The Companies Act, 2009 (Act No. 5 of 2009), Sierra Leone

Formation of a companies

ii

1. Capacity of individuals to form companies.
2. Types of companies.
3. Private companies.
4. Public companies.
5. Unlimited company to have share capital.
6. Company limited by guarantee.

Memorandum of association

1. Requirements with respect to memorandum of company.
2. Form of memorandum.
3. Name as stated in memorandum.
4. Exemption from requirement of using “Limited” as part of name.
5. Provision applicable to company exempted under section 26.
6. Prohibited and restricted names.
7. Penalty for improper use of “Limited”.
8. Change of names of companies.
   31 Articles for regulating companies.
   

1. Documents of incorporation.
2. Registration of memorandum and articles.
3. Effect of registration.

Capacity and powers of a company

1. Powers of companies.
2. Effect of ultra vires act.

Effect of memorandum and articles

1. Effect of memorandum and articles.
2. Member’s right to copies of memorandum.
3. Copies of memorandum issued to embody alterations.

Alteration of memorandum and articles

1. Restriction on alteration of memorandum.
2. Alteration of memorandum.
3. Mode of alteration of business or objects.
4. Alteration of articles.
5. Effect of alteration of company’s members.

iii

Re-registration of companies

1. Re-registration of private company as public company.
2. Re-registration of public company as private company.
3. Re-registration of company limited by shares as unlimited.
4. Re-registration of unlimited as company limited by shares.

Promoters

1. Persons promoting company.
1. Duties and liabilities of promoters.
2. PART IV–ACTS BY OR ON BEHALF OF COMPANY
2. Division of powers between general meeting and board of directors.
3. Delegation to committees and managing directors.
4. Acts of company.
5. Acts of officers or agents.
6. Abolition of constructive notice of registered documents.
7. Presumption of regularity.
8. Liability of company not affected by fraud or forgery of officer.

Company’s contracts

58.

Form of contract.

59.

Pre-incorporation contracts.

60.

Common seal of company.

61.

Official seal for use abroad.

62.

Bills of exchange and promissory notes.

63.

Authentication.

1. PART V –MEMBERSHIP OF COMPANY

64.

Definition of “member”.

65.

Capacity to be member.

66.

Right of member to attend meetings and vote.

67.

Companies ceasing to have members.

68.

Personation of members.

69.

Obligation to keep and enter up register.

iv

1. Location of register.
2. Index of members.
3. Entries in register in relation to share warrants.
4. Inspection of register and index.
5. Non-compliance with sections 67, 68 and 70.
6. Power to close register.
7. Power of court to rectify register.
8. Trust not to be entered in register.
   78 Register to be evidence.
   

Liability of members

79. Liability of members.

Disclosure of beneficial interest in shares

1. Power of company to require disclosure.
2. Obligation of disclosure by substantial shareholders in public Company.
3. Person ceasing to be substantial shareholder to notify company.
4. Register of interests in shares.
5. Registration of interests to be disclosed.

PARTVI–SHARE CAPITAL

Minimum share capital

1. Authorised minimum share capital.
2. Alteration of share capital by consolidation etc.
3. Increase of share capital and notice of increase.
4. Increase of paid up capital on increase of shares.
5. Special resolution for reduction of share capital.
6. Restriction on reduction of issued share capital.
7. Application to court for order of confirmation.
8. Court order confirming reduction.
9. Registration of order and minutes or reduction.

v

PART VII–SHARES

Nature of shares

1. Rights and Liabilities attached to shares.
2. Shares as transferable property.
3. Prohibition of non-voting and weighted shares.

Issues of shares

1. Power of companies to issue shares.
2. Issue of classes of shares.
3. Issue of shares at premium.
4. Issue of shares at discount.
5. Issue of redeemable preference shares.
6. Validation of improperly issued shares.

Allotment of shares

1. Authority to allot shares.
2. Method of application and allotment.
3. Allotment as acceptance of offer.
4. Payment on allotment.
5. Prohibition of allotment unless minimum subscription received.
6. Prohibition of allotment in certain cases of prospectus delivered to Commission.
7. Effect of irregular allotment.
8. Return as to allotments.
9. Prohibition of payment of commissions, discounts out of shares and Capital.
10. Power to pay commission in certain cases.

114. Statement in balance sheet as to commission.

Call on and payment for shares

1. Payment for shares.
2. Meaning of payment in cash.
3. Payment other than in cash.
4. Power to pay different amounts on shares.
5. Reserve liability of companies having share capital.

vi

Class of shares

1. Right of a preference shareholder to more than one vote.
2. Construction of class rights.

Numbering of shares

121. Shares to be numbered.

Share certificates

1. Issue of share certificates.
2. Effect of share certificate.
3. Probate, etc. as evidence of grant.
4. Issue and effect of share warrants to bearer.

Transfer and transmission of shares

1. Transfer of shares.
2. Entry in register of transfers.
3. Notice of refusal to register.
4. Transfer by personal representatives.
5. Recognition of executor’s etc. title to shares.
6. Protection of beneficiaries.
7. Certification of transfers.

Transaction by company in respect of its own shares

1. Redemption of redeemable preference shares.
2. Prohibition of financial assistance by company for acquisition of its shares.
3. Acquisition by company of its own shares.
4. Conditions for purchase by a company of its own shares.
5. Limit on number of shares acquired.
6. Disclosure by company of purchase of own shares.
7. Enforceability of contract to acquire shares.
8. Re-issue of shares acquired.
9. Acquisition of shares of holding company.

vii

PART VIII–DEBENTURES

Creation of debentures and debenture stock

1. Power to borrow money, to charge property and to issue debentures.
2. Perpetual debentures.
3. Convertible debentures.
4. Secured and unsecured debentures.
5. Redeemable debentures.
6. Power to re-issue redeemed debentures in certain cases.
7. Right of debenture holders and shareholders as to register of debenture holders, etc.
8. Meetings of debenture holders.

Fixed and floating charges

1. Meaning of ‘floating’ and ‘fixed’ charges.
2. Priority of fixed over floating charge.
3. Powers of court to appoint receiver or manager.
4. Advertisement of appointment of receiver and manager.
5. Preferential payment to debenture holders in certain cases.
6. Execution of debenture trust deed.
7. Contents of debenture trust deed.
8. Contents of debentures covered by trust deed.
9. Trustees for debenture holders.
10. Disqualification for appointment as trustee of debenture trust deed.
11. Rights of debenture holders.
12. Liability of trustees for debenture holders.
13. Restrictions on transferability of debentures.
14. Company to keep copies of instruments creating charges.
15. Company’s register of charges.
16. Inspection of register and copies of instruments.
17. Register of debenture holders.
18. Inspection of register of debentures etc.
19. Entry in register of transfer of debentures holders.
20. Notice of refusal to register.

viii

Registration of charges with Commission

1. Registration of charges created by companies.
2. Register of particulars of charges.
3. Duty of company to register charges.
4. Duty of company acquiring property to register subsisting charge.
5. Existing charges.
6. Charges to secure fluctuating amounts.
7. Endorsement of registration.
8. Entries of satisfaction of charges.
9. Rectification of register.
10. Inspection of register and copies of instruments.
11. Realisation of debenture holder’s security.
12. Remedies available to debenture holders.
13. Delivery of debentures or certificate of debenture stocks.

PART IX–MEETINGS AND PROCEEDINGS

Statutory meetings

1. Statutory meetings.
2. Non-compliance and penalty.

General meetings

1. Annual general meetings.
2. Business transacted at annual general meetings.

Extra-ordinary general meetings

1. Extra-ordinary general meetings.
2. Place of meetings.

Notice of meetings

ix x

1. Court to order meetings.
2. Right to attend general meetings.
3. Proxies.
4. Corporation’s representation at meetings of companies.
5. Quorum.
6. Resolutions.
7. Written resolutions.
8. Circulation of members’ resolutions.
9. Resolutions requiring special notice.
10. Registration and copies of certain resolutions.
11. Effect of resolutions passed at adjourned meetings.

Miscellaneous matters relating to meetings and proceedings

1. Minutes of proceedings and effect.
2. Inspection of minutes books and copies.
1. Class of meetings.
2. PART X–DIRECTORS AND SECRETARIES OF COMPANY
3. Meaning of “directors”.
4. Shadow directors.

Appointment of Directors

1. Number of directors.
2. Subsequent appointments of directors.
3. Casual vacancy.
4. Liability of person where not duly appointed.
5. Share qualification of directors.
6. Duty of directors to disclose age to company.
7. Insolvent persons acting as directors.
8. Restraint of fraudulent persons.
9. Disqualification for directorship.
10. Rotation of directors.
11. Mode of voting on appointment of directors.
12. Removal of directors.

Remuneration of directors

1. Remuneration of directors.
2. Remuneration of managing directors.
3. Prohibition of loans to directors in certain circumstances.
4. Payment by company for loss of office etc. to be approved.
5. Payment to director for loss of office etc. or transfer of property illegally.
6. Directors to disclose payment for loss of office, etc. in certain cases.
7. Provisions supplemental to sections 227 and 228.

Powers and duties of directors

1. Limitations on the powers of directors.
2. Duties of directors.
3. Duty of care and skill.
4. Directors as trustees and agents of company.
5. Exercise of directors’ power.
6. Conflict of duty and interest.
7. Consent of companies.
8. Duties of directors in connection with sales of the company’s securities.
9. Contracts in which directors are interested.
10. Directors acting professionally.
11. Civil liabilities for breach of duty.
12. Legal proceedings to enforce liabilities.

Miscellaneous matters relating to directors

1. Multiple directors.
2. Directors with unlimited liability in respect of limited company.
3. Special resolution of limited company making liability of directors unlimited.
4. Statement on remuneration of directors to be furnished to shareholders.
5. Provision as to liability of officers and auditors.
6. Register of directors and secretaries.
7. Register of directors’ holdings.

xi xii

1. Appointment and summary dismissal of secretary.
2. Fiduciary interests of secretary
3. Duties of secretary.

PART XI–PROTECTION OF MINORITY AGAINST ILLEGAL AND OPPRESSIVE CONDUCT

Action by or against company

1. Only company may sue for wrong or ratify irregular conduct.
2. Injunction or declaration in the event of illegal or irregular activity.
3. Definition of member.
4. Commencing derivative action.
5. Powers of court.
6. Evidence of share holder’s approval not conclusive.
7. Court’s approval to discontinue.
8. No security for costs.
9. Interim costs.
10. Definition of applicant.

Relief on grounds of unfairly prejudical and oppressive conduct

1. Application.
2. Grounds of application.
3. Powers of court to grant relief.

Investigation of companies and their affairs

1. Investigation of affairs of company by inspectors.
2. Inspector’s powers during investigation.
3. Production of documents and evidence to inspectors.
4. Power of inspector to call for directors’ bank accounts.
5. Inspector’s report.
6. Power to bring civil proceedings.
7. Criminal proceedings on report by inspectors.
8. Inspectors’ report to be used as evidence in legal proceedings.
9. Appointment, etc. of inspectors to investigate ownership of company.
10. Provisions applicable to investigations.
11. Power to require information as to persons interested in shares, etc.
12. Power to impose restrictions on shares etc.
13. Saving for legal practitioners and bankers.

