GIMPA FACULTY OF LAW

COMPANY LAW
POINTERS ON THINGS TO COVER ON TOPICS IN THE COURSE OUTLINE

DEBENTURES

Introduction

• Company – legal person – capacity to contract – exercise borrowing powers.

• Reality – must be creditworthy.
• Debenture – company as borrower - loan – written acknowledgment.
• Relevant laws – Companies Act 2019 & Borrowers and Lenders Act, 2020 (Act 1052)
applies to borrowing of a company
• S. 2 of Act 1052 – provides for the scope of application of the Act.
• S. 4 of Act 1052 defines a credit agreement. Debenture qualifies as a credit
agreement.
• S. 68 – stated capital different from loan capital under s. 83

Debentures

• Definition of debenture – First Schedule of Act 992. Note exclusions from

definition.
• Debenture not reference to only security document but to loan agreement
- Lemon v. Austin Friars Investment Trust Ltd [1926] Ch. 1
• Debentures constitute a credit facility - s. 4 of Act 1052
• Pre-agreement disclosure under Act 1052 – s. 57 of Act 992
• Issue of debenture, series of debentures and debenture stock – s. 83(1) of Act
992
• Series of debentures – s. 83(2) of Act 992
• Debenture stock – s. 83(3) of Act 992
• Trustees; deep of poll and indenture in debenture stock issue – s. 83(4) of Act
992
• Specific performance to enforce a debenture – s. 84 of Act 992

Types of debentures

• S. 87 of Act 992 – perpetual and redeemable debentures

• S. 88 of Act 992 – convertible and non-convertible debentures
• S. 89 of Act 992 – secured and unsecured debentures
- The case of Bank of Africa Ltd v. Gracefield Merchants Ltd & Others Civil
Appeal, Suit No. J4/35/2016 in which the Supreme Court gave judgment on
5 February, 2020 illustrate the instance where the second defendant created
This is not substitute for reading materials on the course outline or joining lectures, and not the
complete information for understanding the topics. The pointers are to guide you in your readings
prior to class.

Ferdinand D. Adadzi – Company Law, GIMPA – FACULTY OF LAW – Regular Students, Level 300 -
Group A, B and C, and Day Students, Level 400.
GIMPA FACULTY OF LAW
COMPANY LAW
POINTERS ON THINGS TO COVER ON TOPICS IN THE COURSE OUTLINE

a mortgage in favour of the appellate for moneys borrowed by the first

defendant.
- S. 4 of Act 1052 – credit agreement
• Other classification – term loan, revolving loan, syndicated loan, participation
loan

Share & debentures

• S. 83(5) of Act 992 – debenture holders not members

• “owners” v. creditors
• Determine factors informing investor to choose to invest in a company through
acquisition of shares or debentures
• Determine from company’s perspective, factors to inform raising capital
through issue of shares of debentures

Trustees for debenture holders

• S. 83(4) of Act 992

• S 95 of Act 992

Meeting of debenture holders

• S. 96 of Act 992

Redemption and re-issue of debentures

• S. 97 of Act 992

Documents relating to debentures

• Title document – debenture and debenture stock certificate

- S. 85 of Act 992 – debenture and debenture stock certificate
- S. 86 – effect of statement in the debenture or debenture stock certificate

• Register of debenture holders and registration of transfer

- S. 99 of Act 992
- Ss. 35 and 36 of Act 992
- S. 101 of Act 992 on registration of transfer
This is not substitute for reading materials on the course outline or joining lectures, and not the
complete information for understanding the topics. The pointers are to guide you in your readings
prior to class.

Ferdinand D. Adadzi – Company Law, GIMPA – FACULTY OF LAW – Regular Students, Level 300 -
Group A, B and C, and Day Students, Level 400.
GIMPA FACULTY OF LAW
COMPANY LAW
POINTERS ON THINGS TO COVER ON TOPICS IN THE COURSE OUTLINE

Transfer of debentures

• S. 100 of Act 992

• S. 322 of Act 992

Transmission of debentures by operation of law

• S. 102 of Act 992

• S. 103 of Act 992 – protection of beneficiaries

Secured Debentures

• S. 89(1) of Act 992 – debenture secured by charge on assets of the company

• Definition of charge
- First Schedule of Act 992
- Ss. 5 and 7 of Act 1052
- Re Cosslet (Contractors) Ltd [1998] Ch 495 - Millett LJ

