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REPUBLIC OF SOMALILAND THE COMPANIES LAW OF SOMALILAND (Law No. 25/2004)
THE HOUSE OF REPRESENTATIVES Having seen: articles 11th, 38th,and 39th of the constitution. Having heard: the proposal of the Minister of Commerce and Industry
ENACTED THIS LAW:
A law of amend and consolidate the Law relating to the incorporation, regulation and winding up of companies limited by shares or by guarantee
PART I
PRELIMINARY
Section 1- Short title
This Law may be cited as the Companies Law.
Section 2 – Interpretation
In this Law, except where the context otherwise requires –
“Articles” means the articles of association of a company as generally framed or as altered by special resolution, including so far as they apply to the company, the regulations contained in table A of the first Schedule. “certificate of incorporation” means a certificate delivered by the registrar of companies which certify that the company has been duly registered under this Law and that the company is limited. “company” means a company formed and registered under this Law, or an existing company; “company limited by guarantee” and “company limited by shares” have the meaning assigned to them respectively by subsection (2) (a) and (b) of section 4 of this Law. “court” used in relation to a company means the court having jurisdiction to wind up the company; “debenture” include debenture stock, bonds and any other securities of a company whether constituting a charge on the assets of the company or not; “director” includes any person occupying the position of director by whatever name called; “document” includes summons, notice, order, and other legal process and registers; “existing company” means a company formed and registered under any of the former Companies Law. “financial year” means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in general meeting is made up, whether that period is a year or not; “foreign company” means a company incorporated elsewhere than in Somaliland which after the commencement of this Law or before that commencement, establishes or has established a place of business in Somaliland; “limited company” means a company limited by shares or a company limited by guarantee; “memorandum” means the memorandum of association of a company as generally framed or as altered from time to time; “minimum subscription” has the meaning assigned to it by subsection (2) of section 43 of this Law. “officer” in relation to a body corporate, includes a director, manager or secretary; “public company” and “private company” have the meaning given by section 4 (3) of this Law, unless the context otherwise requires; “prospectus” means any prospectus, notice, circular, advertisement or other invitation, offering to the public for subscription or purchase any shares or debentures of a company; “registrar of companies” and the “registrar” mean the registrar of companies or other officer performing under this Law the duty of registration of companies in Somaliland; “share” means share in the share capital of a company and includes stock except where a distinction between stocks and shares is expressed or implied. Shares represent a shareholder’s ownership of a company ; “statutory meeting” means the meeting required to be held by subsection (1) of section 140 (1) of this Law; “statutory report” has the meaning assigned to it by subsection (2) of section 140 of this Law; “un distributable reserves” has the meaning given in section 112 (3) of this Law.
(2) Any provision of this Law overriding or interpreting a company’s articles shall, except as provided by this Law, apply in relation to articles in force at the commencement of this Law, as well as to articles coming into force thereafter, and shall apply also in relation to a company’s memorandum as it applies in relation to its articles.
Section 3 – Register of Companies
There shall be kept by the registrar a record called ‘the Register of Companies” wherein shall be entered all the matters prescribed by this Law.
PART I
FORMATION AND REGISTATION OF COMPANIES, JURIDICAL STATUS AND MEMBERSHIP
Chapter 1 Registered Company Formation
Memorandum of association
Section 4. Mode of forming incorporated company
(1) Any two or more persons associated for a lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Law in respect of registration, form an incorporated company with or without liability.
(2) A company so formed may be either –
a) A company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (”a company limited by shares”); b) A company having the liability of its members limited by the memorandum to such amount as the members respectively thereby to contribute to the assets of the company in the event of its being wound up (“a company limited by guarantee”); c) A company not having any limit on the liability of its members (“an unlimited company”).
(3) Being a company -
a) a public company is a company limited by share or limited by guarantee having a share capital and formed by any seven or more persons;
b) A private company is a company limited by share or limited by guarantee having a share capital and formed by any two or more persons.
c) A company cannot be formed as, or become, a company limited by guarantee with a share capital.
(4) Notwithstanding subsection (1), one person may, for lawful purpose, by subscribing his name to a memorandum of association and otherwise complying with the requirement of this Law in respect of registration, form an incorporated company limited by shares or by guarantee.
Section 5. Requirements with respect to memorandum
(1) The memorandum of every company shall be in English language to constitute the original. A certified translation into Somalia language will be attached for purpose of facilitating understanding and comprehension.
(2) The memorandum shall be printed and shall state –
a) The name of the company. The name of the company shall be as agreed by the subscribers but shall not offend the rights of third parties and shall include the words “Company limited by shares” which may be abbreviated to “Ltd” for a private limited company or “plc” or “limited” for a public company limited by shares. b) The registered office of the company or principal place of business and its full address in Somaliland; c) The object of the company. A company, which has been incorporated under the Act, cannot be engaged in activities, which are not expressly or implicitly authorized by the Memorandum.
(3) The memorandum of a company limited by shares shall also state that the liability of its members is limited.
(4) The memorandum of company limited by guarantee must also state that each member undertakes to contribute to the assets of the company it should be wound up while he is a member, for payment of the debts and liabilities of the company contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.
(5) In the case of a company having a share capital –
a) The memorandum shall also state the amount of share capital with which the company proposes to be registered and the division of the share capital into shares of a fixed amount. b) no subscriber of the memorandum may take less than one share; c) There must be shown in the memorandum against the name of each subscriber the number of shares he takes.
(6) The memorandum must be dated and signed by each subscriber before the Attorney General in the presence of at least one attesting witness, who must attest his occupation, postal address and the signature.
(7) Opposite the signature of every subscriber there shall be written in legible roman characters his full name, his occupation and postal address.
(8) A company may not alter the conditions contained in its memorandum except in the cases, in the mode and to the extent for which express provision is made by this Law.
Section 6 – Statement of company’s object: general commercial company
Where the company’s memorandum states that the object of the company is to carry on business as a general commercial company-
a) the object of the company is to carry on any trade or business whatsoever, b) The company has power to do all such things as are incidental or conducive to the carrying on of any trade or business. c) The company should apply for commercial license to the Ministry of Commerce, when required.
Section 7 – Alteration of company’s object by special resolution
(1) A company may by special resolution alter its memorandum with respect to the statements of the company’s object as specified under section 23.
(2) If an application is made under section 24, alteration does not have effect except in so far as it is confirmed by the court.
Articles of association
Section 8 - Articles prescribing regulations for companies
(1) There may in the case of a company limited by shares, and there shall be in the case of a company limited by guarantee or unlimited, be registered with the memorandum articles of association signed by the subscribers to the memorandum and prescribing regulations for the company, must be registered with the memorandum.
(2) Articles must be –
a) in the English language constituting the text original with a certified translation in Somali attached; b) printed; c) divided into paragraphs numbered consecutively; d) dated; e) Signed by each subscriber of the memorandum before the Attorney general in the presence of at least one witness who must attest the signature.
Section 9 - Alteration of Articles by special resolution
(1) Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may alter by special resolution alter or add to its articles. Alterations so made in the articles are (subject to this Law) as valid as if originally contained in them, and are subject in like manner to alteration by special resolution.
Form of Memorandum and Articles
Section 10 - Statutory Form of Memorandum and Articles
(1) Being limited by shares, the company needs not submit Company Articles of association and may adopt all or any of the regulations for the management contained in: a) Table A part I in the first Schedule for a Company limited by shares, nor being a private company; b) Table A part II in the first Schedule for a Private Company limited by shares.
(2) The form of the memorandum and articles of a company limited by guarantee and not having a share capital shall be in accordance with the forms set out in table C in the first Schedule, or as near thereto as circumstances admit.
Registration and its consequences
Section 11 - Documents to be sent to the Registrar of Companies
(1) The company ‘s memorandum and articles, if any, shall be de delivered to the Registrar of Companies, at the office of the Attorney General in Hargeysa.
(2) With the memorandum there shall be delivered a statement in the prescribed form containing the names and requisite particulars of- a) the person who is, or the persons who are, to be the fist director or directors of the company; and b) the person who is, or the persons who are, to be the first secretary of the company.
(3) The statement shall be signed by or on behalf of the subscribers of the memorandum and shall contain a consent signed by each of the persons named in it as a director, as secretary, to act in the relevant capacity
Section 12 - Minimum authorized capital (public companies)
When a memorandum delivered to the registrar of companies under section 11 states that the association to be registered is to be a public company, the amount of the share capital stated in the memorandum to be that with which the company proposes to be registered must not be less than the authorised minimum defined in section 58.
Section 13 - Duty of registrar
(1) The Registrar of Companies shall not register a company’s memorandum delivered under section 11 unless he is satisfied that all the requirements of the Law in respect of registration have been complied with.
(2) Subject to this, the Registrar of Companies shall retain and register the memorandum and articles delivered to him under that section.
(3) A statutory declaration in the prescribed form by – a) a solicitor engaged in the formation of a company, or b) a person named as a director or secretary of the company in the statement delivered under section 11(2), that those requirements have been complied with shall be delivered to the registrar of companies, and the registrar may accept such a declaration as sufficient evidence of compliance.
Section 14 - Effect of registration
(1) On the registration of a company’s memorandum, the registrar of companies shall give a certificate – the certificate of incorporation. The certificate of incorporation shall be conclusive evidence that all the requirements of this Act in respect of registration have been complied with and that the association is a company authorized to be registered, duly registered under this Law and that the company is limited.
(2) The certificate may be signed by the Registrar or authenticated by his official seal.
(3) From the date of incorporation mentioned in the certificate, the subscribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company, with power to hold land and having perpetual succession.
(4) The persons named in the statement under section 11 as directors, secretary are, on the company ‘s incorporation, deemed to have been respectively appointed as its first directors, secretary.
Section 15 - Effect of memorandum and articles
(1) The memorandum and articles, when registered, bind the company and its members to the same extent as if they respectively had been signed and sealed by each member, and contained covenants on the part of each member to observe all the provisions of the memorandum and of the articles.
(2) All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.
Section 16 - Effects of alteration on company’s members
(1) A member of a company is not bound by an alteration made in the memorandum or articles after the date on which he became a member, if and so far as the alteration –
a) requires him/her to take or subscribe for more than the number held by him/her at the date on which the alteration is made; or, b) In any way increases his liabilities as at the date to contribute to the company’s share capital or otherwise to pay money to the company.
(2) Subsection (1) operates notwithstanding anything in the memorandum or articles; but it does not apply in a case where the member agree in writing, either before or after the alteration is made , to be bound by the alteration.
Section 17 - Power to alter conditions in memorandum
(1) Subject to the provisions of section 13, any condition contained in a company’s memorandum which could lawfully have been contained in articles of association instead of in the memorandum may, subject to the provisions of this section, be altered by special resolution.
Provided that if an application is made to the court for the alteration to be cancelled, it shall not have effect except in so far as it is confirmed by the court.
(2) This section shall not apply where the memorandum itself provides for or prohibits the alteration of all or any of the said conditions, and shall not authorize any variation or abrogation of the special rights of any class of members.
Section 18 - Copies of memorandum and articles to be given to members
(1) A company shall, on being so required by any member, send to him a copy of the memorandum and of the articles, if any, and a copy of any written law which alters the memorandum, subject to payment as the company may prescribe.
(2) If a company makes default in complying with this section, the company and every officer of the company who is in default shall be liable for each offence to a fine.
Section 19 - Issued copies of memorandum to embody alterations
(1) Where an alteration is made in the memorandum of a company, every copy of the memorandum issued after the date of the alteration shall be in accordance with the alteration.
(2) If, where any such alteration has been made, the company at any time after the date of the alteration issues any copy of the memorandum which are not in accordance with the alteration, it shall be liable to a fine for each copy so issued and every officer of the company who is in default shall be liable to the like penalty.
A company’s membership
Section 20 - Definition of “member”
(1) The subscribers to the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.
(2) Every person who agrees to become a member of a company, and whose name is entered in its register of members, is a member of the company.
Provision with Respect to Names of Companies
Section 21- Reservation of names and prohibition of undesirable name
(1) The Registrar may, on written application, reserve a name pending registration of a company or a change of name by a company.
