Answered: Nana Yaa and Ato decided to form a…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Nana Yaa and Ato decided to form a company to engage in the manufacture of Roofing Sheets. The name of the proposed company was FBS. In January 2019 it was incorporated as FBS Company Limited. Prior to Incorporation Ato entered into two contracts on behalf of the proposed company namely: i. A contract with Nana Odame, Chief of Nsawam for the grant of a 60 year lease of the land on which the factory was to be situated. Ben signed the indenture under his own name on behalf of the proposed company ii. A contract with MALCO Limited for the supply of Aluminium Bars to be delivered after the company was formed. This contract was signed by Ben by writing the proposed Company’s name and sealed with his own signature. The two agreements were ratified by the Directors of FBS Company Limited, Nana Yaa, Mike and Ato. The Chief of Nsawam has not been paid the sum of one million Ghana Cedis as his rent. MALCO has also not been paid for its first delivery of Aluminium since March 2019 worth fifteen million Ghana Cedis. It is now being rumoured that FBS Company Limited may enter into compulsory liquidation. As a Company Law Student, advice the parties involved.

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