The Registrar General’s Department (RGD) has sent a strong warning to all persons who wish to or have acted as fronts for foreigners doing business in the country, saying, they will be prosecuted as the new Companies Act is now in full force.
The new Companies Act 2019 (Act 992) has given way for the compilation of a Central Beneficial Ownership (CBO) register which is meant to identify the natural persons who exercise significant influence over a company, and benefits from it but are not legal owners.
The RGD believes this new law will help curb the issue of fronting, as clear sanctions have been outlined for persons who are found to have been dishonest in the provision of the names of all persons who have influence and profit from the operations of a company or persons who put up their names as the owner of a business but are not; a move which allows foreigners to avoid or evade the payment of the right levies, thereby, denying the state of the needed revenue.
Speaking to the B&FT in an interview, the Registrar-General, Jemima Oware said: “people do not realize that there is such a law in place, so they boldly come to the office and put the names of different people as the owners of the company but we have done this job for a long time and so we get to know that this foreigner is the Beneficial Owner.
They do this because they want to avoid paying taxes or the duties that are linked to the Ghana Investment Promotion Center (GIPC) law where you have a trading object and the capital on it is like US$1 million; they do not want to pay that so they will put the Ghanaian as the shareholder. If eventually we find out, there are severe sanctions linked to such an act. You can face a maximum of 3-year jail sentence plus a fine and a number of sanctions,” she said.
The RGD said it would be conducting some sensitization at the major central business districts across the country in a bid to educate Ghanaian traders on the sanctions to deter them from engaging in such acts.
“We know that some Ghanaians engage in fronting but some of them are unaware of the dangers they are in. We need to educate and sensitize them, there is nothing wrong disclosing that this person is really the owner of a job but it is when you refuse to do that then it is clear you are hiding something. And when the state finds out the sanctions will kick in.
This is being done so that the nation would be able to rake in the needed revenue. If you front, you are denying the state some revenue and you have to be punished for it” Mrs. Oware said.
The Ghana Union of Traders Association (GUTA) has in the past lamented over foreigners unlawfully engaging in trading activities reserved for locals. They have even gone to the extent of locking up shops they suspect were operated by foreigners, just to find out after investigation that the shops are registered and owned by Ghanaians who, in some instances, worked with the foreigners, especially the Chinese.