100+ Free GSL Company & Commercial Practice Practice Questions

Explanation: Section 11 of the Companies Act, 2019 (Act 992) allows a company to ratify a pre-incorporation contract within 18 months after its formation. If the company ratifies the contract within this period, it becomes bound by and entitled to the benefits of that contract as if the company had been in existence at the date of the contract. If not ratified within 18 months, the contract cannot be ratified, and personal liability remains on the person who entered into it.

Explanation: A promoter stands in a fiduciary relationship with the company they are engaged in forming, as established under Section 10 of Act 992. This fiduciary relationship requires the promoter to act in good faith, avoid conflicts of interest, account for any property received, and disclose any secret profits made. This duty continues until the company is formed and has raised its necessary working capital.

Explanation: In Morkor v Kuma, the Supreme Court of Ghana reinforced that the corporate veil will not be lightly pierced. It will only be lifted where the corporate personality is being used as a sham or mask to evade a legal obligation, or to commit fraud, or where the director/shareholder has treated the company's assets as their personal property, causing a failure of separate corporate identity.

Explanation: Section 171 of the Companies Act, 2019 (Act 992) provides that every company incorporated in Ghana must have at least two directors, one of whom must ordinarily be resident in Ghana. If the number of directors falls below two, the remaining director may act only to appoint another director or to call a general meeting for that purpose.

Explanation: Under Act 992, the minimum age to be appointed as a director of a company is 18 years. This was a reform from the previous Companies Act, 1963 (Act 179) which set the minimum age at 21 years. A director must also be a natural person of sound mind.

Explanation: Under Section 7 of the Companies Act, 2019 (Act 992), a private company must restrict the number of its members to a maximum of 50. This limit excludes joint holders of shares (who are counted as one member) and persons who are in the employment of the company or were members while in that employment.

Explanation: Under Section 7 of Act 992, a private company's constitution must restrict the transfer of its shares and prohibit the company from making an invitation to the public to acquire shares or debentures. Public companies, on the other hand, are permitted to make public invitations and list their shares on a stock exchange.

Explanation: Section 22(3) of Act 992 provides that a reservation of a company name 'shall not exceed two months' (approximately 60 days) and may be renewed for a further period of two months. While the reservation subsists, no other company can be registered under that reserved name or a name the Registrar considers similar to it.

Explanation: Under Section 8 of Act 992, a company limited by guarantee is not incorporated for the purpose of making profits for its members. The Act strictly prohibits the payment of dividends or return of capital to its members. All profits and property must be applied solely to the promotion of the objects of the company.

Explanation: Under Section 13 of Act 992, applicants for incorporation must submit a statutory declaration by each proposed director and promoter stating that they have not, within the preceding five years, been convicted of an offence involving dishonesty, fraud, or in connection with the promotion or management of a body corporate, or been declared insolvent.