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The company’s MOI can also list additional scenarios when shareholder approval will be
required for director actions. As long as the MOI is consistent with the Act, a company
may tailor its MOI in such a way as to limit directors actions substantially by increasing
shareholder activism.
General Ratification by Shareholders of Directors’ Actions
Section 20 (2) – (3): The shareholders may ratify by special resolution any action
by a company or the directors that is inconsistent with any limitations, restrictions or
qualifications listed in the MOI of the company. The action of the director cannot be
ratified if it is in contravention of the Act. A director must act within the powers and
authority conferred on him by the law, the MOI, the shareholders, and fellow directors.
Where a director acts beyond his legal power or authority, the shareholders may ratify the
transaction retrospectively by special resolution. Alternatively, the shareholders may elect
to repudiate the action, whereupon the erring director may be held personally liable to
the company for any loss suffered by the company as a result thereof.
The Act sets out a comprehensive list of actions requiring authorisation by special
resolution of shareholders in Section 65(11).

RING-FENCED AND PERSONAL LIABILITY COMPANIES

The Act provides that the public will not deemed to be acquainted with or have
knowledge of any provision of a company’s MOI merely because it is filed with the
Commission or is available for inspection at the company’s office, except for the
following two specific scenarios:
A company’s MOI may restrict the purpose, objectives or powers of the company;
and may contain additional requirements or even prohibit the amendment of these
restrictions or limitations. In such a case, the company is required to have the word
Ring-Fenced or RF subjoined to its name, and its Notice of Incorporation or subsequent
Notice of Amendment is required to draw attention to the relevant provision and its
location in the MOI. All persons or the public are then regarded as having notice and
knowledge of such a provision in the company’s MOI.
In regard to a Personal Liability Company, all persons are also regarded as having
notice and knowledge of the fact that it is a personal liability company (Incorporated).
This means that the directors and past directors are jointly and severally liable, together
with the company, for any debts and liabilities of the company as are or were contracted
during their respective periods of office.
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