______________________________________________________________________________
RULING
The Applicants are in Court to
invoke the jurisdiction of the
High Court under the Companies
Code 1963, Act 179 for the
following reliefs: (1) An order
for convening an extraordinary
general meeting of the
Respondent Company for the
purpose of passing ordinary
resolutions for the election of
a new Board of Directors and the
removal of the existing one. The
extraordinary general meeting
(hereinafter to be referred to
as an EGM) if ordered, will
consider a resolution under
Section 202(1)(a) to permit the
sale of all, or any of the
Company's assets. (2) An
injunction restraining the
existing Directors of the
Respondent Company from entering
into any agreement, contract or
understanding which may impair
or substantially reduce the
ability of any Board of
Directors elected at the general
meeting to deal with the
Company's affairs as they might
otherwise have chosen. (3)
Consequential orders arising
directly out of the reliefs
sought.
The five Applicants whose
addresses and number of shares
owned by them were annexed to
the application as Exhibit JCG1,
claim they are the holders of
4,716,294 shares of the
Respondent Company and that
their total shareholding
represent 4.2% of the
112,893,000 issued share capital
of the Respondents. From Exhibit
JCG1, it is clear that 1st and
2nd Applicants reside in
Luxembourg, 3rd and 4th
Applicants who bear the same or
similar names reside in New
York, USA and the 5th lives in
Switzerland.
The Respondent Company who will
be referred to in this ruling
simply as "Ashanti", is a
Ghanaian Company incorporated
under the Laws of Ghana in 1974
and became a public company
limited by shares in March 1994.
The stated capital of Ashanti is
200,000,000 ordinary shares of
no par value and one special
rights redeemable preference
share of no par value. As at
31st December 1999, 112,893,000
ordinary shares and the one
special rights redeemable
preference share had been
issued. Ashanti carries on
business as a gold exploration
development and mining company.
There is evidence before me that
in addition to being listed on
the Ghana stock exchange,
Ashanti went international in
1994 and is currently listed on
the London, New York, the
Australian, the Zimbabwe and the
Toronto stock exchanges.
The complaint of the Applicants
is that when Ashanti went public
internationally in May 1994, its
shares were offered to the
public at US$20.0 per ordinary
share but at the close of
trading on the New York exchange
on 5th January 2000, the value
of Ashanti's shares had fallen
drastically and were quoted at
US$3.125 per share. According to
the Applicants, the reduction in
the value of the shares was
occasioned as a result of a
press release by Ashanti on
5/10/99 when it admitted that it
was encountering problems
meeting its obligations to post
collaterals on its hedge book
commitments. Ashanti stated that
if it were to exit or buy back
its forward sales arrangements
at US$325 an ounce, it would
cost the company US$572 million.
The day before the press
release, that is to say on
4/10/99, it is alleged that
Ashanti's shares stood at
US$9.37 giving a market
capitalization of approximately
US$1.0 billion. The resultant
fall in the shares, left Ashanti
with a market capitalization of
only US$374 million
approximately.
It is noted by the Applicants
that the problems of Ashanti on
its hedge book, have now widened
to encompass its overall
financial stability and that at
the end of September 1999,
Ashanti's net debt was US$460.5
million. Ashanti, the Applicants
maintain requires a current
working capital of approximately
US$250 million of which US$95.0
million relates to a revolving
credit facility which fell due
at the end of December 1999 and
which needs to be renewed. In
addition, the Company needs
approximately US$110 million for
development of the Geita Mines
in Tanzania. Cash resources are
also required to satisfy working
capital requirements due to
operational cash flow shortfalls
and the failure to renew
previous financial facilities.
Mr. Tony Lithur, leading Counsel
for the Applicants painted a
gloomy picture of a company
under dire financial distress.
He submitted that the Board of
Directors have acted imprudently
in handling the financial crises
of Ashanti and that members of
the board have shown their
commitment to an agenda that
will plunge Ashanti deeper into
the ongoing crises and if steps
are not taken quickly, the
crises will lead the company
into bankruptcy. Mr. Lithur
submitted further that Ashanti
intend to negotiate for a loan,
and that in the view of the
Government of Ghana and the
Applicants, a further debt in
the magnitude proposed will
enlarge the debts of Ashanti
already in distress and will
further endanger the value of
its shares. According to him,
the Directors have not acted in
the best interest of Ashanti, as
5 out of a membership of 13 owe
allegiance to Lonmin PLC which
has a shareholding of 32% in
Ashanti. It is the view of Mr.
