business registration in ghana

8/16/2019 Business Registration in Ghana

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BUSINESS REGISTRATION IN GHANA

Sole Proprietor Business

The Sole Proprietor business is the most common for micro and small enterprises inGhana. The registration procedure for a sole proprietor business is less complicated

and costly than for a company limited. The sole proprietor must register at theRegistrar-General's Department.

Partnership Business

A partnership is an arrangement whereby two or more persons combine some or allof their resources, skills or industry with the objectif of making profit which will beshared by the partners. Forms of Partnership are non-trading partnership,commercial partnership, limited partnership.

Non-Trading PartnershipFirms of Lawyers, Chartered Accountants, Architects and other professionalpractioners.

Commercial or General PartnershipAll partnerships engaged in trading, manufacturing and other commercialactivities.

Limited PartnershipThis is a special type which is very rar. A limited partnership consists of generaland limited partners. A limited partner is liable to the firm or its creditors to theamount of the capital he has agreed to contribute, but not more. He may share inthe profits according to the partnership agreement, but must take no part in themanagement of the business or he becomes a genral partner.

Partnership AgreementIt is customary for the partners to execute a signed agreement covering suchmatters as the purpose of the busines, name of the firm, duration of theagreement, place of business, capital to be contributed by each partner, divisionof profits ans losses, books of accounts, rights of management of partners, andprocedure for termination or re-organization of the partnership.

Advantages of Partnership• A partnership is a simple, flexible and inexpensive form of business

organization.

• It is not subject to corporate taxes and is exempt from most of thestatutory returns and forms which must be filed by limited companies.

• It is particularly suitable to service type of business that do not requiretoo large investments and when there is no element in the business whichmay lead to the risk of serious personal liability.

Disadvantage of Partnership• Should there be insufficient assets in the partnership to pay any claim

against it, the partners are personally liable.

• As the business grows, the partnership organization becomes lesssuitable, and it is difficult to obtain investment capital for expansion.

The partnership act limits the number of partners to 20. The duration of apartnership is uncertain as it may be terminated by death, bankruptcy or withdrawalof partner



Company Limited By Shares. In a company limited by shares, the shareholderneed not pay the whole amount of his shares to the company at once when acquiringthe shares. The usual practice is that shareholders make payments when thedirectors make "calls" upon them to pay. The shareholder's liabilities are thereforelimited to any amounts unpaid on the shares, and once a shareholder has fully paidfor his shares, he is not to incur any further liabilities in respect of the company.

Thus no contribution is required from any member, exceeding any amount unpaid onhis shares, where the company is being wound up. However, the company maydecide, by special resolution, to reserve any unpaid liability on shares until thecompany is being wound up.

The Regulations of a company limited by shares must expressly state the fact of thelimited liability of members. The last word of the name of a company limited byshares shall be "limited", or its abbreviation "ltd."

Company Limited By Guarantee. This is a company that has the liability of itsmembers limited to amounts that they respectively undertake or guarantee tocontribute to the assets of the company in case of liquidation. Unlike companies

limited by shares, where the liability of the member may have to be implemented atany time during the existence of the company, that is, during the active life as wellas during winding up, in the guarantee company, that liability need only beimplemented after the commencement of the winding up of the company. TheCompanies Code provides for the total liability of members, and no furthercontribution shall be required from any member.

A guarantee company is not registered with shares and is not permitted to createany shares. This type of company is therefore only suitable if no initial funds arerequired or those funds are obtained from other sources, e.g. endowments anddonations. The company is also not permitted to engage in trading. The company isnot permitted to pay dividends or distribute/return any assets to members.

