the non-cash consideration is sufficient evidence of the true value of the consideration, but when a company limited by shares is in the course of being wound up under the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), the liquidator or a creditor may apply to the Court and if the Court is satisfied that the true value of the consideration was less than stated, it may direct that the shares shall be treated as unpaid to the amount of money that it shall direct.

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§ 46Return of issuesProvision

A company that issues shares must file a return with the Registrar within 28 days, unless the issue is a re-issue of treasury shares.

Section 46—Return of issues Where a company issues shares, other than a re-issue of treasury shares as defined in subsection (3) of section 61, the company shall, within twenty-eight days after the issue, deliver to the Registrar for registration a return in the prescribed form showing, as at the date of the return, (a) the amount of the stated capital, attributable to each of the items specified in subsection (1) of section 68; (b) the number of the authorised shares of each class; 65 (c) the total number of the issued shares of each class and the amount of money paid on the shares, distinguishing between the amount paid in cash and the amount paid otherwise than in cash and, in the case of a company limited by shares, the amount of money remaining payable on the shares, distinguishing between the amount presently due for payment and the amount not yet due for payment; and (d) the total number of the treasury shares of each class.

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§ 47Penalties for non-compliance with section 45 or 46Offence

A company and any defaulting officer must pay an administrative penalty of 25 penalty units per day if the company fails to deliver a document required under section 45 or 46.

Section 47—Penalties for non-compliance with section 45 or 46 Where a company defaults in delivering a document required under section 45 or 46, the company and every officer of the company who is in default is liable to pay to the Registrar, an administrative penalty of twenty-five penalty units for each day during which the default continues.

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§ 48Meaning of payment in cashProvision

This section explains when shares count as paid for in cash.

Section 48—Meaning of payment in cash (1) For the purposes of this Act, shares have not been paid for in cash except to the extent that the company has actually received cash for the shares at the time of, or subsequent to the agreement to issue the shares. (2) Where shares are issued to a person who has sold or agreed to sell property or rendered or agreed to render services to the company or to persons nominated by that person, the amount of money of a payment made for the property or services shall be deducted from the amount of a cash payment made for the shares and only the balance shall be treated as having been paid in cash for the shares despite an exchange of cheques or any other securities for money.

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§ 49Classification of sharesProvision

A company’s registered constitution may create different classes of shares by attaching special rights or restrictions to some shares.

Section 49—Classification of shares (1) The registered constitution of a company may provide for different classes of shares by attaching to certain of the shares preferred, deferred or any other special rights or restrictions, whether as regards dividend, voting, repayment or otherwise. (2) Shares are not of the same class unless they rank at the same rate for all purposes.

Section 49Verify source

§ 50Variation of class rights 3Amendment

This section limits when a company can vary the rights attached to a class of shares, and sets consent or court-approval requirements for some changes.

Section 50—Variation of class rights (1) Where at any time the shares of a company are divided into different classes, the rights attached to a class shall not be varied unless otherwise expressly provided for in the constitution of a company. (2) Where the constitution of a company expressly forbids a variation of the rights of a class, or contains provisions regarding that variation and expressly forbids an amendment of the provision, in respect of the variation of rights, the rights shall not be varied and the provision for variation shall not be amended except with the sanction of the Court under a scheme of arrangement in accordance with section 239. (3) Except as provided in subsection (2), a company may, by special resolution, amend its constitution by inserting in the constitution provisions regarding the variation of the rights of a class, or by modifying the terms of those provisions. (4) An amendment under this section requires the prior written consent of the holders of at least three-fourths of the issued shares of each class or the sanction of a special resolution of the 66 holders of the shares of each class and shall be deemed, to be a variation of the rights of each class. (5) Despite a provision in the constitution of a company to the contrary, the rights attached to a class of shares shall not be varied except with the written consent of the holders of at least three-fourths of the issued shares of that class, or the sanction of a special resolution of the holders of the shares of that class. (6) A resolution of a company the implementation of which would have the effect of— (a) diminishing the proportion of the total votes exercisable at a general meeting of the company by the holders of the existing shares of a class, or (b) reducing the proportion of the dividends or distributions payable at any time to the holders of the existing shares of a class, is for the purposes of this Act, a variation of the rights of that class.

