For companies who want to have a head office or start a business in Ghana, this article will prove useful.
Many international companies have head offices in different countries in Africa. Companies such as Vodafone, General Electric, Jumia, and Volkswagen are some of the companies that have branches in Africa.
How do you go about starting a business in Ghana?
What are the factors that you consider when you want to start a business in Ghana?
Many businesses go global to expand their business and profit-making opportunities. One of the benefits of starting a business in Ghana is the chance to have a global business.
Ghana is one of the best options for doing business in Africa because they have a huge wealth of resources, a democratic political system, and a dynamic economy. They are the fastest-growing economy in the world according to the World Bank’s Ease of Doing Business Report 2019.
Some of the other factors you can consider as reasons to start a business in Ghana over the other African countries are as listed below.
- Strong mineral resources (Cocoa industry)
- Consistent government policies
- Recent oil discoveries
- Steady electric power supply
- A friendly business environment
- Free trade zone for foreign companies
Advantages of doing business in Ghana
One of the advantages of doing business in Ghana is stability. Ghana is the most stable political environment within the West African sub-region.
No wonder when Twitter was looking for a place to situate their office in Africa, Ghana was the obvious choice.
Based on its stable political system and the presence of adequate infrastructure, Ghana has become the best bet for individuals and organizations who are seeking to launch their business in West Africa.
The country attracts investments seemingly effortlessly. The purpose of this article is to bring you the information needed to start a company in Ghana. You will need sound legal advice from a corporate attorney to give you the right information.
You will need the information in this article to help guide you in this process.
Stage I to help one start a business in Ghana
The first stage in establishing a company in Ghana is incorporating the company with a relevant statutory body.
You seek the Registrar of companies to gain the status of an artificial person, a corporate entity, and the right to transact business with a corporate name of your choice. You have the right to sue and to be sued.
To do this, you need to fulfill the framework established by law under the supervision of the Registrar Generals Department.
Regulatory and Institutional Requirements needed to start a business in Ghana
It is important to meet the regulatory and institutional requirements such as:
- Register your business with the Ghana Investment Promotion Centre (GIPC)
- Get permits and licenses required from other established regulatory institutions peradventure your corporate entity is interested in undergoing regulated activity.
- Gain local and municipal permits in alignment with the Local Government Act.
An incorporated company is one that is either limited by shares, limited by guarantee or unlimited. There is also a type that is called an external company.
A company limited by shares
A company limited by shares is one that has the liability of its members, and this is limited to the amount unpaid on the shares held by its members respectively. The company cannot have a public offer. This is the most popular type of company in Ghana. It limits the daily running of the company to its board of directors.
A company limited by guarantees
A company limited by guarantees is one that has the liability of its members limited to an amount that the members undertake to contribute to the company’s assets should the company shut down. This is an incorporated company and has no share capital. The goal of being in business is not profit and so its object excludes profit-seeking ventures.
An unlimited company
This company has no limits on the liability of its members.
An external company is one formed outside the Republic of Ghana. It also has an established place of business in Ghana. This means that there is a branch and an existing management team in place. There are shares, transfer, registration office, factories, etc.
Be clear, this is not an agency.
This company has a general authority to negotiate and close contracts for its corporate body. They can also maintain a stock of merchandise that belongs to its corporate body and a representative can fill in the order.
A list of processes to incorporate a company or start a business in Ghana
Some of the conditions that must be met to integrate a company are:
- The choice of who will act as its directors. You need to have a minimum of two directors.
- They must be real people over the age of 13 and one must be a resident of Ghana
Note that infants, people without sound minds, corporate bodies, people who were convicted for fraud or dishonesty cannot be appointed as directors of a company in Ghana.
- The directors have the right to appoint a company secretary who must be a real person or a corporate body. Most times, a company secretary is a barrister or solicitor.
- The directors are also mandated to appoint the first auditors of the company
- The company must choose a business name that is available for use.
- The company must be registered with the Ghana Revenue Authority and should receive its tax identification number (TIN). Applying and obtaining your TIN is a prerequisite for registering your business.
- The regulation of the company must be prepared and signed by one or more of the first subscribers in the presence of an independent adult.
Regulating your company – the requirements
The regulation should state the name of the company, its authorized business, the fact that the company can enter into a legally binding agreement. It should also include the name of the directors and the limits of their powers under Ghanaian laws.