Lithur that the current
arrangement and composition of
the Board tilts in favour of
Lonmin PLC. He stated that the 5
Board members are paid employees
of Lonmin PLC who as employees
should be implementing policies
and not laying down policies as
they do now. To Counsel, the
Board as presently constituted
is not independent. Mr. Sam
Jonah, the Chief Executive of
Ashanti is an employee of Lonmin
and the five other employees are
answerable to Mr. Sam Jonah. He
invited the Court to note that
it is this very Board that is
handling the present crises of
Ashanti. To demonstrate the
absence of independence on the
part of the Board, Counsel
referred to Exhibit JCG3, a
resignation letter of the
deponent to the application
dated 4/10/99 in which letter
Mr. Jean Claude Gandur stated
that he had resigned as a Board
member since his schedule did
not allow him anymore to
participate on the Board as a
passive member, and that his
presence on the Board as
Director was just to acknowledge
documents prepared by the
executives. Counsel noted also
that the same day that Ashanti
announced its crises, Lonmin PLC
made a bid for Ashanti but for
the insistence of the Government
of Ghana and some shareholders,
the Board would have accepted
the bid. In the view of Counsel,
the rejection by the Board of an
asset sale, particularly the
sale of Geita Mines in Tanzania
to Barrick Gold of Canada is
evidence of Lonmin's influence,
which has been geared towards
one direction only, ie. the
acquisition of loans. This
Lonmin influence deprived the
Board from pursuing other
alternatives. Counsel stressed
that Mr. Sam Jonah per Exhibit
JL5 had admitted that he had
been reckless over the use of
hedging in dealing with the
affairs of the company. Counsel
therefore prayed for the reliefs
sought accordingly.
In answering the complaints laid
out by the Applicants, Mr. Kwame
Tetteh Senior Counsel approached
his brief in a professional and
academic manner. He used well
over half of his eight hour
submissions on procedure. He
methodically went through the
whole processes filed inch by
inch as it were, with a comb.
His objections and reservations
are too numerous to recount here
but at the end of the day, he
informed the Court that he was
proceeding to answer the claim
which he did. I shall attempt to
give answers to his numerous
objections first.
Counsel's first objection went
to the procedure adopted by the
Applicants in commencing this
action. His view is that the
action was irregularly initiated
as the summons appeared to be an
ordinary summons associated with
"Summons for Directions" in a
cause which did not initiate or
originate an action. Counsel
likened it to summons for
directions in a cause. Mr. Kwame
Tetteh observed that apart from
Adryx Mining and Metals Ltd
whose name and incomplete
address have been endorsed on
the summons, there is absolutely
no mention of the other
Applicants and addresses in the
summons as required under the
rules. Instead, the Applicants
have annexed a document
immediately after the affidavit
in support of the summons marked
as Exhibit JCG1, which gave the
names and particulars of all the
Applicants inclusive of their
shareholdings. Exhibit JCG1
itself is not signed or
notorised in conformity with
Order 38. Exhibit JCG1 is
partially printed and partially
handwritten. Counsel referred to
the Exhibits attached to the
application and objected to
their admission in evidence as
none of them contains a 'jurat'
indicating that the notary
public saw and identified those
exhibits. Coupled with these
defects, the supportive
affidavit itself is hearsay
having violated the hearsay rule
in every material detail.
Counsel therefore invited the
Court to expunge as many as 26
paragraphs from the affidavit in
support of the application.
I have looked closely at all the
processes filed and in
particular the summons which
originated this case. It is
obvious that Counsel for the
Applicants chose to commence
this action by a mode other than
a writ of summons in view of the
urgency associated with the
case. His options are therefore
limited to commencing the action
by an originating summons or in
the alternative by originating
notice of a motion. The Court
noted that when Counsel was
pressed to disclose the mode by
which the action was commenced,
Mr. Lithur oscillated, but
finally affirmed that his
application was in the nature of
an originating notice of a
motion. I have scrutinized the
process carefully and I am left
in no doubt that short of minor
defects in the process, the
action is one commenced by an
originating notice of a motion
though it has not been headed in
that manner. That being the
case, the nearest judicial form
he ought to have resorted to was
form No. 2 of Appendix K which
requires a notice to appear.
This he did not do. Accordingly,
the Respondents did not appear
to the summons. I do not think
that failure on the part of the
Applicants to endorse their
summons with notice to appear is
so fatal to the application,
that it ought not be heard.