Section 50Verify source

§ 51Preference and equity sharesProvision

This section defines “preference share” and “equity share”.

Section 51—Preference and equity shares (1) In this Act, "preference share" means a share, which does not entitle the holder of the share to a right to participate beyond a specified amount of money in a distribution whether by way of dividend, on redemption, in a winding up, or otherwise; and any other share shall be referred to as an "equity share". (2) A share that is not a preference share shall be referred to as an "equity share". (3) The meaning of "preference share" under subsection (1) shall apply to whatever name a company may designate in its constitution.

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§ 52Suspension of voting rights of preference sharesProvision

Preference shares keep voting rights at general meetings in specified cases, and may carry only one vote per share outside those cases.

Section 52—Suspension of voting rights of preference shares (1) Despite section 34, the right of holders of preference shares to attend and vote at a general meeting of the company may be suspended on conditions. (2) Despite a provision to the contrary in the constitution of a company, preference shares carry the right to attend general meetings and on a poll at those meetings to at least one vote per share in the following circumstances, but not otherwise: (a) on a resolution during the period that the preferential dividend or a part of the preferential dividend remains in arrears and unpaid, the period starting from a date not more than twelve months, or a lesser period that the constitution of a company may provide, after the due date of the dividend; (b) on a resolution which varies the rights attached to those shares; (c) on a resolution to remove an auditor of the company or to appoint another person in place of that auditor; or (d) on a resolution for the winding up of the company or during the winding up of the company. (3) Apart from the circumstances in section 34 and subject to subsections (1) and (2) of this section, preference shares carry the right on a poll at a general meeting of the company to one vote, only, in respect of each share. 67 (4) A special resolution of a company increasing the number of shares of a class may validly resolve that an existing class of preference shares shall carry the right to the votes specified in subsection (3) additional to one vote per share as shall be necessary in order to preserve the existing ratio which the votes exercisable by the holders of those preference shares at a general meeting of the company bear to the total votes exercisable at the meeting. (5) For the purposes of subsection (2), a dividend is due (a) on the day immediately following the expiration of the year or other period; or (b) where a company has a registered constitution, on the date appointed in the constitution for the payment of the dividend for a year or other period whether or not the dividend has been earned or declared.

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§ 53Votes of equity shares Part D: Constitution of the CompanyProvision

Equity shares have one vote only on a poll at a company general meeting, subject to section 34.

Section 53—Votes of equity shares (1) Despite a provision to the contrary in the constitution of a company, equity shares carry the right on a poll at a general meeting of the company to one vote only, in respect of each share subject to section 34. (2) For the purposes of subsection (1), an alteration of the rights of issued preference shares so that they become equity shares is an issue of equity shares.

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§ 54Canons of construction of class rightsProvision

This section sets rules for interpreting company share rights, especially dividends and rights on winding up, unless the constitution shows a contrary intention.

Section 54—Canons of construction of class rights In construing the provisions of the constitution of a company in respect of the rights attached to shares, the following canons of construction shall be observed: (a) unless the contrary intention appears, a dividend is not payable on any shares unless the company resolves to declare that dividend; (b) unless the contrary intention appears, a fixed preferential dividend payable on a class of shares shall be cumulative; in other words, a dividend is not payable on any shares ranking subsequent to that class of shares until all the arrears of the fixed dividend have been paid; (c) unless the contrary intention appears, in a winding up, arrears of a cumulative preferential dividend whether or not earned or declared is payable up to the date of actual payment in the winding up; (d) if a class of shares is expressed to have a right to a preferential dividend, then, unless the contrary intention appears, that class does not have a further right to participate in dividends; (e) if a class of shares is expressed to have preferential rights to payment out of the assets of the company in the event of winding up, unless the contrary intention appears, that class does not have a further right to participate in the distribution of assets in the winding up; (f) in determining the rights of the various classes to share in the distribution of the property of the company on a winding up, consideration shall not be given unless the contrary intention appears, to whether or not the property represents accumulated profits or surplus which would have been available for dividend while the company remained a going concern; and (g) subject to this section the shares rank equally in all respects unless the contrary intention appears. 68

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§ 55Issue of share certificatesOffence

A company must deliver a certified share certificate to the registered holder within two months after issue or transfer, and must renew a lost, destroyed, or defaced certificate on request and payment of the company’s fee and required expenses.

