THE NEW COMPANIES ACT, 2019 It is now easier to get a camel to pass through the eye of a needle than to become a director of a company in Ghana.

On Friday, 2nd August, 2019, Nana Addo Danquah Akufo Addo, the President of Ghana, signed the country’s new Companies Act, 2019 (Act 992) into law. This new law has introduced quite a number of changes in the way companies are run. One such new provision introduced into the law relates to the requirements the proposed director has to meet before the RegistrarGeneral will so appoint him/ her. Any person who is intended to be appointed as a director of a company in Ghana must do all the following:

Requirements for appointment as director
Firstly, the proposed director must fill the application forms to register the company.

Secondly, each proposed director shall add a statutory declaration to the application forms. The statutory declaration shall indicate that within the past 5 years, the intended director has not (1) been charged with or convicted of a criminal offence involving fraud or dishonesty, or (2) relating to the promotion, incorporation or management of a company; or (3) been a director or senior manager of a company that has become insolvent through the culpable activities of that director. If the intended director has been director or senior manager of a company that has become insolvent within the last 5 years, then he/she must state the date of the insolvency and the name of the company.

Thirdly, the person must give a written consent to be a director and file it with the Registrar within 28 days.

In addition to the above, the law restates the provisions were in the old law regarding capacity.

The main difficulty that prospective directors face under the new Act, however, are the stringent requirements to be set forth and met in the statutory declaration. From the tenor of the new law, even if someone has been merely charged with a criminal offence involving fraud or dishonesty or relating to the promotion, incorporation or management of a company but has not been or was not convicted within the five years immediately prior to the application to register the company, that person will be still disqualified.

It is difficult to understand how a person who has merely been charged with an offence but not proven guilty could be disqualified from appointment as a director. I submit that this provision runs counter to Article 19(2)(c) of the 1992 Constitution which provides that a person charged with a criminal offence shall be presumed to be innocent until he is proved or has pleaded guilty. However, since no court has struck down this obnoxious provision yet, prospective directors must beware if they satisfy this provision.

Under this new law, a significant number of the senior managers and directors of the collapsed banks, finance houses, microfinance companies and fund management companies are bound to be disqualified from applying to be directors of companies. It will not matter whether they have been charged with or convicted of a criminal offence. To say such an outcome would be perverse would be charitable. I dare say that in the very near future, getting competent directors to sit on boards of companies in Ghana will be extremely difficult.

It bears stating that in my research on similar laws in the United States, United Kingdom, South Africa, India and Nigeria, none of those countries has a provision that disqualifies a person from becoming a director of a company just because he has been “charged” with a criminal offence of any type. The question is: why did Parliament pass a law with such an obnoxious provision?

Conclusion
In the light of the above, all prospective directors must apprise themselves of the new law before they begin the process to become directors. It is the expectation that Parliament and/the courts will take a second look at the provisions and make the necessary changes.

ABOUT THE WRITER

Francisca Serwaa Boateng is the Founder & Managing Counsel of FSB Law Consult.

Contact: francisca@fsblawconsult.com | Tel: 0302818433/0208195042 | www.fsblawconsult.com

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