ADRYX MINING AND METALS LTD AND OTHERS vs. ASHANTI GOLDFIELDS CO LTD [1999-2000] 2 GLR 758

CASES REFERRED TO

(1) Asafu-Adjaye v Agyekum [1984-86] 1 GLR 382, CA.

(2) Luguterah v Northern Engineering Co Ltd [1979] GLR 477.

(3) Okudjeto v Irani Brothers [1974] 1 GLR 374.

(4) People’s Popular Party v Attorney-General [1971] 1 GLR 138.

(5) Meister Lucius and Bruning Ltd, Re [1914] WN 390; 31 TLR 28; 59 SJ 25.

(6) Ghana Ports and Harbours Authority v Issoufou [1992-93] GLR 24; sub nom Ghana Ports and Harbours Authority v ETS Kabore Issoufou [1992-93] GbR 24, SC.

(7) Okofoh Estates Ltd v Modern Signs Ltd [1996-97] SC GLR 224.

(8) Oils & Fats Co Ltd v Hooper [1992-93] GLR 326; sub nom Hooper v Oils & Fats Co Ltd [1992-93] GBR 384, CA.

(9) Mumuni v Zakaria [1992] 1 GLR 208.

[p.764] of [1999-2000] 2 GLR 758 (10) Republic v Accra Circuit Court; Ex parte Appiah [1982-83] 1 GLR 129, CA.

(11) Edinburgh Workmen’s Houses Improvement Co, Re [1935] SC 56; [1934] SLT 513. (12) Whitchurch Insurance Consultants Ltd, Re [1993] BCLC 1359.

(13) El Sonbrero Ltd, Re [1958] Ch 900; [1958] 3 WLR 349; [1958] 3 All ER 1.

(14) Havard v Leech [1967] 2 NZCLC 100.

(15) Morris Funeral Service Ltd, Re [1957] 7 DLR (2d) 642.

(16) Tuffour v Attorney-General [1980] GLR 637, SC.

(17) Paragon Group Ltd v Burnell [1990] 3 All ER 923.

(18) Conan Doyle’s Wills Trusts, Re; Harwood v Fides Union Fiduciaire Ch 982; [1971] 2 WLR 1048;

[1971] 2 All ER 1377.

(19) Harman v BML Group Ltd [1994] 2 BCLC 674; [1994] 1 WLR 893, CA.

(20) Salomon and Co Ltd v Salomon [1897] AC 22; 66 LJCh 35; 75 LT 426, HL.

APPLICATION brought under the Companies Code, 1963 (Act 179) for inter alia an order for convening an extraordinary general meeting of the respondent company for the purpose of passing an ordinary resolution for the election of a new board of directors and the removal of the existing board. The facts are sufficiently sated in the judgment.

T Lithur (with him Miriam Brew) for the applicants.

S Kwame Tetteh (with him Beyuo, Amenuvor and Forson) for the respondent company.

Richard Apaloo J. The applicants are in court to invoke the jurisdiction of the High court you 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 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 companys assests.

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(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 companys 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 per cent of the 112,893,000 issued share capital of the respondents. From exhibit JCG1, it is clear that the first and second applicants reside in Luxembourg; the third and fourth applicants who bear the same or similar names reside in New York, USA and the fifth applicant lives in Switzerland.

The respondent company (hereinafter referred to 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 million ordinary shares of no par value and one special rights redeemable preference share of no par value. As at 31 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 per ordinary share but at the close of trading on the New York Stock Exchange on 5 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 share was occasioned as a result of a press release by Ashanti on 5 October 1999, 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

[p.766] of [1999-2000] 2 GLR 758 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 October 1999, it is alleged that Ashanti’s shares stood at US$9.37 giving a market capitalisation of approximately US$11 billion. The resultant fall in the shares left Ashanti with a market capitalisation 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 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 intends 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 five out of a membership of thirteen owe allegiance to Lonmin PLC which has a shareholding of 32 per cent 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 board members are paid employees of Lonmin PLC, who as employee 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

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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 October 1999 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 a 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 and that 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 indorsed on the summons, there is absolutely no mention of the names and addresses of the other applicants in the summons as required under the rules. Instead, the applicants have annexed a document immediately after the

[p.768] of [1999-2000] 2 GLR 758 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 notarised in conformity with Order 38 of the High Court (Civil Procedure) Rules, 1954 (LN 140A). 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 scrutinised 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 Asafu-Adjaye v Agyekum [1984-86] 1 GLR 382, CA. Luguterah v Northern Engineering Co Ltd [1979] GLR 477.

In Asafu-Adjaye v Agyekum (supra) the Court of Appeal held that an application under section 218(1)(a) of Act 179, 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

[p.769] of [1999-2000] 2 GLR 758 then was) said obiter in Luguterah Northern Engineering Co Ltd (supra) that “since actions to enforce any right under Act 179 had not been specifically provided for in LN140A 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, r 1 of LN 140A under which commencement of civil proceedings have been mandatonly and specifically provided.”

