Saturday, June 26,
2021 / 02:50PM /by Kwesi Dadzie-Yorke Aelex/Image Header Credit: Aelex
The enactment of the Companies Act, 2019 (Act 992) [2019 Act] in
Ghana marked the dawn of a new era in the country's corporate industry. The
2019 Act repealed the Companies Act, 1963 (Act 179) and reformed the regulation
of companies and businesses in Ghana. One of the major reforms that was
introduced affected the qualifications of persons that can act as directors.
Indeed, it is no surprise that the legislation would seek to
regulate the type of persons that can act as directors as directors have a fiduciary
duty to direct and administer the business of a company.
We have therefore outlined below are the new requirements set out
under the 2019 Act for the appointment of directors.
Reforming the Boards of Directors in Ghana
One of the most interesting provisions in the 2019 Act
provides a 5-year automatic disqualification period for appointed
directors where that person:
been convicted, within the last 5 years of an offence involving fraud or
dishonesty, or relating to the promotion, formation or running of a company.
been a director or senior executive of a company that has become insolvent
within the last five years on account of or partly because of the culpable
activities of that director.
been disqualified to act as company secretary, receiver, manager, or liquidator
of a company.
In addition, the 2019 Act provides for a 10-year automatic
disqualification period and permanent automatic disqualification. Section 177
(3) provides that where a person is convicted for matters highlighted under
paragraph i. above is subsequently subject to:
conviction, that person shall be automatically disqualified for a period of 10
conviction, that person shall be permanently disqualified as a director or to
act as a director.
The Act goes on to introduce the concept of disclosure of
potential conflicts of interest of directors. A potential conflict of interest
is now required to be entered in the Interests Register to be maintained by the
Section 195(1) requires a director of a company who has an
interest that is likely to create a conflict of interest between that director
and the company to:
to be entered that interest in the Interests Register established under section
that interest to the Board of the company at a meeting or by written notice
given to the directors immediately after becoming aware of the fact of that
Section 194(6) states that:
"in the case of a proposed contract in which the director is
interested, the director shall, before the consideration of the matter,
disclose the nature and extent of the interest of the director in the proposed
contract at a meeting of directors or by written notice given and to be
disclosed to the Board of the company in accordance with section 195."
Another useful introduction provides that a director must not
disclose company information that would otherwise not be available to that
director except for special purposes.
Accordingly, the new requirements and procedure for the
appointment of directors and the removal of directors are outlined below:
Appointment of a Director
first directors of the company are appointed and named in the regulations (now
the constitution) of the company.
incorporation, subsequent directors are appointed by an ordinary resolution of
the company in general meeting.
the appointment, the director consents in writing to the appointment and files
the same with the Registrar of Companies within 28 days;
a statutory declaration (to be filed with the Registrar of Companies) to the
effect that the director has not;
the preceding five years of the application for incorporation been charged with
or convicted of a criminal offence involving fraud or dishonesty
charged with or convicted of a criminal offence relating to the promotion, incorporation,
or management of a company,
a director or senior manager of a company that has become insolvent or if the
person has been, the date of the insolvency and the company.
Persons to be appointed directors must be natural persons of a
minimum of 18 years of age, a sound mind and must not be bankrupt.
Removal of a Director
1.The company may by ordinary resolution remove a director from
director who wishes to be removed may put in a resignation letter and the
company will pass a resolution to accept it.
ordinary resolution to remove the director must be passed at a general meeting.
company must give a notice of the resolution to the director affected.
notice must be served on the director at least 21 days before the general
director is entitled to be heard at the meeting or send a written statement.
vacancy created by the removal may be filled at the meeting or at a later date.
Documentation Required for Appointment or Removal of a Director
Appointment of Director
consent letter of the person to be appointed.
declaration of potential director.
resolution of appointment.
Form 17 of the Registrar Companies 'Change of Directors'.
Identification Numbers of all new directors (In line with section 4 of the Tax
Identification Numbering System Act, 2002 (Act 632))
Removal of Director
resolution removing the director.
necessary, a letter of resignation and an Ordinary resolution accepting the director's resignation.
Form 17 of the Registrar of Companies 'Change of Directors'.
It is presumed that when directors meet these standards of
accountability and integrity, the business community and the economy may stand
to benefit. It is also expected that the reforms in the 2019 Act will bring the
companies regulation and corporate governance in Ghana at par with global best
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- Section 177 of the 2019 Act
196 of the 2019 Act
198 of the 2019 Act
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