|DOING BUSINESS IN GHANA
Registration of a company
A. Limited Liability Companies
1. General Requirements:
The Companies Code 1963 (Act 179) governs the organization of companies in Ghana, as amended. Companies in Ghana may be either public or private (not more than 50 members or debenture holders) and unlimited, limited by shares or limited by guarantee. With regard to companies limited by shares, the Code sets down the following minimum requirements:
- 1 shareholder
- 2 directors
- 1 auditor
- 1 Company Secretary
- Submission of the proposed Regulations
The shareholder (s) of a company may be an individual or a corporate body. The directors of the Company also must be natural persons of sound mind, not minors, and may not be undischarged bankrupts. At least one of the Company’s directors must be present in Ghana at all times. A company is required under the law to appoint a Company Secretary. In fact, a company cannot commence business unless a secretary, 2 directors and an auditor have been appointed. A company cannot also carry on business for more than 6 months without a secretary (otherwise officers of the company would be liable to pay a fine for each day of default).
In Ghana, a secretary can be either a natural or artificial person. It is the duty of the directors to appoint a secretary and fix the remuneration of the secretary. The appointment is usually ratified at the first meeting of the Board after incorporation.
Prior to submission of incorporation documents, a letter must also be obtained from the prospective auditors, indicating their willingness to act as auditors to the Company.
2. The Regulations
The Regulations are the equivalent of the Articles of Incorporation of a company. The Regulations would only be accepted if in the opinion of the Registrar, the objects for which the company is being formed are not illegal, the name is acceptable to the Registrar and the subscribers are neither minors nor persons of unsound mind. A minimum of one subscriber (shareholder) is required under Ghanaian law.
The Regulations must contain the following:
a. The name of the company with “Limited” as the last word of the name of company (unless it is not a company limited by shares)
b. The nature of the business or businesses, which is to be carried out by the company.
c. It must state that the company has all the full capacity of a matured person except where the power is expressly excluded by the Regulations.
d. The names of the first directors of the company (at least 2)
e. An indication in the Regulations that the powers of the directors are limited in accordance with Section 202 of the Code.
f. The number of shares with which the company is registered.
g. A declaration that the liability of its members is limited.
The subscribers must sign the Regulations. The subscribers must indicate the number of shares they have agreed to take and the consideration in cash that they have agreed to pay.
Upon submission and acceptance of the regulations by the Registrar, the company is duly registered and the Registrar issues a certificate of incorporation to the Company.
3. Commencement of Business
The Directors and Secretary of the Company are then required to file additional forms stating their full names and addresses, particulars of other directorships held and details of the principal or registered office of the company.
In addition, the following information must be provided-
- The name of the company;
- The objects of the company;
- The name and address of the Secretary;
- The name and address of Auditor
- Stated Capital
- Number of shares issued
- Registered Office
Upon submission of the relevant forms, and payment of a commencement tax (currently 0.5% of the stated capital), a certificate to commence business and a tax identity number are issued to the company.
It is to be noted that when the particulars are submitted, the Registrar is obliged by law to register the returns and cause a copy to be published in the Gazette. The publication in the Gazette is notification to the general public that the company has been incorporated and ready to carry on business.
4. Minimum Capital requirements
The minimum capital for a company registered with Ghanaian shareholders is Gh¢ 500.
However, for companies with foreign participation i.e. foreign shareholders, the minimum capital requirement is as follows:
Joint venture with Ghanaian participation: USD 200,000
100% foreign ownership: USD 500,000
Company engaged in trading activities: USD 1,000,000.
5. Incorporation Steps
- Complete a Tax Identification Number (TIN) application form and return to us with a colour copy of the biodata page of your passport. Please note that all Directors, Officers and Shareholders are required to obtain a TIN before the incorporation process commences.
- Give us details of:
- Proposed name of the Company
- Directors’ details, including dates of birth and residential addresses.
- Proposed business subjects of the company
- Indicate stated capital bearing in mind the minimum stated capital requirements (see 3 above)
- Nominate Auditors (If you do not have any in mind, we can recommend a firm of auditors)
- Shareholders and their respective shareholding in the proposed company. Also provide Address, Age, Nationality and Business Occupation of the shareholders, if they are individuals. Provide address, and name of authorised signatory (preferably a Director), in the case of a corporate Shareholder.
- We will conduct a name search to make sure that the name chosen for the company is available, then complete the appropriate forms and prepare the company’s Regulations using the information supplied on the questionnaire. We will require original signatures of all directors on all copies. If you are not in Ghana at the relevant time, we will email you the completed forms. Print out four copies, sign them, and return them to us by courier.
- We will also email to you:
- an estimate of the incorporation costs, which are dependent on the stated capital of the company and our agreed Company Secretarial fees; and
- a copy of our Company Secretarial agreement, which we require you to sign to authorise our firm to act as your company secretaries for a fee, if you elect that we do.