Counsel referred the Court to
(1) Asafu-Adjaye and others vrs:
Agyekum [1984-86] 1 GLR 382, (2)
Luguterah vrs: Northern
Engineering Co. Ltd. [1979] 477.
In Asafu-Adjaye vrs Agyekum, the
Court of Appeal held that an
application under Sections
218(1) (a) of the Companies
Code, seeking a declaration that
the affairs of a company were
being conducted in a manner
oppressive of a director or a
shareholder must be by a writ
setting out the reliefs sought
in the application itself
otherwise it will disclose no
cause of action. Similarly
Taylor J. (as he then was) said
in obiter in Luguterah vrs
Northern Engineering Co. Ltd.,
that "since actions to enforce
any right under the Companies
Code 1963(Act 179) had not been
specifically provided for in the
High Court (Civil Procedure)
Rules 1954 (L.N.140A) the proper
procedure to enforce such a
right, should not be by
originating motion on notice,
but by a writ of summons by
virtue of Order 2 rule 1 under
which commencement of civil
proceedings have been
mandatorily and specifically
provided".
There are other views
contradicting that of the Court
of Appeal and Taylor J. In
Okudjeto and others vrs: Irani
Brothers and others (1974) 1 GLR
374, Hayfron-Benjamin J. (as he
then was) said at page 378 that
"it seems to me that an
application under S.220 of the
Companies Code ought properly to
be brought by originating notice
of motion". Again in Peoples
Popular Party vrs: Attorney
General (1971) 1 GLR 138 at 145.
Mr. Justice Hayfron-Benjamin
confronted with a similar
procedural difficulty commented
as follows ... "it is however a
rule of practice that where a
statute provides for an
application to the Court without
specifying the form in which it
is to be made, and the normal
rules of Court do not expressly
provide for any special
procedure, such applications may
be made by an originating
motion". The Learned Judge
relied on the English case of
Re: Meister Lucius and Bruning
Ltd. W.N. 390 and gave further
direction on the issue in these
words "The notice of motion must
be intituled in the matter of
the Act under which the
application is made, it must
state clearly the order or
relief sought and must further
state the grounds of the
application".
There is no doubt in my mind
that where a judge is confronted
with two opposing views on a
matter, one binding and the
other persuasive, the judge must
clearly opt for one and give
reasons for refusing to follow
the binding authority. It is
absolutely clear that the
Companies Code did not make any
provisions for commencing an
action of the nature before me
and therefore the normal rules
of procedure should apply. To
commence an action of this
nature under Order 2 rule 1 will
certainly defeat the requirement
of urgency underlying the
application. An action commenced
by a writ of summons will mature
for hearing earliest, after six
weeks for directions to be taken
unless interlocutory
applications are made. An
originating motion on notice,
will upon service disclose the
identity of the parties, the
statute under which the
application is brought, the
reliefs sought and the evidence
at the disposal of the parties
on the return date. Where time
is of the essence this mode is
the preferred one.
The use of form No. 2 Appendix K
requires that the necessary
modifications are made in the
form so as to raise a distinct
and or a reasonable cause of
action. Form No. 2 when used
also requires an endorsement for
appearance. The Applicants
faulted on this as well. Even
though I consider the notice to
appear to be technical and
notwithstanding the
technicality, can it be said
that the Respondents have not
appeared to the summons. The
answer is in the affirmative and
indeed the Respondents have
proceeded further in the trial
by answering particulars in the
summons and as it were, raising
a defence to the claim.
Again the endorsement in respect
of the names and addresses of
the Applicants though defective,
counsel for the Respondents was
able to identify them and in
particular singled out the 2nd
Applicants Stingray Limited and
a deposition by Mr. Richard
Kwame Peprah, Minister of
Finance in the Republic of Ghana
and Chairman of the Board of
Ashanti admitted that Stingray
Limited holds 212,110 shares
equivalent to 0.2% of Ashanti's
total shares.
The principle of law governing
defective Court process is that,
if the defect is technical in
nature the Court can suo moto
cure the defect or order the
party in default to do so. This
is so because the Court should
not permit technicalities to
defeat the aims of justice. See
Holden 1 in Ghana Ports and
Habours Authority vrs: E.T.S
Kabore Issoufou (1992-93) GBR
24. See also Okofo Estates
Limited vrs: Modern Signs
Limited. Supreme Court of Ghana
Law Reports 224. The two cases
above cited, are decisions of
the Supreme Court and they are
clear on this point. In the
Okofo Estates Ltd. case while
butressing this point, that
Court held that "the wrong
heading of the application for
an order of certiorari could not
in any material manner derogate
from the nature of the
applications itself... what was
more important was whether the
application had any substance
regardless of the form in which
it had been intituled".