PART XII–FINANCIAL STATEMENTS AND A UDIT

Accounting records

1. Companies to keep accounting record.
2. Place and duration of records.

282. Penalties for non-compliance with sections 299 and 300.

Company’s accounting reference periods and financial year

1. Accounting reference period and date.
2. Alteration of accounting reference period.
3. Consequence of giving notice under section 285.
4. Inspection of accounts and books by non-directors.
5. Directors’ duty to prepare annual accounts.
6. Form and content of individual financial statements.
7. Group financial statements of holding company.
8. Form and content of group financial statements.
9. Additional disclosure required in notes to financial statements.
10. Director’s report.
11. Signing of balance sheet and documents to be annexed thereto.
12. Persons entitled to receive financial statements as of right.
13. Directors’ duty to lay and deliver financial statements.
14. Penalty for non-compliance with section 296.
15. Default order in case of non-compliance.

Form and content of company, individual or financial statements

1. Penalty for laying or delivering defective financial statements.
2. Share holder’s right to obtain copies of financial statements.

Modification of financial statements

1. Entitlement to deliver financial statements in modified form.
2. Definition of small company.
3. Modified individual financial statements.
4. Modified financial statements of holding company.

Publication of financial statements

1. Publication by company of full individual or group financial statements.
2. Publication of abridged financial statements.

xiii

1. Power of Minister to alter accounting requirements.
2. Appointment and remuneration of auditors.
3. Qualification of auditors.
4. Auditors’ report.
5. Auditors’ duties and powers.
6. Removal of auditors.
7. Auditors’ right to attend company’s meetings.
8. Resignation of auditors.
9. Liability of auditors for negligence.
1. False statement to auditors.
2. PART XIII –ANNUAL RETURNS
10. Annual returns of companies having share capital.
11. Annual return of company not having share capital.
12. Annual returns of small companies.
13. General provisions on annual returns.
1. Certificates to be sent by private companies with annual returns.
2. PART XIV–DIVIDENDS AND PROFITS
14. Declaration of dividend and payment of interim dividend.
15. Distributable profits.
16. Restriction on declaration and payment of dividends.
17. Unclaimed dividends.
18. Reserves and capitalization.
19. Employees’ shares and profit sharing.
20. Right of share holders to sue for dividends.
21. Liability for paying dividend out of capital.

PART XV – RECEIVERS AND MANAGERS

Appointment of receivers and managers

330.Disqualification for appointment as receiver or manager.

xiv

1. Power of a receiver or manager appointed out of court to apply to Court for directions.
2. Registration of appointment order etc.
3. Duties, powers, etc. of receivers and managers.
4. Liabilities of receivers and managers on contracts.

Procedure after appointment

1. Notice of appointment.
2. Special provisions as to statement submitted to receiver.

Accounts by receivers or managers

340. Delivery to Commission of accounts of receivers and managers.

Duty as to returns

341. Enforcement of duty of receivers, managers to make returns etc.

Construction of references

342. Construction of references to receivers and managers.

PART XVI–WINDING UP

Modes of winding up

343. Modes of winding up.

Liability of members

1. Liability as contributories of present and past members.
2. Definition of contributory.
3. Nature of liability of contributory.
4. Contributories in case of death of members.
5. Contributories in case of bankruptcy of members.

Winding-up by the court – jurisdiction

349. Jurisdiction to wind up companies incorporated in Sierra Leone.

Cases in which a company may be wound up by court

350. Circumstances in which company may be wound up by court.

xv

1. Definition of inability to pay debts.
2. Provision as to applications for winding up.
3. Power of court on hearing petition.
4. Power to stay or restrain proceedings against company.
5. Avoidance of disposition of property, etc. after commencement of winding up.
6. Avoidance of attachment, etc.

Commencement of winding up

1. Commencement of winding up by court.
2. Copy of order to be forwarded to Commission.
3. Actions to be stayed on winding up order.
4. Effect of winding up order.

Official receiver in winding up

1. Official receiver to be appointed by the Commission.
2. Statement of company’s affairs to official receiver.
3. Report by official receiver.

Liquidators

1. Power of court to appoint liquidators.
2. Appointment and powers of provisional liquidators.
3. Appointment, etc. of liquidators.
4. Provisions where person other than official receiver is appointed liquidator.
5. General provisions as to liquidators.
6. Custody of company’s property.
7. Vesting of property of company in liquidators.
8. Powers of liquidators.
9. Companies Liquidation Account.
10. Exercise and control of liquidators’ powers.
11. Books to be kept by liquidators’.
12. Payments by liquidators into Companies Liquidation Account.
13. Audit of liquidators’ accounts.
14. Control over liquidators.
15. Release of liquidators.

xvi

Committees of inspection

1. Meetings to consider appointment of committee of inspection.
2. Constitution and proceedings of committee of inspection.

General powers of court in case of winding up by court

1. Power to stay winding up.
2. Settlement of list of contributories and application of assets.
3. Delivery of property to liquidators.
4. Payment of debts due by contributories to company and extent to which set off allowed.
5. Power of court to make calls.
6. Payment into Companies Liquidation Account of moneys due to companies.
7. Order on contributory to be conclusive evidence.
8. Appointment of special manager.
9. Power to exclude creditors not proving in time.
10. Adjustment of rights of contributories.
11. Inspection of books by creditors and contributories.
12. Costs of winding-up to be paid out of assets.
13. Summoning of persons suspected of having property of company.
14. Attendance of directors of company at meetings of creditors, etc.
15. Public examination of promoters, directors etc.
16. Power to restrain fraudulent persons from managing companies.
17. Power to arrest absconding contributory.
18. Powers of court cumulative.
19. Dissolution of company.

Enforcement of and appeal from orders

1. Enforcement of orders.
2. Appeals from orders.

Voluntary winding up

1. Circumstances in which company may be wound up voluntarily.
2. Notice of resolutions to wind up voluntarily.
3. Commencement of voluntary winding up.

xvii

Consequences of voluntary winding up

1. Effect of voluntary winding up on business and status of company.
2. Avoidance of transfers etc., after commencement of voluntary winding up.

Declaration of solvency

1. Statutory declaration of solvency.
2. Distinction between “members” and “creditors” voluntary winding-up.

Provisions applicable to members’ voluntary winding up

1. Provisions applicable to member’s voluntary winding up
2. Power of company to appoint and fix remuneration of liquidator.
3. Power to fill vacancies in office of liquidator.
4. Power of liquidator to accept shares as consideration for sale of company’s property.
5. Creditors’ meeting in case of insolvency.
6. Final meeting and dissolution of companies.
7. Alternative provision as to company meeting in case of insolvency.
8. Books and accounts during members’ voluntary winding up.

Provisions applicable to creditors’ voluntary winding up

1. Meeting of creditors.
2. Appointment of liquidator.
3. Appointment of committee of inspection.
4. Fixing of liquidators’ remuneration and cesser of directors’ powers.
5. Power to fill vacancy in office of liquidator.
6. Liquidator to call meetings of company and others at end of each year.

Provisions applicable to every voluntary winding up

1. Distribution of property of company.
2. Powers and duties of liquidator in voluntary winding up.
3. Appointment and removal of liquidator in voluntary winding up.
4. Notice by liquidator of his appointment.
5. Arrangement when binding on creditors.
6. Power to apply to court to have questions determined or powers exercised.
7. Cost of voluntary winding up.
8. Saving of rights of creditors and contributories.

xviii

Winding up subject to supervision of court

1. Power to order winding up subject to supervision.
2. Effect of petition for winding-up subject to supervision.
3. Application of sections 355 and 356 to winding up subject to Supervision.
4. Appointment and removal of liquidators.
5. Effect of supervision order.

Provisions applicable to every mode of winding up -proof and ranking of claims

1. Debts of all descriptions may be proved.
2. Application of bankruptcy rules in certain cases.
3. Preferential payments.

Effect of winding-up on antecedent and other transactions

1. Fraudulent preference.
2. Liabilities and rights of persons fraudulently preferred.
3. Procedure for setting aside voidable transactions and shares.
4. Orders upon setting aside transactions or charges.
5. Additional provisions relating to setting aside transactions and charges.
6. Transactions at undervalue.
7. Inadequate or excessive consideration for directors and certain other persons.
8. Court to set aside certain securities and charges.
9. Pooling of assets of related companies.
10. Guidelines for orders.
11. Assetless Companies Fund.
12. Effect of floating charge.
13. Disclaimer of onerous property.
14. Restriction of rights of creditor in company being wound up.
15. Duties of sheriff as to goods taken in execution.

Offences antecedent to or in course of winding up

1. Offences by officers of companies in liquidation.
2. Penalty for falsification of books.
3. Fraud by officers of companies which have gone into liquidation.

xix

1. Liability where proper accounts not kept.
2. Responsibility of directors for fraudulent trading.
3. Power of court to assess damages against delinquent directors.
4. Prosecution of delinquent officers and members of company.

Supplementary provisions as to winding up

1. Disqualifications for appointment as liquidator.
2. Corrupt inducement affecting appointment as liquidator.
3. Enforcement of duty of liquidator to make returns, etc.
4. Notification that a company is in liquidation.
5. Exemption of certain documents from stamp duty on winding up of companies.
6. Books of company to be evidence.
7. Information as to pending liquidations.
8. Unclaimed assets to be paid into Companies Liquidation Account.
9. Resolutions passed at adjourned meetings of creditors and contributories.

Supplementary powers of court

1. Meetings to ascertain wishes of creditors or contributories.
2. Affidavits etc., in Sierra Leone and elsewhere.
3. Judicial notice of signature of officers.

Provisions as to dissolutions

1. Power of court to declare dissolution of company void.
2. Commission to strike defunct company off register.
3. Property of dissolved company to be bona vacantia.

1. Returns by Officers of Court
2. Returns by officers in winding up.

Accounts to be prepared annually

1. Annual accounts of company winding up and disposal.
2. PART XVII–ARRANGEMENTS AND COMPROMISES
1. Power to compromise with creditors and members.
2. Information on compromise to be circulated.
3. Provisions for facilitating reconstruction and amalgamation o companies.

1. Power to acquire shares of dissenting minority.
2. Dissentient’s right to compel acquisition of his shares.
1. Provisions supplementing section 48.
2. PART XVIII–COMPANIES I NCORPORATED OUTSIDE SIERRA LEONE AND CARRYING ON BUSINESS WITHIN SIERRA LEONE
3. Companies to which this Part applies.
4. Documents, etc., to be delivered to Commission by companies
   carrying on business in Sierra Leone
   
5. Balance sheet of company carrying on business in Sierra Leone.
6. Obligation to state name of company, etc.
7. Service on company to which this Part applies.
8. Commission to be notified when company ceases to have place of business in Sierra Leone.
9. Notification of windingup of company incorporated outside Sierra Leone.
10. Cessation of business of company incorporated outside Sierra Leone.
11. Penalties.
1. Interpretation.
2. PART XIX–DEALINGS IN COMPANIES’ SECURITIES
12. Regulations.

