RE: “ALLEGED 419 DIRECTOR”: ASSESSING THE CONSTITUTIONALITY OF SECTION 172(2) OF THE COMPANIES ACT, 2019 (ACT 992) By Frederick Agaaya Adongo

In an erudite legal masterpiece authored by my esteemed sister and friend, Christine Selikem Lassey, titled: “Alleged 419 Director”: Assessing the Constitutionality of Section 172(2) of The Companies Act, 2019 (Act 992), the legality of section 172(2) the Companies Act, 2019 (Act 992) was challenged. The conclusion reached by her has been challenged by another legal brain, Timothy Selikem Donkor, who has endeavored to render nugatory the conclusions reached by my noble sister and the reasons she advanced in support of her position. This great legal conflict between the Selikems, which I refer to as the “Legal Selidispute”, is a matter that necessitates the invocation of seasoned legal minds on the issue. The purpose of this piece, therefore, is to assess the respective merits of the two schools of thought regarding the constitutionality or otherwise of the impugned section of the Companies Act, 2019 (Act 992).

Before I proceed, it must be sounded forcefully that any conclusion regarding the legality or otherwise of a statute or a statutory provision thereof is a conclusion that one is not justified in making without proper and careful examination. Indeed, I must say that it runs counter to the best of juristic thought to seek to render unlawful any piece of legislation or any provision therein on the basis of mere trivialities. Hence, for any statute or its provision to be deemed contrary to the dictates of justice and thus unconstitutional, it must be proved satisfactorily that the said statute or the particular provision is greatly at variance with a certain provision of the “Grundnorm” (the fundamental norm which constitutes the foundation stone of a legal system), which, in this instance, is the Constitution, 1992 by virtue of Article 1(2).

Proceeding therefrom, the Companies Act, 2019, is one of the most recent legislation enacted by Parliament. This Act has effected substantial changes to certain provisions that appeared in the Companies Code, 1963 (Act 137). Notably, the new Companies Act has essentially abolished the ultra vires rule and has made it optional for a company to have a Constitution at the time of its incorporation.  More fundamentally, for purposes of our present discourse, another novelty that has been brought to the fore by the new Companies Act is the inclusion therein of the impugned section 172(2) which bars certain categories of persons from becoming Directors of Companies.

For purposes of the analysis herein, it is necessary to produce in extenso the provision in question. In the ibsissima verba of the draftsman as seen in Section 172 of the Companies Act, 2019 (Act 992),

“(2) 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; or

(iii) a director or senior manager of a company that has become insolvent or if the person has been, the date of the insolvency and the particular company.”

Dissatisfied with the import of this provision, Selikem Lassey has, in the Article aforementioned, sought to challenge the propriety of this provision against the background of a cardinal principle of our criminal jurisprudence, the presumption of innocence, which has been given constitutional blessing in Article 19(2)(c) in the following terms: “a person charged with a criminal offence shall be presumed to be innocent until he is proved or has pleaded guilty.”

The essential portions of her arguments as are germane for purposes of this discourse are reproduced here as follows. She there said, “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.” She therefore called on the Supreme Court to declare the said provision unconstitutional, when the opportunity presents itself.

Interestingly, not long after this opinion was published, another publication from Selikem Donkor sought to dispute the arguments raised by Selikem Lassey in many material respects.

Selikem Donkor expressed the view that there is no prima facie case of contradiction or inconsistency between section 172(2) of the Companies Act 2019 and Article 19(2)(c) of the 1992 Constitution. The learned author, after reviewing a couple of legal authorities, particularly the case of Martin Kpebu v Attorney General, concluded that, “the tentacles of Art 19(2)(c) is only into criminal matters, thus can only be applied to invalidate an Act which attempts to prejudice or imply a contrary presumption of innocence into our criminal procedure. Though such an exclusion seems unfortunate since innocent persons who are caught up by frivolous acts of prosecution by the State for the listed offences will be barred from being appointed to be directors of companies within the limitations outlined under section 172 even when proved to be innocent, the court is not a court of emotions to construct the law by what we feel. Rather what is written and has been defined in law is the focus. And per that definition, there is no way one can construct that Art 19(2)(c) limits section 172(2) to the extent that, the latter provision is inconsistent and void.” He further noted: “the Act does not presume that persons who are charged with those offences whether convicted or acquitted are indeed guilty of those offences. Any such construction will be an absurd and an implausible construction of section 172.”