It is also material to stress
that any defective process filed
must be addressed timeously and
at the earliest opportunity
before further fresh steps are
taken. See Hooper vrs: Oils and
Fats Co. Ltd. (1992-93) GBR 384.
See also Mumuni vrs: Zakari
(1992) 1 GLR 208. The failure of
the Respondents to invoke the
power of the Court to have the
summons set aside for
irregularity at the earliest
opportunity available, but
proceeded to fight the case by
filing an affidavit in
opposition constitutes in my
view fresh steps, within the
meaning of Order 70 rule 2; and
I rule that the Respondents
cannot now be heard to object.
In respect of the multiple
irregularities committed by the
Applicants, Mr. Kwame Tetteh
further pointed out in great
details the defective nature of
the supporting affidavit, to
wit, the non-marking of the
exhibits and absence of jurat on
the exhibits. I find his
complaints to be genuine and
true but I also find that those
irregularities or defects having
offended Order 38 are equally
technical. Order 38, headed
affidavits and depositions,
regulates the manner and means
by which affidavit evidence is
presented to the Court. As
pieces of evidence, it is left
entirely to the Court to
determine what weight to attach
to the evidence before it,
bearing in mind whether or not
the evidence is credible, and of
course, subject to the hearsay
rules. In taking this position
the Court has cautioned itself
particularly against the hearsay
rule contained in the Evidence
Decree. And in accepting
evidence for trial, a Court must
first assess whether or not the
evidence is relevant to the
trial, if yes then it is
admissible no matter its source.
I view Mr. Jean Claude Gandur's
affidavit evidence in this light
and I say that even though he
did not exhibit ostensible or
express authority to speak on
behalf of the other Applicants
when he was challenged by the
affidavit in opposition, his
evidence once placed before the
Court and having been regularly
notorised deserves to be
considered with or without the
exhibits. In support of this
view, I cannot do more than
quote and associate myself with
the opinion expressed by Roger
Korsah J. in the Court of Appeal
case of the Republic vrs. Accra
Circuit Court. Ex parte Appiah
[1982-83] 1 GLR 129 at 167 where
the Learned judge said … "all
relevant evidence is admissible
except as otherwise provided by
any enactment. Indeed, it has
more than once been laid down
that where papers and other
subjects of evidence are
illegally taken from the
possession of the party against
whom they are offered, or
otherwise unlawfully obtained,
it constitutes no valid
objection to their admissibility
provided they be pertinent to
the issue. For the Court will
not take notice of whether they
were obtained lawfully or
unlawfully, nor will it raise an
issue to determine that
question".
In the circumstances I am unable
to strike out the 25 paragraphs
or so as demanded by the
Respondents. The power to strike
out affidavits for being
argumentative or containing
hearsay matters, or being
unnecessarily prolix is
discretionary and it is my
further view that where the
exercise of that discretion will
completely render the case of a
litigant meaningless, the
justice of the matter shall
require that the discretion is
exercised with the greatest of
caution. In any case, the
Respondents having reacted to
the affidavit in detail cannot
be heard now to complain, having
failed to raise a preliminary
objection at the earliest
opportunity. On the whole I
consider the various
irregularities not fatal to the
action, and being curable, I
shall invoke Order 70 to do
exactly that.
I must fail in my duties as a
Justice of the High Court, if I
do not comment on the attitude
of Mr. Tony Lithur in settling
these pleadings. Mr. Lithur's
approach has rather been
carefree and he has exhibited
some degree of levity. His
reference to Exhibits as "a
bundle or cluster" and/or his
failure to mark exhibits
properly and serially is most
unacceptable in legal practice.
The Court on one occasion had to
remark the processes so as to be
meaningful. It is noted that
there was a real urgency for
this application but it is my
view that it should not
constitute a justification for
not upholding professional
standards.
Having concluded with procedural
matters, I shall proceed to
consider the substantive
application before me. The
application was brought under
Section 162 of the Companies
Code and I quote fully that
section.
"S162 (1) if for any reason it
is impracticable to call a
meeting of a company in any
manner in which meetings of that
company may be called, or to
conduct the meeting of the
company in the manner prescribed
by the Regulations or this Code,
the Court may, on the
application of any director or
member of the company, or the
Registrar order a meeting of the
company to be called, held and
conducted in such manner as the
Court thinks fit; and where any
such order is made may give such
ancillary or consequential
directions as it thinks
expedient.
