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JUDGMENT
GBADEGBE, JA.
The judgment of the
court was read by Gbadegbe J.A. at the invitation of
Baddoo J. A.
My lords, the question
with which we are concerned in these proceedings in my
view turns upon the determination of a simple question
which may be posed thus: Was the Applicant/Respondent
entitled to be allotted the l0% shares contained in a
special resolution by the 3rd Defendant/Appellant
company dated 3rd August 1986? There is no doubt that
this question essentially was the main plank of the
controversy at the trial with the other reliefs
dependent upon its resolution in that it raised the
question whether the applicant (respondent herein) was a
member of the said company within the intendment of
Section 30 of the companies Code, Act 179?
At the trial, while the
applicant contended that he was, the respondent
contended to the contrary. At the end of the trial, the
learned trial judge in his delivery, the subject matter
of these proceedings, made a determination in favour of
the respondent herein that he was entitled to the title
in the said shares and further ordered that the
respondent issue him with a share certificate in respect
of the said shares. Following the said delivery,
appellant lodged on onslaught against the judgment by
filing a notice of appeal to this court on the following
grounds:
(1) that the judgment
was against the affidavit evidence tendered by the
parties.
(2) The judge erred in
law by giving judgment for the applicant/respondent when
the whole case was based on estoppel contrary to the
well-established rule that no cause of action can be
founded on estoppel.
(3) The learned trial
judge wrongly shifted the burden of proof on the
respondent/appellant.
I wish first of all to
refer to the submission urged on us by the appellants
through their counsel on the issue of estoppel; I think
that the said point actually missed the real nature of
the applicant's case. It would appear that the use of
the word estoppel was in relation to the denials of the
appellants of their own prior acts one which arises in
the realms of evidence, the effect of which is that a
party is precluded from denying the bounden effect of
his prior acts. I think that although much time and
effort was put in the submissions on the said point, it
is clear from a careful reading of the entire
proceedings that the action which originated before the
trial court by means of a notice of motion was not based
on estoppel but rather the unequivocal acts of the
company the effect of which if I understand the
respondent's case is that, the appellant cannot having
regard to the consequences which the law places on them
be enabled to reside therefrom. Accordingly, the point
based on the said estoppe is dismissed as a
misconception. I hope that in dismissing the said ground
in comparatively few words, I shall not be taken to be
disrespectful to the arguments submitted to us on the
same.
I now turn to the main
issue for determination in these proceedings and have
come to the view that the judgment of the trial judge,
the subject matter of this appeal was right in all the
circumstances of the case. As stated earlier on, the
main point which fell before the trial court to decided
was whether the respondent herein was entitled to the
shares allotted to him by the special resolution of the
company dated 3rd August 1986? In considering this
question in my opinion, it is important to consider the
subsequent steps taken on the said resolution. In
particular the following acts may be noted.
(1) the filing of CAM1,
a copy of the special resolution registered under
section 176 of the companies code,
(2) the filing of
Exhibit CAM2 under section 43 of the companies code by
which the alteration in the shareholding of the company
was notified to the Registrar of companies,
(3) the filing of CAM
3, an alteration in the stated capital of the company
under section 66 of the companies code.
These acts were all
statutory steps taken under the companies code and filed
before the Registrar companies on 3rd August 1987 the
regularity of which has not been raised either in this
court or the court below. In my thinking, by their
combined effect, the title of the respondent herein to
the shares allotted to him was completed and he was
therefore at the date when he made a demand on the
respondents to have the share certificate issued to him
right in so doing. As can be discerned from the
authorities on the issue of allotment and the same
subsequently entitling the allottee to the issue of the
shares, what is important is to look at the intention of
the parties from the surrounding circumstances of the
case. Indeed in the Ghanaian case of Conte v. Kpeglo
[1964] GLR 643 311 Ollennu JSC (as he then was) quoting
from SPITZEN v. CHINESE CORPORATION LTD. (1889) 80 LT
347 @ 351 had this to say at 315:
"In the first place, I
have to consider what meaning is to be attached to these
words (allotment and issue). First of all, what is on
allotment of shares? Brooding speaking, it is on
appropriation by the directors or the managing body of
the company of shares to a particular person. The legal
effect of the appropriation depends on the
circumstances. Thus it may be an offer of shares to the
allottee or it may be an acceptance of an application
for shares by the allottee, but of itself the allotment
does not necessarily create the status of membership.
The allotment may be, and probably generally [where it
is an offer] such as to give title in the shares the
moment the allottee communicates his acceptance of it to
the company whose directors make the allotment; but it
seems to me that the allotment may be subject to a
condition as for example, that the allottee should not
only indicate acceptance, but perform same other act,
such as payment of a sum of money. In other words, I
think that the company may offer specified shares to A.B
on the terms that the titles of A.B should not arise
until he has paid a sum of money to the company and this
being so a contract may provide, as I think that the
allotment shall be subject to conditions”.
