UNIVERSITY OF PROFESSIONAL STUDIES, ACCRA (UPSA)

BACHELOR OF LAWS (LLB)

Company Law 1 (BLAW219)

Question:

1. Activity 1.1

2. Activity 1.2

3. Brief the following cases

i. Barclays Bank of Ghana V. Lartey [1978] GLR 282

ii. Salomon v. Salomon (1897) AC 22

General.

NAME ID

Adjei Mensah Tom Dockery 10282602

22th October, 2021.

LECTURER: Mr. Richard Duah-Ansah

ACTIVITY 1.1

I. What information does she need to be able to complete the registration?

Maame Abena Yawson, under the Registration of Business Names Act 1962 (Act 151), would
have to register Legal Victuals and Other Supplies business name as a sole proprietorship form of
business. Under the section 2 of Act 151, Maame Abena would have to submit the following
information to the Registrar:

1. the business name.

2. the general nature of the business.
3. the principal place of the business.
4. all other places at which the business is carried on.
5. where the registration to be effected is that of an individual,
6. his present first name and surname.
7. his nationality and, if that nationality is not the nationality of origin, his nationality of
origin.
8. his usual residence and other business occupation, if any.
9. whether he is under the age of twenty-one years at the date of furnishing the statement
and, if so, his date of birth.
10. where the registration to be affected is that of a company, its corporate name and
registered office.
11. the date of the commencement of the business.

II. What are the various steps needed to complete the registration?

1. Applicant may download from the website of the Registrar General or pick from its office
Form A.
2. Submit the filled forms at the Business names Registration counter for verification and
capturing
3. Pay a processing fee of GHC 60.
4. Registrar examines, approves and issue the Business Name Registration Certificate.

III. What are the consequences of Maabena registering “Legal Victuals & other supplies”
under Act 151?

1. Act 151 does not give the sole proprietor a personality with legal rights. Maabena would
 then have no distinction between her and the company.
2. Maabena would have to renew her business name registration with the Registrar through a
renewal notice (Act 151, section 5a (1)). Without it, her business name would be deemed
to have lapsed and may have the business name expunged from the register.

IV. What are the advantages and disadvantages of a sole proprietorship as a

form of business organization?

Advantages
1. Easy to form
2. The proprietor has absolute control over the business
3. All the profit is enjoyed by the proprietor
4. Decision making does not go through a lengthy channel for finality.
5. Organizational restructuring is easy.

Disadvantages
1. There may be little to no continuity in the absence or death of the proprietor.
2. Liabilities could extend to the personal properties of the proprietor
3. Difficulty in raising capital
4. The problem of financial control and poor bookkeeping practices.

ACTIVITY 1.2

1. With the aid of the Incorporated Private Partnership Act, 1962 (Act 152) and other
relevant authorities, review and discuss Partnerships in terms of the following:

• Relationship between the Firm and its partners: Under section 12 (1) of Act 152,
after registration of the firm, it attains a personality recognition with legal obligations
and privileges making it distinct of the partners of whom it is composed. This by
extension means the firm can solely be sued and can also sue and such legal actions
would not affect the partners unless they are parties to the suit as separate individuals.
Also, any judgement against a partner of the firm shall not be against a property of
the firm but could rather be against his interest in the firm. (Act 152, Section 20).

• Relationship between and among partners: Partners shall be liable to each other in
a case of debts and obligations (Act 152, Section 18), and shall stand in a fiduciary
relationship with each other (Act 152, Section 34).

• Liability of the Firm and its partners: Section 12 (3) of Act 152 posits that,
 although the firm shall exist as a person, its liabilities shall be shared by the partners.
Section 16 of Act 152 again supports this provision, “Every partner in a firm shall be
jointly and severally liable with the firm and the other partners for all debts and
obligations of the firm incurred while he is a partner.”

• Power of partners to bind the Firm and other partners: Every partner is an agent
of the firm and his partners. A partner who acts in the name of the firm
(businesswise) would have the results of the action binding on the firm and its
partners. (Act 152, Section 15) Unless he has no authority to act on behalf of the firm.

• Termination of partnership and consequences flowing therefrom: At the event of

termination of partnership, Section 52 of Act 152 outlines certain consequences
which include:
a. The debts and obligations of the firm shall continue to be the liability of the
partners and may be enforced as though the firm has not been terminated.
b. Every member will be entitled to the properties of the firm.

What are the processes involved in the registration of partnerships? How

different is this from the process for the registration of a business name under
Act 151?