(2) Any meeting called, held and
conducted in accordance with an
order under the foregoing
subsection shall for all
purposes be deemed to be a
meeting of the company duly
called, held and conducted".
The Section itself gives power
to the Court to make an order
for a meeting and contains the
ingredients or conditions for
making such an order. The
conditions are; (1) It must be
impracticable to call a meeting;
(2) And/or to conduct the
meeting of the Company in the
manner prescribed by the
Regulations or this Code.
Section 162 further identifies
persons who are entitled to come
to Court for the order. These
are Any Director, or member of
the Company or the Registrar. To
fit into the purview of Section
162, the Applicants claim they
are members and that it is
impracticable to call a meeting.
That meeting to all intents and
purposes is an extraordinary
general meeting. The Annual
General Meeting has been
provided for in Section 149(1)
and any general meeting convened
for consideration of resolutions
at which members are entitled to
attend and vote is held to be an
extraordinary general meeting.
The membership of a Company is
defined in Section 30 which
deemed subscribers to the
Regulations to be members and
whose names should be entered
into the register of members and
thereupon by Section 30(2) those
in the register "shall be
members of the Company". Section
32(1) is mandatory for the
express words used in it. Every
company shall keep in Ghana, a
register of its members and
enter therein the names and
addresses of members. The
Register of members according to
Section 36, shall be prima facie
evidence of any matters by this
Code directed or authorised to
be inserted therein. In other
words, the contents of the
register is prima facie evidence
of membership. Where a matter is
prima facie evidence, it does
not require further proof
according to our Evidence
Decree. The burden of proof then
shifts on to the party
challenging the prima facie
evidence. This legal position is
clearly reflected in Sections 19
and 20 of the Evidence Decree.
In these proceedings, the
Respondents have challenged the
membership of all the Applicants
except that of Stringray Ltd.
who according to Mr. Richard
Kwame Peprah, are holders of
212,100 shares. A solemn
confession of this nature, under
oath is binding on the
Respondents. I therefore, hold
that Stringray Ltd., the 2nd
Applicants herein, are members
and therefore qualify, subject
to the other conditions
contained in Section l62 to
bring this action against the
Respondents.
As already stated the burden
having shifted onto the other
applicants to prove their
membership of Ashanti, they were
under obligation to satisfy the
Court that notwithstanding the
absence of their names in the
register, they are members. I
have studied closely the
Exhibits filed and particularly,
extracts from the Ashanti
Register kept at Barclays Bank
of Ghana, and that kept at
Jersey and I am persuaded to
conclude that the other
Applicants have not been able to
produce the requisite evidence
to establish that as at the
commencement of this action they
were members of Ashanti.
I must however recognize the
evidence, also overwhelming that
as at 30/12/98, the 1st
Applicants Adryx Mining and
Metals Ltd. were members of
Ashanti and had a total shares
of 2,142,540 per Ashanti share
certificates no. 0007135 and
0007136 in Exhibits EAK4 and
EAK5. The shares were fully paid
ordinary shares of no par value.
From Exhibit EAK2, an extract
from Ashanti's International
share register, Adryx made
certain transactions in respect
of those shares and finally on
28/4/99, the shares were
transferred to James Capel
Nominees Ltd.
From Counsel's submissions, I am
left in no doubt that the 1st
Applicants subscribed to the
Global Depositary Systems, a
system in which shares are
transferred to Nominees who deal
with the shares on the
instructions of the holder. In
the case of 1st Applicants, the
shares were actually transferred
and registered in the nominee's
name in the International Share
Register. The legal effect of
that transaction is to make the
nominee owner. There may well be
an agreement regulating the
conduct of such a transferee and
transferor but I do not think
that the legal position should
be different from what I have
stated.
This Court subpoened the
Managing Director of the Ghana
Stock Exchange as well as the
Acting Registrar of Ashanti in
Ghana. Their Evidence on the
operation of the Global
Depository systems is clear and
unambiguous. The nominee in
fact, transacts all business
concerning the shares acquired
in his own name and gives to the
beneficiary, global depository
receipts for his interest in the
shares. Indeed, according to Mr.
Yeboah Amoah who is a lawyer by
profession, ownership in the
shares is vested in the nominee.
