HIGH COURT, ACCRA
DATE: 17 JANUARY 1967
BEFORE: AMISSAH J.A.
CASES REFERRED TO
(1) Farden v. Richter (1889) 23 Q.B.D.124; 58 L.J.Q.B. 244; 60 L.T. 304; 37 W.R. 766.
(2) Hopton v. Robertson [1884] W.N. 77; 23 Q.B.D. 126n.; Bitt. Cha.Cas. 203.
NATURE OF PROCEEDINGS
PRELIMINARY OBJECTION to an application by the personal representatives of a deceased
shareholder under section 217 of the Companies Code, 1963 (Act 179), to have certain acts of the
company declared null and void. The facts are sufficiently stated in the ruling of Amissah J.A. sitting as an additional judge of the High Court.
COUNSEL
E. N. Moore for the applicants.
I. Amissah-Aidoo and S. A. Okudzeto for the respondent company.
A. C. Kuma in person
JUDGMENT OF AMISSAH J. A.
The applicants herein are personal representatives of one Dr. Dimitra Politis who while she lived was the holder of the majority shares in, and one of the two directors of, a company by the name of Plastico Ltd. On 23 December 1966, the applicants obtained an order from this court that the company should rectify its register of members by placing the names of the applicants, obviously in substitution of the late Dr. Politis, on the register. The applicants have now brought this application under section 217 of the Companies Code, 1963 (Act 179), for an order declaring certain acts of the company, or, of the director surviving Dr. Politis, null and void. Mr. Amissah-Aidoo who represents the company and one other respondent to this application has raised the preliminary objection that the applicants qua administrators of the late Dr. Politis have no locus standi to bring this application. The only, and presumably the best authority he has for this proposition is a sentence from Halsbury’s Laws of England (3rd ed.), Vol. 6, p. 256, para. 533, which reads as follows:
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“Although the legal representatives of a deceased member do not become members unless themselves registered, a transfer of the share or other interest of a deceased member by his personal representative is as valid as if he were a member at the time of the execution of the transfer.”
His emphasis was on the words italicised above and originally the learned counsel was prepared in his submission to let the court know only of those words. After a certain amount of inducement he relented but obviously with some reluctance, and read out the remaining part of the sentence on which he relied. Be that as it may, the purpose of reading the truncated portion of this sentence and of emphasising that part when the whole sentence was eventually read, was to convince the court that a personal representative administering an estate of which shares in a company form a part, was not a member of the company until he was registered. Counsel need not have gone as far as delving into the tomes of Halsburyfor the learning that he conveyed to the court. Much nearer home in our own, perhaps less well-known, Companies Code, the position of the personal representative is provided for in a little more detail than in the sentence of Halsbury which the researches of counsel disclosed. Section 99 of the Companies Code, 1963 (Act 179), is as follows:
“99. (1) In the case of the death of a shareholder or debentureholder the survivor or survivors where the deceased was a joint holder, and the legal personal representatives of the deceased where he was a sole holder or last survivor of joint holders, shall be the only persons recognised by the company as shareholders or debentureholders.
(2) A person upon whom the ownership of a share or debenture devolves by reason of his being the legal personal representative, receiver, or trustee in bankruptcy of the holder, or by operation of law may, upon such evidence being produced as the company may properly require, be registered himself as the holder of the share or debenture or transfer the same to some other person and such transfer shall be as valid as if he had been registered as a holder at the time of execution of the transfer:
Provided that the company shall have the same right, if any, to decline registration of a transfer by such person as it would have had in the case of a transfer by the registered holder but shall have no right to refuse registration of the person himself.
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(3) A person upon whom the ownership of a share or debenture devolves by reason of his being the legal personal representative, receiver, or trustee in bankruptcy of the holder, or by operation of law shall, prior to registration of himself or a transferee, be entitled to the same dividends, interest and other advantages as if he were the registered holder and, in the case of a share, to the same rights and remedies as if he were a member of the company, except that he shall not, before being registered as a member in respect of the share, be entitled to attend and vote at any meeting of the company:
Provided that the company may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share or debenture and if the notice is not complied with within ninety days, the company may thereafter suspend payment of all dividends, interest or other moneys payable in respect of the share or debenture until the requirements of the notice have been complied with.”