Section 55—Issue of share certificates (1) Subject to the Central Securities Depository Act, 2007 (Act 733), a company shall, within two months after the issue of any of the shares of the company or after the registration of the transfer of a share, deliver to the registered holder of the share, a certificate certified by one director and the Company Secretary indicating (a) the number and class of shares held by that holder and the definitive numbers of the shares, (b) the amount of money paid on the shares and the amount remaining unpaid, and (c) the name and address of the registered holder. (2) Where a share certificate is defaced, lost or destroyed, the company at the request of the registered holder of the shares, shall renew the certificate on payment of a fee prescribed by the company and on the terms as to evidence and indemnity and the payment of the out-of- pocket expenses of company of investigating evidence that the company may reasonably require. (3) Where a company defaults in complying with this section, the company and an officer of the company who is in default are liable to pay to the Registrar, an administrative penalty of fifty penalty units. (4) Where an application is made to the Court by a person entitled to have the certificate delivered to that person, the Court may order the company to deliver the certificate and may require the company and that officer to bear the costs of, and incidentals to the application.

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§ 56Effect of share certificatesProvision

Share certificates can serve as prima facie evidence of share title and related amounts, and a company must compensate a person who relied in good faith on a certificate’s continued accuracy and suffered loss.

Section 56—Effect of share certificates (1) Statements made in a share certificate under the common seal of the company or as certified by two directors and the Company Secretary of the company, are prima facie evidence of the title to the shares of the person named in the certificate as the registered holder and of the amounts of money paid and payable on the certificate. (2) Where a person changes a position to the detriment of that person in reliance in good faith on the continued accuracy of the statements made in the certificate, the company is estopped in favour of that person from denying the continued accuracy of those statements and shall compensate that person for the loss suffered by that person in reliance on those statements and which that person would not have suffered bad the statement been or continued to be accurate. (3) Subsections (1) and (2) do not affect a right the company may have to be indemnified by any other person. (4) The provisions of subsections (1) to (3) do not apply in the case of shares which can be transferred through a scheme of a central depository under the Central Securities Depository Act, 2007 (Act 733) or any other relevant enactment.

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§ 57Reserve liabilityProvision

A company limited by shares may, by special resolution, reserve part of the unpaid liability on its shares so it can be called up only if the company is wound up.

Section 57—Reserve liability (1) A company limited by shares may, by special resolution, determine that a portion of the unpaid liability on its shares which has not already been called up shall not be capable of being called up except in the event, and for the purpose, of the company being wound up. 69 (2) Where a resolution is passed, that portion shall not be capable of being called up except in the event and for the purpose stated in that subsection.

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§ 58Prohibited transactions in sharesOffence

A company is prohibited from altering share capital, releasing share liabilities, giving financial assistance for share purchases, or buying its own or its holding company’s shares, subject to a narrow conversion exception.

