(Removal of Shareholder of a Company)
“Membership of a company with shares continues until a valid transfer of all the shares held by the member is registered by the company, or until all the shares are transmitted by operation of law to another person or forfeited for non-payment of calls under the Regulations, or until the member dies.” SECTION 30(5) of the COMPANIES ACT, 1963 (ACT 179)
“A membership of a shareholder may cease in the presence of a valid forfeiture of the said shares by the said shareholder. Under section 30 of the Companies Code, 1963 (Act 179) there were two kinds of members of a company: those who became members at the inception of the company by subscribing to its regulations; and those who after the company came into existence, agreed to become members. The membership of a subscriber was by legal prescription and in the absence of a valid forfeiture, was not predicated on full or partial payment of the consideration for the shares taken…As a member he also became a shareholder pursuant to section 30(4) of Act 179 and, in the circumstances, he could lose his membership under section 30(5) of Act 179 only if all his shares had been forfeited for non-payment of a validly made call. However, contrary to section 201 of Act 179 and regulations 15-27 of the company’s regulations there had been no agreement between the appellants and the respondent requiring the respondent to pay for his shares on any fixed date. Moreover, contrary to sections 200 and 201 of Act 179 there was no evidence of minutes of a directors’ meeting or a signed resolution of the directors calling on the respondent to pay for the shares and therefore there had been no formal call on the respondent to pay for those shares. Since the letters from the company’s solicitors could not constitute valid calls or effectively result in valid forfeiture of any shares, even though the respondent had not paid for the shares in law he had not ceased to be a member of the company.” ADEHYEMAN GARDENS LTD AND ANOTHER v ASSIBEY [2003-2005] 1 GLR 391 (Holding 1)
The company had power under section 13 of the Companies (consolidation) Act, 1908, to introduce into its altered articles anything that might have been included in its original articles, provided that the alteration was made bona fide for the benefit of the company as a whole. A power to expel a shareholder by buying him out was valid in the case of original articles, and could therefore be included in altered articles, subject to the same limitation. And that on the evidence, the resolution was passed bona fide for the benefit of the company as a whole, and was therefore valid, and enforceable by the majority against the minority. SIDEBOTTOM V. KERSHAW, LEESE
That the contract if any between the plaintiff and the company contained in the articles in their original form was subject to the statutory power of alteration and that if the alteration was bona fide for the benefit of the company it was valid and there was no breach of that contract; there was no ground for saying that the alteration could not reasonably be considered for the benefit of the company; therefore, there being no evidence of bad faith, there was no ground for questioning the decision of the shareholders that the alteration was for the benefit of the company; and consequently, the plaintiff was not entitled to the relief claimed. SHUTTLEWORTH V COX BROS & CO (MAIDENHEAD) LTD [1927] 2 KB 9
Can such a company be injunct from changing its regulations ? No. The only remedy is to sue for breach of contract and claim damages. SOUTHERN FOUNDRIES V. SHIRLAW [1940] AC 702