- Once we receive the signed forms and the invoice amounts, we will proceed to register the company.
- Within 1-2 weeks, we will forward you the Certificate of Incorporation and the Certificate to Commence Business. Your company can now begin operating.
B. Joint venture
Where two companies propose to enter into a joint venture relationship, Ghanaian Law only permits them to use the vehicle of an incorporated company. This is because under Ghanaian law, a partnership is defined as an association between 2 or more natural persons (and not more than 20 persons) who carry on a business in common with a view to profit. Further, there is no limited liability form of Partnership in Ghana and therefore, it is not a very advisable form of business organization.
C. External companies
Instead of incorporating a company in Ghana, the investor may register an external company. An external company is a body corporate formed outside Ghana, which has an established place of business in Ghana. The Companies Code defines an external company as a branch, management, share, transfer or registration office. A factory, mine or other fixed place of business also qualifies under the Companies Code as an external company.
Any company incorporated outside Ghana, which intends to operate as an external company in Ghana must register with the Registrar of Companies. It is required to deliver to the Registrar of Companies its establishment documents from its country of origin. These documents should be certified copies of the instruments constituting or defining the constitution of the company.
In addition to its basic instruments, the external company is also required to provide further particulars. These particulars include the name and the nature of business of the company. If the company has shares, the number and nominal value of its authorised and issued shares and the amount paid for the shares and the amount yet to be paid must also be disclosed. The company is also required to provide the address of its registered or principal office in the country of incorporation and its address and principal place of business in Ghana. Should there be any change or alteration in the particulars given to the Registrar of Companies, the external company is required to notify the Registrar of Companies within two months from the time the change occurred, and deliver the new particulars for registration.
1. Officers of external companies
The Companies Code recognises and provides for two officers of an external company. These are described in the Code as the local manager and the process agent.
i. Local manager
The local manager is the person or persons appointed by the external company to manage its business in Ghana. The external company is required to supply to the Registrar of Companies the names and addresses of its local manager or managers. The local manager of a company must be a person who is competent to be appointed a director of a company in Ghana. The acts of a person registered as a local manager bind the external company as a general rule; the exception to this rule is where the local manager has no authority so to act and the person with whom the local manager was transacting business had or should have had knowledge of this absence of authority.
ii. Process agent
An external company is also required by the Companies Code to appoint a process agent. A process agent is a person authorised by an external company to accept service of court processes and other documents on behalf of the external company. The external company is required to supply the Registrar of Companies with the name and address of the process agent. A process is deemed to be served on the company if it is served on the process agent.
Registration with the Ghana Investment Promotion Centre (GIPC)
Foreign investors intending to invest in Ghana are by law required to register with the Ghana Investment Promotion Centre (GIPC) under the Ghana Investment Promotion Centre Act, 2013 (Act 865), provided the enterprise is duly incorporated or registered in accordance with the Companies Code, 1963 (Act 179) or such other laws as are relevant to the establishment of the enterprise (see Registration of a company in Ghana, above).
a. Minimum Foreign Capital Requirement
To satisfy the minimum equity requirement, the investor must first incorporate or register a company at the Registrar General's Department and provide the minimum equity requirements either in cash or in kind.
The foreign shareholder is required to satisfy this minimum equity capital either in cash transferred through Ghana's banking system or its equivalent in the form of goods, plant and machinery, vehicles or other tangible assets imported specially and exclusively to establish the enterprise. Consideration for goodwill of a business or services rendered by partners cannot be used to satisfy the minimum foreign equity capital.
b. Investment Incentives, Benefits and Guarantees
The GIPC Act, provides for automatic incentives and benefits as follows:
1 Customs Import Duty Exemptions
There is custom duties exemption for plant, machinery, equipment and parts thereof. However, with the exception of goods imported specifically for the Educational, Health and Agricultural sectors, all import duty-exempted goods attract the relevant processing and/or other related fees or levies ranging between 0.5% and 1.0%. Essential plant, machinery and equipment should be cleared with the GIPC.
Exemptions may be granted from payment of customs import duty and other related charges for any special equipment that is not zero-rated upon application to the GIPC.
2 Tax benefits
For some chosen sectors e.g. Air and sea transport (non-resident): Income exempted (from start of operations)
Accelerated depreciation allowance is applicable to all sectors except banking, finance, commerce, insurance, mining and petroleum. The qualifying plant expenditure depreciation rate is 50 percent per annum for 2 years; the qualifying building expenditure depreciation rate is 20 percent per annum for 5 years.
- Location Incentives (tax rebate):
Manufacturing industries locate in regional capital other than Accra and Tema will enjoy a 25% rebate. All other manufacturing industries located outside regional capitals will enjoy a 50% rebate.
The tax rate in all sectors is 25% (2007 budget) except for income from non-traditional exports and hotels which enjoy a lower tax rate.
- Exemption from Income Tax:
An exemption will apply for the provision of accommodation for employees on farms, as well as building, timber, mining and construction sites.