(2) Any such reservation shall remain in force for a period of thirty days or such longer period, not exceeding sixty days, as the registrar may, for special reasons, allow, and during such period no other company shall be entitled to be registered with that name.
(3) No name shall be reserved, and no company shall be registered by a name which, in the opinion of the registrar, is undesirable.
Section 22 - Change of name
(1) A company may, by special resolution and with the approval of the registrar signified in writing, change its name.
(2) Where a company changes its name under this section, it shall within fourteen days give to the registrar notice thereof and the Registrar shall enter the new name on the register in place of the former name, and shall issue to he company a certificate of name, and shall notify such change of name in the Official Gazette.
(3) A change of name by a company under this section shall not affect any rights or obligations of the company or render defective any legal proceedings by or against the company, and any legal proceeding that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name.
Chapter II Alteration of objects
Section 23 - Resolution to alter objects
(1) A company may by special resolution alter its memorandum with respect to the statement of the company’s objects if the alteration would enable the company: : a) to carry on its business more economically or more efficiently; or b) to attain its main purpose by new or improved means; or c) To enlarge or change the local areas of its operation; or d) To carry on some business which under existing circumstances may conveniently be combined with the business of the company; or e) To restrict or to abandon any of the objects specified in the memorandum; or f) To sell or dispose of the whole or any part of the undertaking of the company; or g) To amalgamate with any other company or body of persons.
(2) the resolution would be effective immediately if it was voted for by the holders of at least 86% in nominal value of the company ‘s issued share capital.
Section 24 - Procedure for objecting to alteration
(1) Where a company’s memorandum has been altered by special resolution under section 23, application may be made to the court for the alteration to be cancelled.
(2) Such an application can be made –
a) by the holders of not less in the aggregate than 15 percent in nominal value of the company’s issued share capital or any class of it. b) by the holders of not less than 15 percent of the company’s debentures entitling the holders to object to an alteration of its objects. but an application shall not be made by any person who has consented to or voted in favour of the alteration.
(3) The application, under this section, must be made within thirty days after the date on which the resolution altering the company ‘s objects was passed, and may be made on behalf of the persons entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.
(4) The court may on such an application make an order confirming the alteration either wholly or in part on such terms and conditions as it thinks fit and may –
a) if it thinks fit, adjourn the proceedings in order that an arrangement may be made to its satisfaction for the purchase of the interests of dissentient members, and b) give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement.
(5) The court’s order may (if the court thinks fit) provide for the purchase by the companies of the shares of any members of the company , and for the reduction accordingly of its capital, and may make such alteration in the company’s memorandum and articles as may be required in consequence of that provision.
(6) If the court’s order requires the company not to make nay, or any specified, alteration in its memorandum or articles, the company does not then have power without the leave of the court to make any such alteration in breach of the requirement.
Section 25 - Provisions supplementing sections 23, 24
(1) Where a company passes a resolution altering its objects and no application is made to the court under section 24 for its cancellation, the company shall within 15 days from the end of the period for making such an application, deliver to the Registrar of companies a printed copy of its memorandum as altered;
(2) If such an application is made, the company shall –
(i) forthwith give notice of that fact to the registrar, and (ii) within 15 days from the date of any order cancelling or confirming the alteration, deliver to the registrar a certified copy of the order, and in the case of an order confirming the alteration, a printed copy of the memorandum as altered.
(3) The court may by order at any time extend the time for the delivery of documents to the registrar under subsection (1) (b) for such period as the court may think proper.
(4) If a company makes default in giving notice or delivering any document to the registrar of companies as required by subsection (1), the company and every officer of it who is in default is liable of a fine and, for continued contravention, to a daily default fine.
Chapter III Private Companies
Section 26 – Meaning of private company
(1) For the purpose of this Act, “private company” means a company which by its articles-
a) Restricts the right of transfer its shares; and b) Limit the number of its members to thirty, not included persons who are in the employment of the company and 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 of the company; c) Prohibits any invitation to the public to subscribe for any shares of the company.
Section 27 – Consequences of default in complying with conditions constituting a private company
(1) Wherethe articles of a company include the provisions which, under section 26, are required to be included in the articles of a company in order to constitute it a private company but default is made in complying with any of those provisions, the company shall cease to be entitled to any privilege or exemption conferred on private companies under any provisions of this Act, and thereupon the provisions of this Act shall apply to the company as if it were not a private company.
(2) Provided that the court, on being satisfied that the failure to comply with the conditions was accidental or due to inadvertence or to some other sufficient cause, or that on other grounds it is just and equitable to grant relied, may, on the application of the company or any other person interested and on such terms and conditions as seem to the court just and expedient, order that the company be relieved from such consequences as aforesaid.
Section 28 - Statement in lieu of prospectus by company on ceasing to be private company
(1) If a company, being a private company, alters its articles in such a manner that they no longer include the provisions which, under section 26, are required to be included in the articles of a company in order to constitute it a private company, the company must, on and from the date of the alteration, cease to be a private company and must within a period of fourteen days after the said date, deliver to the registrar for registration a statement in lieu of prospectus in the form and containing the particulars set out in Part I of the second Schedule “Form ofStatement in Lieu of Prospectus to be Delivered to Registrar by a Private Company on becoming a Public Company”.
(2) If default is made in complying with subsection (1) the company and every officer of the company who is in default shall be liable to a default fine.
(3) Where a statement in lieu of prospectus delivered to the registrar under subsection (1) include any untrue statement, any person who authorized the delivery of the statement in lieu of prospectus for registration shall be guilty of an offence and liable to a default fine unless he/she proves that the untrue statement was immaterial or that he/she had reasonable ground to believe and did, up to the time of the delivery for registration of the statement in lieu of prospectus, believe that the untrue statement was true.
Chapter 4 A Company’s Capacity, Formalities of Carrying on Business
Section 29 - A company ‘s capacity not limited by its memorandum
(1) The validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company’s memorandum.
(2) A member of a company may bring proceedings to restrain the doing of an act but for subsection (1) would be beyond the company’s capacity; but no such act shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(3) It remains the duty of the directors to observe any limitations on their powers flowing from the company’s memorandum; and action by the directors which but for subsection (1) would be beyond the company’s capacity may only be ratified by the company special resolution.
(4) A resolution ratifying such action shall not affect any liability incurred by the directors or any other person; relief from any such liability must be agreed to separately by special resolution.
Section 30 – Power of directors to bind the company
(1) In favour of a person dealing with a company in good faith , the power of the board of directors to bind the company, or authorize other to do so, shall be deemed to be free of any limitations under the company’s constitution.
(2) For this purpose –
a) a person “deals with” a company if he/she is a party to any transaction or other set to which the company is party. b) a person shall not regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company’s constitution; and c) a person shall be presumed to have acted in good faith unless the contrary is proved.
(3) The references above to limitations on the directors’ powers under the company constitution include limitations deriving-
a) from a resolution of the company in general meeting or a meeting of any class of shareholders, or b) from any agreement between the members of the company or of any class of shareholders.
(4) Subsection (1) does not affect any right of a member of the company to bring procedure to restrain the doing of an act which is beyond the powers of the directors; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(5) Nor does that subsection affect any liability incurred by the directors, or any other person, by reason of the directors’ exceeding their powers.
Section 31- Events affecting a company’s status
A company is not entitled to rely against other persons on the happening of any of the following events –
a) the making of a winding-up order in respect of the company, or the appointment of a liquidator in a voluntarily winding up of the company, or b) any alteration of the company’s memorandum or articles, or c) any changes among the company’s directors, or d) (as regards service of any document on the company) any changes is the situation of the company ‘s registered office, if the event had not been officially notified at the material time and is not shown by the company to have been known at that time to the person concerned.
Reduction of Numbers of Members Below legal Minimum
Section 32 - Minimum membership for carrying on business
(1) If at any time the numbers of members of a company is reduced , in the case of a private company, below two, or, in the case of a public company, below seven, and it carries on business for more than six months while the number is so reduced, every member of the company during the time that it carries on business after those six months, is personally liable (jointly and severally with the company) for the payment of the whole debts of the company contracted during the period or, as the case may be, that part of it and may be severally sued therefore.
(2) If a company other than a private limited by shares or by guarantee carries on business without having at least two members and does so for more than 6 months, a person who, for the whole or any part of the period that it so carries on business after those 6 months –
a) is a member of the company, and b) knows that it is carrying on business with only one member,
Is liable (jointly and severally with the company for the payment of the company’s debt contracted during the period or, as the case may be, that part of it.
(3) When the numbers of members are below the legal minimum or the company does not posses the prescribed organs, the court may order the winding-up of such a company on the application of a member or creditor. The court may adjourn its decision upon such term as it thinks fit to permit of the reorganization of the company and order such conservatory measures as may be necessary.
PART III
CAPITAL ISSUES
Chapter I The Prospectus
Section 33 - Document offering shares for sale deemed a prospectus
(1) If a company allots or agrees to allot its shares with a view to all or any of them being offered for sale to the public, any document by which the offer for sale to the public is made is deemed for all purposes a prospectus issued by the company.
(2) A prospectus issued by or on behalf of a company or in relation with an intended company shall be dated, and that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus;
Section 34 - Matters to be stated and reports to be set out un prospectus
(1) Every prospectus issued by or on behalf of a company, or by or on behalf of a person who is or has been engaged or interested in the formation of the company, shall state the matters specified in Part I of the Third Schedule and set out the reports specified in Part II of that Schedule.
(2) If any persons act in contradiction of the provisions of this section, he shall be liable to a default fine.
(3) In the event of non-compliance with or contravention of any of the requirements of this section, a director or other person responsible for the prospectus shall not incur any liability by reason of non-compliance or contravention, if-
a) As regards any matter not disclosed, he/she proves that he/she was not cognizant thereof; or b) He/she proves that the non-compliance or contravention arose from an honest mistake of fact on his part; or c) The non-compliance or contravention was in respect of matters which in the opinion of the court dealing with the case were immaterial or having regard to all the circumstances of the case, reasonably to be excused
(4) Nothing in subsection (3) above shall limit or diminish any liability, which any person may incur under the general law or this Act apart from that section.
Section 35 - Expert’s consent to issue of prospectus containing statement by him/her
(1) A prospectus inviting persons to subscribe for shares in a company and including a statement purporting to be made by an expert shall not be issued unless-
He/she has given and has not, before delivery of a copy of the prospectus for registration, withdraw his written consent to the issue thereof with the statement included in the form and context in which it is included.
(2) In this section, “expert” includes engineer, valuer, accountant and any other person whose profession gives authority to a statement made by him.
Section 36 - Registration of prospectus
(1) No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless, on or before the date of publication, there has been delivered to the registrar for registration a copy thereof signed by every person who is named therein as a director or proposed director of the company.
(2) The registrar shall not registrar a prospectus unless it is dated and the copy thereof signed in manner required by this section and unless it has endorsed thereon or attached thereto the documents (if any) specified as aforesaid.
(3) If a prospectus is issued without a copy thereof being delivered under this section to the registrar or without the copy so delivered having endorsed thereon or attached thereto the required documents, the company and every person who is knowingly a party to the issue of the prospectus, shall be liable to a fine and, for continued contravention, to a daily default for every date from the date of the issue of the prospectus until a copy thereof is so delivered with the required documents endorsed thereon or attached thereto.
Section 37 - Restrictions on alteration of terms mentioned in prospectus or statement in lieu of prospectus
(1) A company limited by shares shall not previously to the statutory meeting vary the terms of a contract referred to in the prospectus, or statement in lieu of prospectus, except subject to the approval of the statutory meeting.
(2) This section shall not apply to a private company but shall apply to a company which was a private company before becoming a public company. Section 38 – Civil liability for miss-statements in prospectus
(1) Subject to the provision of this section, where a prospectus invite persons to subscribe for share in a company, the following persons shall be liable to pay compensation to all persons who subscribe for any shares on the faith of the prospectus for the loss or damage they may have sustained by reasons of any untrue statement included therein, that is to say –
a) Every person who is a director of the company at the time of the issue of the prospectus; b) Every person who has authorized himself to be named and is names in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time. c) Every person who has authorized the issue of the prospectus.
