On
2 September 2007, the first applicant, acting as a Trustee for a company about
to be formed entered into an agreement with one Marie Louis Morris in respect
of the sale of an immovable property belonging to the latter. The sale was
successfully concluded by the parties thereto. The purchaser of the property
was ...
On
2 September 2007, the first applicant, acting as a Trustee for a company about
to be formed entered into an agreement with one Marie Louis Morris in respect
of the sale of an immovable property belonging to the latter. The sale was
successfully concluded by the parties thereto. The purchaser of the property
was not specifically identified, and was referred to as Ian Spencer Gray acting
as Trustee for a company about to be formed. It is common cause that the second
applicant was incorporated as a company under the laws of this country on 8
November 2007.
On
19 March 2008, legal practitioners acting on behalf of the second applicant
then lodged with the respondent documents to effect transfer of the immovable property
from Marie Louis Morris to the second applicant. The documents were returned
with an instruction that the applicant comply with section 47 of the Companies
Act [Chapter 24:03]. The applicant was not satisfied with the reaction from the
respondent and the result was that a letter was addressed by its legal
practitioners to the respondent in which it was indicated that the applicant
did not need to comply with section 47 of the Companies Act [Chapter 24:03] in
that the first applicant, when it entered into the Agreement of Sale for the
purchase of the immovable property central to the dispute, had acted as a
Trustee for a company not yet formed when the Agreement was concluded – and not
as an agent. Correspondence was exchanged between the parties which did not
yield any result. The applicants therefore have brought this action for an
order from this court directing the respondent to transfer the property from
Marie Louis Morris to the second applicant.
The
respondent opposes the relief being sought.
It
is appropriate, at this juncture, to set out the provisions of the Companies
Act [Chapter 24:03] that the respondent insists must be complied with before
the property can be registered in the applicant's name. Section 47 of the
Companies Act [Chapter 24:03] is to the following effect –
“Any
contract made, in writing, by a person professing to act as agent or trustee
for a company not yet formed, incorporated or registered, shall be capable of
being ratified or adopted by or otherwise made binding upon and enforceable by
such company after it has been duly registered as if it had been duly formed,
incorporated, and registered at the time when the contract was made, if –
(a)The
memorandum, on its registration, contains, as one of the objects of such company,
the adoption or ratification or acquisition of rights and obligations in
respect of such contract; and
(b)
The contract or a certified copy thereof is delivered to the Registrar
simultaneously with the delivery of the memorandum in terms of section twenty-one.”
The
crisp issue before me is whether or not the second applicant is obliged to
comply with any provisions in the Companies Act [Chapter 24:03] in order for
the transfer of the immovable property to be effected in its name or whether,
under common law, the applicant can have the property registered in its name
despite avoiding the requirements set by statute.
The
issue has received attention from the learned authors NKALA and NYAPADI in
their book Company Law in Zimbabwe 1995 edition. The view of the learned
authors is that a company can adopt contracts made on its behalf before
incorporation provided that it (the company) meets the following conditions –
viz:-
(a)
That the contract is in writing;
(b)
The person making the contract on behalf of the company to be formed,
irrespective of how he describes himself, must at least profess to act as agent
for the company;
(c)
The Memorandum and Articles of Association must contain, at the time of
incorporation, the contract as one of its objects;
(d)
The contract must be delivered to the Registrar simultaneously with the
Memorandum and Articles of Association; and
(e)
The contract must be legally enforceable.
This view..., is in accord with the provisions
of the Companies Act [Chapter 24:03].