Processes for registering of partnership

1. Applicant will purchase and complete Form A for incorporation of partnership from
the Registrar General’s office.
2. Provide a stamped partnership agreement at Land Valuation Board.
3. Submit filled forms at the Partnership Registration Counter for Verification and
Capturing.
4. Pay a processing fee of GH 60.
5. Registrar examines, approves and issue certificate of incorporation as well as certified
true copy of the Form B

Difference of the process for the registration of a business name under Act 151

1. The business name is only registered under Act 151 without being incorporated
whereas the business in fully incorporated in registering of partnership.
2. Under Act 151, the registrar issues a certified true copy of Form A after completing
the registration of the business name. A partnership registration on the other hand is
given a certified true copy of Form B on completion of registration.
 BARCLAYS BANK OF GHANA V. LARTEY [1978] GLR 282
HIGH COURT, ACCRA
17 JANUARY 1978

Facts

1. Barclays Bank (the plaintiff) advance overdrafts and loans to Emmanuel Lartey to support
his business, Scarts, which was registered under the Business Name Registration Act, Act
151.
2. Lartey gave his landed property with buildings on as security for the loan.
3. On his demise, Scarts was incorporated into a limited liability company to become Scarts
Limited by his administrators (the defendants). Scarts Limited, as agreed on by the
administrators and the Bank of Ghana was to take over the assets and liabilities of Scarts.
4. The administrators refused to acknowledge the mortgage deed between Lartey and
Barclays Bank as they argued that they were not the right persons to honour the deed.

Procedural History

Case was adjudicated on at the High Court, Accra.

Legal issue

1. Whether or not the defendants are the right persons to be sued under the mortgage deed
dated 3 December 1973?

Holding

Yes. The defendants (administrators of Scarts Limited) were the proper persons to be sued under
the mortgage agreement.

Reasoning

According to the judge, if the business Scarts had been registered under the Companies Code 1963
(Act 179), it would have attained a legal personality and a perpetual succession. This would have
created a distinct personality between Scarts and its directors (the defendants). However, the Scarts
was registered as a business name under the Business Name Registration Act 1962 (Act 151) which
does not create any distinct personality between the business and its proprietor, that is, Emmanuel
Lartey. The court agreed with the argument that the declaration of Lartey’s name on the Mortgage
agreement with the term ‘of Scarts’ was mere descriptive and cited the Mortgage Decree, 1972
(N.R.C.D. 96). Shed II to support this.

Comment

I agree with the final judgement of the court and the reasoning backing it. Emmanuel Lartey was
not a separate entity from his business considering the Act that regulated the type of business he
registered as. All liabilities then extended to his estate and his administrators were legally binding
to all liabilities of Scarts.
 Salomon v A Salomon and Co Ltd (1897) AC 22

Facts

Salomon, who owned a business registered as a sole proprietorship, incorporated his business into
a company limited by liabilities. This was done by the transfer of shares and debentures on the
assets of the company. The company later went bankrupt and fell into liquidation. However, due
to the debenture on the assets of the company, the creditors would not have received anything from
the liquidation process. In a quest by the liquidator to help the creditors, the declared that Salomon
Limited is an illegal business making Salomon distinct from the company and be treated as an
individual to bear the liability.

Procedural History

The Court of Appeal ruled against Solomon by agreeing with the liquidator that the business was
illegal as it was an agent of Salomon, although incorporated as a Company, was operating not in
the true intent of the Companies Act 1862. He was then made responsible for the debt incurred by
Salomon Limited. The House of Lords, upon appeal, held a different view of the judgement passed
by the Court of Appeal and ruled in favour of Salomon.

Legal Issues

Whether or not a shareholder or director of an incorporated company with a legal personality could
be caused to bear the liabilities of the company?

Holding

No. A shareholder or director of an incorporated company with a legal personality cannot be

caused to bear the liabilities of the company.

Reasoning

The House of Lords held that, the Companies Act, 1862 gave companies legality identities with
limited liabilities. Mr. Salon in registering his company under the fulfilled the provisions of the
Act and was conferred on it all the legal responsibilities that came with it. It was then wrong for
the Court of Appeal to hold that creditors of the company are creditors of Mr. Salomon: In re
Baglan Hall Colliery Co. [FN20].
Comments

The provisions of the Companies Act, 1862 could be likened to the provisions of the Companies
Act, 2019 (Act 992) of Ghana in clothing incorporated companies with a legal identity. However,
the corporate veil which protected Mr. Salomon would have been taken off under Act 992 for him
to bear the liabilities of Salomon Limited.