Invitation to the public

1. Control of public invitations.
2. Meaning of “invitation to the public”.
3. Document offering for sale deemed to be prospectus.

Forms of prospectus

SIGNED this 5th day of June, 2009

Service of documents and legal proceedings

No. 5

2009

1. Irregularities in proceedings.
2. Arbitration.
3. Court may disqualify directors.

Sierra Leone

1. Commission’s power of inspection.
2. Appeals from Commission’s decisions.
3. Representative actions.
4. Annual report by Commission.
5. Proof of signature of Registrar.

THE COMPANIES ACT, 2009.

530. Regulations.

Being an Act to provide for the registration and regulation of Short title.

PART XXI–REPEALS

companies and for other related matters.

531. Repeal and savings.

[] Date of com-SCHEDULES mencement.

ENACTED by the President and Members of Parliament in thispresent Parliament assembled.

No. 5 Companies Act 2009

(b)

one representative each of the following bodies or organisations:–

(i)

the Sierra Leone Chamber of Commerce, Industry and Agriculture;

(ii)

the Sierra Leone Labour Congress;

(iii) the Sierra Leone Bar Association; (iv) the Institute of Chartered Accountants of Sierra Leone;

(c)

a representative of the Ministry responsible for trade;

(d)

two persons, one of whom shall be a woman, who at the time of their appointment work principally in the private sector; and

(e)

the Registrar.

(2) The Chairman and other members of the Commission excepting the Registrar, shall be appointed by the President subject to the approval of Parliament.

Tenure of 4. (1) A person appointed as a member of the Commission

office of

(other than an ex-officio member) shall hold office for three years and

members of
Commission. shall be eligible for re-appointment for not more than two terms.

(2) Any member of the Commission shall cease to hold office if –

(a)

he resigns his office by written notice to the President;

(b)

he becomes unsound of mind or is incapable of carrying out his duties;

No. 5 Companies Act 2009 5

(c) he is convicted of any offence involving fraud or dishonesty;

(d ) he is guilty of serious misconduct relating to his duties;

(e)

he is an undischarged bankrupt;

(f)

in the case of the Chairman or representative of the Sierra Leone Bar Association or the Institute of Chartered Accountants of Sierra Leone, if he is disqualified or suspended from practising his profession by the order of any competent authority made in respect of him personally;

(g)

fails to disclose any interest in any matter referred to in subsection (1) of section 7.

1. Members of the Commission appointed under paragraph (a), (b) and (d) of subsection (1) of section 3 shall be paid such remuneration and allowances as may be determined by the Minister of Finance and subject to the approval of Parliament.
2. (1) The Commission shall meet for the dispatch of its business at such time and place as the Chairman may determine.

(2)

A special meeting shall be summoned by the Chairman or at the written request of not less than two other members of the Commission.

(3)

The Chairman shall preside at meetings at which he is present and in his absence, a member elected by the other members present shall preside.

(4)

Each member shall have one vote but in the case of an equality of votes the Chairman or other person presiding shall have a casting vote.

Remunertion and allowances.

Meetings of Commission.

No. 5 Companies Act 2009

Disclosure of interest.

Functions of Commission.

(5)

The quorum for a meeting of the Commission shall be four.

(6)

The Registrar shall act as Secretary to the Commission.

7. (1) A member of the Commission who is–

(a)

directly or indirectly interested in any company or enterprise the affairs of which the Commission is deliberating upon; or

(b)

interested in any contract made or proposed to be made by the Commission,

shall, as soon as possible after the relevant facts have come to his knowledge, disclose the nature of his interest at a meeting of the Commission.

(2)

A disclosure of an interest under subsection (1) shall be recorded in the minutes of the Commission, and the member shall–

(a)

not take part after such disclosure, in any deliberation or decision of the Commission with regard to the subject matter in respect of which his interest is thus disclosed;

(b)

be excluded for the purpose of constituting a quorum of the Commission for such deliberation or decision.

(3)

A decision of the Commission shall not be invalidated by the failure of a member to disclose his interest in any matter being deliberated on by the Commission.

8. The functions of the Commission are to–

(a) administer this Act including the regulation and supervision of the incorporation and registration of companies under or pursuant to this Act;

No. 5 Companies Act 2009 7

(b)

establish and maintain a company’s registry and offices in all the provinces as may be necessary, suitably and adequately equipped to discharge its functions under this Act or any other enactment in respect of which it is charged with responsibility;

(c)

perform such other functions as may be specified by this Act or any other enactment; and

(d)

undertake such other activities as are necessary or expedient for giving full effect to this Act.

9. (1) There shall be appointed by the Commission a Registrar who shall be qualified to practise as a legal practitioner in Sierra Leone and has been so qualified for not less than ten years.

(2)

The Registrar shall be the chief executive of and secretary to the Commission and shall be subject to the directions of the Commission.

(3)

The Registrar shall hold office on such terms and conditions as the Commission may specify in his letter of appointment.

(4)

The Registrar shall be the accounting officer for the purpose of controlling and disbursing amounts from the fund established pursuant to section 12 .

1. The Commission may appoint such other staff as it may think necessary for the efficient performance of the functions of the Commission.
2. Notwithstanding the provisions of any enactment to the contrary, the Registrar or a person appointed under section 10 who is a legal practitioner shall, while so appointed, be entitled to represent the Commission as a legal practitioner for the purpose and in the course of his employment.

Appointment of Registrar.

Appointment of staff.

Right to appear in court.

No. 5 Companies Act 2009

Funds of Commission.

Accounts and audit.

Annual report.

12. The Commission shall have a fund which shall be used to finance its activities, including–

(a)

moneys appropriated by Parliament for the purposes of the Commission;

(b)

any loans raised by the Commission ;

(c)

grants or gifts from any person or organisation; and

(d)

moneys accruing to the Commission in the course of its operations.

13. (1) The Commission shall keep proper books of accounts and proper records in relation to the accounts and shall prepare in respect of each year a statement of accounts in such form as the Auditor-General may approve.

(2) The books of account and related records of the Commission shall be audited not later than six months after the end of each financial year by the Auditor-General, or an auditor appointed by the Auditor-General and the report of the audit shall, pursuant to section 119 of the Constitution, be submitted to Parliament by the Attorney-General.

14. (1) The Commission shall, not later than six months after the end of each financial year, submit to the Minister an annual report on the activities of the Commission during that financial year, and the Minister shall cause the report to be laid before Parliament.

(2) The annual report shall include the audited accounts of the Commission.

No. 5 Companies Act 2009 9

PART III –INCORPORATION OF COMPANIES AND INCIDENTAL MATTERS

No. 5 Companies Act 2009

Capacity of individuals to form companies.

Types of companies.

company, association or partnership during the time that it carries on business after those 14 days shall be guilty of an offence and liable on conviction to a fine of Le500,000 for each day during which the default continues.

17. (1) Subject to subsection (2), an individual shall not form or join in the formation of a company under this Act if he is–

(2)

Paragraph (a) of subsection (1) shall not apply to companies formed prior to the commencement of this Act.

(3)

A corporate body in liquidation shall not join in the formation of a company under this Act.

18. (1) An incorporated company may be either a company–

No. 5 Companies Act 2009

Unlimited company to have share capital.

Company limited by guarantee.

1. After the commencement of this Act, an unlimited company shall be registered with a share capital; and where an existing unlimited company is not registered with a share capital, it shall, not later than six months after the commencement of this Act, alter its memorandum so that it becomes an unlimited company having a share capital not below the minimum share permitted under this Act.
2. (1) Where a company is to be formed for promoting commerce, art, science, religion, sports, culture, education, research, charity or other similar objects, and the income and property of the company are to be applied solely towards the promotion of those objects and no portion thereof is applied or transferred directly or indirectly to the members of the company except as permitted by this Act, the company shall not be registered as a company limited by shares, but as a company limited by guarantee.

(2)

After the commencement of this Act, every company limited by guarantee shall be incorporated as a company limited by guarantee and not having a share capital; and every existing company limited by guarantee and having a share capital shall not later than six months after the commencement of this Act, alter its memorandum so that it becomes a company limited by guarantee.

(3)

In the case of a company limited by guarantee, every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profit of the company or purporting to divide the company’s undertaking into shares or interests shall be void.

(4)

A company limited by guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits for distribution to members.

(5)

If any company limited by guarantee carries on business for the purpose of distributing profits, all officers and members thereof who are cognisant of the fact that it is so carrying on business shall be jointly and severally liable for the payment and discharge of all the debts and liabilities of the company incurred in

Memorandum of Association

23. (1) The memorandum of every company shall state–

(a)

the name of the company;

(b)

that the registered office of the company shall be situated in Sierra Leone;

(c)

the nature of the business or businesses which the company is authorised to carry on, or if the company is not formed for the purpose of carrying on business, the nature of the object or objects for which it is established;

(d)

the restriction, if any, on the powers of the company;

(e)

that the company is a private or public company, as the case may be;

Requirements with respect to memorandum of company.

No. 5 Companies Act 2009

(f) that the liability of its members is limited by shares or by guarantee or is unlimited, as the case may be.

(2) If the company has a share capital–

(a)

the memorandum shall also state the amount of share capital–

(i)

not being less than Le1,000,000 in the case of a private company, 25 percent of which shall be taken by subscribers.

(ii)

not being less than Le50,000,000 in the case of a public company 25 percent of which shall be taken up by subscribers.

(b)

each subscriber shall write opposite to his name the number of shares he takes.

(3) The memorandum of a company limited by guarantee shall also state that–

(a)

the income and property of the company shall be applied solely towards the promotion of its objects, and that no portion shall be paid or transferred directly or indirectly to the members of the company except as permitted by or under this Act; and

(b)

each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member, for the payment of the debts and liabilities of the company, and of the costs of winding-up, such amount as may be required not exceeding Le250,000 or such greater amount as the members may determine.

No. 5 Companies Act 2009 15

(4) The memorandum shall be signed by each subscriber in the presence of at least one witness who shall attest the signature.

(5) The memorandum shall be stamped as if it were a deed.

24. Subject to the provisions of section 23, the form of a memorandum of association of–

(a)

a company limited by shares;

(b)

a company limited by guarantee; and

(c)

an unlimited company,

shall be as specified in Tables B, C and D respectively in the First Schedule, or as near to that form as circumstances may permit.

25. (1) The name of a private company limited by shares shall end with the word “Limited”.

(2)

The name of a public company limited by shares shall end with the words “Public Limited Company”.

(3)

The name of an unlimited company shall end with the word “Unlimited”.

(4)

Subject to section 26, the name of a company limited by guarantee shall end with the word “limited by guarantee”.

(5)

A company may use the abbreviations “Ltd”, “PLC”, “Ultd” and “LG” for the words “Limited”, “Public Limited Company”, “Unlimited” and Limited by Guarantee respectively in the name of the company.

26. (1) Subject to subsection (3), the Commission may exempt a company limited by guarantee from the requirements of section 25 relating to the use of “limited” as part of its name.

No. 5 Companies Act 2009

(2) Subject to subsection (3), an existing company which at the commencement of this Act did not include “limited” as part of

Cap. 249. its name by virtue of a licence under section 19 of the Companies Act may be exempted from the requirements of section 25.