Section 58—Prohibited transactions in shares (1) Except as provided in this Act, a company shall not, (a) alter the number of its shares or the amount of money remaining payable on those shares; (b) release a shareholder or former shareholder from a liability on the shares; (c) provide financial assistance, directly or indirectly, for the subscription or purchase of the shares of the company or the shares of its holding company; or (d) acquire, by way of purchase or otherwise, any of its issued shares or any shares of its holding company. (2) For the purposes of paragraph (d) of subsection (1), shares are acquired by the company if they purport to be held in trust for the company although they are registered in the names of nominees. (3) Subsection (1) does not prohibit a company from voluntarily acquiring its own shares on the conversion of the company to a company limited by guarantee in accordance with section 9. (4) In the event of a breach of this section, (a) if the breach is of paragraph (a) or (b) of subsection (1), the purported alteration or release is void and every officer of the company who is in default is liable to pay to the Registrar, an administrative penalty of five hundred penalty units; (b) if the breach is of paragraph (c) or (d) of subsection (1), then, (i) knowledge of the breach, voidable by the company and a payment made by the company in respect of that transaction is immediately repayable with interest at the yearly interest rate applicable to the ninety-one day government treasury bill or a higher rate that the Court may order, and (ii) whether or not the transaction is avoided, every officer of the company who is in default is liable to pay to the Registrar, an administrative penalty of five hundred penalty units or twice the amount of money of a provision or payment made by the company in respect of the transaction, whichever is the greater.

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§ 59Alteration of number of sharesProvision

A company may increase or reduce its shares, and directors may issue shares with rights or restrictions they determine, unless the constitution says otherwise.

Section 59—Alteration of number of shares (1) Subject to subsection (3), a company may— (a) increase the number of the shares of the company by creating new shares; or (b) reduce the number of the shares of the company by cancelling shares which have not been taken or agreed to be taken by a person or by consolidating its existing shares, whether issued or not, into a smaller number of shares. (2) On a consolidation of shares 70 (a) the amounts of money paid, (b) an unpaid liability on the shares, and (c) a fixed sum of money by way of dividend or repayment to which the shares were entitled shall also be consolidated. (3) Unless otherwise provided in the constitution of a company, the directors may issue shares with rights or restrictions as may be determined by the directors, subject to the provisions of this Act.

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§ 60Financial assistance for acquisition of sharesProvision

Section 60 lists transactions that Section 58 does not prohibit, including certain commission payments, ordinary-course lending, employee share assistance, employee loans, dividends used to repay share-related debt, and some public-company underwriting/placing costs.

Section 60—Financial assistance for acquisition of shares Section 58 does not prohibit any of the following transactions:— (a) the payment or commission or brokerage to a person in consideration of that person subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in the company, where the payment of commission or brokerage does not exceed ten per cent of the price at which the shares are issued or a lesser rate as may be specified in the constitution of the company; (b) where the lending of money is part of the ordinary business of the company, or lending of money is the ordinary course of business although the money may be used for the subscription or purchase of shares in the company or its holding company; (c) the provision by a company of money for the purchase or subscription of shares to be held for the benefit of persons genuinely in the employment of the company or an associated company including a director holding a salaried employment in the company or an associated company in accordance with a scheme for the time being in force; (d) the advancing by a company of loans to persons, other than directors, genuinely in the employment of the company or an associated company with a view to enabling those persons to purchase or subscribe for shares to be held by themselves beneficially and not as nominees for the company or any other person; (e) the payment by a company of a lawful dividend on the shares of the company although the dividend received by a shareholder is used to discharge a liability on the shares of that shareholder or to repay money borrowed for the purpose of subscribing or purchasing shares; (f) in the case of a public company some or all of whose equity shares are dealt with on an approved stock exchange, or in respect of which an application has been made to an approved stock exchange for permission to deal in those shares, the payment of any commissions, fees, costs and expenses and the giving of any indemnities and warranties in each case to a person arranging or otherwise involved in an underwriting, placing or sale of securities in the company or any other similar transaction, where (i) an application for permission to deal in those securities has been or is to be made to an approved stock exchange, and (ii) any other financial assistance is given in good faith in the interests of the company.

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§ 61Acquisition by company of its own sharesProvision

A company may create and issue redeemable preference shares and convert existing shares into them, subject to sections 62 to 65.

Section 61—Acquisition by company of its own shares 71 (1) Despite section 58 a company may, (a) create and issue preference shares which are, or at the option of the company are liable, to be redeemed and may convert existing shares, whether issued or not, into those redeemable preference shares subject to sections 62 to 65;

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