(2) No person shall be liable under subsection (1) if he proves –
That having consented to become a director of the company, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent; or That the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue he forthwith gave reasonable public notice that it was issued without his knowledge or consent; or That after the issue of the prospectus, he on becoming aware of any untrue statement therein, withdrew his consent thereto and gave reasonable public notice of the withdrawal and of the reason therefore.
Section 39 – Expert’s Liability
(1) An expert who gives a report for inclusion in a prospectus is placed in a similar position in that he is liable for an untrue statement contained in his report as being a person who has authorized the issue of the prospectus.
(2) However, he is not liable for any part of the prospectus other than his own report and he shall not be liable if he proves – a) that having given his consent under section 35 to the issue of the prospectus he withdrew his consent in writing before the registration of the prospectus; b) that after such registration but before allotment, on becoming aware of the untrue statement, he withdrew his statement in writing and gave reasonable public notice of such withdrawal and the reason for it; or c) that he was competent to make the statement and up to the time of allotment he believed on reasonable grounds that it was true.
Section 40 - Criminal liability for misstatements in prospectus
Where a prospectus includes any untrue statement, any person who authorized the issue of the prospectus shall be guilty of an offence and liable to a fine, unless he proves either the statement was immaterial or that he had reasonable ground to believe and did, up to the time of the issue of the prospectus, believe that the statement was true.
Section 41 – Interpretation of provisions relating to prospectuses
For the purpose of the foregoing provisions of this Part-
a) a statement included in a prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and b) a statement shall be deemed to be included in a prospectus if it is contained therein or in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.
PART IV
ALLOTMENT OF SHARES AND DEBENTURES
Chapter I General Provisions as to allotment
Section 42 – Authority of company required for certain allotment
(1) The directors of a company shall not exercise any power of the company to allot relevant securities unless they are, in accordance with this section authorized to do so by-
a) The company in general meeting; or b) The company ‘s articles.
(2) In this section “relevant securities” means-
a) shares in the companies other than shares shown in the memorandum to have been taken by the subscribers to it, b) any right to subscribe for, or to convert any security into, shares in the company (other than shares so allotted);
and references to the allotment of relevant securities include the grant of such a right but not the allotment of shares to such a right.
Section 43 - Prohibition of allotment unless minimum subscription is received
(1) No allotment shall be made of any share capital of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount which, in the opinion of the directors, must be raised by the issue of capital in order to provide for the matters specified in paragraph 4 of the Third Schedule has been subscribed, and the sum payable on application for the amount so stated has been paid and received by the company.
(2) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Act referred to as the “minimum subscription”
(3) The amount payable on application on each share shall not be less than five per cent of the nominal amount of the share.
(4) If the conditions aforesaid have not been complied with on the expiration of sixty days after the first issue of the prospectus, all money received from applicants for shares shall be forthwith repaid to them without interest, and if any such money is not so repaid to them within seventy- five days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the appropriate rate per annum from the expiration of the seventy-five day. Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.
Section 44 - Prohibition of allotment unless statement in lieu of prospectus delivered to registrar.
(1) A company having a share capital which does not issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares allotted to the public for subscription shall not allot any of the said shares unless, at least three days before the first allotment, there has been delivered to the registrar for registration a statement in lieu of prospectus. The statement must be signed by every person who is named therein as a director or a proposed director of the company.
(2) The statement must be in the form set in Part I of the Fourth Schedule to the Act and must contain the particulars set out therein and, where applicable, set out the reports specified therein.
(3) a statement shall be deemed to be untrue if it is misleading in the form and context in which it is included.
(4) Where a statement in lieu of a prospectus delivered to the registrar under subsection (1) include any untrue statement, any person who authorized the delivery of the statement in lieu of prospectus for registration shall be guilty of an offence and liable to a default fine, unless he proves either that the untrue statement was immaterial or that he had reasonable grounds, up to the time of the delivery for registration of the statement in lieu of prospectus, to believe that the untrue statement was true.
(5) This section shall not apply to a private company.
Section 45 - Effect of irregular allotment
An allotment made by a company to an applicant in contravention of the provisions of section 43 shall be void able at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, or in case where the company is not required to hold a statutory meeting, or where the allotment is made after the holding of the statutory meeting, within one month after the date of the allotment and not later, and shall be so void able notwithstanding that the company is in course of being wound up.
Section 46 - Applications for and allotment of, shares and debentures.
(1) No allotment shall be made of any shares in or debentures of a company in pursuance of a prospectus issued generally and no proceedings shall be taken on application made in pursuance of a prospectus so issued, until the beginning of the third day after that on which the prospectus is first so issued, or such later time (if any) as may be specified in the prospectus.
(2) The validity of an allotment shall not be affected by any contravention of the foregoing provisions of this section but, in the event of any such contravention, the company and every officer of the company who is in default shall be liable to a fine.
Section 47 - Return as to allotments
(1) Whenever a company limited by shares and having a share capital make any allotment of its shares, the company shall, within sixty days thereafter, deliver to the Registrar for registration
(a) a return of the allotments stating (i) the number and nominal amount of the share allotted, (ii) the names, addresses and description of the allottee, and (iii) the amount, if any, paid or due and payable on each share.
(b) In the cases of shares allotted as fully or partly and paid up otherwise than in cash, a contract in writing constituting the title of the allottee to the allotment together with any contract of sale or for services or for other consideration in respect of which the allotment was made, such contracts being duly stamped, and a return stating the number and nominal amount of shares so allocated, the extend to which they are to be treated as paid up, and the consideration for which they have been allocated.
(2) Where such a contract as above-mentioned is not reduced in writing, the company shall within sixty days after the allotment deliver to the registrar for registration the prescribed particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing.
Chapter II Amount to be paid as to payment for shares on allotment
Section 48 - General rules as to payment for shares on allotment
(1) Subject to the following provisions of this Part, shares allotted by a company, and any premium on them, may be paid up in money, or money’s worth (including goodwill and know-how).
(2) A public company shall not accept at any time, in payment up of its shares or any premium on them, an undertaking given by any person that he or another should do work or perform services for the company or any person.
(3) If a public company accepts such an undertaking in payment up to its shares or premium on them, the holder of the shares when they or the premium are treated as paid up (in whole or in part) by the undertaking is liable-
a) to pay the company in respect of these shares an amount equal to their nominal value, together with the whole of any premium or, if the case so requires, such proportion of that amount as is treated as paid up by the undertaking; and b) to pay interest at the appropriate rate on the amount payable under paragraph (a) above.
(4) This section does not prevent a company from allotting bonus shares to its members or from paying up, with sums available for the purpose, any amounts for the time being unpaid on any of its shares (whether on account of the nominal value of the shares or by way of premium).
(5) The reference in subsection (3) to the holder of shares includes any person who has unconditional right to be included in the company’s register of members in respect of those shares or to have an instrument of transfer of them executed in his favour.
Section 49 - Prohibition on allotment of shares at a discount
(1) A company’s shares shall not be allotted at a discount.
(2) If shares are allotted in contravention of this section, the allottee is liable to pay the company an amount equal to the amount of the discount, with interest at the appropriate rate.
Section 50 - Shares to be allotted as at least one-quarter paid up
(1) a public company shall not allot a share except as paid up at least as to one - quarter of its nominal value and the whole of any premium on it.
(2) If a company allots a share in contravention of subsection (1), the share is to be treated as if one-quarter of its nominal value, together with the whole of any premium on it, had been received.
(3) But the allottee is liable to pay the company the minimum amount which should have been received in respect of the share under subsection (1).
(4) Subsections (2) and (3) do not apply to the allotment of bonus shares, unless the allottee knew or ought to have known the shares were allotted in contravention of subsection (1).
Section 51- Restriction on payment by long term undertaking
(1) A public company shall not allot shares as fully or partly paid up (as to their nominal value or any premium on them) otherwise than in cash if the consideration for the allotment is or includes an undertaking which is to be or may be, performed more than 5 years after the date of the allotment.
(2) If a company allots in contravention of subsection (1), the allottee is liable to pay the company an amount equal to the aggregate of their nominal and the whole of any premium with interest at the appropriate rate.
Section 52 - Non-cash consideration to be valued before allotment
(1) A public company shall not allot shares as fully or partly paid (as to their nominal value or any premium on them) otherwise than in cash unless –
a) the consideration for the allotment has been independently valued under section 53. b) a report with respect to its value has been made to the company by a person appointed by the company during the 6 months immediately preceding the allotment of the shares; and c) a copy of the report has been sent to the proposed allottee.
(2) If a company allots shares in contravention to subsection (1) and either-
a) the allottee has not received the valuer’s report required by that subsection to be sent to him; or b) there has been some other contravention of this section or section 46 which the allottee knew or ought to have known amounted to a contravention, The allottee is liable to pay the company an amount equal to the aggregate of the nominal value of the shares and the whole of any premium with interest at the appropriate rate.
Chapter III Valuation provisions
Section 53 - Valuation and Report
(1) The valuation and report required by section 52 shall be made by an independent person, that is to say a person qualified at the time of the report to be appointed, or continue to be, an auditor of the company.
(2) The valuer’s report shall state-
a) the nominal value of the shares to be wholly or partly paid for by the consideration in question; b) the amount of any premium payable on the shares; c) the description of the consideration and the method used to value and the date of the valuation. d) the extent to which the nominal value of the shares and any premium are to be treated as paid up – (i) by the consideration (ii) in cash
(3) The valuer’s report shall contain or be accompanied by a note by him-
a) In the case of a valuation made by a person other than himself, that it appeared to himself reasonable to arrange for it to be so made or to accept a valuation so made; b) Whoever made the valuation, that the method of valuation was reasonable in all the circumstances c) That on the basis of the valuation the value of the consideration, together with any cash by which the nominal value of the shares is to be paid up, is not less that so much of the aggregate of the nominal value and the whole of any such premium as is treated as paid up by the consideration and any such cash.
Section 54 - Entitlement of valuer to full disclosure
(1) A person carrying out a valuation or making a report under section 45 is entitled to require from the officers of the company such information and explanation as he thinks necessary to enable him to carry out the valuation or make the report and provide a note under section 53 (3).
(2) A person who knowingly or recklessly makes a statement which –
a) Is misleading, false or deceptive in a material particular, and b) Is a statement to which this subsection applies,
Is guilty of an offence and liable to imprisonment or a fine or both.
(3) Subsection (2) applies to any statement made (whether orally or in writing) to a person carrying out a valuation or making a report under section 46, being a statement which conveys or purports to convey any information or explanation which that person requires, or is entitled to require, under subsection (1) of this section.
Section 55 - Matters to be communicated to registrar
A company to which a report is made under section 53 as to the value of any consideration for which, or partly for which, it proposes to allot shares shall deliver a copy of the report to the registrar of companies for registration at the same time that it files the return of the allotment of those shares under section 47.
Chapter IV Commissions and Discounts
Section 56 - Power to pay certain commissions and prohibitions of payment of all other commissions, discounts
(1) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely ort conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company if-
a) The payment of the commission is authorized by the articles;
b) The commission paid or agreed to be paid does not exceed ten per cent of the price at which the shares are issued or the amount or rate authorized by the articles, whichever is the less;
c) The amount or rate per cent of the commission paid or agreed to be paid is-
(i) In the case of shares offered to the public for subscription, disclosed in the prospectus; or (ii) In the case of shares not offered to the public for subscription disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and delivered before the payment of the commission to the registrar for registration; and
d) The number of shares which persons have agreed for a commission to subscribe absolutely is disclosed in manner aforesaid.
(2) Save as aforesaid, no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount or allowances, to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company, or to the contract price of any work to be executed for the company, or the money to be paid out of the nominal purchase money or contract price, or otherwise.
(3) Nothing in this section shall affect the power of any company to pay such brokerage as it has heretofore been lawful for a company to pay.
(4) A vendor to, or promoter of, or other person who receives payment in money or shares from, a company shall have and shall have be deemed always to have has power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.
PART V
SHARE CAPITAL, ITS INCREASE, MAINTENANCE AND REDUCTION
Chapter I General Provisions about share capital
Section 57 - Public company share capital requirements
(1) A company registered as a public company on its original incorporation shall not do business or exercise any borrowing powers unless the registrar of companies has issued it with a certificate under this section.
