Company law revision question and answer

Discuss:

(i) Duties and powers of an inspector appointed the court.
(ii) Causes of action or proceedings on an inspectors report.
(iii) Costs and expenses of investigation.

ANSWER

(i) Duties and powers of an inspector appointed the court:

Duties
– Under Section 169(1) of the Act, once an inspector is appointed the court, he must enter upon his obligations/duties without undue delay.
– And if required the terms of the appointment, make an interim report, on the conclusion of the investigation, he must make a final report to the court which must be written or printed if the court so directs. A copy of the report is forwarded to the registrar the court. It is deemed to be opinion evidence in legal proceedings. The court may direct that the report be printed and published.

Powers:

1. Under Section 167 of the Act, he is empowered to investigate related companies i.e. the holding or subsidiary if such investigation is necessary.

2. To administer oath.

3. To examine officers and agents of the company on oath.

4. To demand the production of books, documents and other information officers of the company.

5. To apply to the court for persons to give evidence there in for purposes of their investigation.

(ii) Causes of action or proceedings on the inspectors report:

Under Section 170(1), if it appears from the inspectors report, that further action ought to be taken in relation to persons or the company investigated, a copy of the report must be delivered to the Attorney General who may take any of the following actions:

1. Initiate criminal proceedings against any person implicated in the report. The Attorney General must be satisfied that there is sufficient evidence to sustain the case. Officers and agents of the company are bound to assist
the Attorney General in the prosecution.

2. If the Attorney General is satisfied that proceedings ought to be instituted, in the public interest the company so as to recover damages in respect of fraud misfeasance or misconduct in relation to the formation or promotion of the company or its management or for the recovery of any property of the company misapplied or retained a person, the Attorney General may institute the proceedings in the name of the company.

3. If the Attorney General is satisfied that the company ought to be wound up, he may petition for winding up pursuant to Section 219(f) i.e the company be wound up if the court is of the opinion that its just and equitable that the company should be wound up.

(iii) Costs and expenses of investigation:

Under Section 171(1) of the Companies Act, the expenses of and incidental to an investigation an inspector appointed the court must in the first instance be made good the registrar. However, the following persons are liable to repay the registrar:

1. Any person convicted on a prosecution instituted the Attorney General on the basis of the report.

2. Any person held liable in damages or ordered to restore any property in proceedings instituted on the basis of the report.

3. The body corporate in whose name proceedings are instituted.

4. The body corporate dealt with the report.

5. Applicants for the investigation if an inspector was appointed pursuant to Section 165(1).

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