Again, in Halsbury's
Laws of England volume 7, 4th Ed. Para 368 @ 264, the
learned authors writing on this same point provide
substantially to the same effect as follows:
"The term issue of
shares is also used in connection with shares which are
signed for by the signatories to the memorandum are
issued when the company is registered. As regards other
shares, when a person who has agreed to take shares is
entered in the register as a shareholder, the shares
have been issued to him although he has not obtained the
share certificate. But a resolution to allot shares is
not necessarily the issue of them, and the term seems to
mean allotment followed by registration or possibly some
other act, distinct from allotment whereby the title of
the allottee becomes complete" see Halsbury's 4th
Edition vol. 7(1) Reissue Para. 425 @ 279 (2) CLARK'S
case (1878) 8 Ch. D 365.
(1) POOL'S case (1887)
35 Ch. D. 579.
I have upon a careful
reading of the above statements come the view that they
apply equally to the Ghanaian situation particular in
view of section 30 of the Companies code, which describe
who a member of a company is. It is important in my
opinion for their purpose to refer in particular to
section 30 (2) which reads:
"Every other person who
agrees with the company to become a member of the
company and whose name is entered in the register of
members shall be a member of the company"
I think that by the
acts evidenced in these proceedings as Exhibits CAM1,
CAM2 and CAM3, if the special resolution of 3/8/86 was
not ultra vires the company within the provisions of
section 22(b) of the companies code, then the allottee
by these subsequent steps taken on the said resolution,
has thereby become a member of the company. In
particular, I wish to say that by filing the particulars
of the said special resolution which had the effect of
amending the regulation of the company the allottee had
constituted thereby in his favour, a binding contract
between him and the company within the provision of
section 21 of the companies code, Act 179. To my mind,
the effect of the said act in particular in terms of its
consequence is one which the respondents cannot lightly
displace as they sought to do in the court below. I have
examined the record of proceedings as well as the points
which were taken by the appellants and I do not think
that they raise the question of the said special
resolution being ultra vires, therefore I am of the
thinking that the allottee namely the respondent herein
had his title to the said shares completed and or
perfected in his favour. I wish to say that whiles the
appellants herein do not deny that the shares were paid
for their concern is that they were not paid for by the
respondent. In my view, the said point is not one which
was credibly taken having regard to the fact that
section 36 of the code provides to the following effect:
"the register of members shall be prima facie evidence
of any matters in this code directed or authorized to be
inserted therein". From the said provision, it is clear
that the entries contained in CAM2 and CAM3 in
particular that the shares have been paid for is
decisive of the company having received the
consideration for the allotment and I do not think that
the bare denial by one of the allottees in that they did
not pay for them operates to defect the legal
consequence of the said unequivocal acts done by the
company of which he is a director. I also venture to
say that the said unequivocal act, operate to defeat the
situation provided for in section 42(2) of the code
which specifically provides that where shares are issued
otherwise than wholly in cash, the company shall deliver
to the Registrar of Companies for registration a copy of
the said agreement duly stamped embodying the true value
of the consideration to be provided by the person in
whose favour the said shares have been issued.
Speaking for myself, I
think that the fact that in filing CA 1, the company did
not do this means as that it is indeed true that the
shares were paid for. It is important to ask whether the
company would have taken the steps evidenced by CAM1,
CAM2 and CAM3 if the condition attached to the allotment
was not met by the allottee? I do not think so; I think
on the contrary these acts provide evidence that the
conditions (if any) attached to the allotment have been
satisfied. I also do not think that the mere fact that
the returns were not filed within the period provided
affects it subsequent registration as was contended for
by counsel for the appellant at the trial below. I am of
the opinion that since the transaction relating to the
shares as can be discerned from CAM2 was expressed to be
in cash, the company was not obliged to comply with
section 42(2) in terms of the 28 days provided for the
registration of the agreement, it being applicable to
non-cash transactions in respect of shares. On the
contrary, in my opinion if anything having regard to the
fact that the stated capital of the company was
increased and or raised by the cumulative effect of the
said exhibits if there was a default in satisfying
section 66(2) of the code by not having the particulars
thereof registered within 28 days this by itself does
not defeat the shares so issued but the registrar of
Companies may apply, the sanction provided for in
section 66(3) for as long as the default continued.
In my judgment
therefore the instant appeal fails and the judgment of
the learned trial judge is affirmed together with the
order declaring title to the said shares in the
respondent as well as the order that the respondents
issue a certificate to him in respect of the said
shares. I would however, having regard to the powers of
this Court by virtue of rules 32 of CI. 19 wish to vary
the order made upon the respondent by directing that the
certificate to, be issued by them be done within 30 days
from today I think that having regard to the
circumstances of this case it is desirable that the
respondent be given a time limit within which to comply
with the order relating to the issue of the share
certificate and it is so ordered.
N.S. GBADEGBE
JUSTICE OF APPEAL
COUNSEL
DR. SETH OWUSU FOR THE
APPELLANT
MR. AMARKAI AMERTEFIO
FOR THE RESPONDENT |