Whilst other companies may operate on a "one share, one vote" principle, theoperating principle in respect of guarantee companies is "one member, one vote".The Regulations of a guarantee company must contain the following mandatoryprovisions:

• That the liabilities of the members are limited• That the income and property of the company shall be applied solely

towards the promotion of its objects• That no portion of the income and property shall be paid or transferred in

any manner to the members, except payments permitted by theRegulations, such as the payment of reasonable and proper remunerationto officers in return for services actually rendered, out-of-pocket

expenses, interest not exceeding 6% on money lent to the company, andreasonable and proper rent for premises let to the company. Further, nodirector is to be appointed to any salaried office. These may be modifiedonly with the approval of the Registrar

• That each member will contribute to the assets of the company in theevent of its being wound up, to cater for the payment of the company'sdebts and obligations, costs of liquidation and other amounts required, upto whatever limit is prescribed by the Regulations. In respect of members,this liability extinguishes only where a person has ceased to be a member



for more than a year. Note that membership of a guarantee company mayend only by death, valid retirement or any other manner prescribed in theRegulations

• That upon winding up, the residue of the property shall not be distributedto members, but shall be either given to some other guarantee companywith similar objects or applied to some charitable purpose. Members

before the dissolution of the company shall determine the beneficiary.

Unlimited Company. This company is also registered with shares, and, there isno limit on the liability of the members, e.g. they are liable to contributewhatever sums are required to pay the debts of the company in case ofbancruptcy. There are not too many of such companies in Ghana. The few thatexist are mostly law firms and other professional establishments who may beprevented from operating as limited liability companies by professional ethics.

Public and Private Companies. Each of the above types of companies may be"private" or "public". A company is a private company if by its Regulations, itfulfills the following conditions:

• Where it is a company registered with shares, there is a restriction of theright to transfer shares

• The total number of members and debenture holders do not exceed 50Debentures are similar to bonds except there are no pledges on specificassets. This number excludes genuine employees and ex-employees of thecompany who became members or debenture holders during theiremployment, and continued to be so after their employment. Theexclusion of employees is designed to enable companies to institute co-partnerships schemes without forfeiting their private status

• The company is prohibited from making of any public invitations for theacquisition of its shares and debentures

• The company is prohibited from making an invitation to the public to

deposit money for fixed periods or payable at call, whether interest-bearing or not.

Cooperative. Membership is unrestricted but is for specific purposes such as joint purchase of raw materials and group marketing of products.

External Company. Corporate bodies formed outside Ghana that seek tooperate in Ghana need not automatically incorporate subsidiaries in Ghana. Sucha corporate body is allowed to establish a place of business in Ghana after it hasregistered with the Companies Registry as an "external company".

A company 100% Ghanaian-owned have minimum nominal capital of at least

GH¢500. A foreign investor may team up with a Ghanaian entrepreneur or companyfor a joint venture, usually in the form of a partnership or a limited liability company.However, under the Ghana Investment Promotion Centre Act, 1994 (Act 478), aminimum equity capital of US$10,000 is required from any foreign investor whointends to enter into a joint venture partnership with a Ghanaian in any area ofeconomic activity, except trading. In trading, the minimum equity capitalrequirement is US$300,000.



The foreign shareholder is required to satisfy this minimum equity capital either incash transferred through Ghana's banking system or its equivalent in the form ofgoods, plant and machinery, vehicles or other tangible assets imported specially andexclusively to establish the enterprise. The imported items must be covered by aDestination Inspection Report issued by an accredited inspection company, statingthe 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 equitycapital.

Foreigners are permitted 100-per-cent ownership of an enterprise provided theinvestor satisfies section 19 (2b) of the GIPC Act, 1994 (Act 478). Wholly foreign-owned enterprises must have a minimum paid up capital, the equivalent ofUS$50,000 in all areas of economic activity except import trading, where theminimum equity capital requirement is US$300,000. In the cases of export tradingand liaison (external) offices, there is no minimum foreign equity requirement.

Annual Returns 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 ofincorporation.

An external company may invite the Ghanaian public to subscribe to its shares,subject to its complying with requirements of the Companies Code concerninginvitations 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 mustsubmit for registration, a profit-and-loss account and balance sheet (as in the limitedliability 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 theeffective date of the alteration.

business registration in ghana

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