(3)

A company shall, in order to be exempted from the requirements of section 25 satisfy the Commission that–

(a)

the objects of the company are, or in the case of a company about to be registered are to be, the promotion of commerce, art, science education, religion, charity or any profession, and any thing incidental or conducive to any of those objects; and

(b)

the company’s memorandum or articles

(i)

require its profits (if any) or other income to be applied in promoting its objects;

(ii)

prohibits the payment of dividends to its members, and

(iii) require all the assets which would otherwise be available to its members generally to be transferred on its winding up either to another body with objects similar to its own or to another body the objects of which are the promotion of charity and anything incidental or conducive thereto (whether or not the body is a member of the company).

(4)

The company shall deliver to the Commission a statutory declaration made–

No. 5 Companies Act 2009 17

(5) A company which is exempted from the requirements relating to the use of “limited” and does not include that word as part of its name, is also exempted from the requirements of this Act relating to the publication of its name and the sending of lists of members to the Commission.

27. (1) A company which is exempted under section 26 and whose name does not include “limited” shall not alter its memorandum or to articles of association so that it ceases to comply with the requirements of subsection (3) of that section.

(2) If it appears to the Commission that a company referred to in subsection (1) has–

it may, in writing, direct the company to change its name by resolution of the directors within such period as may be specified in the direction, so that its name ends with “limited”.

No. 5 Companies Act 2009

Prohibited and restricted names.

(3)

A copy of a resolution passed by the directors in compliance with a direction under subsection (2) shall be forwarded to the Commission within fifteen days after the passing of the resolution in accordance with section 204.

(4)

If a company contravenes subsection (1), the company and any officer in default shall be guilty of an offence and be liable to a daily default fine of Le500,000 and any resolution passed in contravention of this section shall be void.

(5)

If a company fails to comply with a direction of the Commission under subsection (2), the company and any officer in default shall be liable to a daily default fine of Le500,000.

28. (1) No company shall be incorporated or registered under this Act by a name which–

No. 5 Companies Act 2009 19

(2)

Except with the consent of the Commission, no company shall be registered by a name which

(a)

contains the words “Sierra “Leone” “National” or “Government,” or any word which in the opinion of the Commission suggests or is calculated to suggest that it enjoys the patronage of the Government or any Ministry or Department of Government; or

(b)

contains the word “Municipal” or “Chartered” or in the opinion of the Commission suggests, or is calculated to suggest, connection with any municipality or other local council;

(c)

contains the word “Co-operative”;

(d)

contains the word “Group” or “Holding”.

(3)

The Commission may by statutory instrument amend subsection (2).

1. Any person who trades or carries on business under a name or title of which “limited or any contraction or imitation thereof, is the last word, that person, unless duly incorporated with limited, shall be guilty of an offence and be liable on conviction to a fine not exceeding Le.500,000 for each day that the default continues.
2. (1) Subject to subsection (2) a company may, by special resolution and with the approval of the Commission, change its name.

(2) In the case of a company which has been directed by the Commission to change its name under section 27 that company shall by resolution change its name within such period as may be specified in the direction.

No. 5 Companies Act 2009

(3)

If a company, through inadvertence or otherwise, is registered under a name identical with that by which a company in existence is previously registered or so nearly resembling it as to be likely to deceive, the first mentioned company may–

(a)

with the approval of the Commission signified in writing, change its name; and

(b)

if the Commission so directs, within six months after the registration, the company concerned shall change its name.

(4)

If a company defaults in complying with a direction of the Commission given under subsection (2), the company and any director of the company who is cognisant of the default shall be guilty of an offence and be liable on conviction to a fine not exceeding Le500,000 for each day that the default continues.

(5)

Where a company changes its name, the Registrar shall enter the new name on the register in place of the former name and shall issue a certificate of incorporation altered to meet the circumstances of the case.

(6)

If the Commission is of the opinion that by reason of any change in the nature of the business carried on by a company the name under which it is registered is misleading or undesirable, it may direct the company to change its name within six weeks of such direction.

(7)

If at the expiration of the period mentioned in subsection (6), the company has not complied with the direction and has not shown cause for the non-compliance, the Commission may strike its name off the register.

(8)

Any company or member or creditor of such company aggrieved by a decision of the Commission under subsection (7) may appeal to the High Court for the restoration of the company to the register.

No. 5 Companies Act 2009 21

(9)

A change of name shall not affect any right or obligation of the company, or render defective any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name.

(10)

Any change in the name of a company shall be published by the Registrar in the Gazette and in any local newspaper.

(11)

A publication in the Gazette shall be prima facie evidence of the change of name to which it relates.

Articles of association

31. (1) Every company whether limited by shares or by guarantee or unlimited shall be incorporated with the memorandum or articles of association, signed by the subscribers to the memorandum and prescribing regulations for the company.

(2)

Articles of association may adopt all or any of the rules contained in Table A of the First Schedule.

(3)

In the case of an unlimited company having a share capital, the articles shall state the amount of share capital with which the company proposes to be registered.

(4) The articles shall be–

(a)

printed;

(b)

divided into paragraphs numbered consecutively; and

(c)

signed by each subscriber of the memorandum in the presence of at least one witness who shall attest the signature.

Articles for regulating companies.

No. 5 Companies Act 2009

Documents of 32. (1) After the commencement of this Act, a company shall incorporation.

be formed in the manner set out in this section.

(2) There shall be delivered to the Commission–

(a)

the memorandum of association of the company;

(b)

the notice of the address of the registered office of the company and the head office if different from the registered office,

but the postal box address or a private bag address shall not be accepted by the Commission as the registered office;

(c)

a statement containing–

(i)

the list and particulars together with the consent of the persons who are to be the first directors of the company;

(ii)

the person who is or the persons who are to be the first secretary or joint secretaries of the company;

(d)

a declaration by the subscribers stating–

(i)

the names and addresses of the subscribers;

(ii)

the share capital of the company;

(iii) the number of shares to be issued to each subscriber; and

(iv) that twenty five percent of the shares have been subscribed;

No. 5 Companies Act 2009 23

(3) Where the Commission refuses a statutory declaration, it shall, within 14 days of the date of receipt of the declaration send to the declarant a notice of its refusal, giving reasons for the refusal.

33. (1) The Commission shall register the memorandum and articles unless in its opinion–

(2)

Where the Commission refuses to register the memorandum and articles of association, it shall, within 14 days give notice in writing to the applicant of its decision.

(3)

Any person aggrieved by the decision of the Commission under subsection (1) shall appeal to the High Court within 30 days of the receipt of the decision.

Registration of memorandum and articles.

No. 5 Companies Act 2009

Effect of incorporation.

Powers of companies.

Effect of

ultra vires

acts.

(4) The Commission may, in order to satisfy itself as provided in paragraph ( c) of subsection (1) in writing require a person subscribing to the memorandum to make and lodge with the Commission, a statutory declaration to the effect that he is not disqualified under section 17 from forming or joining in a company.

34. (1) On the incorporation of a company, the Commission shall certify under its seal that the company is incorporated and in the case of a limited company, that it is limited.

(2)

From the date of incorporation mentioned in the certificate, the subscribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum.

(3)

A certificate of incorporation shall be prima facie evidence–

(a)

that the requirements of this Act in respect of registration and of matters precedent and incidental to it have been complied with, and is duly registered under this Act; and

(b)

if the certificate contains a statement that the company is a public company, that the company is such company.

No. 5 Companies Act 2009 25

(2)

A breach of subsection (1) may be asserted in any proceedings under subsection (4) or Part XI.

(3)

Notwithstanding subsection (1), no act of a company and no conveyance or transfer of property to or by a company shall be invalid by reason of the fact that the act, conveyance or transfer was not done or made for the furtherance of any of the authorised business of the company or that the company was otherwise exceeding its objects or powers.

the court may prohibit by injunction, the doing of any act or the conveyance or transfer of any property in breach of subsection (1).

(5)

If the transactions sought to be prohibited in any proceeding under subsection (4) are being, or are to be performed or made pursuant to any contract to which the company is a party, the court may, if it thinks it to be equitable and if all the parties to the contract are parties to the proceedings, set aside and prohibit the performance of the contract, and may allow to the company or to the other parties to the contract compensation for any loss or anticipated profits to be derived from the performance of the contract.

(6)

In favour of a person dealing with a company in good faith, any transaction decided on by the directors is deemed to be one which is within the capacity of the company to enter into, and the power of the directors to bind the company is deemed to be free of any limitation under the memorandum or articles.

Effect of memorandum and articles.

Member’s right to copies of memorandum.

Effect of memorandum and articles

37. (1) Subject to this Act, on the incorporation of a company the memorandum and articles shall bind the company and the members to the same extent as if they respectively had been signed and sealed by each member and contained covenants on the part of each member to observe all the provisions of the memorandum and the articles.

(2)

All moneys payable by any member to the company under the memorandum or articles shall be a debt due from him to the company and shall be of the nature of a specialty debt.

(3)

Where the memorandum or articles empower any person to appoint or remove any director or other officer of the company, the power shall be exercisable by that person notwithstanding that he is not a member or officer of the company.

(4)

In any action by any member or officer to enforce any obligation owed under the memorandum or articles to him and any other member or officer, the member or officer may, if any other member or officer is affected by the alleged breach of such obligation with his consent, sue in a representative capacity on behalf of himself and all other members or officers who may be affected other than any who are defendants and the provisions of Part XI shall apply.

No. 5 Companies Act 2009 27

(1) the company or every officer of the company who is in default commits an offence and is liable on conviction to a fine not exceeding Le3,000,000.

39. (1) Where an alteration is made in the memorandum of a company every copy of the memorandum issued after the date of the alteration shall be in accordance with the alteration.

(2) If, where the alteration has been made, the company at any time after the date of the alteration issues any copies of the memorandum which are not in accordance with the alteration, it shall be liable to a fine not exceeding Le 10,000 for each copy so issued, and every officer of the company who is in default shall be liable to the same penalty.

40. (1) A company may not alter the conditions contained in its memorandum except in the cases and in the manner and to the extent for which express provision is made in this Act.

(2) Only those provisions which are required by section 23 or by any other specific provision contained in this Act, to be stated in the memorandum of the company concerned shall be deemed to be conditions contained in its memorandum.

41. (1) The name of the company shall not be altered except with the consent of the Commission in accordance with section 30.

(2)

The business which the company is authorised to carry on or, if the company is not formed for the purpose of carrying on business, the objects for which it is established may be altered or added to in accordance with this Act.

(3)

Any restriction on the powers of the company may be altered in the same way as the business or object of the company.

No. 5 Companies Act 2009

Mode of alteration of business or objects.

(4) Any other condition of the memorandum may be altered in accordance with section 42 or as otherwise provided in this Act.

42. (1) A company may, at a meeting of which notice in writing has been duly given to all members (whether or not otherwise entitled to it), by special resolution alter the provisions of its memorandum with respect to the business or objects of the company.

(2)

If an application is made to the court in accordance with this section for the alteration to be cancelled, it shall not have effect except in so far as it is confirmed by the court.