The nominee however, pays the
dividends declared, less his
commission to the beneficiary.
Notices of meetings are
forwarded to the nominee who in
turn take instructions from the
Global Depository Receipt
holder. There is evidence that
for Ashanti to enter into some
European or American markets, it
was mandatory for her to
subscribe to the system in
conformity with the regulations
of those countries. I have
studied the Ashanti Global
offering dated 14/3/94 in which
Ashanti on page 95 referred to
the Global Depository securities
as basis of its international
offer. I have carefully
considered the international
repercussions to my conclusions
and I am of the firm view that
having regard to Ghanaian law,
which is the applicable law,
there is no doubt in my mind
that a particular name in the
register of a Ghanaian Company,
is the legal owner of shares
acquired in the Ghanaian
company.
Having declared the 2nd
Applicants as members of
Ashanti, I shall proceed now to
consider the meaning of the
phrase "impracticable to call a
meeting". The word
"impracticable" has received
judicial interpretation in other
Courts exercising analogous
jurisdiction as ours and both
Counsel have been good enough to
furnish me with authorities on
the subject. In the Edinburgh
Workmen's Houses Improvement
Company [1935] Session cases 56,
where the Scottish Court of
Session faced with the same
wording, ordered a meeting of
the company for special
resolutions to be proposed and
passed, the facts disclose that
between 1875 and 1996, the
Company had purchased certain of
its own shares which was ultra
vires of the Company to do. Two
Extraordinary General Meetings
of the company were convened to
be held the same day for the
purpose of considering and
passing special resolutions. The
quorum necessary for the
transaction of business at these
meetings was thirteen
shareholders. Only two
shareholders were in fact
present at the meetings but they
proceeded to pass the
resolutions. All the proxies
received, 21 in number were in
favour of the second resolution.
The Petitioner prayed the Court
to order a meeting to consider
the resolutions and that the
necessary quorum should be only
5 shareholders personally
present. In Re: Whitchurch
Insurance Consultants Ltd.
[1993] BCLC 1359, the two
directors were husband and wife
whose personal and business
relationship had broken down and
therefore, the two could not
meet at an extraordinary general
meeting to consider a resolution
removing the wife as a director.
The Court held that it was
impracticable to convene a
meeting.
In Re: El Sanbrero Ltd. [1958] 3
Ch 900, the Applicants first
summoned a meeting when it was
frustrated that they went to
Court for the order. In Havard
vrs: Leech [1967] 2 NZCLC
100,077, the Applicant first
requisitioned a meeting but the
1st Co-Shareholder Director was
not interested so the Applicant
went to Court for the order.
Again, in Re: Funeral Houses
Ltd. [1957] 7 DLR 642, the
Ontario Court of Appeal
dismissed the application
because the Applicant failed to
convene an EGM first. Of all the
authorities cited, it is noted,
the only occasion the Court
ordered an EGM without first
convening one, is the case of
Re: Edinburgh Workmen's Houses
Improvement Company, and I shall
comment on this position in due
course.
It has been urged before me that
the words in Section 162 must be
given their natural meaning and
that if the law maker had wanted
a condition precedent to exist
before an application for the
Court order, the law maker would
have stated so clearly.
In interpreting provisions of
statutes, the law requires a
Judge faced with difficulties to
resort to textbooks and/or
memorandum attached to the bill,
which I must say does not form
part of the text to be
interpreted. Fortunately for us,
Professor Gower who was
commissioned in 1958 to draft
our Companies Code submitted a
report popularly referred to in
legal circles as the Gower
Report. I shall refer to his
comments on Section 162 before
coming to my conclusions.
This is what Professor Gower
said on page 120 of his report
and I shall quote it in extenso.
"This section is based on
Section 135 of the English Act
with certain changes.
Under the English Act, only
directors and members entitled
to vote at the meeting can apply
to the Court. This seems a
pointless restriction in view of
the fact that under the English
Act, the Court may act on its
own motion - though it is
difficult to envisage its doing
so. Clearly, the Court cannot
act unless someone draws the
matter to its attention and
there seems to be every reason
for allowing this to be done by
as wide a range of persons as
possible. Hence I have allowed
any member to apply and also the
Registrar". [emphasis mine]
From the foregoing, it is my
opinion that Professor Gower
wanted Ghana to depart from the
English tradition and create new
avenues for ourselves. He indeed
recognised the power of the
Court to order a meeting but
realised how preposterious it
will appear if a Court on its
own makes an order to convene an
EGM. He added that he wanted the
Applicants for the order "to be
done by as wide a range of
persons as possible" and the
applicant could be "any member"
to quote his words. My
conclusion therefore is, that a
member qua member can apply for
the order. There are no
qualifications attached to the
membership. I shall accordingly
reject the argument that for an
Applicant to come before this
Court for this relief, he must
qualify in terms of Section 271
to call or requisition an
extraordinary general meeting.