Neither counsel chose to place before me the reason why the applicants came to court on the earlier occasion for an order for the rectification of the register of members. But it would appear from section 99 (2) quoted above that, upon the production of such evidence as the company may require, a personal representative is entitled to automatic registration as the holder of the shares of the deceased and therefore as a full member of the company. The fact that the applicants obtained an order of the court for the rectification of the register suggests that there had either been an improper refusal to register them or that there had been a default in entering their particulars like their names, their addresses, numbers (if any) of their shares, the amount paid on them and the amount remaining unpaid, the date they were entered on the register as members, and the date when the deceased ceased to be a member, all of which are requirements of section 32 of the Code. Section 35 (1) of the Code, which deals with grounds for an application for the rectification of the register provides that:
“If,
(a) the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or
(b) default is made in entering on the register any of the particulars which, under section 32 of this Code, are required to be entered thereon; the person aggrieved, or any member of the company, or the company, may apply to the Court forrectification of the register.’
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The preliminary objection of counsel and the circumstances shown by the affidavits in this application argue strongly that the application for rectification had been under section 35 (1) (a) rather than (b). The question is whether the company is entitled to take advantage of its own wrong and be allowed successfully to maintain that because it had not done what it should have done, the applicants are not members of the company, and because they are not members, they cannot bring this application against the company because the right to do so is exclusively reserved to members, a qualification which the applicants are denied by the company’s own wrongdoing. The submission is no less startling than this. Counsel went as far as to say that the rectification even if done would not make the applicants members of the company. It was merely to give the company notice of the fact that they are personal representatives of the deceased shareholder. But the register in question is not a register of notices, it is the register of members of the company. There is nothing in the Code which enjoins the registration of trusts or the rights of personal representatives. No one therefore would have the right to force, or to ask a court to order, a company to register his name as trustee or personal representative qua personal representative. Yet the applicants were able to persuade the court to order the company to rectify its register so as to include their names. There could have been no other reason for the rectification of the register than to register the applicants as members.
Mr. Amissah-Aidoo admitted that he was aware that the applicants had obtained an order of the court that the company’s register of members be rectified to place the names of the applicants thereon. However, he advanced the argument that this order had not been drawn up and served upon the company and so the company was not bound to act on it. Asked how he became aware of the order, he said this knowledge was gained by him because the company was represented by counsel in court. Although there are rules requiring that orders of the court be drawn up and entered, I do not think that the omission to do this relieves either of the parties from the obligation to obey the order made, unless it is of such a kind as tonrender obedience contingent on service of the order. The English appeal case of Farden v. Richter (1889) 23 Q.B.D. 124 is an example of a situation where a step taken in spite of the omission to serve the order was held to have been regular. The following passage from the judgment of Huddleston B. at pp. 128-129 is illustrative of the point and also indicates the circumstances in which a party may be denied relief from his duty to obey the order:
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“The action is one of the ejectment. The defendant delivered a defence. The plaintiffs exhibited interrogatories. The defendant delayed to answer, and, in this state of things, on February 5 an order was made to the effect that if he should not file an affidavit in three days his defence should be struck out and judgment should be signed against him. The judgment which has been set aside was signed by the plaintiffs under this order on February 9, at which date no affidavit had been filed by the defendant.