(2) The registrar shall issue a company with such a certificate if, on application made to him by the company in the prescribed form, he is satisfied that the nominal value of the company‘s allotted share capital is not less than the authorized minimum, and there is delivered a statutory declaration complying with the following subsections.
(3) The statutory declaration must be in the prescribed form and be signed by a Director of the company, and it must -
a) state that the nominal value of the company’s allotted share capital is not less than the authorized minimum; b) specify the amount paid up, at the time of the application, on the allotted share capital of the company; c) Specify the amount, or estimated amount, of the company’s preliminary expenses and the persons by whom any of those expenses have been paid or are payable. And d) Specify any amount or benefit paid or given or intended to be paid or given, to any promoter of the company, and the consideration for the payment or benefice.
(4) A certificate under this section in respect of a company is conclusive evidence that the company is entitled to do business and exercise any borrowing powers.
(5) If a company does business or exercise borrowing powers in contravention with this section, the company and any officer of it who is in default is liable to a fine.
(6) Nothing in this section affects the validity of any transactions entered by a company; but if a company enters into transaction in contravention with this section and fails to comply with its obligation in that connection within 21 days from being called upon to do so, the directors of the company are jointly and severally liable to indemnify the other party to the transaction in respect of any loss or damage suffered by him by reason of the company ‘s failure to comply with those obligations.
Section 58 - The authorized minimum
In this Act, “the authorized capital” means US$…………or such other sum as the Attorney General may by order made by statutory instrument specify instead.
Section 59 - Alteration of share capital (limited companies)
(1) A company limited by shares or a company limited by guarantee and having a share capital, if so authorized by its articles, may alter the conditions of its memorandum in any of the following ways:
(2) The company may-
a) increase its share capital by new shares of such amount as it thinks expedient; b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; c) convert all or any of its paid-up shares into stock and re-convert that stock into paid-up shares of any denomination; d) Sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum (but subject to the following subsection); e) Cancel shares, which, at the date of the passing of the resolution to cancel them, have not be taken or agreed to be taken by any person , and diminish the amount of the company’s share capital by the amount of the shares so cancelled.
(3) In any sub-division under subsection (2d) the proportion between the amount paid and the amount, if any, unpaid on each reduced shares must be the same as it was in the case of the share from which the reduced share is derived.
(4) The powers conferred by this section must be exercised by the company in general meeting.
(5) A cancellation of shares under this section does not for the purpose of the Act constitutes a reduction of share capital.
Section 60 - Notice to registrar of alteration
(1) If a company having a share capital has – a) consolidated and divided its share capital into shares of larger amount than the existing shares ;or, b) converted any shares into stock ;or, c) re-converted stock into shares; or, d) sub-divided its shares or any of them; or, e) redeemed any redeemable shares; (to convert any share into cash); or, f) cancelled any shares (other wide than in connection with a reduction of shares capital under section 72), it shall within one month after so doing give notice in the prescribed form to the registrar of companies, specifying (as the case may be) the shares consolidated, divided, converted, sub-divided, redeemed or cancelled, or the stock reconverted. (2) If default is made in complying with this section, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.
Section 61 - Notice to registrar of increased share capital
(1) If a company having a share capital (whether or not its share having been converted into stock) increases its share capital beyond the registered capital, it shall within 15 days after the passing of the resolution authorizing the increase, give to the registrar of companies notice of the increase, and the registrar shall record the increase.
(2) The notice must include such particulars as may be prescribed with respect to the classes of shares affected and the conditions subject to which the new shares have been or are to be issued.
(3) There shall be forwarded to the registrar together with the notice a printed copy of the resolution authorizing in some other form approved by the registrar.
(4) If default is made in complying with this section, the company and every officer of it who is in default is liable to a fine and, or for continued contravention, to a daily default fine.
Chapter II Class Rights
Section 62 - Variation of class rights
(1) This section is concerned with the variation of the rights attached to any class of shares in a company whose share capital is divided into shares of different classes.
(2) Where the rights are attached to a class of shares otherwise than by the company’s memorandum, and the company’s articles do not contain provision, with respect to the variation of the rights, those rights may be varied if, but only if-
a) the holders of three quarters in nominal value of the issued shares of that class consent in writing to the variation; or b) an extraordinary resolution passed at a separate general meeting of the holders of that class sanctions the variation;
(3) Where -
a) the rights are attached to a class of shares by the memorandum or otherwise; b) the memorandum or articles contain provision for the variance of those rights; c) The variation of those rights is connected with the giving variation, revocation or renewal of an authority for allotment under section 35 or with a reduction of the company’s share capital under section 62.
Those rights shall not be varied unless –
(i) The condition mentioned in subsection (2)(a) or (b) above is satisfied; (ii) Any requirement of the memorandum or articles in relation to the variation of rights of that class is complied with to the extent that it is not comprised in that condition.
(4) If the rights are attached to a class of shares by the memorandum or otherwise and –
a) where they are so attached by the memorandum, the articles contain provision with respect to their variation which had been included in the articles at the time of the company’s original incorporation; or b) where they are so attached otherwise, the articles contain such provision (whenever first so included),
and in either case the variation is not connected as mentioned in subsection (3) (c), those rights may only be varied if all the members of the company agree to the variation.
(5) If the rights are attached to a class of shares by the memorandum, and the memorandum and articles do not contain provision with respect to the variation of those rights, those rights may be varied if all the members of the company agree to the variation.
(6) Any alteration of a provision contained in a company’s articles for the variation of the rights attached to a class of shares, or the insertion of any such provision into the articles, is itself to be treated as a variation of those rights.
Section 63 - Shareholders‘s rights to object to variation
(1) The section applies if, in the case of a company whose share capital is divided into different classes of shares -
a) Provision is made by the memorandum or articles for authorizing the variation of the rights attached to any class of shares in the company, subject to- (i) The consent of any specified proportion of the holders of the issued shares of that class, or (ii) The sanction of a resolution passed at a separate meeting of the holders of those shares, and in pursuance of that provisions the rights attached to any such class of shares at any time varied;
b) The rights attached to any class of shares in the company are varied under section 62 (2).
(2) The holders of not less in the aggregate than 15 per cent of the issued shares of the class in question (being persons who did not consent to or vote in favour of the resolution for the variation), may apply to the court to have the variation cancelled; and if such an application is made, the variation has no effect unless it is confirmed by the court.
(3) Application to the court must be made within 21 days after the date on which the consent was given or the resolution was passed (as the case may be), and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.
(4) The court, after hearing the applicant and any other person who apply to the court to be heard, may, if satisfied having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation and shall, if not satisfied, confirm it. The decision of the court on any such application is final.
(5) The company shall within 15 days after the making of an order of the court on such an application forward a copy of the order to the registrar of companies; and, if default is made in complying withy this provision, company and every officer of it who is in default is liable to a fine and for continued contravention, to a daily default fine.
(6) “Variation” in this section includes abrogation; and varied is to be construed accordingly
Chapter III Shares At Premium, At Discount And Redeemable Preference Shares
Section 64 - Application of share premiums
(1) If a company issues shares at a premium i.e. at a price above their nominal value, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account called “the share premium account”.
(2) The share account may be applied by the company in paying up unissued shares to be allotted to members as fully paid bonus shares, or in writing off a) the preliminary expenses of the company; b) the expenses of any issues of shares or the commission paid or discount allowed on such issue, or, in providing for the premium payable on redemption of debentures of the company.
(3) The share premium account shall be governed by the provisions of the Company act relating to the reduction of the share capital of a company as if the share premium account were part of its paid up share capital of the company.
Section 65 - Application of share at a discount
(1) Subject as provided in this section, it shall be lawful for a company to issue at a discount shares in the company of a class already issued:
Provided that – (i) the issues of the shares at a discount shall be authorized by resolution passed in general meeting of the company, and shall be sanctioned by the court; and (ii) the resolution shall specify the maximum rate of discount at which the shares are to be issued; and (iii) not less than one year shall at the date of the issue, have elapsed since the date on which the company was entitled to commence business; and (iv) the shares to be issued at a discount shall be issued within one month after the date on which the issue is sanctioned by the court or within such extended time as the court may allow.
(2) Where a company has passed a resolution authorizing the issue of shares at a discount, it may apply to the court for an order sanctioning the issue, and on any such applications the court, if, having regard to all the circumstances of the case, it thinks proper to do so, may make an order sanctioning the issue on such terms and condition as it thinks fit.
(3) Every prospectus relating to the issue of the shares shall contain particulars of the discount allowed on the issues of the share or of so much of that discount as has not been written off at the date of the issue of the prospectus.
(4) If default is made in complying with this subsection, the company and every officer who is in default shall be liable to a default fine.
Section 66 - Power of company to arrange for different amount being paid on shares
A company, if so authorized by its articles, may so any one or more of the following things –
a) make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares,
b) accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up;
c) pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.
Section 67 - Reserve liability of limited company
A limited company may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purpose of the company being wound up and thereupon that portion of its share capital shall not be capable of being called up except in the event and for the purposes aforesaid.
Section 68 - Power of a company limited by shares to alter its share capital
(1) A company limited by shares, if so authorized by its articles, may alter the conditions of its memorandum as follows, that is to say, it may- a) increase its share capital by new shares of such amount as it thinks expedient; b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; c) convert all or any of its paid-up shares into stock, and reconvert that stock into paid-up shares of any denomination; d) subdivide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so however, that in the subdivision the proportion between the amount paid and the amount , if any , unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived, e) cancel shares which, at the date of the passing of the resolution in that behalf, have not be taken nor agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.
(2) The powers conferred by this section shall be exercised by the company in general meeting.
(3) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.
Section 69 - Notice to registrar of consolidation of share capital
(1) If a company having a share capital has –
a) consolidated and divided its share capital into shares of larger amount than its existing shares; b) converted any shares into stock; or c) reconverted stock into shares; or d) subdivided its share or any of them; or e) redeemed any redeemable preference shares; or f) cancelled any shares, otherwise than in connection with a reduction of share capital under section 72, it shall, within thirty days after so doing, give notice thereof to the registrar specifying, as the case may be, the share consolidated, converted, subdivided, redeemed or cancelled, or the stock reconverted.
(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a default fine.
Section 70 - Notice of increase of share capital
(1) Where a share company having a share capital has increased its share capital beyond the registered capital, it shall within thirty days after the passing of the resolution authorizing the increase, give to the registrar notice of the increase, and the registrar shall record the increase.
(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a default fine.
Section 71 - Power of a company to pay interest out of capital in certain cases
Where any shares of a company are issued for the purpose of raising money to defray the expenses of the construction of any works or building or the provision of any plant which cannot be made profitable for a lengthened period, the company may pay interest on so much of that share capital as is for the time being paid up for the period and may charge the sum so paid by way of interest to capital, as part of the cost of construction of the work or building, or the provision of plant:
Provided that –
(i) No such payment shall be made unless it is authorized by the articles or by special resolutions; (ii) So such payment, whether authorized by the articles or by special resolution, shall be made without the previous sanction of the registrar. (iii) The payment shall be made only for such period as may determined by the registrar, and that period shall in no case extend beyond the close of the half next year after the half year during which the works or building are actually completed or the plant provided. (iv) The rate of interest shall in no case exceed the rate as the Minister may for the time being by notice in the Gazette prescribe. (v) The payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.
Chapter IV Reduction of Share Capital
Section 72 - Special resolution for reduction of share capital
(1) Subject to confirmation by the court, a company limited by shares may, if so authorized by its articles, by special resolution reduce its share capital in any way:
(2) In particular, and without prejudice to subsection (1), the company may- a) Extinguish or educe the liability on any of its share in respect of share capital not paid up; or b) Either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or un represented by available assets; or c) Either with or without extinguish or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the company’s wants. and the company may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its share accordingly.
(3) A special resolution under this section is in this Act referred to as “a resolution for reducing share capital”.
Section 73 - Application to court for order of confirmation
(1) Where a company has passed a resolution for reducing shares capital, it may apply to the court for an order confirming the reduction;
(2) If the proposed reduction of share capital involves either- a) diminution of liability in respect of unpaid shares capital; or b) the payment to a shareholder of any paid-up share capital, and in any other case if the court so directs, the next three subsections have effect, but subject throughout to subsection (6).
