‘’Alleged 419 Director ‘’: Assessing the constitutionality of section 172(2) of The Companies Act, 2019 (Act 992) by Christine Selikem Lassey

The law is certain but not static. There is a need for modification to suppress the mischief of society as they occur. In the wake of the collapse of many banks and micro-finance institutions in the country, there was a need to revisit and appraise the potency of our laws. This is particularly because of the bad decisions made by some directors of these institutions.  The Companies Act, 1963 (Act 179) is one of the laws that have gone through the baptism by fire. The call for reform led to the passage of the new Companies Act 2019 (Act 992).  The new breeze of policy can be highlighted in section 172(2) of Act 992 which provides that:

A person shall not be appointed as a director of a company unless the person has, before the appointment

(a) Made a statutory declaration submitted to the company and subsequently filed with the Registrar to the effect that, the person has not within the preceding five years of the application for incorporation been

(i) charged with or convicted of a criminal offence involving fraud or dishonesty;

(ii) charged with or convicted of a criminal offence relating to the promotion, incorporation or management of a company;

A director of a company stands in a fiduciary relationship to the company and hence must exercise good faith in his role. Under ACT 992 a person who has been ‘’charged’’ of a criminal offence involving dishonesty, fraud, promotion, incorporation or management of a company cannot be a Director. The provision adopts a defensive mechanism and seeks to prevent such persons from being Directors.

The rationale of the provision on the face of the provision can be justified considering the hardship persons have been put through as a result of poor management by Directors of Banks. However, a critical assessment of the provision raises critical issues about the presumption of innocence and whether the provision is unconstitutional.

As noted by the general comment on the administration of justice by the committee on civil and political rights, the presumption of innocence is a fundamental principle for the protection of fundamental human rights. As a result, the onus lies on the prosecution to prove the guilt of the accused person beyond reasonable doubt and the accused person enjoys the benefit of any doubt. The principle requires that the accused person should not be prejudiced in any way by reason only of his arrest or charge. Inherent in this principle is the protection afforded innocent persons who may be unfairly charged and trialed for offences they did not commit.

Ghana as a state party to the International Covenant on Civil and Political Rights (ICCPR) has inculcated this principle in the 1992 constitution and its predecessors. This is reflected in Article 19(2) c of the 1992 Constitution which provides that a person charged with a criminal offence be presumed to be innocent until he is proved or has pleaded guilty.

Section 172(2) of Act 992 provides a blanket provision which precludes persons who have been charged with the offences stated therein from becoming directors. This by necessary implication includes individuals who have even been acquitted and discharged by the court. It can be argued by policymakers that in criminal procedure an accused person can be acquitted based on procedural rules and this in no way suggests that the individual did not in actual fact commit the said offence. As a result, section 172(2) is the barricade to prevent such persons from being directors. The danger with such a proposition is its implications for other individuals who did not, in fact, commit the crimes they were accused of and hence have been acquitted and discharged by the court. It is worthy of note that section 172(2) to the extent that it prejudices persons and prevents them from being directors by reason only of being charged with a criminal offence involving fraud or dishonesty, promotion, incorporation or management of a company sins against the presumption of innocence as enshrined in article 19(2)c of the 1992 constitution. The drafters of the Act must adopt another approach which protects companies from fraudulent directors but is also in sync with the constitution.

Justice Sowah in the celebrated case of Tuffour v Attorney General explains that the constitution is ‘’ the fountain-head for the authority which each of the three arms of government possesses and exercises’’. Article 1(2) of the 1992 Constitution provides that ‘’the Constitution shall be the supreme law of Ghana and any other law found to be inconsistent with any provision of this Constitution shall, to the extent of the inconsistency, be void.’’

The writer submits that section 172(2) of the Companies Act 2019, Act 992 is unconstitutional. The Act is still in its early days and the Supreme Court, when seized with the opportunity, should uphold its duty as the custodian of the constitution and strike down the said provision as unconstitutional.