Establishing a business without breaking any laws – Lawyer provides answers
Many entities and individuals who wish to establish businesses are usually caught in a web full of questions concerning legal requirements.
For the fear of the high cost of consultation or legal advice, many try to cut corners and often end up on the wrong side of the law.
From pre-establishment, beginning of operations and the life span of the business, a renowned lawyer has provided all the answers to having a business venture without flouting any law.
In this piece of article, private legal practitioner Helen Amponsah Asare provides all the answers on setting up a private limited liability company in Ghana in a Question and Answer session.
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- PRE-REGISTRATION REQUIREMENTS
What are some of the pre-registration requirements to consider when starting a Limited Liability Company (LTD) in Ghana?
Name reservation and name verification
What is name verification?
This is usually a search conducted with the Registrar General’s Department (RGD) to ascertain whether or not a business name is available for use.
How do I verify the name of the LTD I intend to register?
This can be done manually through a search letter addressed to the RGD to check the availability of the proposed business name.
Alternative and easier method is by conducting the search online via www.rgdeservices.com and clicking on name search.
Are there any costs involved in the process of name verification?
The online search is free. Cost of GH₵25.00 applies to the manual search.
What is name reservation?
This is an application addressed to the Registrar General (Registrar) to reserve the name of a company pending registration or a change of business name subject to a prescribed fee.
How long can I reserve an intended company name with the Registrar?
Two (2) months.
- REGISTRATION REQUIREMENTS
What information is required to complete the registration form?
In summary, you would be required to provide the following on the registration form:
- Particulars of the LTD (Name, registered address and principal place of business, telephone, email, Tax Identification Number, etc.);
- The amount of proposed stated capital of the company;
- The number of authorized shares and issued shares;
- Particulars of Directors and Shareholder(s);
- Particulars of Company Secretary and Auditors;
- Particulars of Beneficial Owners of the LTD, if any.
DIRECTORS
What is the minimum number for Directors of LTDs in Ghana?
Two (2).
Can an LTD have foreign Directors?
Yes. However, at least one of the Directors of the LTD must be always present in Ghana.
Are there any specific qualifications for Directors in Ghana?
Yes. The following persons shall not be appointed to act as Directors in Ghana:
- Infants (persons below the age of 18);
- Persons of unsound mind;
- A body corporate;
- An undischarged bankrupt except where leave is obtained from the court by which the person was discharged bankrupt;
- Fraudulent persons (see your solicitor for details of what this entails under the law);
- Etc…
Are Directors in Ghana required to give consent prior to their appointment?
Yes, a standard consent form has been provided by the RGD (Form 26A).
Apart from consent to act as a Director what other requirement (s) will be required by the Registrar?
Directors will also be required to give a statutory declaration. A standard statutory declaration form has been provided by the RGD (Form 26C).
SHAREHOLDERS
Is there a minimum number for shareholders in Ghana?
Yes. LTD’s must have a minimum of one (1) shareholder. The shareholder(s) may either be individual (s) or a body corporate.
Is there a difference between a member and a shareholder of an LTD?
No. A holder of share (s) in an LTD is a member of the company.
Who are the Subscribers of an LTD?
These are the first members (shareholders) of the LTD who sign on to the issued shares of the LTD upon incorporation.
COMPANY SECRETARY
Who can be appointed as a Company Secretary for LTD’s in Ghana?
- A person who has obtained professional or tertiary level qualification (in company law practice and administration) that enables that person to have the requisite knowledge and experience to perform the work of a company secretary.
- A person who has previously held an office as a company secretary trainee or has been trained under the supervision of a qualified company secretary for at least three (3) years.
- A person who is a member in good standing of the:
o Institute of Chartered Secretaries and Administrators, Ghana;
o the Institute of Chartered Accountants, Ghana;
o Ghana Bar Association.
- A person who appears to be capable to act as Company Secretary by virtue of academic qualification (in company law practice and administration) or as a member of a professional body.
Can I appoint a corporate entity as a Company Secretary?
Yes. However, the corporate entity must have at least one (1) of its subscribers, directors or promoters or operating officers qualified as a company secretary.
Are Company Secretaries required to give consent prior to appointment?
Yes, a standard consent form has been provided by the RGD (Form 26B).
Are Company Secretaries required to declare a statutory declaration prior to appointment?
No.
Can one of the Directors of the company serve as the Company Secretary?
Yes, subject to some limitations under the law.
Is there a tenure of office for Company Secretaries in Ghana? If yes, how many years?
No. No specific tenure is provided under the law.
AUDITORS
Who can be appointed to serve as an external Auditor of the LTD?
A person licensed and qualified to practice under the Chartered Accountants Act, 1963 (Act 170) and is not:
- An officer of the company or an associated company;
- A partner, an officer or a person in employment of the company or associated company;
- A person found by a court of competent jurisdiction to be of sound mind;
- A body corporate (a partnership firm of auditors can be appointed and in that case the appointment shall be deemed to the appointment of the partners of the firm who are deemed qualified at the time of appointment);
- A person disqualified to act as an auditor by the Registrar of Companies;
- An undischarged bankrupt, except with leave of the Court by which the adjudication of bankrupt was made;
- Etc…
Are External Auditors required to give consent prior to appointment?
Yes.
Is there a tenure of office for External Auditors? If yes, how many years?
Yes. An External Auditor shall hold office for a term of not more than six (6) years from the date of appointment and is eligible for re-appointment after a cooling-off period of not less than six (6) years. Specific industry requirements may apply.
AUTHORISED AND ISSUED SHARES
What are authorised shares?
This is the maximum number of shares that the LTD is legally permitted to issue as contained in the incorporation documents or constitution of the LTD.
What are issued shares?
This is the number of shares (out of the LTD’s authorised shares) that have been allocated and subsequently held by the shareholder(s) of the LTD for valuable consideration.
STATED CAPITAL
What is the minimum stated capital requirement for LTD’s in Ghana?
The minimum stated capital requirements for LTDs in Ghana depends on whether it is wholly-owned Ghanaian, a joint venture or a wholly-owned foreign company as shown below:
Wholly-Owned Ghanaian – GH₵500.00
Joint Venture (with Ghanaian partner having not less than 10% equity participation) -Minimum foreign equity of US$200,000.00
Wholly-Owned Foreign – Minimum foreign equity of US$500,000.00
Wholly-Owned Foreign (Trading activity with a minimum of 20 skilled Ghanaians employed by such an enterprise) – Minimum foreign equity US$1,000,000.000
Specific industries (for example banks) have their specific stated capital requirements different from the above.
- FEES AND TIMELINES
How much will it cost to register an LTD in Ghana?
The cost of registration is summarised below:
Cost of incorporation – GH₵230.00
Filing fee – GH₵50.00
Stamp duty – 0.5% of stated capital
How long will it take for my registration documents to be processed?
There is no specific timeline. However, once the registration forms are completed and filed, it should take about two (2) weeks for the LTD to be incorporated.
- POST REGISTRATION DOCUMENTS
What documents will I receive from the Registrar after my registration is complete?
- Certificate of Incorporation
- Certified Copy of Standard/Registered Constitution of the LTD
- Certified Copy of Form 3
The Companies Act, 2019 (Act 992) has dispensed with the issuance of the Certificate of Commencement.