(3)

An application under this section may be made to the court–

(a)

by the holders of not less in the aggregate than 10 per cent in nominal value of the company’s issued share capital or any class thereof or, if the company is not limited by shares, not less than 10 per cent of the company’s members; or

(b)

by the holders of not less than 10 per cent of the company’s debentures entitling the holders to object to alterations of its objects:

but an application shall not be made by any person who has consented to or voted in favour of the alteration.

(4)

An application under this section shall be made not later than 28 days after the date on which the resolution altering the company’s business or objects was passed, and may be made on behalf of the persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose.

(5)

The court may, on application, by order extend the period for the making of the application.

No. 5 Companies Act 2009 29

(6)

On the hearing of an application under this section, the court may make an order confirming or cancelling the alteration either wholly or in part and on such terms and conditions as it thinks fit, and may adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court for the purchase of the interests of dissentient members; and the court may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect such an arrangement:

(7)

No part of the capital of the company shall be expended on any purchase referred to in subsection (6).

(8)

The debentures entitling the holders to object to alterations of a company’s business or objects shall be any debentures secured by a floating charge.

(9)

The special resolution altering a company’s business or objects shall require the same notice to the holders of such debentures as to members of the company; and in default of any provisions regulating the giving of notice to such debenture holders, the provisions of the company’s articles regulating the giving of notice to members shall apply.

(10)

Where a company passes a resolution altering its business or objects and–

No. 5 Companies Act 2009

(11)

The court may, at any time extend the time for the delivery of documents to the Commission under paragraph (a) of subsection (10) for such period as the court may think proper.

(12)

If a company defaults in giving notice or delivering any document to the Commission as required by subsection (10) the company and every officer of the company who is in default shall be guilty of an offence and be liable on conviction to a fine not exceeding Le3,000,000.

(13)

The validity of an alteration of the provision of a company’s memorandum with respect to the business or objects of the company shall not be questioned on the ground that it was not

No. 5 Companies Act 2009 31

authorised by subsection (1) except in proceedings taken for the purpose (whether under this section or otherwise) before the expiration of 21 days after the date of the resolution in that behalf; and where the proceedings are taken otherwise than under this section, subsections (9), (10), and (11) shall apply in relation thereto as if they had been taken under this section, and as if an order declaring the alteration invalid were an order cancelling or an order dismissing the proceedings were an order confirming the alteration.

43. (1) Subject to the provisions of this Act and to the conditions of the other provisions contained in its memorandum, a company may by special resolution alter or add to its articles.

(2) Any alteration or addition so made in the articles shall, subject to this Act, be as valid as if originally contained therein and be subject, in like manner, to alteration by special resolution.

44. (1) A member of a company is not bound by an alteration made in the memorandum or articles of the company after the date of which he became a member, if and so far as the alteration–

(2) Subsection (1) operates notwithstanding anything in the memorandum or articles but does not apply in a case where the member agrees in writing, either before or after the alteration is made, to be bound by the alteration.

No. 5 Companies Act 2009

^Re-regist-45. (1) Subject to this section, a private company having a

ration of

share capital may be re-registered as a public company if–

private company as ^public (a) a special resolution that it should be so re-

company.

(2) The special resolution shall–

(3) The application shall be made to the Commission in writing and signed by at least one director and the secretary of the company.

(4) The documents referred to in subsection (1) are–

No. 5 Companies Act 2009 33

(5) If the Commission is satisfied that a company has complied with this section and may be re-registered as a public company, it shall–

(6) Upon the issue of a certificate of incorporation

No. 5 Companies Act 2009

(7)

The certificate of incorporation shall be prima facie evidence that–

(a)

the requirements of this Act in respect of reregistered conversion and of matters relating thereto have been complied with; and

(b)

the company is a public company.

(8)

A company shall not be converted under this section if it has previously been re-registered as an unlimited liability company.

Re-regist-46. (1) A public company may be re-registered as a private

ration of

company if–

public company as

_{private com-}(a) a special resolution complying with

pany. subsection (2) that it should be so registered is passed and has not been cancelled by the court under this section;

No. 5 Companies Act 2009 35

(2)

The special resolution shall alter the company’s memorandum so that it states that the company is a private company and shall make such other alterations in the company’s memorandum and articles as are requisite in the circumstances.

(3)

Where the special resolution is passed, an application may be made to the court for the cancellation of the resolution, and the application may be made by either–

(a)

the holders of not less in the aggregate than 5 per cent in the nominal value of the company’s issued share capital, or any class thereof; or

(b)

not less than 5 per cent of the company’s members, but excluding any person who has consented to or voted in favour of the resolution.

(4)

The application shall be made within 28 days after the passing of the resolution and the applicant shall forthwith give notice to the Commission and to the company.

(5)

On the hearing of the application, the court shall make an order either cancelling or confirming the resolution and may make all such orders or give such directions as it may think expedient in the circumstances.

(6)

The company shall, within 15 days of the making of the court’s order, or within such other period as the court may by order direct, deliver to the Commission a certified true copy of the order.

(7)

If a company fails to deliver to the Commission a certified true copy of the order as required in subsection (6), the company and any officer of the company who is in default, shall be guilty of an offence and liable to a fine not exceeding Le3,000,000.

(8)

If the Commission is satisfied that a company may be re-registered under this section, it shall–

No. 5 Companies Act 2009

Re-registration of company limited by shares as unlimited.

(9)

On the issue of the certificate–

(a)

the company shall become a private company; and

(b)

the alteration in the memorandum and articles set out in the resolution shall take effect accordingly.

(10)

The certificate shall be prima facie evidence that–

(a)

the requirements of this section in respect of re-registration and of matters precedent and incidental to it have been complied with; and

(b)

the company is a private company.

(11) This section shall not apply to public companies whose members are more than 53.

47. (1) Subject to this section, a company which is registered as limited may be re-registered as unlimited in pursuance of an application in that behalf complying with the requirements of this section.

(2) A company shall be precluded from re-registering under this section if it is limited by virtue of re-registration under section 48.

No. 5 Companies Act 2009 37

(3)

A public company or a company which has previously been re-registered as unlimited company shall not be re-registered under this section.

(4)

An application under this section shall be signed by a director and the secretary of the company, and be lodged with the Commission together with the documents specified in subsection (6).

(5)

The application shall set out such alterations in the company’s memorandum and articles as are requisite to bring it into conformity with the requirements of this Act with respect to the memorandum and articles of a company to be formed as an unlimited company.

(6)

The documents to be lodged with the Commission are as follows:–

(a)

a special resolution by the company being registered as unlimited, subscribed by or on behalf of all the members of the company;

(b)

a statutory declaration made by the directors of the company stating–

(i)

that the persons by whom or on whose behalf the special resolution is subscribed constitute the whole membership of the company; and

(ii)

that if any of the members have not subscribed that form themselves, that the directors have taken all reasonable steps to satisfy themselves that each person who subscribed to it on behalf of a member was lawfully empowered to do so; and

No. 5 Companies Act 2009

(7)

If the Commission is satisfied that the company be registered under this section as an unlimited company, it shall retain the application and other documents lodged with it under this section and–

(a)

register the application and other documents; and

(b)

issue to the company a certificate of incorporation appropriate to the status to be assumed by virtue of this section.

(8) On the issue of the certificate–

(a)

the status of the company, by virtue of the issue, shall be changed from limited to unlimited;

(b)

the alterations in the memorandum set out in the application and any alteration in the articles so set out shall take effect as if duly made by resolution of the company; and

(c)

this Act shall apply accordingly to the memorandum and articles as altered.

(9)

The certificate shall be prima facie evidence that the requirements in respect of the re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be re-registered under this Act in pursuance of this section and was duly so re-registered.

No. 5 Companies Act 2009 39

48. (1) Subject to this section, a company which is registered as unlimited may be re-registered as limited by shares if a special resolution that it should be so re-registered is passed, and the requirements of this section are complied with in respect of the resolution or otherwise.

(2)

A company shall not, under this section be reregistered as a public company or company limited by guarantee; and a company shall be precluded from re-registering under it if it is unlimited by virtue of re-registration under section 47.

(3)

The special resolution shall state the proposed share capital and provide for the making of the alterations in the memorandum as are necessary to bring it into conformity with the requirements of this Act with respect to the memorandum of a company so limited, and the alterations in the articles as are requisite in the circumstances.

(4)

An application for the company to be re-registered as limited signed by a director and the secretary of the company shall be lodged with the Commission together with the necessary documents not earlier than the day on which the resolution was filed.

(5)

The documents to be lodged with the Commission shall be a printed copy of the–

(a)

memorandum as altered in pursuance of the resolution; and

(b)

articles as so altered.

(6)

If the Commission is satisfied that the company be reregistered under this section as a company limited by shares, it shall retain the application and other documents lodged with it under this section and register them, and it shall issue to the company a certificate of incorporation appropriate to the status to be assumed by the company by virtue of this section.

(7) On the issue of the certificate–

No. 5 Companies Act 2009

Persons promoting company.

Duties and liabilities of promoters.

(8)

The certificate shall be prima facie evidence that the requirements of this section in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be re-registered in pursuance of this section and was duly so re-registered.

(9)

The re-registration of an unlimited company as a limited company shall not affect the rights and liabilities of the company in respect of any debt or obligation incurred, or any contract entered into, by, to, with, or on behalf of the company before the reregistration, and those rights or liabilities may be enforced in the manner provided by Part IV as in the case of a company registered pursuant to this Part.

1. Any person who undertakes to take part in forming a company with reference to a given project and to set it going and who takes the necessary steps to accomplish that purpose, or who, with regard to a newly formed company, undertakes a part in raising capital for it, shall prima facie be deemed a promoter of the company; but a person acting in a professional capacity for persons engaged in procuring the formation of the company shall not be deemed to be a promoter.
2. (1) A promoter stands in a fiduciary relationship to the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf and shall compensate the company for any loss suffered by reason of his failure to do so.

No. 5 Companies Act 2009 41

(2)

A promoter who acquired any property or information in circumstances in which it was his duty as a fiduciary to acquire it on behalf of the company shall account to the company for the property and for any profit which he may have made from the use of the property or information.

(3)

Any transaction between a promoter and the company may be rescinded by the company unless, after full disclosure of all material facts known to the promoter, the transaction shall have been entered into or ratified on behalf of the company–

(a)

by the company’s board of directors independent of the promoter;

(b)

by all the members of the company; or

(c)

by the company at a general meeting at which neither the promoter nor the holders of any shares in which he is beneficially interested shall vote on the resolution to enter into or ratify that transaction.

(4)

No period of limitation shall apply to any proceedings brought by the company to enforce any of its rights under this section but in such proceedings the court may relieve a promoter in whole or in part and on such terms as it thinks fit from liability if in all the circumstances, including lapse of time, the court thinks it equitable to do so.

PART IV–ACTS BY OR ON BEHALF OF THE COMPANY

51. (1) A company shall act through its members in general meeting or its board of directors or through officers or agents, appointed by or under authority derived from the members in general meeting or the board of directors.