This should include the number of shares in which the company is registered. It should also include the number of shares each subscriber owns on incorporation and the amount payable for shares.
Have a declaration of the liability of the members, stating clearly that it is limited.
When the registrar is satisfied with the compliance of the application, a specific fee is paid. The registrar then certifies that the company is incorporated under his seal.
When it involves a limited liability company, the liability of members is limited.
The company can now perform the functions of an incorporated company.
To complete the incorporation, a fee is charged at the rate of 0.5% of what the company has stated as share capital. This will include the registration fee is submitted to the Registrar of Companies.
The Ghana Investment Promotion Centre Act prescribes the minimum capital threshold for companies with foreign equity participation. Foreign investors are to comply with the requirements. This can be in cash or in capital goods that are useful to the investment or both.
Minimum Foreign Equity Requirement
- US$200,000 for a joint venture with a Ghanaian partner who has nothing less than 10% equity participation
- US$500,000 for 100 percent foreign ownership
- US$1,000,000 for trading activity. You must employ at lease 20 skilled Ghanaians.
Some exceptions to the minimum requirements are as follows
- Manufacturing and export trading of locally manufactured goods
- Portfolio investment business
- Foreign spouses and Ghanaians with dual nationality are exempt.
Incentives and Benefits under the GIPC Acts
The GIPC Act provides benefits such as:
- Custom Import Duty Exemptions for a plant, machinery, equipment, and machinery parts.
- Tax benefits
- Investment guarantees
- Automatic expatriate quotas
Other Mandatory Institutions You Must Liaise With To Start a Business in Ghana
Some of the institutions you must work with to be successful in opening your business are:
The Ghana Revenue Authority:
Ghanaian law demands that companies register with this institution. Pay your taxes and get a tax clearance certificate.
Social Security and National Insurance Trust (SSNIT)
Social Security is a priority in Ghana. This is a statutory public Trust under the National Pensions Act with the responsibility to administer Ghana’s Basic National Social Security Scheme. They cater to the First Tier of the three-tier Pension Scheme. It is the largest non-banking financial institution in Ghana. The law demands that all incorporated entities register and contribute to their employee’s retirement funds. It is a mandatory act.
Environmental Protection Agency (EPA)
When you want to start a business in Ghana, keep in mind that the law in Ghana demands that entities whose activities have negative and hostile effects on the environment apply for an environmental impact assessment certificate from the EPA.
For example, if your business is in the mining industry, the EPA is responsible for making sure that mineral rights holders take environmental safety precautions while executing their goals.
Metropolitan, Municipal, or District Assembly
You should apply for a Business Operating Permit from the body named above. Ghanaian law insists that incorporated companies pay to obtain permits from the body named where all the activity of the corporate entity is located. It is a mandatory act.
The documents needed for registration are:
- Purchase the application form from the Cash office at the Metropolitan, Municipal or District Assembly
- Complete the application forms
- Submit to the Revenue Mobilization Officer at the Assembly
- Copy of certificate of incorporation
- Registration certificate from other standard bodies
- Tax clearance certificate from the Ghana Revenue Authority
Submit the forms and a team made of the Finance Department, Environmental Health Division and City Engineers will visit your site to inspect your office premises in 5 business days. This team sends a recommendation to the Assembly in two business days.
The Assembly approves and issues the license after you pay the prescribed fee.
On how to start a business in Ghana, you will need many different corporate licenses.
You are required to apply and obtain a license for your corporate entity. Get one from the regulatory entity in the field where your corporate entity seeks to carry out regulated activity.
Getting a Business Account
When you have a business account, you can transfer any amount of funds you want.
All you need to do is meet the required minimum capital and be issued a GIPC Certificate. One of the benefits of a Business Account is the right to transfer funds as often as possible.
Data Protection Commission
This body is an independent statutory body. This commission supplies your company with the process to obtain, hold, use or disclose personal information.
Companies often collect personal data from Ghanaian citizens. Registering with the commission benefits them; they get a license and their collection of data is regulated. This will ensure they use the information properly.
Tax Liabilities for Doing business in Ghana
This organization helps you understand Ghana’s tax structure and assist companies to fulfil their obligation to the government. There are different kinds of taxes, on what you earn, what you buy, and what you own.
There are direct taxes on employee salaries and then there is company tax.
This is the simple process of starting your business in Ghana.
So when you want to start a business in Ghana, remember not to proceed without the assistance of a legal representative. It cost you less when you follow due process.