Incorporating a company
Incorporating a company means establishing a legal identity for the company that is separate from the legal identity of its directors or shareholders.
Some benefits of incorporation are that it allows a company to contract in its own name; limits the liability of the company’s directors and shareholders; and ensures continuity of the company in the event of the death or bankruptcy of a shareholder.
The three types of companies that may be incorporated in Ghana are:
Company limited by shares – an incorporated company with share capital that cannot offer its shares to the public. This is the most popular company structure in Ghana. Generally, a member’s liability is limited to the amount unpaid, if any, on the shares they hold. The company’s board of directors manages its day-to-day activities.
Company limited by guarantee –
an incorporated company without share capital. It is a not for profit entity and, as such, its objects must not include the generation of profit. The company has an executive council instead of a board of directors and its members are often referred to as ‘guarantors’. Typically, this type of company is used to protect its officers and members from personal liability in excess of what they consented to contribute towards the company’s assets in the event of the company’s liquidation.
External company – a body corporate formed outside the Republic, which has an established place of business (such as a branch, management, share, transfer, registration office, factory, mine or an agent authorized to conduct contract negotiations and enter into contracts on behalf of the body corporate) in Ghana. Following registration in Ghana, Ghanaians may buy and sell shares in an external company as if the company had been incorporated in Ghana.
Company limited by shares
To incorporate a private company limited by shares, you must:
1. Decide who will act as the company’s first directors.
A company incorporated and registered in Ghana must have a minimum of two directors, both natural persons over 21 years, one of whom must be a permanent resident of Ghana.
The directors appoint the company secretary, who may be a natural person or a corporate body. Many law firms provide company secretarial services to businesses.
The directors also appoint the first auditor of the company who, is required, by law, to be a member of the Institute of Chartered Accountants. The auditor must not be an officer or employee of the company.
2. Register with the Ghana Revenue Authority (GRA).
The company must obtain a tax identification number (TIN) for itself and personal TINs for its intended directors and the intended secretary, if they don’t have them already.
Estimated processing time: 2 DAYS
3. Choose a business name.
The company must check with the Registrar General’s Department whether their preferred business name is available. If the preferred name is already taken or too similar to the name of an existing corporation, the company must choose a different name.
Unless special permission has been sought, a company limited by shares must have a business name ending with the word “Limited”.
Estimated processing time: 1 DAY
4. Prepare the regulations of the company. The regulations must be signed by one or more of the initial subscribers in the presence of an independent adult witness and must state:
- the name of the company;
- the company’s objects or authorized business;
- that the company is able to enter into legally binding agreements (i.e. has full capacity), unless it is restricted from doing so by its regulations;
- the names of the first directors of the company;
- that the powers of the directors are limited in
accordance with the law;
- the number of shares with which the company is registered;
- the number of shares each subscriber will own on incorporation and the amount payable for the share(s); and a declaration that the liability of members is limited.
5. If the Registrar is satisfied that the information.
contained in the application and the supporting documents is accurate, a certificate of incorporation will be issued.
During the period after the issue of the certificate of incorporation but before the issue of a certificate to commence business, the company may only transact business, exercise borrowing powers or incur indebtedness if the action is incidental to its incorporation, obtaining subscriptions to or payment for its shares.
6. Within 28 days of the date of the certificate of incorporation, the company must complete and
submit to the Registrar of Companies a statement of company particulars and shareholding (Form 3) and a declaration of receipt of payment for (Form 4).
Form 4 must be signed in the presence of a Commissioner for Oaths. There is a Commissioner for Oaths in the Registrar General’s Department.
7. The completed forms, capital duty charged at 0.5% of the company’s stated share capital and the registration fee must be submitted to the Registrar of Companies. If the Registrar is satisfied with the documents submitted, a certificate to commence business will be issued.