There are other views contradicting that of the Court of Appeal and Taylor J (as he then was). In Okudjeto v Irani Brothers [1974] 1 GLR 374 at 378, Hayfron-Benjamin J (as he then was) said that: “It seems to me that an application under section 220 of the Companies Code ought properly to be brought by originating notice of motion.” Again in Peoples Popular Party Attorney-General [1971] 1 GLR 138 at 145, Hayfron-Benjamin J (as he then was) 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 [1914] WN 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, r 1 of LN 140A 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

[p.770] of [1999-2000] 2 GLR 758 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 indorsement 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 second applicants, Stingray Ltd; and a deposition by Mr Richard Kwame Peprah, Minister of Finance of the Republic of Ghana and chairman of the board of Ashanti, admitted that Stingray Ltd holds 212,110 shares equivalent to 0.2 per cent 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 holding(1) in Ghana Ports and Habours Authority v ETS Kabore Issoufou [1992-93] GBR 24, SC; and Okofoh Estates Ltd v Modern Signs Ltd [1996-97] SC GLR 224. The two cases above cited, are decisions of the Supreme Court and they are clear on this point. In the Okofoh Estates Ltd case (supra), while butressing this point, that court held that “the wrong heading of the applica-tion 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 v Oil & Fats Co Ltd [1992-93] GBR 384, CA and also Mumuni v Zakaria [1992] 1

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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, and the fact that he proceeded to fight the case by filing an affidavit in opposition constitute in my view fresh steps within the meaning of Order 70, r 2 of LN 140A; 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 detail 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 of LN 140A are equally technical. Order 38 of LN 140A, 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, 1975 (NRCD 323). 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 notarised, 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 v Accra Circuit Court; Ex parte Appiah [1982-83] 1 GLR 129 at 167, CA 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 are otherwise unlawfully obtained, it constitutes no valid objection to their admissibility provided they be pertinent to the issue. For the court will not

[p.772] of [1999-2000] 2 GLR 758 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 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 of LN 140A 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” or his failure to mark exhibits properly and serially or both 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 Act 179 and I quote fully that section:

“162. (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 of 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.

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(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; or (2) to conduct the meeting of the company in the manner prescribed by the regulations or Act 179 or both. Section 162 of Act 179 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 of Act 179, the applicants claim they are members and that it is impracticable to call a meeting. That meeting to all intent and purposes is an extraordinary general meeting. The annual general meeting has been provided for in section 149(1) of Act 179 and an general meeting convened for consideration of resolutions at which members are entitled to attend and vote is held to be a extraordinary general meeting.

The membership of a company is defined in section 30 of Act 179 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) of Act 179 those in the register “shall” be members of the company. Section 32(1) of Act 179 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 of Act 179, “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 NRCD 323. 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 NRCD 323.

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 second

[p.774] of [1999-2000] 2 GLR 758 applicants herein, are members and therefore qualify, subject to the other conditions contained in section 162 of Act 179, to bring this action against the respondents.

As already stated, the burden having shift 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 recognise the evidence, also overwhelming, that as at 30 December 1998 the first 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 EAKS. 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 of April 1999, the shares were transferred to James Capel Nominees Ltd.

From counsel’s submissions, I am left in no doubt that the first 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 the first 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 the 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 subpoenaed 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

[p.775] of [1999-2000] 2 GLR 758 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 March 1994, 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 second 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 Re Edinburgh Workmen’s Houses Improvement Co [1935] SC 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 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 five 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.

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In Re EI Sonbrero Ltd [1958] Ch 900 the applicants first summoned a meeting and when, he was frustrated, he went to court for the order. In Havard v Leech [1967 2 NZCLC 100 the applicant first requisitioned a meeting but the first co-shareholder director was not interested so the applicant went to court for the order. Again, in Re Morris Funeral Service Ltd [1957] 7 DLR (2d) 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 when an EGM was not first convened before seeking the order, is the case of Re Edinburgh Workmen’s Houses Improvement Co (supra) and I shall comment on this position in due course.

It has been urged before me that the words in section 162 of Act 179 must be given their natural meaning and that if the lawmaker had wanted a condition precedent to exist before an application for the court order, the law maker wuld have stated so clearly. In interpreting provisions of statutes, the law requires a judge faced with difficulties to resort to textbooks or memorandum attached to the bill or both, which I must say does not form part of the text interpreted. Fortunately for us, Professor Gower who was commissioned in 1958 to draft our Act 179 submitted a report, Final Report of the Commission of Enquiry into the Working and Administration of the Present Company Law of Ghana (popularly referred to in legal circles as the Gower Report). I shall refer to his comments on section 162 of Act 179 before coming to my conclusions. This is what Professor Gower said at 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.”

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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 preposterous 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 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 of Act 179 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 of Act 179 before applying for this order, I hold further that “impracticable” used in section 162 of Act 179 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 v Attorney General [1980] GLR 637 at 659-660, the Supreme Court said that “Our first duty of the is to take the words as they stand and 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 v Burnell [1990] 3 All

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ER 923, where under the normal rules of civil procedures 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 (supra). Harman J went further in the Paragon Group case (supra) to consider Re Conan Doyles Will Trusts Re; Harwood v Fides Union Fiduciaire [1971] 2 All ER 1377 at 1379, 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 as 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 v BML Group Ltd [1994] 1 WLR 893, CA. 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 the 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 section 162 of Act 179) 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

[p.779] of [1999-2000] 2 GLR 758 was reversed to give effect to the agreement entered into by the holders of A and B shares.

In the judgment of Dillon LJ at 896 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 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’s share register and records of membership had been destroyed by wartime bombing or in a fire, and a meeting was necessary to resurrect the 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 section 162 of Act 179 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 & Co Ltd v Salomon [1897] AC 22, HL, 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

[p.780] of [1999-2000] 2 GLR 758 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. The value of its shares have tumbled from US$20 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 April 2000. In my view, as a distressed company requiring assistance now and urgently, Ashanti may not be Ashanti as known today by 21 April 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

[p.781] of [1999-2000] 2 GLR 758

High Court under section 162 of Act 179, I order that an extraordinary general meeting of Ashanti be called and convened in Accra within 21 days hereof to consider the following resolution: “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, 1 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.

Application granted in part.

SA