Question

On 1st January, 2018, Parentsgold Ltd, a new and promising company had its prospectus published and on 3rd January 2018, Frank Larry sent an application for GH¢100,000 worth of shares in Parentsgold Ltd. On the same 3rd January, Abena Manu submitted an application for GH¢50,000 worth of shares but on 8th January, 2018, she sent a mail revoking her application. Both applicants remitted the requisite application moneys on the day of their application. Due to lack of a quorum, the Board of Directors of Parentsgold Ltd could not meet to consider the applications and allot shares until 15th September, 2018. Frank Larry was informed on 16th September, 2018 that his application had been accepted and that GH¢100,000 worth shares had been duly allotted to him but he wrote back refusing the allotment.

Answer 1

Solution:

Parties involved are Parentsgold Ltd, Abena Manu and Frank Larry.

Advices:

1. Frank Larry:

   As per principles of the law of contract, an offer must be accepted within a reasonable time period, where no particular period is mentioned in the offer regarding the acceptance. Where an offer is not accepted within reasonable time period, the offer is deemed to have been lapsed.

In the given case Frank Larry sent an application on 3rd January, 2018, but company (Parents gold Ltd) took around 9 months to inform Frank Larry that his application had been accepted. So in this stance , we can conclude that offer is not accepted in reasonable time period and company has not made any communication in between to assure that Frank Larry’s application is active or in progress.

Frank Larry’s application deemed to be lapsed as it is not accepted in reasonable time. Frank Larry has right to get refund of the application money.

2.Abena Manu:

On 3rd January Abena Manu submitted an application for shares but on 8th January he sent an mail revoking the same. So Abena Manu submitted and withdrew her offer within a time period of ten days from the date of the publication of the prospectus, which is allowed under Section 281(2) of the Companies Act, 1973.

Section 281(2) of the Companies Act, 1973 states that any application, offer or acceptance by any person in response to an invitation to the public in respect of any securities of any public company shall be revocable by such person at any time prior to the expiry of Waiting period.

Section 281(1) of the Companies Act, 1973 explains Waiting Period as a period of Ten days after the first publication of a registered prospectus or such longer period as may be stated in the prospectus as         the period prior to the expiration of which application , offer or acceptance in response thereto will not be accepted or treated a binding.

Since Abena Manu exercised her right to revoke within “Waiting Period” , the offer stands revoked and she is eligible for refund.

3. Parentsgold Ltd.

      Frank Larry: In the case of Frank Larry, Company has no right to hold the application money as it failed to accept the application within reasonable time and offer stands lapsed. So Company shall refund the application money.

Abena Manu : Abena Manu exercised her right to revoke within “Waiting Period” , the offer stands revoked and Company is liable to refund the application amount.