EXPERT GUIDE
Setting Up A Private Company Limited By Shares For Business In Ghana
By Eric Adjei-Laryea
Ghanaian law provides various vehicles by
which a person may set up and conduct a business
or commercial activity in Ghana. Thus, for
example, a person may conduct business under
a sole proprietorship. A business may also be
conducted under a partnership arrangement.
There is also the “Company Limited by Guarantee”
which is the vehicle commonly used by
not-for-profit organisations to conduct their
business in Ghana. In view of my reference to
“Company Limited by Guarantee”, may I add
that under Ghanaian law, limited liability companies
are of three main types: company limited
by shares, company limited by guarantee and
unlimited liability company. Any of these three
types of companies may either be private or
public. Yet, another vehicle recognised by Ghanaian
law is an “external company”. An external
company is a body corporate incorporated outside
Ghana but which has an established place
in Ghana (see Section 302(2) of the Companies
Act, 1963 (Act 179)). This piece would be limited
to private companies limited by shares and
would consider the general regulatory requirements
and procedures that attend same.
Incorporation at Registrar-General’s Department
One has to first conduct a search at the Registrar-
General’s Department (the Registrar of
Companies/the Registrar) to ascertain whether
the name intended name for the company is
available for use. It would be advisable to thus
submit at least three names for the purpose. It
could take about 30 days to obtain an official
search result. However, a non-official search result
may be obtained within a few days. Where
the Registrar confirms that the intended name
is available for use, the incorporators/promoters
may in writing request that the Registrar reserve
the name for a fee while they make preparations
to register the company. It needs adding
that no such reservation shall subsist beyond
two months during which period, no other
company shall be registered with the reserved
name. This reservation system is not foolproof
hence it would be advisable to proceed with the
incorporation process as soon as the Registrar
passes the intended name.
Tax Identification Numbers (TIN) are required
for all persons to be named directors, company
secretary, shareholder or auditor of the proposed
company. This is a requirement for tax
purposes in terms of Sections 4, 5 and 8 of the
Taxpayers Identification Numbering System
Act, 2002 (Act 632).
Completed Incorporation forms must then be
submitted to the Registrar-General’s Department.
A limited liability company is required to
have at least one shareholder and at least two
directors one of who must be present in Ghana
at all times. In practice, this requirement is
satisfied if a local address is provided for one
of the directors named in the incorporation
application forms. In terms of capital requirements
(“stated capital”), generally, a wholly foreign-
owned non-trading company is required to
have a minimum foreign equity capital of
$500,000.00. A non-trading company with
Ghanaian partnership must have a minimum
foreign equity capital of $200,000.00 and the
Ghanaian partner shall have at least 10% equity
participation in the joint enterprise. A trading
company, whether wholly foreign-owned or a
joint enterprise with a Ghanaian, is required
to have a minimum foreign equity capital of
$1million. The minimum foreign equity capital
may be in cash or capital goods.
Again, it is important to note that while a company
may carry on all kinds of businesses, a
company which is wholly foreign-owned or
jointly owned with a Ghanaian may not engage
in certain activities reserved for only citizens of
Beyond successfully incorporating a limited
liability company (i.e. limited by shares), a
company must undertake a number of further
registrations so as to make its operations
lawful or compliant with applicable law.
These include the following:
Registration with the Ghana Investment
Promotion Centre (“GIPC”)
All enterprises operating in Ghana are required
to register with the GIPC. This requirement
is particularly mandatory for enterprises with
foreign participation and no such enterprise
can lawfully commence operations unless it has
first registered with the GIPC. Generally, the
procedure is as follows:
- A bank account must be opened in the
name of the incorporated company.
- The available foreign equity must be
transferred into a bank account with
written confirmation thereof from Ghana’s
central bank. The conversion into local
currency of such funds is a condition
precedent for a company with foreign
participation being able to take advantage
of its entitlement to automatic immigrant
- The company must then submit to the
GIPC completed forms together with,
among others, copies of the applicant
company’s constitutional/incorporation
documents/certificates and the written
confirmation of equity transfer issued by
the Bank of Ghana. The appropriate application
fee must be paid to the GIPC.
Where non-cash equity (e.g. equipment)
is the case, the appropriate customs documents
must be submitted to the GIPC.
Registration with the Ghana Revenue Authority
(“GRA”)
This enables a company satisfy its tax obligations.
As part of the registration process, the
GRA may raise a provisional tax assessment on
the applicant. The process is, substantially, the
same for VAT registration.
Registration with the Social Security and
National Insurance Trust (“SSNIT”)
Every company having employees must register
with SSNIT. Thus as soon as a company
commences recruitment of employees, it
would be required to register with SSNIT so
as to enable it to pay the relevant social security
contributions of its employees. The employer
is required to pay a total of 18.5% (to
SSNIT by the 14th day of the month following
the month of payment of the relevant salary.)
It must be noted that Ghana has a 3-tier pension
system. Tiers 1 and 2 are compulsory
while Tier 3 is voluntary.
Registration with Local Government Authority
Companies are required to register with
the relevant local government authority in
whose jurisdiction the company operates or
is located and to obtain from the said authority
a Business Operating Permit. The Business
Operating Permit is valid for one year.
To register, the applicant must complete the
relevant application forms and submit same
to the relevant authority together with copies
of its constitutional documents. It will then
pay the relevant fee and then the Business
Operating Permit will be issued.
It must be noted that in addition to the above
compliance requirements, there are other registrations
which a company may be required
by law to undertake. These would usually be
industry specific registrations. Thus, for example,
a telecom company may also be required
to register with the National Communications
Eric Adjei-Laryea is a Partner at Glory Law Firm
and is team lead for the corporate and commercial
work of the firm. He has been involved with
the setting up of countless number of companies
for foreign investors in Ghana. He has significant
experience in a wide range of regulatory matters
concerning corporate entities. He routinely
advises various corporate entities across various
industry sectors, particularly foreign companies
on wide ranging matters, including immigration,
employment, company formation and allied setting
up arrangements, corporate governance,
company secretarial, regulatory compliance, foreign
investment and real estate.
“Every company having employees must register
with SSNIT. Thus as soon as a company commences
recruitment of employees, it would be required to
register with SSNIT so as to enable it to pay the relevant
social security contributions of its employees”