In my view, a qualification of
this nature would have been
added to the text simply by
words such as "subject to the
qualification contained in
Section 271 a member may apply
to the Court"….
As already stated, I have noted
that out of the five cases cited
for my consideration in the
interpretation of the word
"impracticable", there was only
one case in which an EGM was not
convened first, before seeking
the order. In line with my
previous conclusion that a
member need not be qualified to
call an EGM under Section 271
before applying for this order,
I hold further that
"impracticable" used in Section
162 of the Code need not
necessarily be given a
restrictive meaning, limited
only and associated with a
failure to convene an EGM. I am
of the view that the word must
be interpreted liberally to give
effect to its natural meaning.
Impracticable means incapable of
being done according to Chambers
21st Century Dictionary. Where
words are very clear, they are
not allowed secondary meanings.
In Tuffour vrs: Attorney General
[1980] GLR 637, the Supreme
Court said that the duty of the
Court in interpreting the
provisions of Article 128(8) and
(9) was to take the words as
they stood and to give them
their true construction having
regard to the language of the
provisions of the Constitution,
always preferring the natural
meaning of the words involved,
but nonetheless giving the words
their appropriate construction
according to the context".
I am fortified in the stand I
have taken by the view and
decision of Harman J. in Paragon
Group Ltd. vrs: Burnell [1990] 3
AER 923, where under the normal
rules of civil procedure
substituted service could be
ordered if "it appears to the
Court that it is impracticable
for any reason to serve the
document in the manner
prescribed". The Learned Judge
was of the view that
impracticable was a practical
matter. The attention of the
Judge was drawn to the same word
used in the Companies Act of
1948, and the decision reached
in Re: EL Sombrero Ltd. already
cited herein. Harman J. went
further in the Paragon Group
case to consider Re: Conan
Doyles Will Trusts, Harwood vrs:
Fides Union Fiduciare [1971] 2
All ER 1377, where Goulding J.
held ... "the requirement ...
that personal service must be
shown to be impracticable for
one reason or another has to be
tested according to the
circumstances of any particular
case at the time when the
request for an order for
substituted service is made".
The judge continued "if it
appears probable from the
evidence, personal service
cannot be effected until early
in May, it will not be possible
for the Plaintiff to bring the
Defendant before the Court in
time for the Court to consider
whether or not to restrain the
projected sale by tender".
Finally, I shall refer to Harman
and another vrs: BML Group Ltd.
[1994] 2 BCLC 674. I will for
clarity reproduce the facts as
fully reported. A company's
share capital was divided into A
and B shares. The B shares being
registered in the name of B. H
and M held a majority of the A
shares. Under an agreement
entered into by the holders of
A and B shares, it was provided,
inter alia, that a meeting of
shareholders could not quorate
unless a B shareholder or proxy
was present. H and M applied for
an order under Section 371 of
the Companies Act 1985 (similar
to our Section 162) that a
meeting of shareholders be
summoned. The judge ordered that
a meeting of the Company be held
whereat any two members of the
Company do constitute a quorum
of the members of the Company.
On appeal, the decision was
reversed for the reason that
Section 371 was never intended
to permit a meeting to be
summoned which would have the
effect of overriding a class
right. That decision in my
opinion was reversed not because
the Applicants had first omitted
to call a meeting. It was
reversed to give effect to the
agreement entered into by the
holders of A and B shares.
In the judgment of Dillon LJ on
page 677 of the report, the
Learned Judge expressed views
which are relevant to the
present case before me and I
shall quote again in extenso:
"There are statutory antecedents
going back to the Companies Act
1862. The wording of the Section
is wide. The sort of
circumstances in which it was
commonly invoked so far as my
experience goes up until 1958,
were where for instance a
company with a large number of
shareholders or members had
failed to comply with provisions
of the articles as to the
retirement of directors by
rotation and thus by the
operation of the rule in Re
Consolidated Nickel Mines Ltd.