- Exemption from the Minimum Chargeable Income Tax:
There is an exemption from the minimum chargeable income of 5% of turnover during the first 5 years.
Withholding tax rebates are as follows: dividends 10%; royalties, management and technology transfer fees 15%; interest 10%.
All sectors are allowed 5 years for loss carry-over, except for insurance business, which is unlimited.
3 Investment Guarantees
- Free Transferability of Capital, Profits and Dividends
The GIPC Act 865 guarantees to all enterprises, unconditional transferability through any authorized dealer bank in freely convertible currency of dividends or net profits attributable to the investment; payments in respect of loan servicing where a foreign loan has been obtained; remittance of proceeds (net of all taxes and other obligations) in the event of sale or liquidation of the enterprise or any interest attributable to the investment. Guarantees against expropriation of private investments provided under Act 865 are buttressed by the Constitution of the Republic of Ghana.
- Protection regimes at the multilateral level
Ghana has signed an Investment Incentive Agreement with the Overseas Investment Corporation (“OPIC”) of the United States of America. OPIC offers investment insurance on a commercial basis with support of the United States government.
Ghana is also a signatory to the World Bank’s Multilateral Investment Guarantee Agency (“MIGA”) Convention. MIGA guarantees insurance coverage against non-commercial risks such as transfer restrictions, breach of contract, expropriation, war and civil disobedience.
Under the GIPC ACT, enterprises benefit from the grant of an automatic maximum immigrant quota, depending on the enterprises' paid-up capital as follows:
- US $50,000.00 but less than US $250,000.00 or its equivalent in Ghana Cedis, shall be entitled to an initial automatic maximum immigrant quota of one person.
- US $250,000.00 but less than US $500,000.00 or its equivalent in Ghana Cedis shall be entitled to an initial automatic maximum immigrant quota of two persons.
- US $500,000.00 but less than $700,000 00.00 or its equivalent in Ghana Cedis shall be entitled to an initial automatic maximum immigrant quota of three persons.
- US $700,000.00 or more or its equivalent in Ghana Cedis shall be entitled to an initial automatic maximum immigrant quota of four persons.
All other applications for Immigrant quota with respect to an investment in Ghana should be submitted to the Centre and will be dealt with by the Immigration Service in consultation with the Centre.
c. GIPC Registration Procedures
Using the company’s certificates (Certificate of Incorporation & Certificate to Commence Business), the company will have to open two corporate accounts, (i.e. foreign and local) with a local bank of your choice, and:
- Make a Bank to Bank transfer of minimum equity requirement, which has to be converted into local currency (Ghana Cedis). This transaction should be confirmed to the Bank of Ghana by the investor's local authorised dealer bank, which will in turn, confirm the transaction to GIPC for the company's registration purposes. Note that the minimum capital may be either one of, or a combination of, a cash transfer into your account or Import Declaration Forms (originals only and in the name of the company to be registered) in respect of equipment, goods and materials imported into the country by your company.
- If you have proof of money transferred into Ghana, then
- we will write to Bank of Ghana requesting confirmation of transfer of equity capital for GIPC registration, and copy your bank requesting that they forward copies of your bank statement evidencing the existence of the minimum stated capital in your account.
- Bank of Ghana will liaise with us and verify all your corporate documents, then grant approval.
- Bank of Ghana will write to GIPC, instructing them to register your company and copy us.
- If you have Import Declaration Forms, we will submit them directly to GIPC and request registration of your company with them.
- We will purchase GIPC registration forms and complete them on your behalf, then present them with the GIPC requisite registration fees. The GIPC certificate will be issued within five to ten working days.
- With the aid of the GIPC certificate, we will submit applications to the GIPC to process work permits at the Ghana Immigration Service for any expatriate members of your company.
Costs of registration
The costs for incorporating a company are mainly determined by the amount of the stated capital. A commencement tax of 0.5% of the stated capital is paid at incorporation. For instance, a stated capital of USD50, 000 would attract a tax of USD250.
With respect to registering an external company in Ghana, a company will be required to pay a flat registration fee of USD1,000.
The other costs are the costs of filing of the requisite statutory forms; registration at the Ghana Investment Promotion Centre (the fees for this is between USD1,000 and USD 5,000 depending on whether the company is a joint venture between a Ghanaian and foreigner, is wholly foreign owned or proposes to carry on general trading activities).
We hope this has answered most of your questions about setting up a business in Ghana. We shall be happy to provide any further information that you may require. Please do not hesitate to contact us on (+233 +233 302 768156/8 or firstname.lastname@example.org.
Please note that all income derived from, accruing in, brought into or received in Ghana by any person, whether resident in Ghana or not, and whether Ghanaian or not, is taxable. All enterprises must register with the Internal Revenue Service and the Value Added Tax (VAT) Secretariat for purposes of statutory tax, e.g. taxes, rebates and exemptions thereof.