It is a well-established principle that a company, non-natural person, acts through its officers to achieve its goals and objectives. In the matter Of Dalex Finance And Leasing Company Ltd Vrs Ebenezer Denzel Amanor and 2 others CIVIL APPEAL NO. J4/02/2020 (unreported) ("Dalex Finance Case"), Pwamang JSC stated that:

"It is a self-evident postulate of law that a limited liability company, being an artificial legal person, can only act through the instrumentality of human beings who stand in certain legal relationships with the company".

By virtue of the above principle, it is legitimate for any reasonable person to believe that any acts of officers of a company shall be deemed as an act of the company thereby holding the company liable for any fraudulent acts of it officers.

However the court further indicated in the Dalex Finance case (supra) that:

"the law distinguishes acts of the company from acts of its officers and agents that may be binding on the company but are not deemed acts of the company. Stated differently, it is not the acts of any person with a relationship to a company that are considered acts of the company and even for those whose relationship warrants their acts to be deemed acts of the company, it is not every act of theirs that the law treats as acts of the company".

Therefore not all acts or fraudulent acts of officers of a company can be deemed to be act of the company. The obvious question any curious person will ask is: under what circumstances acts of officers of a company could be deemed to be an act of the company?

In the Dalex Finance case, the Supreme Court had the opportunity to affirm the circumstances upon which fraudulent acts of officers of a company can be deemed to be acts of the company.

Dalex Finance and Leasing Company Ltd ("D"), a finance house, advanced an amount of Two Million Ghana Cedis (GHC2M) to L.G.G. Company Limited ("L.G.G.") upon representation made by the Finance manager of Huawei Technologies (GH) SA Limited ("H") that H is indebted to L.G.G. in respect of unpaid purchase order amounting to Three million Ghana cedis (GH3M).

In reliance of the representation of the Finance Manager of H and further assurance that any amount due to L.G.G shall be paid to D, D advanced loan in excess of Two Million Ghana Cedis (GH2M) to L.G.G.

However, the Representation made by the Finance Manager of H was fraudulent. Therefore upon default of the repayment terms by L.G.G, D brought an Action against H for the amount lost to L.G.G due to the fraudulent misrepresentation of their finance manager.

The argument of D was that since the Finance Manager at the material time was an officer of H, acts of the finance manager was deemed to the acts of H therefore H was liable for the losses D had incurred.

The case against H was dismissed by the Supreme Court of Ghana. The court thereby used the opportunity to affirm the circumstances upon which acts of officers of a company can be deemed as acts of the company.

The first one is indicated in section 147 of the companies Act, 2019 (Act 992). Section 147(1) of Act 992 states that:

"(1) An 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 for that act to the same extent as if it were a natural person".

Therefore an act of the following persons can easily be deemed to be an act of the company:

  1. An Act of members (shareholders) in a general meeting,
  2. The Board of Directors or
  3. Managing Director while carrying on in the usual way the business of the company

The second category is established in Section 148 of Act 992. Section s.148 of Act 992 states that:

"(1) Except as provided in section 147, the acts of an officer or agent of a company are not the acts of the company, unless,

(a) the company, acting through its members in general meeting, board of directors, or managing director, has expressly or impliedly authorised that officer or agent to act in the matter; or

(b) the company, acting under paragraph (a) has represented the officer or agent as having its authority to act in the matter, in which event the company shall be civilly liable to a person who has entered into the transaction in reliance on that representation, unless that person had actual knowledge that the officer or agent did not have authority or unless, having regard to the position with, or relationship to, the company, that person ought to have known of the absence of authority".

Similarly, Acts of officers or Agents of the company can be deemed an act of the company when the officer(s) has a direct authority from its members in general meeting, board of directors or the managing director. The person seeking to impute such liability has the obligation to establish such authority.

The purpose of the above is to safeguard companies from unlimited exposure to unimaginable risk.

In practice, businesses and other individuals who seek to enter into contract or any other business transaction must ensure that they are dealing with the right person with authority for any act to be binding on the company.

In conclusion, for acts of officer(s) of a company to be binding on the company, a party must ensure they are dealing with following categories of person:

  1. An Act of members (shareholders) in a general meeting
  2. The Board of Directors
  3. Managing Director while carrying on in the usual way the business of the company
  4. Any other officers of company acting with the authority of members in a general meeting; the board of directors and/or the Managing director.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.