In what respect was this judgment irregular. The learned counsel for the defendant contends that it was so, because the order of February 5 had not been served upon the defendant. The order was, however, made inNthe presence of a solicitor employed by the defendant, and it is not therefore unfair to suppose that he became aware of its terms. But Hopton v. Robertson (1884) W.N. 77 is a reported case in which Field J., sitting at chambers, expressly held that such orders did not require to be served. The decision is one of a series of decisions which were given by that learned judge when he sat at chambers at the instance of the Lord Chancellor in order to superintend the formation of the practice under the new rules, and it is evidently the result of careful consideration. We have examined the circumstances of the case and the arguments which were addressed to our learned brother, and we agree with the decision.”What therefore are the orders which according to Field J. do not need to be served? In Hopton v. Robertson (1889) 23 Q.B.D. 126 n., at p. 127 (the full report is in a note on that and the following page) Field J. said this of such orders: “The proposition in the textbooks as to the necessity in certain cases of drawing up and serving the order does not apply when the party to be served has himself to take the next step under the order. It is when the other side may suppose that the order is abandoned that the necessity of service arises.”
I am persuaded by the reasoning in these two cases. The company had notice of the order, in that it was represented in court that day, according to Mr. Amissah-Aidoo, by counsel. The next step to be taken under the order was by the company and it was upon the company that the service of the order had to be. I am of the view therefore that the company, having notice of the order is not relieved of the duty to rectify the register of the company just because the order has not been served on it. In any case the order took effect
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from the date it was made, and at the time the present application was brought that order had been made. But the contention of the respondents founders on even simpler ground. The application is made under section 217 of the Companies Code, 1963 (Act 179), which empowers the court “on the application of any member” of the company to do certain things. It will be recalled that section 99 (3) of the Code provides that a person upon whom the ownership of a share devolves by reason of his being a legal personal representative shall prior to registration of himself or a transferee, be entitled not only to the same dividends, interest and other advantages as if he were the registered holder but also to the same rights and remedies as if he were a member of the company. The only exception to this almost total assimilation is that the personal representative would not, before being registered as a member in respect of the share, be entitled to attend and vote at any meeting of the company. Thus the difference between the rights and remedies of the member on the one hand and his legal personal representative on the other is that while the member can attend and vote at meetings of the company, the personal representative cannot. In all other respects they both have exactly the same rights and remedies. This is clearly borne out by the final report of the Commission of Enquiry into the working and administration of the present company law of Ghana (popularly known as the Gower Report). By section 19 of the Interpretation Act, 1960 (C.A. 4), I am entitled to refer to such a report as an aid to construction. The commission drafted our Companies Code, and submitted it as part of the report. In its comments on the draft clause which has now become section 99 of the Code, the commission said this at p. 83 of the report: “1. The existing Ordinance scarcely deals with the position of persons to whom shares or debentures pass by operation of law; nor does the English Act. Both leave this to the company’s Regulations or the terms of the debentures. Clearly this is not a matter which ought to be left to the chance that the Regulations will cover it.
2. This section is based on section 33 and Table A, Arts.18-20 of the present Ordinance, with amplifications. The main additions are in subsections (2) and (3). Under the present Act and Table A it would appear that a personal representative or trustee in bankruptcy is in a very weak position if the Regulations contain restrictions on the right to transfer shares. He cannot compel the company to register him or to register a transfer and he cannot even present a petition to wind up the company
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(Re Bolton Engineering Co. [1956] Ch. 577) or, presumably, bring any other proceedings as a member. He may therefore find himself quite unable to realise the shares for the benefit of the estate or the creditors. Under subsection (2), however, he can insist on the company’s registering him,though he cannot compel the company to register a transfer from him if the Regulations give power to refuse transfers. Further, subsection (3) gives him all the rights of a member, except that of attending and voting at meetings, even though he has not registered as a member. And by the proviso (based on article 32 of Table A of the English Act) the company can force him either to become registered himself or to transfer. This seems to me a reasonable compromise.”
The position of the personal representative not being quite the same as in the law in England, caution should be exercised when the English textbooks are referred to as authority. It cannot be said that applying to the court under section 217 is either attending or voting at a meeting of the company. Just as a member can apply to the court under the section, so can his personal representative by virtue of the provisions of section 99 (3).
On either of the two grounds discussed above, the preliminary point raised by counsel for the respondents, challenging the locus standi of the applicants, fails and is therefore overruled.
DECISION
Objection overruled.
S.O.
