All humans are entrepreneurs; not because they should start companies, but because the will to create is encoded in human DNA. – Reid Hoffman, LinkedIn co-founder
Do you have a great business idea that you are ready to turn into reality? One of the first steps you’ll need to take is registering your business as a legal entity in Ghana. But with several options available, how do you choose the right type of registration for your business?
Fortunately, Ghana has a well-defined legal framework for incorporating different types of business entities – including partnerships, sole proprietorships and companies. By following the right steps, you can register your business and obtain the necessary licences and permits to operate legally and grow your venture.
Starting a business can be a daunting task, but it is also an exciting opportunity to turn your ideas into a reality. In Ghana, entrepreneurs have several options to choose from when it comes to registering their businesses. Whether you are interested in incorporating a partnership, sole proprietorship or company, the process can seem overwhelming. However, with the right guidance and knowledge, you can successfully navigate the legal requirements and leap to turn your business idea into a registered entity in Ghana.
In this article, I’ll take you through the process of incorporating a partnership, sole proprietorship or private company in Ghana. I’ll discuss the key differences between each type of registration, the requirements for each, and the steps you must take to ensure a successful registration process.
So, if you’re ready to take the leap and turn your business idea into a registered entity in Ghana, read on to learn more!
- Types of Businesses in Ghana
In Ghana, there are three main types of legal structures for businesses and each structure has its advantages and disadvantages. Choosing the right one for your business depends on several factors; such as the nature of your business, your growth plans, and your personal goals.
Whether you are a first-time entrepreneur or an experienced business-owner looking to expand your operations, this guide will provide you with the essential information you need to take the leap and turn your business idea into a registered entity in Ghana.
Before diving into the process of incorporating a business in Ghana, it is essential to understand the different types of businesses available. The most common types of businesses are sole proprietorships, partnerships and companies.
- Sole Proprietorship or a Solo Business
A sole proprietorship is a type of business owned and run by one individual. This business structure is the simplest and most common form of business entity in Ghana. In a sole proprietorship, the owner has complete control over the business and is responsible for all its debts and liabilities. The owner also enjoys all the profits generated by the business.
To incorporate a sole proprietorship in Ghana, an individual must first choose a business name that is not already registered with the Office of the Registrar of Companies. Once a unique name has been selected, the individual must then file an application for registration with the Office of the Registrar of Companies. The application must include the proposed business name, nature of the business, owner’s name and address, and any other relevant information that may be required by the Office of Registrar of Companies.
Upon successful registration, the sole proprietorship is issued with a business registration certificate, which is proof that the business is legally registered in Ghana. It is important to note that under the Registration of Business Name Act, 1962 (ACT 151), a sole proprietorship is not a separate legal entity from the owner. This means that the owner is personally liable for any debts or obligations incurred by the business.
In terms of taxation, a sole proprietorship is required to register for tax with the Ghana Revenue Authority (GRA) and obtain a Taxpayer Identification Number (TIN). The business is then required to file annual tax returns with the GRA and pay any taxes owed.
It is also important to note that as a sole proprietorship, there may be limitations on growth and expansion of the business, as well as the ability to access funding and credit facilities.
- A Partnership
A partnership is a business structure wherein two or more people share ownership of the business jointly to make profits.
Partnerships can either be general or limited. In a general partnership, all partners are jointly responsible for the debts and liabilities of the business. In a limited partnership, some general partners have unlimited liability and limited partners have limited liability.
To incorporate a partnership in Ghana, the first step is to select a business name. The business name must not be identical or too similar to any existing registered business name in Ghana. Once a business name has been selected, a search can be conducted on the Registrar General’s Department website to ensure that the name is available for registration.
The next step is to draft a Partnership Agreement, which should include: the name of the partnership, the nature of the business to be conducted, the term of the partnership, the amount of capital to be contributed by each partner, the profit-sharing ratio among the partners, and the roles and responsibilities of each partner[i].
The partnership agreement must be signed by all partners and witnessed by a Commissioner for Oaths and registered in accordance with the law. The Partnership Agreement acts as a Constitution that regulates and governs the partnership, and also serves as a binding contract between the Partners.
Upon submission of these documents, the Office of the Registrar of Companies issues a Certificate of Registration that confirms legal existence of the partnership.
It is important to note that Partnerships in Ghana are regulated by the Incorporated Private Partnership Act, 1962 (Act 152).
No partnership consisting of more than twenty persons or of which any body-corporate is a member shall be registered under this Act[ii].
- A Company
A company is a separate legal entity from its owners. Subject to the Companies Act, a person with the age of eighteen years and above may apply for the incorporation of a company.