(3) Every creditor of the company who at the date fixed by the court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company is entitled to object to the reduction of capital.
(4) The court shall settle a list of creditors entitled to object, and for that purpose- a) Shall ascertain, as far as possible, without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims; and b) May publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction of capital.
(5) If a creditor entered on the list whose debt or claim is not discharged or does not consent to the reduction, the court may , if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating (as the court may direct) the following amount – a) If the company admits the full amount of the debt or claim, or though not admitting it, is willing to provide for it , then the full amount of the debt or claim; b) If the company does not admit, and is not willing to provide for, the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the court after the like enquiry and adjudication as if the company were being wound up by the court.
(6) If a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the court may, if having regard to any special circumstances of the case it think proper to do so, direct that subsections (3) to (5) of this section shall not apply as regards any class or any class of creditors.
Section 74 - Court order confirming reduction
(1) The court, if satisfied with respect to every creditor of the company who under section 73 is entitled to object to the reduction of capital that either – a) his consent to the reduction has been obtained; or b) his debt or claim has been discharged or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as it thinks fit.
(2) Where the court so orders, it may also- a) for any reason it thinks proper to do so, make an order directing that the company shall, during such period as is specified in the order, add to its name as its last words the words “and reduced”; and b) make an order requiring the company to publish (as the court direct) the reasons for reduction of capital or such other information in regard to it as the court thinks expedient with a view to giving proper information to the public and (if the court thinks fit) the causes which led to the reduction.
(3) Where a company is ordered to add to its name the words “and reduced”, those words are, until the expiration of the period specified in the order, deemed to be part of the company’s name.
Section 75 - Public company reducing capital below authorized minimum
(1) This section applies where the court makes an order confirming a reduction of a public company‘s capital, which has the effect of bringing the nominal value of its allotted share capital below the authorized minimum.
(2) The registrar of companies shall not register the order unless the court otherwise directs, or the company is first registered as a private company.
(3) The court may authorize the company to be so re-registered without its having passed the special resolution required; and where that authority is given; the court shall specify in the order the alterations in the company’s memorandum and articles to be made in connection with that re-registration.
(4) The company may then be re-registered as a private company, if an application in the prescribed form and signed by a director or secretary of the company is delivered to the registrar, together with a printed copy of the memorandum and articles as altered by the court’s order.
(5) On receipt of such an application, the registrar shall retain it and the other document delivered with it and issue the company with a certificate of incorporation appropriate to a company that is not a public company; and –
a) the company by virtue of the issue of the certificate becomes a private company, and the alteration in the memorandum and articles set out in the court’s order take effect. And, b) the certification is conclusive evidence that the requirements of this section in respect of re-registration and of matters precedent and incidental thereto have been complied with, and that the company is a private company.
Chapter V Maintenance of Capital
Section 76 - Duty of directors on serious loss of capital
(1) Where the net assets of a public company are half or less of its called-up share capital, the directors shall, not later than 28 days from the earliest day on which that fact is known to a director of the company, duly convene an extraordinary general meeting of the company for a date not later than 56 days from that day for the purpose of considering whether any, and if so what, steps should be taken to deal with the situation.
(2) If there is a failure to convene an extraordinary general meeting as required by subsection (1) each of the directors of the company who- a) Knowingly and willfully authorizes or permits the failure, or b) After the expiry of the period during which that meeting should have been convened, during which that meeting knowingly and willfully authorizes or permits the failure to continue, is liable to a fine.
Section 77- General rule against company acquiring own shares
1. Subject to the following provisions, a company limited by shares or limited by guarantee and having a share capital shall not acquire its own shares, whether by purchases, subscription or otherwise.
(2) If a company purports to act in contravention of this section, the company is liable to a fine, and every officer of the company who is in default is liable to imprisonment or a fine, or both; and the purported acquisition is void.
(3) A company limited by shares may acquire any of its fully paid shares otherwise than for valuable consideration; and subsection (1) does not apply in relation to-
a) the redemption or purchase of shares in accordance with the Chapter VII of this Part. b) the acquisition of shares in a reduction of capital duly made; c) the purchase of shares in pursuance of an order of the under section 5?? (alteration of object); d) the forfeiture of shares or the acceptance of shares surrendered in lieu, in pursuance of the articles, for failure to pay any sum payable in respect of the shares.
Chapter VI Financial assistance by a company for acquisition its own shares
Section 78 - Prohibition of provision of financial assistance by a company for purchase of or subscription for its own shares
(1). Subject to the following provision of this section, where a person is acquiring or is proposing to acquire shares in a company, it is not lawful for the company to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place.
(2) Where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of that acquisition, it is not lawful for the company to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.
Provided that nothing in this section will be taken to prohibit –
a) Where the lending of money is part of the ordinary business of a company and the money is lent by the company in the ordinary course of its business. b) Where the loan is to trustees to enable them to purchase fully paid shares in the company to be held under an employee’s share scheme. c) Where the loan is to employees’ (other than directors) to enable them to purchase or subscribe for fully-paid shares in the companies to be held by themselves by way of beneficial ownership.
(2) If a company acts in contravention of this section, the company and every officer of the company who is in default is liable to a fine.
Chapter VII Redeemable Shares
Section 79 - Power to issue redeemable preference shares
(1) Subject to the provisions of this section, a company limited by shares may, if so authorized by its articles, issue preference shares which are to be redeemed:
Provided that – (i) No such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or out the proceeds of a fresh issue of shares for the purposes of the redemption; (ii) No such shares shall be redeemed unless they are fully paid; (iii) The premium, if any payable on redemption, must have been provided for out of the profits of the company or out of the company’s share premium account before the shares are redeemed; (iv) Where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall out of profits which would otherwise have been available for dividend be transferred to a reserve fund to be called the capital redemption reserve fund, a sum equal to the nominal amount of the shares redeemed.
Section 80 - Financing of redemption
(1) Subject to the next subsection and to section 83 (private companies redeeming or purchasing own shares out of capital) -
a) redeemable shares may only be redeemed out of distributable profits of the company or out of the proceeds of a fresh issue of shares made for the purpose of the redemption; and b) Any premium payable on redemption must be paid out of distributable profits of the company.
(2) If the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to –
a) The aggregate of a premiums received by the company on the issue of the share redeemed, or b) The current amount of the company’s share premium account (including any sum transferred to that account in respect of premiums on the new shares), whichever is the less; and in that case the amount of the company‘s share premium account shall be reduced by a sum corresponding to the amount of any payment made by virtue of this subsection out of the proceeds of the issue of the new shares.
(3) Subject to the provisions of this section, redemption of shares may be affected on such terms and in such manner as may be provided by the company’s articles.
(4) Shares redeemed under this section shall be treated as cancelled on redemption, and the amount of the company ‘s issued share capital shall be diminished by the nominal value of those shares accordingly; but the redemption of preference shares by a company is not to be taken as reducing the amount of the company’s authorized share capital.
(5) Without prejudice to subsection (4), where a company is about to redeem shares, it has power to issue share up to the nominal value of the shares to be redeemed as if those shares had never been issued.
Purchase by a Company of its own Shares
Section 81 - Power of company to purchase own shares
(1) Subject to the provision of this section, a company limited by shares or limited by guarantee and having a share capital may, if authorized to do so by its articles, purchase its own shares (including any redeemable shares).
(2) Section 79 applies to the purchase by a company under this section of its own shares as they apply to the redemption of redeemable shares, save that the terms and manner of purchase need not to be determined by the articles as required by section 79 (3).
(3) A company may not under this section purchase its shares if as a result of the purchase there would no longer be any member of the company holding shares other than redeemable shares.
Section 82 - The capital redemption reserve
(1) Where under this chapter shares of a company are redeemed or purchased wholly out of the company’s profits, the amount by which the company’s issued share capital is diminished in accordance with section 79 (3) on cancellation of the shares redeemed or purchased shall be transferred to a reserve called “the capital redemption reserve”.
(2) If the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue and the aggregate amount of those proceeds is less than the aggregate nominal value of the shares redeemed or purchased, the amount of the difference shall be transferred to the capital redemption reserve.
Redemption or purchase of own shares out of capital (Private companies only)
Section 83 - Power of private companies to redeem or purchase own share out of capital (1) Subject to the following provision of this chapter, a private company limited by shares or limited by guarantee and having a share capital may if so authorized by its articles, make a payment in respect of the redemption or purchase under section 80, of its own shares otherwise than out of its distributable profits or the proceeds of a fresh issue of shares.
(2) The payment which may be made by a company out of capital in respect of the redemption or purchase of its own shares is such an amount as, taken together with
a) any available profits of the company, and b) the proceeds of any fresh issue of shares made for the purposes of the redemption or purchases, is equal to the price of redemption or purchase; and the payment permissible under this subsection is referred to below in this section as the permissible capital payment for the shares.
(3) Subject to subsection (5), if the permissible capital payment for shares redeemed or purchased is less than their nominal amount, the amount of the difference shall be transferred to the company’s capital redemption reserve.
(4) Subject to subsection (5), if the permissible capital payment is greater than the nominal amount of the shares redeemed or purchased – a) the amount of any capital redemption reserve, share premium account or fully paid share capital of the company, and b) any amount representing unrealized profits of the company for the time being standing to the credit of any reserve maintained by the company (revaluation reserve), may be reduced by a sum not exceeding the amount by which the permissible capital payment exceeds the nominal amount of the shares.
(5) Where the proceeds of a fresh issue are applied by a company in making any redemption or purchase of its own shares in addition to a payment out of capital under this section, the references in subsections (3) and (4) to the permissible capital payment are to be read as referring to the aggregate of that payment and those proceeds.
Section 84 - Objections by company’s members or creditors
(1) Where a private company passes a special resolution approving any payment out of capital for the redemption or purchases of any of its shares –
a) any member of the company other than one who consented to or voted in favor of the resolution; and b) Any creditor of the company may within 5 weeks of the date on which the resolution was passed apply to the court for cancellation of the resolution. (2) If an application is made, the company shall – a) forthwith give notice in the prescribed form of that fact to the registrar of companies; and b) within 15 days from the making of any order of the court on the hearing of the application, such longer period that the court may by order direct, deliver an office copy of the order of the registrar.
Section 85 - Powers of court on application under section 84
(1) On the hearing of an application under section 84, the court may, if it thinks for, adjourn the proceedings in order that an arrangement may be made to the court’s satisfaction for the purchase of the interests of dissentient members or for the protection of dissentient creditors (as the case may be), and the court may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement.
(2) Without prejudice to its powers under subsection (1), the court shall make an order on such terms and conditions as it thinks for either confirming or canceling the resolution; and if the court confirms the resolution, it may in particular by order alter or extend any date or period of time specified in the resolution.
(3) The court’s order may, if the court thinks fit, provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company’s capital, and may make such alterations in the company’s memorandum and articles as may be required in consequence of that provision.
(4) If the court’s order requires the company not to make any or any specified, alteration in its memorandum or articles, the company has not them power without leave of the court to make any such alteration in breach of the requirement.
Chapter VIII Miscellaneous Provisions about Shares and Debentures
Share and debentures certificates
Section 86 - Nature, transfer and numbering of shares
(1) The share or other interest of any member in a company shall be movable property transferable in manner provided by the articles of the company.
(2) Each share in a company having a share capital shall be distinguished by its appropriate number; except that, if at any time all the issued shares in a company, or all the issued share in it of a particular class, are fully paid up and rank pari passu for all purposes, none of those shares need thereafter have a distinguished number so long as it remains fully paid up and rank pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.
Section 87 - Transfer and registration
(1) It is not lawful for a company to register a transfer of shares in or debentures of the company unless a proper instrument of transfer has been delivered to the company.
This applies notwithstanding anything in the company’s articles.
(2) Subsection (1) does not prejudice any power of the company to register as shareholder or debenture holder a person whom the right to any shares in or debentures of the company has been transmitted by operation of law.
(3) On the application of the transferor of any share or interest in a company, the company shall enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.