(2) Subject to this Act, the respective powers of the members in general meeting and the board of directors shall be determined by the company’s memorandum or articles .

Division of powers between general meeting and board of directors.

No. 5 Companies Act 2009

Delegation to committees and managing directors.

(3)

Except otherwise provided in the company’s memorandum or articles, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Act or the memorandum required to be exercised by the members in general meeting.

(4)

Unless otherwise provided in the memorandum, the board of directors when acting in good faith and with due diligence within the powers conferred upon them by this Act or the memorandum or articles shall not be bound to obey the directions or instructions of the members in general meeting.

(5)

Notwithstanding subsection (3), the members in general meeting may–

(a)

act in any matter if the board of directors are disqualified or are unable to act by reason of a deadlock in the board or otherwise;

(b)

ratify or confirm any action taken by the board of directors;

(c)

make recommendations to the board of directors regarding action to be taken by the board; or

(d)

institute legal proceedings in the name and on behalf of the company if the board of directors refuse or neglect to do so.

(6)

No alteration of the memorandum or articles shall invalidate any prior act of the board of directors which would have been valid if that alteration had not been made.

52. Unless otherwise provided in the memorandum or articles, the board of directors may–

No. 5 Companies Act 2009 43

53. Any act of the members in general meeting, the board of directors, or a managing director while carrying on in the usual way the business of the company shall be treated as the act of the company itself; and accordingly the company shall be criminally and civilly liable therefore to the same extent as if it were a natural person; but–

54. (1) Except as provided in section 53, the acts of any officer or agent of a company shall not be deemed to be acts of the company, unless–

Acts of company.

Acts of officers or agents.

No. 5 Companies Act 2009

Liability of company not affected by fraud or forgery of officer.

Form of contract.

57. Where, in accordance with this Part a company would be liable to a third party for the acts of any officer or agent, the company shall, except where there is collusion between the officer or agent and the third party, be liable notwithstanding that the officer or agent has acted fraudulently or forged a document purporting to be sealed by or signed on behalf of the company.

58. (1) Contracts on behalf of a company may be made, varied or discharged as follows:–

No. 5 Companies Act 2009

Official seal for use abroad.

Bills of exchange and promissory notes.

Cap 229.

61. (1) A company whose objects require or comprise the transaction of business in foreign countries may, if authorised by its articles, have for use in any territory, district, or place outside Sierra Leone, an official seal, which shall be a facsimile of the common seal of the company, with the addition on its face of the name of every territory, district, or place where it is to be used.

(2)

A company having such an official seal may, by writing under its common seal, authorise any person appointed for the purpose in any territory, district, or place outside Sierra Leone, affix the seal to any deed or other document to which the company is party in that territory, district or place.

(3)

The authority of the agent shall, as between the company and any person dealing with the agent, continue during the period, if any, mentioned in the instrument conferring the authority, or if no period is therein mentioned, then until notice of the revocation or determination of the agent’s authority has been given to the person dealing with him.

(4)

The person affixing such official seal shall, by writing under his hand, on the deed or other document to which the seal is affixed, certify the date on which and place at which it is affixed.

(5)

A deed or other document to which an official seal is duly affixed shall bind the company as if it had been sealed with the common seal of the company.

62. (1) A bill of exchange or promissory note shall be deemed to have been made, accepted, or endorsed if made, or by or on account of a company.

(2) The company and its successor shall be bound thereby if the company is in accordance with section 53, liable for the acts of those who made, accepted or endorsed it in its name or on its behalf or account, and the signature by the director or the secretary on behalf of the company shall be deemed to be a signature by procuration for the purposes of section 25 of the Bills of Exchange Act.

No. 5 Companies Act 2009

(5)

Where after the commencement of this Act, any shareholder purports to transfer any shares to a person falling within subsection (1), the purported transfer shall not vest the title in the shares in that person but the title shall remain in the purported transferor or his personal representative who shall hold the shares in trust for that person during the period of his incapacity.

(6)

Where a member dies intestate, his personal representative shall hold his shares in trust for the persons referred to in subsection (1) during the period of their incapacity.

(7)

Membership of a company with shares shall continue until–

(a)

a valid transfer of all shares held by the member is registered by the company;

(b)

all the shares are transmitted to another person by operation of law;

(c)

the shares are forfeited for non-payment of calls under a provision in the memorandum; or

(d)

until the member dies.

(8)

Membership of a company limited by guarantee shall continue until–

(a)

the member dies or validly retires; or

(b)

the member is excluded from membership in accordance with any provision in the memorandum or articles.

Right of 66. Subject to section 96, every member shall, notwithstanding

member to

any provision in the articles, have a right to attend any general meeting

attend

meetings of the company and to speak and vote on any resolution before the

and vote. meeting; but the articles may provide that a member shall not be entitled to attend and vote unless calls or other sums payable by him in respect of shares in the company have been paid.

No. 5 Companies Act 2009

Location of register.

(4)

In the case of a company which does not have a share capital but has more than one class of members, there shall be entered in the register, with the names and addresses of the members, the class to which each member belongs.

(5)

If a company defaults in complying with this section, the company and every officer of it who is in default is liable to a default fine and, for a continued contravention, to a daily default fine of Le500,000

(6)

Any entry relating to a former member of the company may be removed from the register after the expiration of 10 years from the date on which he ceases to be a member.

(7)

Liability incurred by a company from the making or deletion of an entry in its register of members, or from a failure to make or delete the entry, is not enforceable more than 10 years after the date on which the entry was made or deleted or, in the case of such failure, the failure first occurred.

70. (1) A company’s register of members shall be kept at its registered office, except that–

No. 5 Companies Act 2009

Inspection of register and index.

(2)

Subject to the company’s articles, the bearer of a share warrant is entitled, on surrendering it for cancellation, to have his name entered as a member in the register of members.

(3)

The company shall be responsible for any loss incurred by any person by reason of the company entering in the register the name of a bearer of a share warrant in respect of the shares specified in it without the warrant being surrendered and cancelled.

(4)

Until the warrant is surrendered, the particulars specified in subsection (1) are deemed to be those required by this Act to be entered in the register of members and on the surrender, the date of the surrender shall be entered.

(5)

Subject to this Act relating to the directors’ share qualification, the bearer of a share warrant may, if the articles of the company so provide, be deemed a member of the company within the meaning of this Act, either to the full extent or for any purposes defined in the articles.

73. (1) Except when the register of members is closed under thisAct, the register and the index of members’ names shall, during business hours be open to the inspection of any member of the company without charge, and of any other person on payment of the appropriate charge.

(2) The reference to business hours is subject to such reasonable restrictions as the company in general meeting may impose, but not less than 2 hours in each day is to be allowed for inspection.

No. 5 Companies Act 2009

Power to close register.

Power of court to rectify register.

or with any requirement of this Act as to the production of the register, that other person is liable to the same penalties as if he were an officer of the company who was in default, and the power of the court under subsection (6) of section 73 extends to the making of orders against that other person and his officers and servants.

75. A company may, on giving notice by advertisement in a local newspaper circulating in the district in which the company’s registered office is situated, close the register of members for any time or times not exceeding in the whole 30 days in each year.

76. (1) If–

the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register.

(2)

The court may either refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved.

(3)

On an application under subsection (1), the court may decide any question relating to the title of a person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.

(4)

In the case of a company required by this Act to send a list of its members to the Commission, the court, when making an

Liability of members

79. (1) Prior to the winding up of a company a member of the company with shares shall be liable to contribute the balance, if any, of the amount payable in respect of the shares held by him in accordance with the terms of the agreement under which the shares were issued or in accordance with a call validly made by the company pursuant to its articles.

(2)

Where any contribution has become due and payable by reason of a call validly made by the company pursuant to the articles or where, under the terms of any agreement with the company, a member has undertaken personal liability to make future payments in respect of shares issued to him, the liability of the member shall continue notwithstanding that the shares held by him are subsequently transferred or forfeited under a provision to that effect in the articles, but his liability shall cease if and when the company shall have received payment in full of all such moneys in respect of the shares.

(3)

Subject to subsections (1) and (2), no member or past member shall be liable to contribute to the assets of the company, except in the event of its being wound up.

Disclosure of beneficial interest in shares

80. (1) Notwithstanding section 81, a public company may by notice in writing require any member of the company, within such reasonable time as is specified in the notice–

No. 5 Companies Act 2009

(2)

Where a company is informed in pursuance of a notice given to any person under subsection (1), or under this subsection that any other person has an interest in any shares in the company, the company may, by notice in writing, require that other person within such reasonable time as is specified in the notice–

(a)

to indicate in writing the capacity in which he holds that interest;

(b)

if he holds it otherwise than as beneficial owner, to indicate in writing, so far as it lies within his knowledge, the persons who have any interests in them (either by name and address or by other particulars sufficient to enable them to be identified) and the nature of their interests.

(3)

Whenever a company receives information from a person in pursuance of a requirement imposed on him under this section with respect to shares held by a member of the company, it shall be under an obligation to inscribe against the name of the member in the register of members–

(a)

the fact that the requirement was imposed; and

(b)

the information received in pursuance of the requirement.

No. 5 Companies Act 2009 59

(4) Subject to subsection (5), any person who–

(a)

fails to comply with a notice under this section; or

(b)

in purported compliance with such a notice, makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular,

shall be guilty of an offence and liable to imprisonment for a term not exceeding 6 months or to a fine of Le500,000 for each day during which the default continues.

(5) A person shall not be guilty of an offence under paragraph (a) of subsection (4), if he proves that the information in question was already in the possession of the company or that the requirement to give it was for any other reason frivolous or vexatious.

81. (1) A person who is a substantial shareholder in a public company shall give notice in writing to the company stating his name and address and giving full particulars of the shares held by him or his nominee (naming the nominee) by virtue of which he is a substantial shareholder.

(2)

A person is a substantial shareholder in a public company if he holds by himself or by his nominee, shares in the company which entitle him to exercise at least 10 per cent of the unrestricted voting rights at any general meeting of the company.

(3) A person required to give a notice under subsection

(1)

shall do so within 14 days after that person becomes aware that he is a substantial shareholder.

(4)

The notice shall be so given notwithstanding that the person has ceased to be a substantial shareholder before the expiration of the period referred to in subsection (3).

No. 5 Companies Act 2009

Person ceasing to be substantial shareholder to notify company.

Register of interests in shares.

(5) A person who fails to comply with this section shall be guilty of an offence and be liable to a fine of Le500,000 for each day during which the default continues.

82. (1) A person who ceases to be a substantial shareholder in a public company shall give notice in writing to the company stating his name and the date on which he ceases to be a substantial shareholder and giving full particulars of the circumstances by reason of which he ceased to be a substantial shareholder.

(2) A person required to give notice under subsection (1), shall do so within 14 days after he becomes aware that he has ceased to be a substantial shareholder.

83. (1) A public company shall keep a register in which it shall enter–

(2)

The register shall be kept at the place where the register of members required to be kept under section 70, is kept and subject to the same right of inspection as the register of members.

(3)

The Commission may, at any time in writing, require the company to furnish it with a copy of the register or any part of the register and the company shall furnish the Commission within 14 days after the day on which the requirement is received by the company.

