UNION MORTGAGE BANK vs. SERBEH-YIADOM [1997-98] 1 GLR 1025

NATURE OF PROCEEDINGS

APPLICATION by the plaintiff-applicant-company for an order of the High Court inter alia, compelling the defendant-respondent-director to sign company Forms 3 and 4 as required by section [p.1026] of [1997-98] 1 GLR 1025

27(1) of the Companies Code, 1963 (Act 179) or for the other directors to submit the forms to the Registrar-General without the signature of the respondent. The facts are sufficiently set out in the ruling.

COUNSEL

Dr Seth Twum for the plaintiff-applicant.

Ohene for E D Kom for the defendant-respondent.

JUDGMENT OF AKOTO-BAMFO J.

It is the prayer of the plaintiff-applicant (hereinafter referred to as the applicant) that the defendant-respondent (hereinafter referred to as the respondent) be, (a) made to sign company Forms 3 and 4 as required by section 27(1) of the Companies Code, 1963 (Act 179); (b) be removed as a director of the company; or (c) that the other directors submit the forms to the Registrar-General without the signature of the defendant and for further orders as this court may deem fit.

The application is supported by an affidavit consisting of seventeen paragraphs. The gist of the applicant’s case is that the company was incorporated to carry on business as a bank among other projects. In compliance with the section 27(1) of Act 179, the company applied for a certificate to commence business from the Registrar-General’s Department. Section 27 of Act 179 requires that company Forms 3 and 4 be signed by all the directors named in the regulations of the company at the time of the application. Even though the respondent is one of such directors, he has refused to sign the Forms despite repeated demands. It was urged that the bank had engaged staff, hired offices but could not carry on any business owing to the respondent’s conduct which was oppressive and causing heavy loses to the bank.

In urging the court to grant the order, learned counsel for the applicant, relying extensively on the averments in the affidavit, submitted that the respondent’s refusal to sign the forms was holding up the operations of the bank. According to him, the respondent had set out extensively his reasons for failing to sign the forms, and that since he had clearly evinced an intention not to sign the forms, the forms should be submitted without his signature and further that since he had clearly shown that he no longer desired to carry on his duties as a director, the other

[p.1027] of [1997-98] 1 GLR 1025

directors be allowed to buy him out and that he be removed from the company.

The application was opposed by the respondent. The gravamen of his case is that the applicant had no authority to bring the present proceedings since he as a director was not given any notice of the application. According to him, the other directors had reneged on their promise to make him an executive director, he was locked out of his office and was prevented from using the company vehicle. It was further urged by learned counsel for the respondent that a mandatory injunction was not the appropriate remedy in circumstances where a director fails to sign Forms 3 and 4, and further that there was no provision for a mandatory injunction under Act 179. He further submitted that the respondent had given reasons for refusing to sign the forms and that the issues involved could be determined on affidavit evidence. He additionally urged that since a mandatory injunction was an equitable remedy, the applicant must show a wrongful act.

I have carefully considered the arguments advanced by both learned counsel. It is not in doubt that the respondent is one of the first directors of the company, neither is it in doubt that the parties have taken steps in establishing the bank, notably among which is the hiring of premises, engagement of staff and obtaining a licence from the Bank of Ghana.

It is a mandatory requirement under section 27 of Act 179 that all the directors of the company must sign Forms 3 and 4. The respondent had demonstrated that he has no intention to sign the forms. What are the remedies of the other directors? I am of the view that a court of competent jurisdiction can, in a proper case, in exercise of its inherent jurisdiction, grant the order prayed for. The present case, it is my belief, falls within such a class.

The respondent raised a number of issues as regards the conduct of the other directors. According to him, having gone far in the formation of the company, it would be risky for his good name and integrity to be associated with the day to day running of the company. Having regard to the fact that there are irreconcilable differences between them, it is my view that this is a proper case for the other directors to buy out the respondent and steps taken to replace him with another director.

[p.1028] of [1997-98] 1 GLR 1025

On hearing both learned counsel and on reading the affidavits and the annexures, therefore, it is ordered that the forms be submitted to the Registrar-General without the signature of the respondent.

DECISION

Application granted.