• Type of charges to secured debentures

- Fixed and floating charge – s. 89(2) of Act 992
- What constitute floating charge
o ss. 89(2) and 90(2) of Act 992
o Governments Stock and Other Securities Investment Co Ltd v. Manila
Railway Co Ltd [1897] AC 8 at 86, Lord Macnaghten
o Illingworth v. Houldsworth [1904] AC 355 at 358
o George Cohen (WA) Ltd, v. Comet Construction Co Ltd; Ghana
Commercial Bank (Claimants) [1966] GLR 777 at 779 Edusei J
o Re Spectrum Plus Ltd [2005] UKHL 41 at 111, Lord Scott of Foscote
o Re Yorkshire Woolcombers Association Ltd [1903] 2 Ch 284 at 295,
Romer LJ
o Re Panama, New Zealand and Australian Royal Mail CO (1870) LR 5 Ch
App 318. – floating charge can be on fixed assets such as buildings if they
constitute stock-in-trade

• Crystallization of floating charge

- S. 90(3) of Act 992
- S. 90(2) of Act 992 – four events of crystallization
This is not substitute for reading materials on the course outline or joining lectures, and not the
complete information for understanding the topics. The pointers are to guide you in your readings
prior to class.

Ferdinand D. Adadzi – Company Law, GIMPA – FACULTY OF LAW – Regular Students, Level 300 -
Group A, B and C, and Day Students, Level 400.
GIMPA FACULTY OF LAW
COMPANY LAW
POINTERS ON THINGS TO COVER ON TOPICS IN THE COURSE OUTLINE

- Appointment of receiver and manager – s. 90(2) of Act 992

- S. 91 of Act 992 – two circumstances under which court will appoint a
receiver – event of default & assets being in jeopardy
- Fixed charge – only a receiver
- Floating charge – receiver and manager. See s. 264 on managers
- . George Cohen (WA) Ltd, v. Comet Construction Co Ltd; Ghana
Commercial Bank (Claimants) [1966] GLR 777 at 779 Edusei J on
crystallization
- Floating charge even without crystallization confers equitable interest
which can be protected by court.
o Evans v. River Granite Quarries Ltd [1910] 2 KB 979. Flectcher
Moulton at pg 994 and Buckley LJ at pg 999 to 1000

• Priority in multiple charges

- Priority depends on time of creation if charges are same type
- Fixed charge takes precedent over floating charge
- Exception – floating charge take priority over fixed charge – s. 90(5) – three
conditions must be satisfied.
- Chargees can by agreement agree on priority - Cheah Theam Swee v.
Equiticorp Finance Group Ltd [1992] 1 AC 472
- George Cohen (WA) Ltd, v. Comet Construction Co Ltd; Ghana
Commercial Bank (Claimants) [1966] GLR 777
- Sections 34 to 40 of Act 1052

• Hardening period of floating charge – ability to claw back floating charge on

winding up of company within a year – s. 93 of Act 992

• Enforcement of charges
- S. 89(3) and s. 91 of Act 992
- Enforcement of charges of series of debenture – 89(4) of Act 992 – reference
to representative action in s. 205 of Act 992
- Realization of charged assets can be done as follows
(a) taking possession of the assets with or without court intervention
(b) selling the assets with or without court action
(c) receiving the income from the use of the charged assets
(d) appointing a receiver and manager with or without court to do (a), (b)
and (c) above
(e) court action for performance
This is not substitute for reading materials on the course outline or joining lectures, and not the
complete information for understanding the topics. The pointers are to guide you in your readings
prior to class.