[1914] 1 Ch. 883 suddenly found,
contrary to its belief that it
had no directors and it was
necessary to have directors
appointed. Other circumstances
would be where the company share
register and records of its
members had been destroyed by
wartime bombing or in a fire, a
meeting was necessary to
resurrect membership of the
company and carry out the
necessary formalities until that
could be done. Equally there
could be a case where, under the
articles, notices of meetings
had to be given to overseas
shareholders and there were
hostilities in foreign parts
which prevented that being done
and that could have prevented
meetings being validly convened.
So other directions could be
given by the Court".
These antecedents of the English
Section 371 of the Companies
Act, 1985 which corresponds with
our Section 162 should and ought
to remove all doubts as to the
circumstances in which the order
could be made.
This action was commenced
against Ashanti by name. Mr.
Kwame Tetteh took a late
objection to it, after the
conclusion of the arguments for
the applicants. I agree
entirely that in an action
against the Company, it is
proper to make the Directors,
Respondents as well; the Company
being a legal person can be sued
and can sue. In applying this
principle in Salomon vrs:
Salomon [1897] 2 AC 22, it is
instructive to stress that as a
legal person distinct from the
persons of the Directors, the
Company can be sued in its name.
The Directors were at liberty to
join the action if they felt
that the issues before the Court
required their joinder. Since
the Directors are not parties,
matters raised before me which
will necessarily require answers
from such Directors will be
ignored, as a determination
thereon will sin against the
audi alteram partem rule. I
shall accordingly refuse to
consider whether Mr. Sam Jonah,
Ashanti's Chief Executive said
he was reckless or not in the
Ashanti's hedging arrangements.
Arising out of this view, I have
to restate the legal position
that though the Directors are
not parties herein, orders made
in respect of Ashanti must be
obeyed by the Directors and
every officer, since Ashanti
operates and acts through such
officers.
Have the Applicants established
that convening an EGM is
impracticable. There is evidence
that Ashanti is in deep
financial crises. The
Respondents have admitted it.
Value of shares have tumbled
from US$20.00 to $3.30 a share.
The original hedging problem
according to Counsel, has
emcompassed the whole financial
base of the company. Ashanti
intends to take a loan to
survive and it is the view of
the Applicants that such a loan
if acquired will place the
fortunes of the company in the
hands of the Banks. The loan
will also further reduce the
share value of Ashanti. The
Applicants believe the present
Board as constituted cannot
handle the crises even though
the Respondents claim to be
skilful and competent. These and
other concerns of the Applicants
articulated in this Court must
be considered by the Court.
Counsel for the Respondents has
argued that the Court has no
business running Ashanti. That
is of course true. Judges are
not businessmen and therefore
cannot pretend to be running any
business concern. A shareholder
has expressed reservations about
how competently a company he has
sunk in his money is being run
and I believe, he ought to be
heard and given the appropriate
forum to address his concerns.
That forum in my view is the EGM.
According to the Applicants, it
is this same Board that is
handling the crises and since
they claim they are competent,
the Directors may not be too
keen to convene an EGM. In any
case, the Directors may not
convene an EGM at all as
provisions have been made for an
AGM on 26/4/2000. In my view, as
a distressed company requiring
assistance now and urgently,
Ashanti may not be Ashanti as
known today by 26/4/2000 if the
present crises continues without
a shift in policy. I find as a
fact based on the foregoing that
it is impracticable to call a
meeting of Ashanti in any manner
in which meetings of that
company may be called and
pursuant to the powers vested in
the High Court under Section 162
of the Companies Code, I order
that an Extraordinary General
Meeting of Ashanti be called and
convened in Accra within 21 days
hereof to consider the following
resolution.
1. A resolution that the
existing Board of Directors be
removed and the election of a
new Board.
It is my further view that an
injunction in the form prayed
for, is likely to clog the
smooth operations of Ashanti if
granted; that application is
refused accordingly. However,
since the Applicants have
expressed grave concern over
Ashanti's present net debt which
stood at US$460.5 million at the
end of September 1999, I shall
restrain the Board of Directors
or any officer of Ashanti from
contracting any loan or
executing any instrument which
will impose any financial
obligations until the EGM is
convened. Consequential orders
will be made in consultation
with both Counsel and the
parties. Ordered accordingly.
(sgd.) R. K. APALOO
JUSTICE OF THE HIGH COURT
COUNSEL
MR. TONY LITUHR FOR APPLICANTS,
WITH HIM MIRIAM BREW
MR. KWAME TETTEH FOR
RESPONDENTS, WITH HIM MR. BEYUO,
AMENUVOR AND FORSON |