Legal practitioner and managing partner of Audrey Grey law firm, Audrey Naa Dei Kotey, has said that the new Companies bill awaiting presidential assent to become a law will go a long way to improve corporate governance and compliance among companies, as it will hold directors accountable for the collapse of companies.
The new Act has among its provisions corporate governance requirements which dictate how a company should be owned, managed and run, with increased responsibility on directors and company secretaries to ensure that companies comply with rules of the game or risk being banned or imprisoned.
These and other provisions in the Act, Ms. Kotey says, will be a game-changer in the way business is done in the country; thereby, reducing probability of the corporate governance rot that led to the collapse of nine banks – resulting in huge loses to the economy.
“Most of the issues that companies have are as a result of poor corporate governance. The new Act requires the company secretary to have knowledge about company law and governance, so that if your company is not compliant the responsibility falls on the company secretary – who is to ensure that your company is compliant, because this is a person who is supposed to know basically everything concerning company law, and is supposed to keep abreast with new regulations that come about. At least, this is one step in ensuring that companies are compliant and corporate governance standards are upheld.
“And even with directors, presently company directors do whatever they like. But under the new Act, if directors do not uphold their fiduciary responsibilities to a company, they are disqualified from being a company director; and not only that, they are also disqualified from holding any managerial position in any company. So, that alone serves as a disincentive; because at the end of the day you are affected personally, and this will make every director act well in the interests of the company,” she said.
Ms. Kotey was speaking at a forum organised by the Ghana Association of Restructuring and Insolvency Advisors (GARIA) in Accra, aimed at educating stakeholders on the new Company Act.
Also commenting on the new Act, President of the Ghana Association of Restructuring and Insolvency Advisors (GARIA), Felix Addo, said it will bring the country in synch with the modern way of doing business, as the former law had provisions that were old-fashioned.
“GARIA has been advocating for these reforms since we were formed some 12 years ago. We have been pushing for changes in the law because the old law we had was old-fashioned, the world has moved on. Now we have globalisation, we have e-commerce; things have changed, so we have to move globally. We welcome it, and we are very happy that this opens and brings Ghana to the modern age of doing business,” he said.
However, the CEO of the Private Enterprise Federation (PEF), Nana Osei Bonsu, pushed for certain considerations to be made for micro, small and medium scale enterprises, as most of them do not have the capacity to comply with all the provisions of the law.
“What we are saying is that for medium and small-scale enterprises, the requirement of having an accountant before they go public to seek any facility must be staggered for them. Let us grow them to a level where they can sustain themselves before that compliance requirement. Other than that, most of our SMEs will not be able to meet this requirement,” he said.