Company share transfer gone bad as Supreme Court jumps to Secretary’s defense

The Supreme Court of Ghana has held as valid a supposed transfer of shares in Cottage Italia Industries Ltd to a secretary under the ‘guise’ of escaping governmental interference.

The five-member panel, in the opinion of Kulendi JSC, assessed the percentage shares of the transferee secretary of the company at 59% thus making her the majority shareholder.

This judgment by the apex court thus overturned those of the High Court and Court of Appeal which upheld a submission of no case by the first defendant, Mario De Cataldo.

The plaintiff, Tatiana Boya, Managing Director and Board Secretary of Cottage Italia Industries Limited, sued for the recognition of her shares transferred to her by the owner via two deeds of assignments.

She averred that despite receiving no salary but only paltry allowances while managing the company, the first defendant, an Italian always emptied the company’s bank account and transferred same to his home country.

Tatiana thus sued for among others a declaration that she is a beneficial interest holder of shares in the company.

On his part, Mario De Cataldo told the court that the transfers were done firstly to outwit the law and to create a façade to deceive that indeed the plaintiff was a majority shareholder.

He added that the transfers were done to insulate the company from the interference of the government at the time and that he had an oral agreement with the plaintiff that she should hold the shares as his trustee.

Mario added that the transfer was not approved by the board of directors and no consideration had also been paid by her for the shares.

The High Court and the Court of Appeal held for the first defendant after it upheld his submission of no case.

However the Supreme Court panel, on appeal affirmed Tatiana as the majority shareholder with 59% shares in the company owing to the two deeds of transfer.

It thus established that Mario cannot deal with the business and assets of Cottage Italia without recourse to Tatiana.

Additionally, the apex court ordered Mario to render an account of his management of the company to Tatiana with effect from October 10, 2011 and duly injuncted him from the contrary.

Other members of the panel were Justices Baffoe-Bonnie, Owusu, Ackah-Yensu, and Asiedu.

Visit Dennislaw to read the full judgment.