(4) If a company refuses to register a transfer of shares or debentures the company shall, within 2 months after the date on which the transfer was lodged with it, send to the transferee notice of the refusal.
(5) If default is made in complying with subsection (4) , the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.
Section 88 - Certification of transfers
(1) The certification by a company of any instrument of transfer of shares in or debentures of the company shall be taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on the face of them show a prima facie title to the shares or debentures in the transferor names in the instrument of transfer, but not has a representation that the transferor has any title to the shares or debentures.
(2) For the purpose of this section-
a) An instrument of transfer shall be deemed to be certificated if it bears the words “certificate lodged” or words to the like effect,
b) The certification shall be deemed to be made by a company if – (i) the person issuing the instrument is a person authorized to issue certificated instruments of transfer on the company’s behalf; and (ii) the certification is signed by a person authorized to certificate transfers on the company’s behalf or by any officer or servant either of the company or of a body corporate so authorized;
c) A certification shall be deemed to be signed by any person if- (i) It purports to be authenticated by his signature or initials (whether handwritten or not); and (ii) It is not shown that the signature or initials was or were placed there neither by himself nor by any person authorized to use the signature or initials for the purpose of certificating transfers on the company’s behalf.
Section 89 - Duty of company as to issue of certificates
(1) Every company shall –
a) within sixty days after the allotment of any of its shares, debentures or debenture stock, and b) within sixty days after the date on which a transfer of any such shares, debentures or debenture stock is lodged with the company ,complete and have ready for delivery the certificates of all shares, the debentures and the certificates of all debentures stock allotted or transferred (unless the condition of issues of the shares, debentures or debentures stock otherwise provide).
(2) For this purpose, transfer means a transfer duly stamped and otherwise valid, and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register.
(3) if default is made in complying with subsection (1), the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.
Section 90 - Certificate to be evidence of title
A certificate under the common seal of the company, specifying any shares held by a member shall be sufficient evidence of his title to the shares.
Debentures
Section 91- Register of debenture holders
(1) Every company which after the appointed day issues a series of debentures shall keep at the registered office of the company a register of holders of such debentures:
Provided that –
(i) Where the work of making up such register is done at some office of the company other than the registered office such register may be kept at such office; and (ii) Where the work of making up such register is by arrangement by the company undertaken by some person on behalf of the company such register may be kept at the office of that person at which the work is done.
(2) Every company shall give notice to the registrar of the place where the register is kept and of any change in that place Provided that a company shall not be bound to give notice under this subsection if the register has been kept at the registered office of the company.
Section 92 - Right to inspect register
(1) Every register of holders of debentures of a company shall, except when duly closed, be open to the inspection-
a) of the registered holder of any such debentures or any holder of shares in the company without fee; and b) of any other person on payment of such fee as may be prescribed.
(2) Any such registered holder or debentures or holder of shares, or any other person, may require a copy of the register of the holders of debentures of the company or any part of it, on payment of such fee as may be prescribed.
(3) A copy of any trust deed for securing an issue of debentures shall be forwarded to every holder of any such debentures at his request on payment of such fee as may be prescribed.
(4) If inspection is refused, or a copy is refused or not forwarded, the company and every officer in it who is in default is liable to a fine and , for continued contravention for a daily default fine.
(5) Where a company is in default as above mentioned, the court may by order compel an immediate inspection of the register or direct that the copies required be sent to the person requiring them.
(6) For the purpose of this section, a register is deemed to be duly closed if closed in accordance with provisions contained in the articles or in the debentures or, in the case of debenture stock, in the stock certificates, or in the trust deed or other document securing the debentures or debentures stock, during such period or periods not exceeding in the whole 30 days in any year, as may be therein specified.
PART VI
ACCOUNTS AND AUDIT
Chapter I Provisions Applying To Companies Generally
Accounting records
Section 93 - Duty to keep accounting record
(1) Every company shall keep accounting records which are sufficient to show and explain the company’s transactions and are such as to-
a) disclose with reasonable accuracy, at any time, the financial position of the company at that time, and b) Enable the directors to ensure that any balance sheet and profit and loss account prepared under this Part complies with the requirement of this Act.
(2) The accounting record shall in particular contain –
a) entries from day to day of all sums of money received and expended by the company, and the matters in respect of which the receipt and expenditures takes place, and b) a record of the assets and liabilities of the company.
(3) If the company’s business involves dealing in goods, the accounting records shall contain –
a) Statements of stock held by the company at the end of each financial year of the company, b) All statements of stocktaking from which any such statement of stock as its mentioned in paragraph (a) has been or is to be prepared; and c) except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased, showing the goods and the buyers and the sellers in sufficient detail to enable all these to be identified.
(4) If a company fails to comply with any provision of this section, every officer of the company who is in default is guilty of an offence unless he shows that he has acted honestly and that in the circumstances in which the company’s business was carried on the default was excusable.
(5) A person guilty of an offence under this section is liable to imprisonment or a fine or both.
Section 94 - where and for how long records be kept
(1) A company’s accounting records shall be kept at its registered office or such other place as the directors think fit, and shall at all time be open to inspection by the company’s officers.
(2) If a company fails to comply with any provision of subsection (1), every officer who is in default is guilty of an offence and liable to imprisonment or a fine or both. unless he shows that he has acted honestly and that in the circumstances in which the company’s business was carried on the default was excusable.
(3) Accounting records which a company is required by section 93 to keep shall be preserved by it-
a) in the case of a private company for three years from the date on which they are made, and b) in the case of a company limited by share, for six years from the date on which they are made.
(4) An officer of a company is guilty of an offence, and liable to imprisonment or a fine or both, if he fails to take all reasonable steps for securing compliance by the company with subsection (3) or intentionally causes any default by the company under that subsection.
Section 95 - A company’s financial year
(1) A company’s “financial year” is determined as follows
(2) Its first financial year begins with the first day of its accounting reference period and ends with the last day of that period or such other date, not more than seven days before or after the end of that period, as the directors may determine.
(3) Subsequent financial years begin with the day immediately following the end of the company’s previous financial year and end with the last day of its next accounting reference period or such other date, not more than seven days before or after the end of that period, as the directors may determine.
Section 96 - Accounting reference period and accounting reference date
(1) A company’s first accounting reference period is the period of more than six months, but not more than 18 months, beginning with the date of its incorporation and ending with its accounting reference date.
(2) Its subsequent accounting reference period are successive periods of twelve months beginning immediately after the end of previous accounting reference period and ending with its accounting reference date.
Section 97 - Alteration of accounting reference date
(1) A company may by notice in the prescribed form given in the registrar specify a new accounting reference date having effect in relation to the company’s current accounting reference period and subsequent periods.
Annual accounts
Section 98 - Duty to prepare company accounts
(1) the director of the company shall prepare for each financial year of the company –
a) a balance sheet as at the last day of the year; and b) a profit and loss account.
(2) The balance sheet shall give a true and fair view of the state of affairs of the company as at the end of the financial year; and profit and loss account shall give a true and fair view of the profits or loss of the company for the financial year.
(3) A company ‘s accounts shall comply with the provisions of Schedule 4 as to the form and content of the balance sheet and profit and loss account and additional information to be provided by way of notes to the accounts.
Approval and signing of accounts
Section 99 - Approval and signing of accounts
(1) A company’s annual account shall be approved by the board of directors and signed on behalf of the board by a director of the company.
(2) The signature shall be on the company’s balance sheet.
(3) The copy of the company’s balance sheet which is delivered to the registrar shall be signed on behalf of the board by a director of the company.
(4) If annual accounts are approved which do not comply with the requirements of this Act, every director of the company who is party to their approval and who knows that they do not comply is guilty of an offence and liable to a fine.
(5) If a copy of the balance sheet -
a) is laid before the company, or otherwise circulated, published or issued without the balance sheet having been signed as required by this section or without the required statement of the signatory’s name being included, or b) is delivered to the registrar without being signed as required by this section, the company and every officer of it who is in default is guilty of an offence and liable to a fine.
Chapter II Director ‘s report
Section 100 - Duty to prepare directors’ report
(1) The directors of a company shall for each financial year prepare a report – Containing a fair review of the development of the business of the company during the financial year and of their position at the end of it, and stating the amount (if any) which they recommend should be paid as dividend.
(2) The report shall state the names of the persons who, at any time during the financial year, were directors of the company, and the principal activities of the company in the course of the year and any significant change in those activities in the year.
(3) The report shall also comply with schedule 7 as regards the disclosure of the matters mentioned there.
(4) In Schedule 7 –
Part I relates to matters of general nature, including changes in asset values; directors’ shareholding and other interests and contributions for political charitable purposes. Part II relates to the acquisition by a company of its own shares Part III relates to the employment, training and advancement of disabled persons.
Section 101- Approval and signing of director’s report
(1) The director’s report shall be approved by the board of directors and signed on behalf of the board by the director.
(2) The copy of the directors’ report which is delivered to the registrar shall be signed on behalf of the board by the director.
(3) If a copy of the directors’ report -
a) is laid before the company, or otherwise circulated, published or issued without the balance sheet having been signed as required by this section or without the required statement of the signatory’s name being included, or b) is delivered to the registrar without being signed as required by this section, the company and every officer of it who is in default is guilty of an offence and liable to a fine.
Chapter III Auditors’ report
Section 102- Auditors’ report
(1) A company ‘s auditors shall make a report to the company’s members on all annual accounts of the company of which copies are to be laid before the company in general meeting during their tenure of office.
(2) The auditor’s report shall state whether in the auditor’s opinion the annual accounts have been properly prepared in accordance with this Act, and in particular whether a true and fair view is given.
a) In the case of an individual balance sheet, of the state of affairs of the company as at the end of the financial year. b) In the case of an individual profit and loss account, of the profit or loss of the company for the financial year,
(3) The auditors shall consider whether the information given in the directors’ report for the financial year for which the annual accounts are prepared is consistent with those accounts; and if they are of opinion that it is not they shall state that fact in their report.
Section 103 - Signature of auditors’ report
(1) The auditor’s report shall state the names of the auditors and be signed by them.
(2) The copy of the auditor’s report which is delivered to the registrar shall state the names of the auditors and be signed by them.
(3) If a copy of the auditors’ report -
a) Is laid before the company, or otherwise circulated, published or issued without the balance sheet having been signed as required by this section or without the required statement of the signatory’s name being included, or b) Is delivered to the registrar without being signed as required by this section, The company and every officer of it who is in default is guilty of an offence and liable to a fine.
Section 104 - Duties of auditors
(1) A company’s auditors shall, in preparing their report, carry out such investigations as will enable them to form an opinion as to –
a) Whether proper accounting records have been kept by the company ; b) Whether the company’s individual accounts are in agreement with the accounting records and returns.
(2) If the auditors are of opinion that proper accounting records have not been kept , or that proper returns adequate for their audit have not been received , or if the company‘s individual accounts are not in agreement with the accounting records and returns , the auditors shall state that fact in their report.
(3) If the auditors fail to obtain all the information and explanation which to the best of their knowledge and belief, are necessary for the purpose of their audit , they shall state that fact in their report.
Chapter IV Publication of accounts and reports
Section 105 - Persons entitled to receive copies of accounts and reports
(1) A copy of the company’s annual accounts, together with a copy of the directors’ report for that financial year and of the auditors’ report on those account, shall be sent to –
a) every member of the company b) every holder of the company’s debenture; c) every person who is entitled to receive notice of general meetings, not less than 21 days before the date of the meeting at which a copies of those documents are to be laid in accordance with section 107.
(2) In case of a company not having a share capital, copies need not to be sent to anyone who is not entitled to receive notices of general meeting of the company.
(3) If copies are sent less than 21 days before the date of the meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by all members entitled to attend and vote at the meeting.
(4) If default is made in complying with this section, the company and every officer of it who is in default is guilty of an offence and liable to a fine.
Section 106 - Right to demand copies of accounts and reports
(1) Any member of a company and any holder of a company’s debentures is entitled to be furnished, on demand and without charge, with a copy of the company’s last annual accounts and directors’ report and a copy of the auditor‘s report on those accounts.
(2) If a demand under this section is not complied with within seven days , the company and every officer of it who is in default is guilty of an offence and liable to a fine and for continued contravention, to a daily default fine.
