Act 992 requires that the Registrar General’s Department (RGD) keep a Central Register of the actual owners of all companies in manual and electronic format and every company is mandated to report their information
This article will show you how to comply with the law on beneficial ownership of companies by addressing the following issues:
- who is a beneficial owner of a company;
- how do you report beneficial owners to the RGD;
- when do you report beneficial owners;
- the threshold for reporting beneficial owners; and
- the penalties for failing to report or reporting false or misleading information.
- WHO IS A BENEFICIAL OWNER (“BO”)?
A beneficial owner (BO) could be a natural person, publicly listed company and/or a government owned company that has substantial and significant interest or control over a company; receives substantial economic benefits from a company whether acting alone or together with other persons; on whose behalf a transaction is conducted; or who exercises significant control or interest through a formal or informal agreement. The control or interest can be direct or indirect. Apart from sole proprietorships and partnerships, all other companies are required to keep a register of their beneficial owners and file it at the RGD. The reason for keeping the register of beneficial owners and filing the names of the beneficial owners at the RGD is to combat money laundering, terrorist financing and corruption.
- HOW DO YOU REPORT BENEFICIAL OWNERS TO THE REGISTRAR GENERAL’S DEPARTMENT
A company can submit a BO’s information at the RGD by filling a Beneficial Ownership Declaration Form and indicate the type of beneficial ownership on the form by stating whether the BO is a natural person, publicly listed company and government owned company. A separate beneficial ownership form must be completed depending on the type of beneficial owner, i.e., natural person, publicly listed company, government owned company.
- Declaration of beneficial ownership by natural persons.
Where the BO is a natural person, the following information must be registered:
- full name;
- place of birth;
- telephone number;
- national identity card number;
- residential and digital addresses as well as email address of the BO.
Foreigners must provide their passport details in addition to the aforementioned information. The individual must disclose the nature of their interest including the details of the legal, financial, security, debenture or informal arrangement giving rise to the beneficial ownership.
The individual must also disclose the percentage of their interest in the company and indicate whether they meet the definition of a politically exposed person. Politically exposed persons are persons who have been entrusted with a prominent public function in Ghana, a foreign country or an international organization. Such prominent public functions include:
- A senior political party, government, judicial or military official;
- A person who is or has been an executive in a State-owned company;
- A senior political party official in a foreign country; and
- An immediate family member or close associate of a person who holds a prominent public function in Ghana or abroad.
- Declaration by publicly listed company.
Where the BO is a publicly listed company, the following information must be registered:
- The percentage of shares listed on the stock exchange and where the percentage is less than 100%, details of other beneficial owners must be provided;
- The name of each stock exchange on which the stocks are listed;
- The web address of the page which gives details of the listing for each Exchange named.
- Declaration by government owned entity.
Where the BO is a government owned entity, the following information must be registered:
- The percentage of the ownership of each government agency and where the total percentage is less than 100% details of other beneficial owners must be provided;
- The name and address of each government agency that is a beneficial owner;
- The nationality of each government agency;
- Country of incorporation of the government owned company;
- Notarized copy of proof of ownership such as extract from the relevant corporate register;
- Details of each government official that exercise control including Tax Identification Number, full name, position and date appointed, nationality, contact address or telephone number and method by which control is exercised.
- WHEN DO YOU REPORT BENEFICIAL OWNERS TO THE RGD
(a) Where the company is not yet incorporated.
A company yet to be incorporated in the process of preparing their incorporation documents must fill a Beneficial Ownership Declaration Form. On this form, the company must state whether or not they have a beneficial owner and whether the BOs are natural persons, publicly listed companies or government owned entities. The type of beneficial owners will determine the additional declaration form to be filled. The Beneficial Ownership Declaration Form and additional declaration form must be submitted to RGD along with the standard incorporation documents.
(b) Where the company is already incorporated:
For companies that are already incorporated, they can disclose the details of their BOs at RGD when they are filing their annual returns. They can also report BO information by simply going to RGD and requesting their information to be updated. Readers should note that these actions are subject to the deadlines outlined below.
(c) Timelines/deadlines to report beneficial owners.
RGD has provided timelines/deadlines by which all companies must submit information on their company’s BO. The timelines are as follows:
- Companies already registered with RGD must submit their information by June 2021;
- From 31 March 2021, all annual returns filed must include BO data;
- Where changes have been made to BO in the company, the company must submit that information to RGD within 30 days.
(4) THRESHOLDS FOR REPORTING BENEFICIAL OWNERS
There are thresholds for reporting beneficial owners to RGD. These thresholds depend on the sector of the company and the type of beneficial owners. Generally, a person who has direct or indirect interest of 10% or greater in a company must be registered as a BO. If a foreign politically exposed person has an interest of 5% or greater in any company, regardless of the sector, they must be reported as a BO of that company. For a domestic politically exposed person, any shares or any form of control over a business in any sector must be registered as a BO.
Some companies are considered high risk by RGD. These companies include, but are not limited to, banking and financial institutions, real estate companies, extractive sector, gaming and betting companies and used car dealership sector. For companies in the high-risk sector, any natural person who owns 5% shares or has significant control must be reported as a BO. However, the 5% threshold does not apply to shareholders or directors in the extractive industry as no thresholds have been set for such companies, they are required to report entities with any interest or control.
- PENALTIES FOR FAILING TO REPORT/REPORTING MISLEADING INFORMATION
The penalties for providing false or misleading information or failing to provide information of beneficial owners could be a fine of up to GHs3000 or two years imprisonment or both.
A major concern of beneficial owners may be that their personal data could be released to some unauthorized persons and this may cause the beneficial owners to suffer damage or distress. The Data Protection Act, 2012 (Act 843) provides that an individual or entity is entitled to compensation from the RGD for any damage or distress. Thus, it is imperative that the RGD ensures that the data provided by the beneficial owners are treated with confidentiality and released in accordance with law.
The key takeaways from this article are that the law makes it mandatory for companies save sole proprietorships and partnerships, who have natural persons, publicly listed and government companies who own a substantial interest in a company or who control or influence a company to disclose this information to the RGD by a set date and the disclosure and processing of such information must be done in accordance with law. In other words, it is imperative to note that in as much as Act 992 requires a company to disclose the personal data of its BO, the BO is equally protected by law in the way that their data is put to use and if the BO suffers some damage or distress from the misuse of such data, the RGD could be held accountable for the way that data was managed.
Emmanuel is the Managing Partner of M&O Law Consult and heads the Real Estate, Construction and Infrastructure Team. Yaw is a member of the Corporate and Commercial team of the firm.
Email: [email protected].