Estimated processing time: 2 WEEKS
(steps 4, 5,6 and 7 happen concurrently)
8. Except where exempt, a company with foreign participation (that is, where any of the beneficial owners of the company is not Ghanaian) must submit an application for registration with the GIPC and pay the appropriate fee, which is determined on a sliding scale, based on the type of business and the proportion of foreign equity in the business.
Estimated processing time: 6 DAYS
9. Register for social security contributions.
Ghana operates a three-tier pension scheme of which contributions to the first tier (basic national social security scheme) and the second tier (occupational pension scheme) are mandatory. It is a criminal offence for an employer not to make the mandatory contribution.
An employer must contribute at least a sum equal to 13% of the employee’s basic salary towards the mandatory tiers of the scheme and the employee must make a minimum contribution of 5.5% of their basic salary. Employers and employees may make voluntary contributions towards any tier of the pension scheme.
Distribution of mandatory contributions
- Tier 1 13.5%
- Tier 2 5%
- Total 18.5%
Before national pension contributions can be made on an employee’s behalf, the employee must be registered with the Social Security and National Insurance Trust scheme.
Total estimated processing time: 4 WEEKS
- General information
- Exchange control rules 5 DAYS
The Bank of Ghana regulates the transfer of currency into and out of Ghana and, from time to time, it issues directives in relation to foreign exchange transactions.
Transfers of foreign currency involving an organization with its principal place of business or center of control in Ghana or an entity incorporated in Ghana (‘a resident’) must be made through a bank that reports its foreign currency transactions to the Bank of Ghana.
Though the requirements of each bank are different, the information that must be provided before a transfer
of money in respect of imported goods is authorized includes: • Invoices; • Bills of lading or airway bills;
• Import declaration forms; • A customs entry form; and • A final classification and valuation report.
Any person who transfers outside Ghana in a year an amount in excess of US$10,000 per annum must provide proof of the reason for the transfer. Proof may be in the form of medical bills, invoices for school fees or goods and services purchased.
Companies resident in Ghana are taxed on their worldwide income, taxes are only applied to foreign income that is received in or brought into Ghana. Non- resident companies are taxed on their locally-generated income only. The rate of corporation tax is 25%.
A company is resident in Ghana for tax purposes if it is incorporated in Ghana or its management and control have been exercised in Ghana at any time during the relevant period of assessment.
A national fiscal stabilization levy (NFSL) is charged on the pre-tax profits of: • banks and non-banking financial institutions
(excluding rural and community banks);
• insurance companies;
• telecommunications companies liable to collect and pay the communications service tax;
• breweries; • inspection and valuation companies; • companies providing mining support services; and • shipping lines, maritime and airport terminals.
The levy, which is assessed, is payable in quarterly installments falling due on March 31, June 30, September 30 and December 31 of the year to which the payments relate.
Resident income Payment of employees – see section on individual taxes Directors’ fees – 10% Payment of interest (excluding individuals) – 8% Fees to part-time teachers, lecturers, examiners etc. – 10% Payment of dividend to shareholders – 8% Commission to insurance and sales agents – 10% Commission to lottery agents and receivers – 5% Payment for goods and services supplied – 5% Rent – 8%
Non-resident income Management and technical service fees – 15%* Royalties, natural resource payments and rents – 10% Endorsement fees – 15% Dividends – 8% Repatriated branch after tax profits – 8% Interest – 8% Short-term insurance premium – 5%
Value Added Tax (VAT)* VAT is charged on the supply of goods and services in
Ghana and imported goods and the supply of imported services at a rate of 15%.
National Health Insurance Levy (NHIL)**
A levy is imposed on most goods and services imported into or supplied in Ghana to fund the national health scheme. The levy is 2.5% of the sale price excluding VAT of the goods or service.
Currently, the rate of capital gains tax on the disposal of a chargeable asset amounting to a gain of over GH¢ 50 is 15%. Dividends are taxed at 8%.
In Ghana, tax is deducted from an employee’s personal income at source through a ‘pay-as-you-earn’ scheme. The highest income tax rate payable by an individual resident in Ghana is 25%.