The Registrar General Department in consultation with key stakeholders has abolished the key requirement that required businesses to obtain some form of pre-commencement of activities certificates prior to their commencement.
In place of this, as a pivotal part of the quest to improve the ease of doing business in the country, only Certificates of Incorporation – being a legal document relating to the formation of a company or corporation – will now need to be issued henceforth, and this has now been incorporated in the Companies Act 2019 (Act 992).
Per the new regime, an application for incorporation shall include a statutory declaration by each proposed director indicating that within the preceding five years, they have not been charged with or convicted of a criminal offence involving fraud or dishonesty, among other things listed in the new law.
In effect, once the registration process involving a business is complete, a company can proceed to do business in the country. The move, according to the Department, is to simplify the registration process.
“Therefore, there would be no minimum capital requirement before commencement of operations. However, companies with foreign participation would still have to comply with the Ghana Investment Promotion (GIPC) rules on minimum equity requirements”, a report from the RGD added.
Importantly, it is mandatory that every type of business goes through the process of incorporation which involves the preparation of specific documents including Articles of Incorporation among other things. With respect to limited liability companies (LLCs), the main documents used to incorporate are the Articles of Organization.
Instructively, when opening a business bank account, applying for any type of loan or selling shares to investors, the Certificate of Incorporation is one of the most important documents that a business is required, to provide as the document evidences that the company is properly set up. This requirement further specifies that the business is a legal entity captured on the public register of companies.
Meanwhile, shareholders now have increased influence in major transactions of companies. In fact, a resolution of shareholders is a major requirement in situations such as acquisitions, dispositions – gifting, transfer or selling – and in all cases where the transaction is expected to affect the company’s rights and interest.
This provision is aimed at removing from the board of directors the authority to enter into such major transactions without the authorization of the majority of shareholders as this measure would in turn strengthen shareholder democracy, the RGD insists.
It is to ensure utmost compliance in the new regime, that the Institute of Directors (IoD-Ghana) recently held a seminar to deepen sensitization on the duties, responsibilities and liabilities of Directors and Secretaries under the new companies Act 2019, ACT 992.
President of IoD-Ghana, Rockson Dogbegah told the Goldstreet Business that the changes in the new Act in the area of Director responsibilities were quite significant, further entreating Directors on the need to bring value to the board and renew their commitments to the tenets of ethical values of transparency, accountability, integrity, fairness and responsibility.