I agree with Selikem Donkor on the point that Miss Lassey’s construction of section 172(2) as sinning against the rule of the presumption of innocence as enshrined in Article 19(2)(c) of the Constitution is palpably erroneous. However, with the greatest of respect, his conclusion that the impugned section does not presume that persons who are charged with those offences whether convicted or acquitted are indeed guilty of those offences, is highly flawed. The question I pose to Mr. Donkor is this: if the Act does not presume that the accused person is actually guilty of the offence, then on what basis is the person barred from becoming a director of a company? To state that any person who has been “charged with” a criminal offence cannot be a director has a similar effect as saying that “no person who has graduated from the University of Ghana School of Law can be a director of a company.” On the basis of what can this assertion be justified? Is it just actuated by malice? What is the crime committed by University of Ghana School of Law students to warrant such a limitation? None whatsoever! The provision in section 172(2) seeks to suggest that it is a criminal offence to be arraigned before court. Is that what our criminal jurisprudence stipulates? Certainly not. What then is the sin that section 172(2) commits against the Constitution, 1992, if any? We shall resolve this question subsequently.

Admittedly, as both authors identify, the fairest interpretation that could be given to the phrase “charged with or convicted of” on its face value is as follows. It presupposes that any person who has been brought before court on account of an alleged criminal act committed by him, provided that act falls within the category of crimes contemplated under section 172(2), cannot be a director of a company. This is so even if the accused person has been declared innocent by the court, and hence acquitted and discharged. Will this interpretation not occasion a grave miscarriage of justice? Let us not be quick to conclude without careful examination.

In so far as the interpretation given by my esteemed brother and sister is sound, one is entitled to ask: what is the legislative intent behind section 172(2) of Act 992 and whether it is possible to read the word “or” appearing between “charged with” and “convicted of” in section 172(2) of Act 992 as being conjunctive so as to ascertain the intention of the legislature in this instance? In the case of Republic v. Yebbi and Avalifo [1999-2000] 2 GLR 50, Acquah JSC stated: “generally the word “and” is conjunctive and “or” disjunctive. But to carry out the intention of the legislature, it may be necessary to read “and” in place of the conjunction “or” and vice versa.” In consequence thereof, he concluded that unless there are compelling reasons for interpreting the word “and” in article 143(1) of the Constitution, 1992 as being only conjunctive, it would be more desirable to interpret it liberally to encompass both conjunctive and disjunctive.

On the basis of this authority, and without any access to parliamentary records as aids to ascertaining the intention of Parliament behind the contested provision, one may argue that Parliament intended that the person charged must have actually been convicted before section 172(2) can apply to him.

Even if the immediately preceding analysis is correct, one is entitled to ask further: what is the rationale behind such choice of words? Is it merely designed to confuse the general public as regards the true import of the provision and to perpetrate legislative mischief? Thus, even if we read the word “or” as it appears in section 172(2) conjunctively, it is highly superfluous, hence illogical for the legislature to use such words in framing the provision, provided that the intent as stipulated above was actually the intent of the legislature. In essence, the legislature could have used “convicted of” to convey such an intention, since no one can be convicted of an offence without first been charged with that offence.

Then, the fundamental question I shall attempt to resolve is whether the impugned section is unconstitutional. To be able to resolve this question, recourse shall be had to Article 15 of the 1992 Constitution which provides as follows:

“(1) The dignity of all persons shall be inviolable.

(2) No person shall, whether or not he is arrested, restricted or retained, be subjected to –

(a) torture or other cruel, inhuman or degrading treatment or punishment;

(b) any other condition that detracts or is likely to detract from his dignity and worth as a human being.

(3) A person who has not been convicted of a criminal offence shall not be treated as a convicted person and shall be kept separately from convicted persons.”

In the case of Martin Kpebu v. Attorney General, Benin JSC notoriously opined that “the free person and his dignity are the highest values of the constitutional order therefore the State in all its forms is obliged to respect and defend it.” Therefore, any attempt by any State institution, including Parliament, to deny the individual of his dignity must be frowned upon.

Without delving so much into constitutional interpretation, it is submitted that section 172(2) of Act 992, in so far as it bars persons who have been merely “charged with” certain offences from becoming directors of Companies sins against Article 15 of the 1992 Constitution. This is because, it places both those who are convicted of criminal offences and those who may be discharged by a court upon been charged with a criminal offence on the same pedestal, as far as assuming directorship roles in companies is concerned. This presupposes, as I have stated before, that it is criminal to have been arraigned before a court. This contention therefore materially seeks to treat acquitted persons in much the same way as convicted persons, an attempt which Article 15(3) categorically prohibits.

From the discussion so far, the inescapable conclusion is that section 172(2) is contrary to Article 15 of the 1992 Constitution and should be declared void in pursuance of Article 1(2) of the 1992 Constitution which 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 should, to the extent of the inconsistency, be void.” As such, whenever the opportunity avails itself, the Supreme Court should, in the interest of justice struck down as illegal section 172(2) of the Companies Act, 2019 (Act 992).