A company can either be private or public. A private company is restricted to a total number of members or shareholders, as well as prohibited from making public invitations to the public to acquire its shares or debentures; and also the company is prohibited from making invitations to the public to deposit money for a fixed period or payable on call. There are other distinguishing features by way of a minimum number of directors and tenure of directorship, especially in public companies.
A Private or Public Company may either be limited or unlimited in terms of rights and liabilities. A private or a public company may be limited either by Shares or Guarantee or may be unlimited. External Companies may also be registered in Ghana. An external Company is a body-corporate formed or incorporated outside the Republic but has a registered place of business in the country. An established place of business is defined under Section 329 of the Act to mean a branch, management, registered office or factory, among others.
In essence, there are seven types of companies in Ghana.
By the Companies Act, 2019 (Act 992), all companies in Ghana are required to have a company secretary. The company secretary is responsible for ensuring the company complies with all legal and regulatory requirements, maintaining the company’s records, and providing administrative support to the board of directors. The company secretary must be a resident of Ghana and cannot be a director or shareholder of the company. It is also recommended that the company secretary be a qualified lawyer, accountant, or other professional with relevant experience in corporate governance[iii].
To register a company in Ghana, the following steps must be taken:
- Choose a business name: The business name must not be identical or too similar to any existing registered business name in Ghana.
- Prepare the necessary documents: This includes the company’s constitution, details of the company’s directors and shareholders; the company’s registered office address, GPS Address, Ghana Card Numbers; and TIN numbers of Directors and Shareholders as well as the details of a Secretary and an Auditor.
- Pay the necessary fees: The fees vary depending on the registered company type.
- Obtain a Certificate of Incorporation: Once the documents have been approved and fees paid, the Office of the Registrar of Companies issues a Certificate of Incorporation, which confirms the company’s legal existence.
A company upon registration shall have full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction; and full rights, powers, and privileges of giving and entering into and be bound by and claiming all rights under a deed or mortgage or other instruments[iv].
- Are there other necessary requirements?
Additionally, if the company is engaged in certain activities such as banking, tourism, mining or petroleum exploration, it may require additional permits and licences from relevant government agencies.
Examples are the Bank of Ghana and Securities and Exchanges Commission for the banking and other financial sector businesses; The Ghana Tourism Authority for tourism and travel & tour Operators; The Gaming Commission for gaming and sport betting ventures; The Mining Commission for mining natural resources and so on.
- A Ghanaian company with foreign membership
The Ghana Investment Promotion Centre Act, 2013, ACT 865, (GIPC Act) mandates that any company with foreign investment or participation must get a GIPC registration certificate[v]. All domestic businesses with foreign ownership must register with the Ghana Investment Promotion Centre (GIPC) to obtain an investment certificate.
The GIPC Act also stipulates that there must be a minimum amount of capital for foreign participation or investment in Ghanaian businesses. Companies exempt from the minimum equity requirement include: Manufacturing, Export Trade, Portfolio Investments, companies owned by Ghanaians (living in Ghana or the Diaspora) and spouses of Ghanaians in marriage for 5 years, and also residents in Ghana.[vi]
Under Section 26 of the GIPC Act 865, companies are granted exemption from payment of Import Duty, VAT and NHIL on plant and machinery for their operations, including those under the laws mentioned in the Act.
Wholly Ghanaian-owned enterprises are also encouraged to register with the GIPC to benefit from incentives provided for in the GIPC Act, 2013 (Act 865)[vii].
- Congratulation, you are in business!
Whether you choose to register a sole proprietorship, partnership or company, it is important to understand the legal requirements and follow the necessary steps to ensure compliance with Ghanaian laws and regulations.
Remember to carefully consider your business objectives, the structure that best suits your needs, and the minimum capital requirements and foreign participation restrictions that may apply. Seeking the services of legal and business professionals can help you navigate the incorporation process and set you up for success in your new venture.
Taking the leap to turn your business idea into a registered entity in Ghana is a significant step toward achieving your entrepreneurial dreams. With a solid plan, a commitment to compliance and a willingness to learn and adapt, you can establish a thriving business in Ghana.
[i] Section 5 of ACT 152
[ii] Section 4(2) of ACT 152
[iii] Section 211(3) of Companies Act, 2019 (ACT 992)
[iv] Section 18 of Companies Act, 2019 (ACT 992)
[v] Section 24(1) of GIPC ACT
[vi] Section 28 of GIPC ACT
[vii] Section 23 of the GIPC ACT
The writer is a Barrister and Solicitor of the Supreme Court of Ghana and a Member of Zoe, Akyea & Co Law Firm in Labone, Accra.
His Legal Interests Include but are not limited to Real/Property Law, Corporate and Commercial Practice, Construction Law, and Dispute Resolution.