Chapter V Laying and delivering of accounts and reports
Section 107 - Accounts and reports to be laid before company in general meeting
(1) The directors of a company shall in respect of each financial year lay before the company in general meetings copies of the company’s annual accounts, the directors’ report and the auditors’ reports on those accounts.
(2) If the requirements of subsection (1) are not complied with and before the end of the period allowed for laying and delivering accounts and reports, every person who immediately before the end of that period was a director of the company is guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine.
(3) It is a defence for a person charged with such an offence to prove that he took all reasonable steps for securing that those requirements would be complied with before the end of that period.
(4) It is not a defence to prove that the documents in question were not in fact prepared as required by this part.
Section 108 - Accounts and reports to be delivered to the registrar
(1) The directors of a company shall in respect of each financial year deliver to the registrar a copy of the company’s annual accounts together with a copy of the directors’ report for that year and a copy of the auditors’ reports on those accounts.
(2) If the requirements of subsection (1) are not complied with and before the end of the period allowed for laying and delivering accounts and reports , every person who immediately before the end of that period was a director of the company is guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine.
(3) Further, if the directors of the company fail to make good the default within 14 days after the service of a notice on them requiring compliance, the court may on the application of any member or creditor of the company or of the registrar, make an order directing the directors (or any of them) to make good the default within such time as may be specified in the order.
The court’s order may provide that all costs of and incidental to the application shall be borne by the directors.
(4) It is a defence for a person charged with such an offence to prove that he took all reasonable steps for securing that those requirements would be complied with before the end of that period.
(5) It is not a defence to prove that the documents in question were not in fact prepared as required by this part.
Section 109 - Civil penalty for failure to deliver accounts
(1) Where the requirements of section 108 (1) are not complied with before the end of the period allowed for laying and delivering accounts and reports, the company is liable to a civil penalty.
This in addition to any liability of the directors under section 109.
(2) The amount of the penalty is determined by reference to the length of the period between the end of the period allowed for laying and delivering accounts and reports and the day on which the requirements are complied with, and whether the company is a public or private company as follow:
(3) The penalty may be recovered by the registrar and shall be paid by him into the Consolidated Fund.
(4) It is not a defence to prove that the documents in question were not in fact prepared as required by this part.
Section 110 - Period allowed for laying and delivering account and reports
(1) The period allowed for laying and delivering accounts and reports is –
a) for a private company, 10 months after the end of the relevant accounting reference period, and b) for a public company, 7 months after the end of that period.
This is subject to the following provision of this section.
(2) If the relevant accounting reference period is the company’s first and is a period of more than 12 months, the period allowed is –
a) 10 months or 7 months, as the case may be, from the first anniversary of the incorporation of the company, or b) 3 months from the end of the accounting reference period,
which ever last expires.
(3) In this section “the relevant accounting reference period” means the accounting reference period by reference to which the financial year for the accounts in question was determined. PART VII DISTRIBUTION OF PROFITS AND ASSETS
Limits of company’s power of distribution
Section 111 – Certain distribution prohibited
(1) A company shall not make a distribution except out of profits available for the purpose.
(2) In this Part, “distribution” means every description of distribution of a company’s assets to its members, whether in cash or otherwise, except distribution by way of -
a) an issue of shares as fully or partly paid bonus shares, b) the redemption or purchase of any of the company’s own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealized profits in accordance with Chapter V of Part V; c) the reduction of share capital by extinguishing or reducing the liability of any of the members on any of the company’s share in respect of share capital not paid up, or by paying off paid up share capital, and d) a distribution of assets to members of the company on its winding up.
(2) For purpose of this Part, a company’s profit available for distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made.
(3) A company shall not apply an unrealized profit in paying up debentures, or any amounts unpaid on its issued shares.
Section 112 Restriction on distribution of assets
(1) A public company may only make a distribution at any time –
a) If at that time the amount of its net assets is not less than the aggregate of its called –up share capital and undistributable reserves, and b) If and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate.
(2) In subsection (1) “net assets” means the aggregate of a company ‘s assets less the aggregate of its liabilities (“liabilities to include any provision for liabilities or charges).
(3) A company’s un distributable reserves are
a) the share premium account b) the capital redemption reserve c) the amount by which the company’s accumulated, unrealized profits so far as not previously utilized by capitalization of a description to which the paragraph applies, exceed its accumulated, unrealized losses (so far as not previously written off in a reduction or reorganization of capital duly made) and d) any other reserve which the company is prohibited from distributing by any enactment other than the one contained in this Part) or by its memorandum or articles.
(4) A public company shall not include any uncalled share capital as an asset in any accounts relevant for purposes of this section.
Section 113 - Distribution to be justified by reference to company’s accounts
(1) The amount of a distribution which may be determined by reference to the following items as stated in the company’s accounts -
a) profits, losses, assets and liabilities b) provisions of any of the kinds mentioned in Schedule 4 (depreciation, diminution in values of assets, retentions to meet liabilities, ). c) share capital and reserves (including un distributable reserves).
Except in a case falling within the next subsection, the company’s accounts which are relevant for this purpose are its last annual accounts, that is to say those prepared under Part VI which were laid in respect of the last preceding accounting reference period in respect of which accounts so prepared were laid.
PART VIII
A COMPANY’S MANAGEMENT : DIRECTORS AND SECRETARIES : THEIR QUALIFICATIONS DUTIES AND RESPONSABILITIES
Officers and registered office
Section 114- Directors (1) Every company registered (other than a private company) shall have at least two directors
(2) Every private company shall have at least one director.
Section 115 - Secretary (1) Every company shall have a secretary .
(2) A sole director shall not also be secretary
Section 116 - Validity of acts of directors The acts of a director are valid notwithstanding any defect that may afterwards be discovered in his appointment or qualifications.
Section 117 - Registered office (1) A company shall have at ant times a registered office to which all communications and notice may be addressed.
(2) On incorporation the situation of the company ‘s registered office is that specified in the statement sent to the registrar under section 11.
(3) The company may change the situation of its registered office from time to time by giving notice in the prescribed form to the registrar.
(4) For the purposes of any duty of a company –
a) to keep at its registered office, or make available for public inspection there, any register, index or other document, or b) to mention the address of its registered office in any document,
a company which has given notice to the registrar of a change in the situation of its registered office may act on the change as from such date not more than 14 days after the notice is given as it may determine.
(5) Where a company unavoidably ceases to perform at its registered office any such duty as it is mentioned in subsection (4) (a) in circumstances in which it was not practicable to give prior notice to the registrar of a change in the situation of its registered office, but –
a) resumes performance of that duty at other premises as soon as practicable, and b) gives notice accordingly to the registrar of a change in the situation of its registered office within 14 days of doing so, it shall not be treated as having failed to comply with that duty.
Section 118 - Register of directors and secretaries
(1) Every company shall keep at its registered office a register of its directors and secretaries; and the registrar shall, with respect to the particulars to be contained in it of those persons, comply with the requirements.
(2) The company shall, within the period of 14 days from the occurrence of – a) Any change among its directors or in its secretary, or b) Any change in the particulars contained in the register.
send to the registrar of companies a notification in the prescribed form of the change and of the date on which it occurred; and a notification of a person having a director or secretary of the company shall contain a consent, signed by that person, to act in the relevant capacity.
(3) The register shall be open to the inspection of any member of the company without charges and of any other person on payment of such fees as may be prescribed.
(4) If an inspection required under this section is refused, or if default is made in complying with subsection (1) and (2), the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.
(5) In the case of a refusal of inspection of the registrar, the court may by order compel an immediate inspection of it.
Provisions governing appointment of directors
Section 119 - Share qualification of directors
(1) It is the duty of every director who is by the company’s articles required to hold a specified share qualification, and who is not already qualified, to obtain his qualification within 2 months after his appointment , or such shorter time as may be fixed by the articles.
(2) The office of director of a company is vacated if the director does not within 2 months from the date of his appointment (or within such shorter time as may be fixed by the articles) obtain his qualifications, or after the expiration of that period or shorter time he ceases at any time to hold his qualification.
(3) A person vacating office under this section is incapable of being reappointed to be a director of the company until he has obtained his qualification.
(4) If after the expiration of that period or shorter time any unqualified person acts as a director of the company, he is liable to a fine and, for continued contravention, to a daily default fine.
Section 120 - Appointment of directors to be voted individually
(1) At a general meeting of a public company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be made, unless a resolution that it shall be so made has first been agreed to by the meeting without any vote being given against it.
(2) For purposes of this section, a motion for approving a person ‘appointment, or for nominating a person for appointment, is to be treated as a motion for his appointment.
Section 121 - Age limit for directors
(1) Every company (except a private company) is subject to this section.
(2) no person is capable of being appointed a director of a company which is subject to this section if at the time of his appointment he has attained the age of 70.
(3) A director of such company shall vacate his office at the conclusion of the annual general meeting commencing next after he attains the age of 70; but acts done by a person as director are valid notwithstanding that it is afterwards discovered that his appointment had terminated under this subsection.
Removal of directors
Section 122 - Resolution to remove director
(1) A company may by ordinary resolution remove a director before the expiration of his period of office
(2) Special notice is required of a resolution to remove a director under this section or to appoint somebody instead of a director so removed at the meeting at which he is removed.
(3) A vacancy created by the removal of a director under this section, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.
Section 123 - Director ‘s right to protest removal
(1). On receipt of notice of an intended resolution to remove a director under section 122, the company shall forthwith send a copy of the notice to the director concerned; and he (whether or not a member of the company) is entitled to be heard on the resolution at the meeting.
(2) Where notice is given of an intended resolution to remove a director under that section, and the director concerned makes with respect to it representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so –
a) In any notice of the resolution given to members of the company state the fact that the representations having been made; and b) Send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company).
(3) If a copy of the representations is not send as required by subsection (2) because received too late or because of the company’s default, the director may (without its rights to be heard orally) require that the representations shall be read out at the meeting.
Section 124 - Directors ‘s name on company correspondence
A company to which this section applies shall not state, in any form, the name of any of its directors (otherwise than in the text or as a signatory) on any business letter on which the company’s name appear unless it states on the letter in legible characters the name of every director of the company.
If a company makes default in complying with this section, every officer of the company who is in default is liable for each offence to a fine
PART IX ENFORCEMENT OF FAIR DEALING BY DIRECTORS
Restrictions on directors taking financial advantage
Section 125 - Payment to director for loss of office
It is not lawful for a company to make to a director of the company any payment by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, without particulars of the proposed payment (including its amount) being disclosed to members of the company and the proposal being approved by the company.
Section 126 - Director’s duty of disclosure on takeover, etc
(1) This section applies where, in connection with the transfer to any person of all or any of the shares in a company, being a transfer resulting from – a) an offer made to the general body of shareholders ;or b) an offer made by or on behalf of some other body corporate with a view to the company becoming its subsidiary; c) an offer made by or on behalf of an individual with a view to his obtaining the right to exercise of not less than one-third of the voting power at any general meeting of the company; or d) any other payment which is conditional on acceptance to a given extent, a payment is to be made to a director by way of compensation for loss of office, or as consideration for or in connection with his retirement from office.
(2) It is in those circumstances the director’s duty to take all reasonable steps to secure that particulars of the proposed payment (including its amount are included in or sent with any notice of the offer made for their shares which is given to any shareholders.
(3) If- a) the director fails to take those steps, or b) any person who has been properly required by the director to include those particulars in or send with the notice required by subsection (2) fails to do so, he is liable to a fine.
Section 127 - Directors to disclose interest in contracts
(1) It is the duty of a director of a company who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the company to declare the nature of his interest at a meeting of the directors of the company.
(2) For purpose of this section, a general notice given to the directors of a company by a director to the effect that –
a) he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm; or b) He is to be regarded as interested in any contract which may after the date of the notice be made with a specified person who is connected with him/her is deemed a sufficient declaration of interest in relation to any such interest.
(3) However, no such notice is of effect unless either it is given at a meeting of the directors or the director takes reasonable steps to secure that it is brought up and read at the next meeting of the directors after it is given.