Ferdinand D. Adadzi – Company Law, GIMPA – FACULTY OF LAW – Regular Students, Level 300 -
Group A, B and C, and Day Students, Level 400.
GIMPA FACULTY OF LAW
COMPANY LAW
POINTERS ON THINGS TO COVER ON TOPICS IN THE COURSE OUTLINE

- Sections 60 to 74 of Act 1052

- S. 91 of Act 992

• Registration of particulars of charge

- S. 89(5) of Act 992
- Two parallel registration systems – registration with Company Registry
under Act 992 and registration with Collateral Registry under Act 1052
- Charge relating to land subject to registration with Lands Commission
under Land Act, 2020 (Act 1036) and must comply with the requirements of the
Mortgages Decree, 1972 (NRCD 96).
- S. 110 – charge must be registered within forty-five days or it will be void.
- Exemptions from registration – s. 101(5)
- Ss 6 and 22 of Act 1052 – registration with Collateral Registry within 28 days
- Republic v James Town Circuit Judge; ex parte Annor [1978] 1 GLR 453 at
463-4
- Declaration charge accelerate the secured debt – s. 110(3) and (5) of Act 992
- Charge on assets acquired must be registered within twenty eight days – s.
112 of Act 992
- Prior charges before Act 992 registered within six month of the Act – s. 113
of Act 992
- S. 114 of Act 992 – duty on company, but chargee can also register the charge
- S. 110(6) – particulars required for registration of charge with Company
Registry
- S. 23 of Act 1052 – particulars of registration with Collateral Registry
- S. 111 of Act 992 – indication in case of fluctuating amount
- Document must be stamped before registration – Stamp Duty Act, 2005 (Act
689)
- S. 115 of Act 992 - Evidence of registration of charge – issue certificate of
registration and entry in the register of particulars of charge
- S. 116 of Act 992 – endorsement on debenture and debenture stock
certificates
- S. 117 of Act 992 – registration of discharge and enforcement of charge
- S. 30 of Act 1052
- S. 118 of Act 992 – extension of time for registration or rectification of
register can only be done through extension granted by the Court or order
of rectification giving by the court.

This is not substitute for reading materials on the course outline or joining lectures, and not the
complete information for understanding the topics. The pointers are to guide you in your readings
prior to class.

Ferdinand D. Adadzi – Company Law, GIMPA – FACULTY OF LAW – Regular Students, Level 300 -
Group A, B and C, and Day Students, Level 400.
GIMPA FACULTY OF LAW
COMPANY LAW
POINTERS ON THINGS TO COVER ON TOPICS IN THE COURSE OUTLINE

o Re Ghana Timber Marketing Board’s Application: Ghana Timber

Marketing Board v Ashanti Curl & Lumber Product Ltd [1968] GLR
931
- S. 121 of Act 992 – registration of charge constitutes notice of the particulars
but not content of debenture or deed of charge.

Receiver and manager – ss. 261 – 273 of Act 992

• Appointment of debenture - s. 94 of Act 992

• Receiver defined under First Schedule of Act 992
• Manager defined under First Schedule of Act 992
• Appointment of a receiver or manager
(a) by the Registrar – s. 261(1) and (2) of Act 992; Registrar is also Official
Trustee
(b) by the court upon application by a chargee – ss. 91, 267 and 262 of Act 992;
and s. 74 of Act 1052
(c) by a chargee pursuant to power confers on the chargee in a secured
debenture – s. 90(2) of Act 992; s. 74 of Act 1052; s. 268 of Act 992
• S. 261(3), (4) and (5) of Act 992 - qualifications of receivers and managers
• Ss. 263, 264, 267 and 268 of Act 992– duties of receivers and managers
(a) Duty to act in good faith – s. 263(1) of Act 992
(b) Duty to act in the interest of chargee or debenture holders – s. 263(2)
and (3); (5) of Act 992
(c) Duty to obtain best price for assets – s. 263(4) of Act 992
(d) Duty to keep proceeds or income from charged assets separate – s.
263(6) of Act 992
(e) Duty to keep account – s. 263(7) and (8) of Act 992
• Powers of receivers and managers
o S. 266 of Act 992
o S. 29 of Act 992
• Liabilities of receivers and managers
o S. 269 of Act 992
o S. 265 of Act 992
o S. 273 of Act 992
• Ss. 271 and 272 of Act 992 – accounts prepared by receivers and managers

This is not substitute for reading materials on the course outline or joining lectures, and not the
complete information for understanding the topics. The pointers are to guide you in your readings
prior to class.

Ferdinand D. Adadzi – Company Law, GIMPA – FACULTY OF LAW – Regular Students, Level 300 -
Group A, B and C, and Day Students, Level 400.