Kwame Nkrumah University of
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Science & Technology, Kumasi, Ghana
COMPANY LAW
D E PA RTM E N T: M A R K E TI N G & CO R P O R ATE
STR ATEGY
FAC U LTY & CO LLEGE : B U S I N ES S S C H O O L
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COMPANY LAW
MAS 354
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UNIT 2
SOURCES OF COMPANY
LAW
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THE SOURCES OF COMPANY LAW 4
A source of law may mean two things:
• First, it may mean the authority from which the laws of a State spring, for
example, the current constitution, enactments by parliament/decrees by
military government. These are described as formal source.
• The second meaning is the source from which the rules of law are derived
and are referred to as legal source. Under the second meaning, the law of
Ghana has three sources, namely: Common Law, including judicial
precedence, Equity and Customary Law.
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The question of sources of law in Ghana is answered by our country’s
most authoritative legal document, the CONSTITUTION OF GHANA.
Article 11(1) of the 1992 Constitution gives the following as sources of
law in Ghana:
• The constitution,
• Enactments,
• Rules and Regulations,
• The existing law and the
• Common law
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(B) LEGISLATIVE SOURCE (STATUTES/ DECREES) 6
• Enactments by Parliament and decrees made by military regimes which are
still in force.
• These form the primary statutory sources of law in Ghana. In this sense, the
Ghana Companies Act, 2019 (Act 992) is the main primary legislative source
of Company law in Ghana (regulating business companies and their
operations).
• However, some other relevant statutes (a written law passed by a
legislative body). have special provisions regulating business association
and the conduct of business.
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The other relevant Statutes include: 7
• Ghana Investment Promotion Center Act 2013, Act 865
• Contract Act, 1960 (Act 25)
• Trustee (Incorporation)Act1962 (Act 106)
• Bodies Corporate (Official Liquidation) Act 1963 (Act 180)
• Co-operative Societies Decree 1968 (NLCD 252)
• Exchange Control Act 1961 (Act 71)
• Incorporated Private Partnership Act 1962 (Act 152)
• Insolvency Act 1963 (Act 153)
• Registration of Business Names Act 1962 (Act 151)
• Borrowers and Lenders Act 2008 (Act 773)
• Banking Act 2016, (Act 930)
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(C) STATUTORY INSTRUMENT (LI) AS SUPLIMENTARY SOURCE 8
These are regulations made by ministries and other authorities under power
conferred by parliament. Such Regulations relating to associations of business
organizations include:
• Companies (Prescribed Forms) Instrument, 1963 (L.I. 289)
• Registration of Business Names Regulations, 1974 (L.I. 982)
• Stock Exchange (Ghana Stock Exchange) Membership Regulations 1990 (LI
1510)
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(D) LEGAL SOURCE COMMON LAW SOURCE (JUDICIAL PRECEDENTS)
• Salomon v Salomon & Co. (1897), dealing with the separate legal personality of
company when incorporated and its liability;
• (held the company was duly incorporated, it is an independent person with its rights and
liabilities appropriate to itself, and that “the motives of those who took part in the
promotion of the company are absolutely irrelevant in discussing what those rights and
liabilities are”) The company is a legal entity; creditor can not sue cannot sue
shareholders to pay company’s debt.
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(D) LEGAL SOURCE COMMON LAW SOURCE (JUDICIAL PRECEDENTS)
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Trevor v Whitworth (1887), which requires a company’s share capital to be kept intact for the
benefit of its creditors;
• Ewing v Buttercup Margarine Co. Ltd. (1917), it concerns name used by two companies to sell
the same goods and the plaintiff who earlier in1904 used the name contended that there was
likely to be confusion between the two companies which the defendant denied. Court held that
an injunction to be granted to restrain the defendant from the use of its name which registered
in 1916 (because the objects and the place of business are the same and could create confusion,
i.e. the tort of passing off)
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• Royal British Bank v. Turquand (1855), the company went into liquidation
and the liquidator (Turquand)argued that the company had no obligation to
repay the loan since the loan contract (debentures) had been made without
the authority required by the articles.
• Held: the bank must be deemed to be aware that the directors needed
authority to borrow but could also assume that authority had been properly
given since the bank may have no means of knowing whether a valid
resolution had been passed. However, a person who has any knowledge to
the contrary cannot make these assumptions. The case also lays down the
indoor-management rule.
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1. If an officer of a company has exceeded the authority given to
him by the article of association
2. There has been non-compliance with an internal procedure
3. There outsider may presume that internal procedure is
complied with.
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• Panayiotopoulos v Plastico Ltd. (1965) GLR 176, deals with pre-
incorporation contracts. Personal liability of signatory to contract of a
company (before its formation) will be fully effected in the absence of
expressed exclusion of personal liability.
• Foss. v Harbottle (1843), which affirms the principle of majority rule and
minority protection. The principle that court will not intervene in a matter
which the company is competent to settle itself, particularly in a case of
irregularity requiring that the company ratifies it by its own internal
procedures. An individual cannot take a legal action in response to a wrong
suffered by the company.
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Thank You
• For any concerns, please contact
• elearning@knust.edu.gh
• elearningknust@gmail.com
• 0322 191132
Jan 2014
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