Setting up a business (6)
A foreign investor may team up with a Ghanaian entrepreneur or company for a joint venture, generic usually in the form of a partnership or a limited company. However, under the Ghana Investment Promotion Centre Act, 2013 (Act 865), a minimum equity capital of not less than US$200,000 in cash or capital goods is required from any foreign investor who intends to enter into a joint venture partnership with a Ghanaian, who does not have less than 10% equity participation.
where the investment is wholly owned by the foreign investor, a capital of not less than US$500,000 in cash or capital goods is required in any area of economic activity, except trading. In trading, the minimum equity capital requirement is US$1,000,000.
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. The imported items must be covered by a Destination Inspection Report issued by an accredited inspection company, stating the value and condition of the goods. Consideration for goodwill of a business or services rendered by partners cannot be used to satisfy the minimum foreign equity capital. Such an enterprise shall employ at least twenty skilled Ghanaians.
Foreigners are permitted 100-per-cent ownership of an enterprise provided the investor satisfies section 28 (1b) of the GIPC Act, 2013 (Act 865).
Further information can be accessed from the GIPC
Application for registration of a company is made directly, or through agents or solicitors, to the Registrar-General. A company is duly registered after the company’s regulations have been submitted to the registrar of companies and a certificate of incorporation issued. A specified fee is paid on presentation of the regulations. The information required includes:
- the name of the company with the word “Limited” as the last word in the name
- the nature of the company’s business
- the names of the first directors of the company
- a statement that the liability of the company is limited
- the share capital and its division into shares of no par value
- a statement that the company possesses all the powers of a natural person of full capacity
- limitation on the powers of the Board of Directors in accordance with section 202 of the Companies Code
- any other lawful provisions relating to the constitution and administration of the company
- the requirements for a public company limited by shares are similar to those stated above, except that the public can buy shares
Before commencing business, further information on the company must be provided. This includes the particulars of the company and a declaration of compliance.
The particulars of the company are given on Form No. 3 and signed by the directors and the company secretary. The information provided must include:
- name of company
- authorized business
- particulars of directors (at least two) and a secretary
- name and address of auditors
- addresses of the company’s registered office and principal place of business
- address at which register of members is maintained
- amount of stated capital; number of authorized and issued shares, amount paid (other than cash), and amount due for each class.
The declaration of compliance is made on Form No. 4. This states that the conditions of section 28 of the Companies Code pertaining to a minimum capital issue of GH ¢ 25,000 (C) has been paid and signed by all directors and the secretary of the company. There is a stamp duty of 0.5 per cent of capital issue payable. Upon due completion and presentation of the forms, the registrar issues the company with a certificate of commencement of business.
Limited Liability Companies must file annual returns with the Registrar of Companies showing its audited balance sheet and profit-and-loss statement after 18 months of incorporation.
An external company is a body corporate formed outside Ghana but which has an established place of business in Ghana. This can take the form of a branch, management, share, transfer, registration office, factory, mine or other fixed place of business, but does not include an agency unless the agent is authorized to negotiate and conclude contracts on behalf of the outside company.
Within one month of the establishment of the place of business, the external company should deliver to the registrar of companies the following:
1. An English language translation of a certified copy of the charter, statutes, regulations, memorandum and articles or other instrument constituting or defining the constitution of the company,
2. Statement of the following in duplicate
- nature of business or main objects
- name, address and business occupation of the local
- manager authorized to manage the business in Ghana
- number of authorized shares, amount paid and what is remaining payable in cash or otherwise
- address of its registered or principal office in the country of its incorporation.
- address including post office box number of its principal place of business in Ghana
- name and address in Ghana of a person authorized by the company to accept service of process and other documents on its behalf
- particulars and copies of any charges on the property of the company or if no such charges, then statement to that effect
On receipt of the documents, they are registered in the Registrar of External Companies and the particulars gazette. An external company may invite the Ghanaian public to subscribe to its shares, subject to its complying with requirements of the Companies Code concerning invitations and the prospectus as if it were a Ghanaian company. The registrar, however, has the discretion to waive or modify parts of these requirements.
Annually, or at intervals not exceeding 15 months, the external company must submit for registration, a profit-and-loss account and balance sheet (as in the limited liability return of accounts).
Alterations made in the charter, statutes, regulations, articles or other instruments used in registration should be delivered to the registrar within two months of the effective date of the alteration.
The various forms required for registration of companies are obtainable from the Registrar-General. Prospective investors should obtain competent professional advice on the type of company which may best meet their needs. Such advice is obtainable from:
P.O. Box 118
Tel: (233-302) 662043/664691
Visit the Registrar General’s website here
Domestic taxes are administered by the Domestic Tax Revenue Division (DTRD) of the Ghana Revenue Authority. It is the merger of the operational wings of the erstwhile Value Added Tax Service and the Internal Revenue Service. Some of the domestic taxes being administered by the DTRD include:
Corporate Tax: This is the tax paid by companies on their profits in the year. The tax rate is 25%.
Personal Income Tax: Self-employed persons are required to pay Income tax at graduated rates in four equal installments. The current Personal Income Tax rates took effect from November 2011.
Pay As You Earn (PAYE): The PAYE contributions are withholdings from salaries of employees in order to satisfy their income tax responsibilities. The PAYE is computed with the Personal Income Tax rates.
- Certificate or Letter of Business Registration
- Copy of Valid Driver’s License (picture page)
- Copy of Valid Passport (picture page)
- Copy of Valid Voters ID
- Copy of Valid National ID
Industry Associations (links)
The GIPC has an investment catalogue which can be accessed here.