(4)

If the company ceases to be a public company, it shall continue to keep the register until the end of the period of 6 years beginning with the day next following that on which it ceases to be such a company.

No. 5 Companies Act 2009 61

(5)

A company shall not, by reason of anything done for the purposes of this section, be effected with notice of, or put on enquiry as to, a right of a person to or in relation to a share in the company.

(6)

If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine not exceeding Le3,000,000 and a fine of Le500,000 for each day that the default continues.

84. The matter relating to beneficial interests in shares required by section 80 to be disclosed shall be entered in a different part of the register of interests which shall be so made up that the entries inscribed in it appear in chronological order.

PARTVI–SHARE CAPITAL

Alteration of share capital by consolidation etc.

86. (1) A company having a share capital may in general meeting and not otherwise alter the conditions of its share capital so as to–

(2) Cancellation of shares made in pursuance of subsection (1) shall not be deemed to be reduction of share capital within the meaning of this Act.

No. 5 Companies Act 2009

Special 89. (1) Subject to confirmation by the court, a company

resolution for

having a share capital may, if so authorised by its articles, by special

reduction of
share capital. resolution reduce its share capital in any way.

(2)

In particular, and without prejudice to subsection (1), the company may–

(a)

extinguish or reduce the liability on any of its shares in respect of share capital not paid up;

(b)

either with or without extinguishing or reducing liability on any of its shares cancel any paid-up share capital which is lost or unrepresented by available assets; or

(c)

either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the company’s wants, and the company may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(3)

A special resolution under this section shall in this Act be referred to as “a resolution for reducing share capital”.

No. 5 Companies Act 2009

Registration of order and minutes of reduction.

93. (1) The Commission, on production to it of the order of the court confirming the reduction of a company’s share capital, and the delivery to it of a copy of the order and of the minutes of the meeting of the company (approved by the court) showing, with respect to the company’s share capital as altered by the order –

shall register the order and minutes.

(2)

On the registration of the order and minutes, and not before, the resolution for reducing the share capital as confirmed by the order so registered shall take effect.

(3)

A notice of the registration shall be published in such manner as the court may direct.

(4)

The Commission shall certify the registration of the order and minutes and the certificate–

(a)

may be either signed by the Registrar or authenticated by the official seal of the Commission;

(b)

shall be prima facie evidence that all the requirements of this Act with respect to the reduction of share capital have been complied with, and that the company’s share capital is as stated in the minutes.

Nature of shares

94. Subject to this Act, the rights and liabilities attaching to the share of a company shall–

(a)

be dependent on the terms of issue and of the company’s articles; and

(b)

include the right to attend any general meeting of the company and to vote at such a meeting.

1. The shares or other interest of a member in a company shall be personal estate transferable in the manner provided in the articles of association of the company.
2. (1) Unless otherwise provided by any other enactment or the articles of association–

(a) any shares issued by a company after the date of commencement of this Act, shall carry the right on a poll at a general meeting of the company to one vote in respect of each share and no company may by its articles or otherwise authorise the issue of shares which carry more than one vote in respect of each share or which do not carry any right to vote; and

No. 5 Companies Act 2009

Power of companies to issue shares.

Issue of

classes of

shares.

Issue of shares at a premium.

(2) If a company contravenes any of the provisions of this section, the company and any officer in default shall be guilty of an offence and be liable to a daily default fine of Le500,000 and any resolution passed in contravention of this section shall be void.

(3) Nothing in this section shall–

(a)

affect any right attached to a preference share under section 119; and

(b)

apply to a private company.

1. Subject to any limitation in the articles of a company with respect to the number of shares which may be issued, and any preemptive rights prescribed in the articles in relation to the shares, a company shall have the power, at such times and for such consideration as it shall determine, to issue shares up to the share capital of the company.
2. (1) A company may, where so authorised by its articles, issue classes of shares.

(2)

Shares shall not be treated as being of the same class unless they rank equally for all purposes.

99. (1) Shares of a company may be issued at a premium.

(2)

Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premium on those shares shall be transferred to an account, to

No. 5 Companies Act 2009 71

be called “the share premium account”; and the provision of this Act relating to the reduction of share capital of a company shall, except as provided in this section, apply as if the share premium account were paid up share capital of the company.

(3)

Notwithstanding anything to the contrary in subsection (2), the share premium account may be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares, in writing off–

(a)

the preliminary expenses of the company; or

(b)

the expenses of, or the commission paid or discount allowed on, issue of shares of the company; or in providing for the premium payable on redemption of any redeemable share of the company.

(4)

Where a company has, before the commencement of this Act issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act; but any part of the premium which has been so applied that it does not at the commencement of this Act form an identifiable part of the company’s reserves within the meaning of this Act shall be disregarded in determining the sum to be included in the share premium account.

100. (1) Subject to this section, it shall be lawful for a company Issue of shares at

to issue at a discount shares in the company of a class of shares

discount. already issued if–

No. 5 Companies Act 2009 73

No. 5 Companies Act 2009

Issue of redeemable preference shares.

(2)

Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the court for an order sanctioning the issue, and on such application the court may, having regard to all the circumstances of the case, if it thinks proper to do so, make an order sanctioning the issue on such terms and conditions as it thinks fit.

(3)

Every prospectus relating to the issue of the shares and every balance sheet issued by the company subsequent to the issue of shares, shall contain particulars of the discount allowed on the issue of the shares or of so much of that discount as has not been written off at the date of the issue of the prospectus.

(4)

If default is made in complying with subsection (3), the company and every officer of the company who is in default shall be guilty of an offence and be liable to a fine of Le500,000 for each day during which the default continues.

101. Subject to section 133, a company limited by shares may, if so authorised by its articles, issue preference shares which shall, or at the option of the company, be liable to be redeemed.

102. (1) Where a company has purported to issue or allot shares and the creation, issue or allotment of those shares was invalid by reason of any provision of this Act or any other enactment or of the articles of the company or otherwise, or the terms of issue or allotment were inconsistent with or unauthorised by such provision, the court may, upon application made by the company or by a holder or mortgagee of those shares or by a creditor of the company, and upon being satisfied that in all the circumstances it is just and equitable to do so, validate the issue or allotment of those shares or confirm the terms of the issue allotment, as the case may be.

(2) In every case where the court validates an issue or allotment of shares or confirms the terms of an issue or allotment in accordance with subsection (1), it shall make, upon payment of the prescribed fees, an order which shall be proof of the validation or confirmation and upon the issue of the order, those shares shall be deemed to have been issued or allotted upon the relevant terms of issue or allotment.

1. Subject to this Act, the power to allot shares shall be vested in the company which may delegate it to the directors, subject to any conditions of directions that may be imposed in the articles or from time to time by the company in general meeting.
1. The following provisions shall apply in respect of an application for an allotment of issued shares of a company:–
1. in the case of a private company or a public company where the issue of shares is not public, there shall be submitted to the company a written application signed by the person wishing to purchase shares and indicating the number of shares required;
2. in the case of a public company, subject to any conditions imposed by the Commission where the issue of shares is public, there shall

No. 5 Companies Act 2009

Allotment as acceptance of offer.

Payment on allotment.

Prohibition of allotment unless minimum subscription received.

1. An allotment of shares made and notified to an applicant in accordance with section 104, shall be an acceptance by the company of the offer by the applicant to purchase its shares and the offer takes effect on the date on which the allotment is made by the company.
2. Subject to sections 114 to 117, a company may in its articles, make provision with respect to payments on allotment of its shares.
3. (1) No allotment shall be made of any share capital of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount which, in the opinion of the directors shall be raised by the issue of share capital in order to provide for matters specified in subsection (6) has been subscribed, and the sum payable on application for the amount so stated has been paid to and received by the company.

No. 5 Companies Act 2009 75

(2)

For the purposes of subsection (1), a sum shall be deemed to have been paid to and received by the company if a cheque for that sum has been received in good faith by the company and the directors of the company have no reason for suspecting that the cheque will not be paid.

(3)

The amount stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Act referred to as “the minimum subscription”.

(4)

The amount payable on application on each share shall not be less than 5 per cent of the nominal amount of the share.

(5)

The amount paid on application shall be set apart by the directors as a separate fund and shall not be available for the purposes of the company or the satisfaction of its debts until the minimum subscription has been made up.

(6)

If the conditions specified in this section have not been complied with on the expiration of 30 days after the closure of the public offering, all moneys received from applicants for shares shall be forthwith repaid to them without interest, and, if such money is not so repaid within 40 days after the closure of the public offering, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent per annum from the expiration of the fortieth day; but a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(7)

Any condition requiring or binding any applicant for shares to waive compliance with any requirement of this section shall be void.

(8)

This section, except subsection (3), shall not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

No. 5 Companies Act 2009

Prohibition of allotment in certain cases of prospectus delivered to Commission.

Effect of irregular allotment.

108. (1) A company having a share capital which–

shall not allot any of its shares or debentures unless at least 3 days before the first allotment of either shares or debentures there has been delivered to the Commission for registration a statement in lieu of prospectus, signed by every person who is named in it as a director or a proposed director of the company or by his agent authorised in writing in the form containing the particulars set out in the Second Schedule .

(3) If a company acts in contravention of this section, the company and every director of the company who knowingly authorises or permits the contravention shall be guilty of an offence and be liable to a fine not exceeding Le3,000,000.

109. (1) An allotment made by a company to an applicant in contravention of sections 107 and 108, shall be voidable at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, notwithstanding that the company is in the course of being wound up.

(2) If any director of a company knowingly contravenes or permits or authorises the contravention of any of the provisions of sections 107 and 108 with respect to allotment, he shall be liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby.

No. 5 Companies Act 2009 77

(3) Proceedings to recover any loss, damages or costs shall not be commenced after the expiration of two years from the date of allotment.

110. (1) Whenever a company limited by shares makes any

allotment of its shares, the company shall, within one month thereafter deliver to the Commission for registration–

(2) If default is made in complying with this section, every officer of the company who is in default shall be guilty of an offence and be liable to a fine of Le500,000 for each day during which the default continues; but in case of default in delivering to the

No. 5 Companies Act 2009

Prohibition of payment of commissions, discounts out of shares and capital.

Power to pay commission in certain cases.

Commission within one month after the allotment any document required to be delivered by this section, the company or any officer liable for the default, may apply to the court for relief, and the court, if satisfied that the omission to deliver the document was accidental or due to inadvertence or that it is just and equitable to grant relief, may make any order extending the time for the delivery of the document for such period as the court may think proper.

111. (1) Subject to section 105, no company shall apply any of its shares or capital money either directly or indirectly in payment of any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolutely or conditional, for any shares in the company,whether the shares or capital money of any property acquired by the company or to the contract price of any work to be executed for the company, or such money is paid out of the nominal purchase money or contract price, or otherwise.

(2)

Nothing in this section shall affect the payment of any brokerage as is usual for a company to pay.

(3)

A vendor to or promoter of a company or other person who receives payment in money or shares from a company, shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.