(4) For purpose of this section, a transaction or arrangement of a kind described in section 130 (prohibition of loans, quasi loan to directors) made by a company for a director of the company or person connected with such a director is treated as a transaction or arrangements in which that director is interested.
Section 128 - Directors ‘s services contracts to be open to inspection.
(1) Subject to the following provisions, every company shall keep at an appropriate place-
a) In the case of each director whose contract of service with the company is in writing, a copy of that contract; b) In the case of each director whose contract of services with the company is not in writing, a written memorandum setting out its terms.
(2) All copies and memoranda kept by a company in pursuance of subsection (1) shall be kept at the same place.
(3) The following are appropriate place for the purpose of subsection (1) –
a) The company’s registered office. b) The place where its register of members is kept (if other than its registered office)
(4) Every company shall send notice in the prescribed form to the registrar of companies of the place where copies and memoranda are kept in compliance with subsection (1), and of any change in that place, save in a case in which they have at all times been kept at the company’s registered office.
(5) Every copy and memorandum required by subsection (1) to (4) to be kept shall be open to inspection of any member of the company without charge.
(6) If-
a) default is made in complying with subsection (1) or, b) an inspection required under subsection (5) is refused, or c) default is made for 14 days in complying with subsection (4), the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.
Section 129 - Contracts with sole members who are directors
(1) Subject to subsection (2), where a private company limited by shares or by guarantee having only one member enters into a contract with the sole member of the company and the sole member is also a director of the company, the company shall, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the company following the making of the contract.
(2) Subsection (1) shall not apply to contracts entered into the ordinary course of the company’s business.
(3) If a company fails to comply with subsection (1), the company and every officer of it who is in default is liable to a fine.
(4) Failure to comply with subsection (1) with respect to a contract shall not affect the validity of that contract.
Restriction on a company’s power to make loans, etc to a director and persons connected with them
Section 130 - General restriction on loans etc to directors and persons connected with them
(1) The prohibitions listed below in this section are subject to the exceptions in section 132.
(2) A company shall not-
a) make a loan to a director of the company b) enter into any guarantee or provide any security in connection with a loan made by any person to such a director
(3) A relevant company shall not-
a) make a quasi loan to a director of the company; b) make a loan or a quasi-loan to a person connected with such a director; c) enter into a guarantee or provide any security in connection with a loan or a quasi loan made by any other person for such a director or a person so connected.
(4) A relevant company shall not –
a) enter into a credit transaction as creditor for such a director or a person so connected; b) enter into any guarantee or provide any security in connection with a credit transaction made by any other person for such a director or person so connected.
Section 131 - Definitions for section 130
(1) The following subsections apply for the interpretation of section 130.
(2) “Guaranteeé includes indemnity, and cognate expressions are to be construed accordingly; (3) A quasi loan is a transaction under which one party (“the creditor”) agrees to pay, or pays otherwise than in pursuance of an agreement, a sum for another (“the borrower”) or agrees to reimburse, or reimburse otherwise than in pursuance of an agreement, expenditure incurred by another party for another (“the borrower”).-
a) on terms that the borrower (or a person on his behalf) will reimburse the creditor; or b) in circumstances giving rise to a liability on the borrower to reimburse the creditor.
(4) Any reference to a person to whom a quasi-loan is made is a reference to the borrower; and the liabilities of a borrower under a quasi-loan include the liabilities of any person who has agreed to reimburse the creditor on behalf of the borrower.
(5) “Relevant company” means a company which –
a) is a public company, or b) a subsidiary of a public company .
(6) A “credit transaction” is a transaction under which one party (“the creditor”) –
a) supplies any goods or sells any land under a hire-purchase agreement or a conditional sale agreement; b) leases or hires any land or goods in return for periodical payments; c) otherwise disposes of land or supplies goods or services on the understanding that payment (whether a lump sum or by way of periodical payments or otherwise) is to be deferred.
(7) “Services” means anything than goods or land
(8) A transaction or arrangement is made “for” a person if-
a) in the case of a loan or quasi loan, it is made to him; b) in the case of a credit transaction, he is the person to whom goods or services are supplied, or land is sold or otherwise disposed of, under the transaction; c) in the case of a guarantee or security, it is entered into or provided in connection with a loan or a quasi- loan made to him or a credit transaction made for him; and d) in the case of any other transaction or arrangement for the supply or transfer of, or any interest in, goods, land or services, he is the person to whom the goods, land and services (or the interest) are supplied or transferred.
Section 132 - Short term quasi-loans
(1) Subsection (3) of section 130 does not prohibit a company (“the creditor”) from making a quasi-loan to one of its directors or to a director of its holding company if-
a) the quasi loan contains a term requiring the director or a person on his behalf to reimburse the creditor his expenditures within 2 months of its being incurred; and b) the aggregate of the amount of that quasi- loan and of the amount outstanding under each relevant of quasi-loan does not exceed ……
(2) A quasi-loan is relevant for this purpose if it was made to the director by virtue of this section by the creditor or its subsidiary.
PART X
COMPANY MANAGEMENT, ADMINISTRATION AND PROCEDURE
Chapter 1 Company Identification
Section 133 - Company’s name to appear in its correspondence
(1) Every company shall have its name mentioned in legible characters –
a) in all business letters of the company b) in all its notices and other official publications, c) in all bill of exchange, promissory notes, endorsement, check and orders for money or goods purporting to be signed by or on behalf of the company, and d) in all its bills of parcels, invoices, receipts and letter of credit.
(2) If a company fails to comply with subsection (1) it is liable to a fine.
(3) If an officer of a company or a person on its behalf –
a) issues or authorizes the issue of any business letter of the company or any notice or other official publication of the company, in which the company’s name is not mentioned as required by subsection (1), or b) issues or authorizes the issue of any bill of parcels, invoice, receipt or letter of credit of the company in which the name is not so mentioned, he is liable to a fine.
(4) If an officer of a company or a person on its behalf signs or authorizes to be signed on behalf of the company any bill of exchange, promissory notes, endorsement, checks or orders for money or goods in which the company’s name is not mentioned as required by subsection (1), he is liable to a fine; and he is further personally liable to the holder of the bill of exchange, promissory notes, checks or orders for money or goods for the amount of it (unless it is duly paid by the company).
Section 134 - Particulars in correspondence etc
(1) Every company shall have the following particulars mentioned in legible characters in all business letters and order forms of the company, that is to say –
a) The company’s place of registration and the number with which it is registered, b) The address of its registered office
(2) If in the case of a company having a share capital there is on the stationery used for any such letters, or on the company’s order forms, a reference to the amount of share capital, the reference must be to paid-up share capital.
(3) As to contravention of this section, the following applies – If a company fails to comply with subsection (1) or (2), it is liable to a fine, If an officer of the company or a person on its behalf issues or authorizes the issue of any business letter or order form not complying with those subsections, he is liable to a fine.
Statement of Amount of Paid up Capital
Section 135 - Statement of Amount of Paid up Capital
Where any notice, advertisement or other official publication of a companies contains a statement of the amount of the authorized capital of the company, such notice, advertisement, or other official publication shall also contain a statement in an equally prominent position and in equally conspicuous characters of the amount of the capital which has been subscribed and the amount paid up.
Register of Members
Section 136 - Obligation to keep and enter up register
(1) Every company shall keep a register of its members and enter in it the particulars required by this section.
(2) There shall be entered in the register –
a) The names and address of the members; b) The date on which each person was registered as a member, and c) The date at which any person ceased to be a member.
(3) The following applies in the case of a company having a share capital –
a) With the names and addresses of the members there shall be entered a statement – (i) of the shares held by each member, distinguish each share by its number (so long as the share has a number) and, where the company has more than one class of issued shares, by its class, and (ii) of the amount paid or agreed to be considered as paid on the shares of each member; b) Where the company has converted any of its shares into stock and given notice of the conversion to the registrar of companies, the register shall show the amount and class of stock held by each member, instead of the amount of shares and the particulars relating to shares specified in paragraph (a).
(4) If a company makes default in complying with this section, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.
Section 137 - Statement that company has only one member
(1) If the number of members of a private company limited by shares falls to one there shall upon the occurrence of that event be entered in the company’s register of members with the name and address of the sole member – a) A statement that the company has only one member, b) The date on which the company became a company having only one member.
(2) If the membership of a private company limited by shares increases from one to two or more members there shall upon the occurrence of that event be entered in the company’s register of members, with the name and address of the person who was formerly the sole member, a statement that the company has ceased to have only one member together with the date on which that event occurred.
(3) If a company makes default in complying with this section, the company and every officer of it who is in default is liable to a fine, and for continued contravention, to a daily default fine.
Section 138 - Inspection of registrar and index
(1) Except when the registrar of members is closed under the provisions of this Act, the registrar and the index of members’ names shall be open to the inspection of any member of the company without charge, and of any other person on payment of such fee as may be prescribed.
(2) Any member of the company or other person may require a copy of the registrar, or any part of it, on payment of such fee as may be prescribed. And the company shall cause any copy so required by a person to be sent to him within 10 days beginning with the day next following that on which the requirement is received by the company.
(3) If an inspection required under this section is refused, or if a copy so required is not sent within the proper period, the company and every officer of it who is in default is liable in respect of each offence to a fine.
(4) In the case of such refusal or default, the court may by order compel an immediate inspection of the registrar and index, or direct that the copies required be sent to the persons requiring them.
Section 139 - Register to be evidence
The register of members is prima facie evidence of any matters which are by this Act directed or authorized to be inserted in it.
Annual Return
Section 140- Duty to deliver annual returns –
(1) Every company shall deliver to the registrar successive annual returns each of which is made up to a date not later than the date which is from time to time the company’s “return date”, that is – a) the anniversary of the company’s incorporation, or b) If the company’s last return delivered in accordance with this chapter was made up to a different date, the anniversary of that date.
(2) Each return shall-
a) to be in the prescribed form, b) contain the information required by or under the following provisions of this chapter, and c) be signed by a director or the secretary of the company; and it shall be delivered to the registrar within 28 days after the date to which it is made up.
(3) If a company fails to deliver an annual return in accordance with this chapter before the end of the period of 28 days after a return date, the company is guilty of an offence and liable to a fine and, in the case of continued contravention, to a daily default fine.
The contravention continues until such time as an annual return made up to that return date and complying with the requirements of the subsection (2) (except as to the date of delivery) is delivered by the company to the registrar
(4) Where a company is guilty of an offence under subsection (3), every director or secretary of the company is similarly liable unless he/she shows that he/she took all reasonable steps to avoid the commission or continuation of the offence.
Section 141 - Contents of annual return: general
(1) Every return shall state the date to which it is made up and shall contain the following information:
a) The address of the company b) The name and address of the secretary c) The name and address of every director of the company d) In the case of each individual director (i) His nationality, date of birth and business occupation; and (ii) Such particulars of other directorships and former names as are required to be contained in the company’s register of directors; e) If the register of members is not kept at the company’s registered office, the address of the place where it is kept. f) If the company has elected – g) To dispense with the laying of accounts and reports before the company in general meeting, or h) To dispense under section 144 with the holding of annual general meetings, i) A statement to that effect.
(2) The information as to the company’s principal business activities my be given by reference to one or more categories of any prescribed system of classifying business activities.
Section 142 - Contents of annual return: particulars of share capital and shareholders
(1) the annual return having a share capital shall contain the following information with respect to its share capital and members.
(2) The return shall state the total number of issued shares of the company at the date to which the return is made up and the aggregate added value of those shares.
(3) The return shall state with respect to each class of shares in the company –
a) The nature of the class, and b) The total number and aggregate nominal value of issued shares of that class at the date to which the return is made up.
(4) The return shall contain a list of the names and addresses of every person who-
a) Is a member of the company on the date to which the return is made up, or b) Has ceased to be a member of the company since the date to which the last return was made up (or in the case of the first return, since the incorporation of the company); And if the names are not arranged in alphabetical order the return shall have annexed to it an index sufficient to enable the name of any person in the list to be easily found.
(5) The return shall also state-
a) the number of shares of each class held by each member of the company at the date to which the return is made up; and b) the number of shares of each class transferred since the date to which the last return was made up (or, in the case of the first return, since the incorporation of the company) by each member or person who has ceased to be a member, and the dates of registration of the transfers. |
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