112. (1) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company or procuring or agreeing to procure subscription, whether absolutely or conditionally, for any shares in the company if–

No. 5 Companies Act 2009 79

(2) If default is made in delivering to the Commission any document required to be delivered to the Commission under this section, the company and every officer in default shall be liable to a fine not exceeding Le3,000,000.

No. 5 Companies Act 2009

Statement in balance sheet as to commission.

Payment for shares.

Meaning of payment in cash.

Payment other than in cash.

113. (1) Where a company has paid any sum by way of commission in respect of any shares in the company, the amount so paid or so much of it as has not been written off, shall be stated in every balance sheet of the company until the whole amount has been written off.

(2) If default is made in complying with this section, the company and every officer of the company in default commits an offence and be liable to a fine of Le500,000 for each day during which the default continues.

No. 5 Companies Act 2009 81

(3)

The company shall, not more than three days after the receipt by it of the valuer’s report, send a copy of it to the proposed purchaser of shares, and indicate to the proposed purchaser whether or not it intends to accept the consideration as payment or part payment for its shares by the valuer as worth at least as much as may be credited as paid up in respect of the shares allowed to the proposed purchaser.

(4)

A company shall not accept as payment or part-payment for its shares consideration other than cash, unless the cash value of the consideration as determined by the valuer is worth at least as much as may be credited as paid-up in respect of the shares allowed to the proposed purchaser.

(5)

A valuer who, in his report or otherwise, knowingly or recklessly makes a statement which is misleading, false or deceptive in a material particular shall be guilty of an offence and be liable to imprisonment for a term not exceeding 12 months or to a fine not exceeding Le8,000,000 or both such imprisonment and fine.

(6)

A valuer shall be paid by the company and the buyer of the shares such amount as may be agreed upon.

(7)

For the purposes of this section “valuer” means an auditor, a valuer, a surveyor or an accountant not being a person in the employment of the company nor an agent or associate of the company or any of its directors or officers

117. To the extent to which it is so authorised by its articles, a company may–

Reserve liability of companies having share capital.

Right of a preference shareholder to more than one vote.

119. (1) Notwithstanding section 96, the articles may provide that preference shares issued after the commencement of this Act shall carry the right to attend general meetings and on a poll at the meeting to more than one vote per share in the following circumstances, but not otherwise:–

(a)

upon any resolution during such period as the preferential dividend or any part of it remains in arrears and unpaid, such period starting from a date not more than 12 months or such less period as the articles may provide, after the due date of the dividend;

(b)

upon any resolution which varies the rights attached to such shares;

(c)

upon any resolution to remove an auditor of the company or to appoint another person in place of such auditor; and

(d)

upon any resolution for the winding up of the company or during the winding up of the company.

(2) Notwithstanding the provisions of section 96, any special resolution of a company increasing the number of shares of any class may validly resolve that any existing class of preference shares shall carry the right to such votes additional to one vote per

No. 5 Companies Act 2009 83

share as shall be necessary in order to preserve the existing ratio which the votes exercisable by the holders of such preference shares at a general meeting of the company bear to the total votes exercisable at the meeting.

(3) For the purposes of subsection (2), a dividend shall be deemed to be due on the date appointed in the articles for the payment of the dividend for any year or other period, or if no such date is appointed, upon the day immediately following the expiration of the year or other period, and whether or not such dividend shall have been earned or declared.

120. In construing the provisions of a company’s articles in respect of the rights attached to shares, the following rules of construction shall be observed–

Construction of class rights.

No. 5 Companies Act 2009

Shares to be numbered.

Issue of share certificates.

(e)

if any class of shares is expressed to have preferential rights to payment out of the assets of the company in the event of winding up, then unless the contrary intention appears, such class has no further right to participate in the distribution of assets in the winding up;

(f)

in determining the rights of the various classes to share in the distribution of the company’s property on a winding up, no regard shall be had, unless the contrary intention appears, to whether or not such property represents accumulated profits or surplus which would have been available for dividend while the company remained a going concern;

(g)

subject to this section, all shares rank equally in all respects, unless the contrary intention appears in the company’s articles.

121. Each share in a company having a share capital shall be distinguished by its appropriate number; but if at any time all the issued shares in a company, or all of its issued shares of a particular class, are fully paid up and rank pari passu for all purposes, none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.

No. 5 Companies Act 2009 85

(2)

Every person whose name is entered as a member in the register of members shall be entitled without payment to receive, within 3 months of allotment or lodgement of transfer or within such other period as the conditions of issue shall provide one certificate for all his shares or several certificates each for one or more of his shares upon payment of a fee as the directors shall, from time to time, determine.

(3)

Every certificate issued by a company shall be under the company’s seal and shall specify the shares to which it relates and the amount paid up on them; but in respect of shares held jointly by several persons, the company shall not be bound to issue more than one certificate, and delivery of a certificate for shares to one of several joint holders shall be sufficient delivery to all such holders.

(4)

If a share certificate is defaced, lost or destroyed, it may be replaced on such terms (if any), as to evidence and indemnity and the payment of the expenses of the company of investigating evidence as the directors think fit.

(5)

If any company on which a notice has been served requiring it to make good any default in complying with the provisions of subsection (1) fails to make good the default within 10 days after the service of the notice, the court may, on the application of the person entitled to have the certificate delivered to him, make an order directing the company and any officer of the company to make good the default within such time as may be specified in the order; and such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company responsible for the default.

(6)

If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and be liable to a fine of Le500,000 for each day during which the default continues.

Effect of share certificate.

Probate, etc. as evidence of grant.

Issue and effect of share warrants to bearer.

No. 5 Companies Act 2009 87

126. (1) Notwithstanding anything in the articles of a company, it shall not be lawful for the company to register a transfer of shares in or debentures of the company, unless a proper instrument of transfer has been delivered to the company; but nothing in this section shall prejudice any power of the company to register as shareholder, any person to whom the right to any shares in the company has been transmitted by operation of law.

(2)

In the case of the death of a shareholder or debenture holder, the survivor, where the deceased was a joint holder, and the legal representatives of the deceased, where he was a sole holder or last survivor of joint holders, shall be the only persons recognized by the company as shareholders or debenture holders.

(3)

A person upon whom the ownership of a share or debenture devolves by reason of his being the legal personal representative or trustee in bankruptcy of the holder or by operation of law, may upon such evidence being produced as the company may properly require, be registered himself as the holder of the share or debenture or transfer it to some other person; and such transfer shall be as valid as if he had been registered as a holder but shall have no right to refuse registration of the person himself.

(4)

A person upon whom the ownership of a share or debenture devolves by reason of his being the legal representative, receiver or trustee in bankruptcy of the holder or by operation of law shall, prior to registration of himself or a transferee be entitled to the same dividends, interest and other advantages as if he were the registered shareholder and, in the case of a share, to the same rights and remedies as if he were a member of the company, except that he shall not, before being registered as a member in respect of the share, be entitled to attend and vote at any meeting of the company; but the company may at any time give notice requiring such person to elect to be registered himself or to transfer the share or debenture; and if the notice is not complied with within 90 days, the company may

Entry in register of transfers.

Notice of refusal to register.

Transfer by personal representatives.

Recognition of executors’ etc. title to shares.

No. 5 Companies Act 2009 89

(3)

Nothing in subsection (2) shall release the estate of a deceased joint holder from any liability in respect of any share which have been jointly held by him with other persons.

(4)

Any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such evidence being produced as may from time to time be properly required by the directors, have the right, either to be registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made but the directors shall, in either case have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or bankrupt person before the death or bankruptcy.

(5)

A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company.

131. (1) Any person claiming to be interested in any shares or the dividends or interest on them may protect his interest by serving on the company concerned a notice and affidavit of interest.

(2)

Notwithstanding section 77, the company shall enter on the register of members, the fact that such notice has been served and shall not register any transfer or make any payment or return in respect of the shares contrary to the terms of the notice until the expiration of 21 days notice to the claimant of the proposed transfer or payment.

(3)

In the event of any default by the company in complying with this section, the company shall compensate any person, injured by the default.

No. 5 Companies Act 2009 95

(3)

The aggregate amount of any outstanding loans made under paragraph (c) of subsection (2) shall be shown as a separate item in every balance sheet of the company.

(4)

If a company acts in contravention of this section, the company and every officer of the company who is in default shall be guilty of an offence and be liable to a fine not exceeding Le5,000,000.

Acquisition by company of its own shares.

Conditions for purchase by a company of its own shares.

No. 5 Companies Act 2009 97

137. No transaction shall be entered into by or on behalf of a company whereby the total number of its shares, or of its shares of any one class, held by persons other than the company or its nominees becomes less than 70 per cent of the total number of shares of that class, which have been issued but–

138. (1) Within the period of 28 days beginning with the date on which any shares purchased by a company under this Part are delivered to it, the company shall deliver to the Commission for registration a return in the prescribed form stating with respect to shares of each class purchased, the number and nominal value of those shares and the date on which they are delivered to the company.

(2) In the case of a public company, the return shall also state–

Enforceability of contract to acquire shares.

Re-issue of shares acquired.

Acquisition of shares of holding company.

No. 5 Companies Act 2009 99

(3) A subsidiary which is, at the commencement of this Act, a holder of shares of its holding company or a subsidiary which acquired shares in its holding company may continue to hold such shares, but subject to subsection (1), shall have no right to vote at meetings of the holding company or any class of shareholders of the holding company and shall not acquire any future shares in it except on a capitalisation issue.

Creation of debentures and debenture stock

142. A company may borrow money for the purpose of its business or objects and may mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the company or of any third party.

1. A company may issue perpetual debentures, and a conditioncontained in any debentures, or in any deed for securing any debentures, shall not be invalid by reason only that the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding.
2. Debentures may be issued upon the terms that in lieu of redemption or repayment, they may, at the option of the holder or the company, be converted into shares in the company on such terms as may be stated in the debentures.
3. (1) Debentures may either be secured by charge over the company’s property or may be unsecured by any charge.

Redeemable debentures

Power to reissue redeemed debentures in certain cases.

No. 5 Companies Act 2009 101

(2)

On a re-issue of redeemed debentures, the person entitled to the debentures shall have, and shall be deemed always to have had, the same priorities as if the debentures had never been redeemed.

(3)

Where a company has either before or after the commencement of this Act, deposited any of its debentures to secure advances, from time to time, on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit, whilst the debentures remained so deposited.

(4)

The re-issue of a debenture or the issue of another debenture in its place under the power given by this section to or deemed to have been possessed by a company, whether the re-issue or issue was made before or after the commencement of this Act, shall be treated as issue of a new debenture for the purposes of a stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued.

(5)

Any person lending money on the security of a debenture re-issued under this section which appears to be duly stamped, may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped, but in such case the company shall be liable to pay the proper stamp duty and penalty.

(6)

Nothing in this section shall prejudice any power to issue debentures in place of any debentures paid off or otherwise satisfied or extinguished which, by its debentures or the securities for the debentures, is reserved to a company.

148. (1) Every register of holders of debentures of a company shall, except when duly closed, be open to the inspection of the registered holders of such debentures and of any holder of shares in the company, but subject to such reasonable restrictions as the company may in general meeting impose, so that not less than two hours in each day shall be allowed.

Meetings of debenture holders.