Incorporating a company limited by shares (three)

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In our previous two articles in this three-part article series, we diligently walked readers through what must be done in the pre-incorporation and incorporation stages of registering a company limited by shares. Many people mistakenly assume that the legal process of setting up a company ends with incorporation.

They are unaware of the important supplementary registrations that must be obtained in the post-incorporation stage to make a company compliant with legislation. In fact, we often encounter clients who assume that once their company is registered with the Registrar-General’s Department (RGD), they are fully compliant with the law. This is a popular misconception that can have serious consequences. Let us explain why.

As mentioned in part one of this article series, the primary purpose of incorporating a company is to make the company a separate legal entity from its owners and shareholders.

In the case of limited liability companies, the act of incorporation also limits the risks for owners and shareholders and protects their personal assets such that if the company faces financial trouble, only the assets of the company and not those of the shareholders, directors and employees can be used to settle the debts of the company.

In the legal world, this separation of a company and its members is referred to as the “veil of incorporation”. This veil is a metaphorical barrier that conceals the members of the company. However, this veil is not impermeable.

It can be “lifted” or “pierced” by the Companies Act itself, by other legislation and by the courts. Thus, should the company be suspected of not complying with relevant laws regulating that company, the veil of incorporation can be compromised and the shareholders, directors and employees of the company can be exposed.

For example, should a company in which foreign participation is permitted fail to register or renew a registration with the Ghana Investment Promotion Centre, that company commits an offence and is liable to summary conviction or a fine. The Ghana Investment Promotion Centre is able to convict a company for an offence because its Act allows it to lift the veil of incorporation in order to see the foreigners behind that veil. This defeats the purpose of incorporating a company.

Considering the importance of these supplementary registrations, we are dedicating this last article of our three-part series to educate readers on how to obtain these registrations. We will address the following:

  • Registration with the Municipal/District Assembly
  • Registration with the Social Security and National Insurance Trust (SSNIT)
  • Registration with Ghana Revenue Authority (GRA)
  • Registration with the Ghana Investment Promotion Centre (GIPC), where necessary
  • Registration with the Data Protection Commission, where necessary
  • Registration with industry specific authorities, where necessary

Registration with the Municipal/District Assembly

Every business must obtain a Business Operating Permit (BOP) from the Municipal or District Assembly in which the business is located. This BOP is a licence that authorizes the company to carry out work in its locality.

How to obtain a BOP

After a company has been registered with RGD, they must visit their municipal/district assembly with the required documents to obtain a Business Operating Permit. The basic information/documents that must be presented are the company’s Certificate of Incorporation and the name, nature of business, location and contact details of the company. A fee will be quoted and the permit will be issued once payment is made. If the registration fee is over GHS 1000, a certificate may be issued as evidence of the BOP. Otherwise, the payment receipt that is issued serves as the BOP.

Readers should note that every municipal/district assembly has its own requirements and process. For example, some assemblies determine the cost of the permit based on the industry of the business (i.e. real estate, finance, food service etc) while others require an inspection of the business’ premises and determine the cost  based on the specifications of the premises. While the information we have provided here is a general guideline, it is important that one gets in touch with their company’s municipal/district assembly to inquire about the exact requirements.

Duration of BOP

A Business Operating Permit must be renewed every year.

Registration with Social Security and National Insurance Trust (SSNIT)

Every company is mandated to open a SSNIT account, place all their employees on their  account and pay monthly contributions for these employees.

How to register with SSNIT

To register a company with SSNIT, one can walk into any SSNIT office to present the following documents and information:

  • Copy of Certificate of Incorporation
  • Copy of Form 3
  • Copy of Company’s Constitution
  • List of all workers with their effective date of work, basic salaries, and their social security numbers
  • Current address of the business
  • Copy of photo ID card of contact person (e.g. passport, driver’s licence, NHIS card) and their SSNIT number
  • Copy of photo ID card of all directors and shareholders
  • Phone numbers, email addresses, and residential addresses of all directors and shareholders.

After the documents have been inspected by a SSNIT official and the account is opened, the company will be responsible for paying 13% of each employees’ salary as SSNIT contribution for that employee. Payments must be made by the 14th of each month and failure to abide by this deadline will result in financial penalties.

In handling SSNIT registrations for our clients, we have encountered some atypical circumstances that give rise to an interesting question. As already mentioned, a company must obtain a SSNIT registration and in order to do so, the company needs to have at least one employee on its SSNIT account for whom the company must pay monthly contributions for. But, what  happens when a newly incorporated company has started operating but has no employees yet? In that case, they can put a director on the SSNIT account to make it active.

Duration of SSNIT Registration

Once a company is registered with SSNIT, they do not have to renew that registration. It is a permanent registration.

Registration with Ghana Revenue Authority (GRA)

The Ghana Revenue Authority is the government body tasked with assessing, collecting and accounting for tax revenue in Ghana. All companies are obligated to register with GRA and pay taxes on their revenue.

When should a company register with GRA?

One of the  most common questions we get from clients regarding GRA registration is whether a company must register if they have not begun operations and have no taxes to pay. We advise clients to register with GRA as soon as possible after incorporating their company even if they are not making any revenue yet. This is so that the company can avoid any allegations of tax evasion. Should a company wait until it begins operating to register with GRA, it could be assumed that the company was covertly operating after its incorporation at RGD and failed to register with GRA in order to avoid paying taxes. It is therefore better to enter GRA’s system as soon as possible and when the company is questioned as to why they have not paid taxes, they can simply show GRA their financial statement to prove that the company has not made any revenue and therefore does not owe any taxes.

How to register with GRA

A company must fill out the appropriate paperwork and submit it to GRA. This paperwork includes a “Company Statement of Estimated Tax Payable” form, where the company estimates the revenue they will make in the upcoming year. The company will be responsible for paying 25% of the estimated income as annual corporate taxes. In addition to the company self-assessment estimate form, each director of the company must also fill a “Personal Income Tax Return” form, where they report their personal income taxes for the previous year. In addition to these two important forms, GRA requires the company to also out a Value Added Tax (VAT) registration form.

Once the application documents have been submitted and approved, a GRA Certificate of Registration and a VAT  Certificate of Registration is issued to the company. 

Duration of GRA Registration

Once a company is registered with GRA, they are permanently in GRA’s system and they do not need to renew that registration. They need only keep up with their tax payments.

Registration with Ghana Investment Promotion Centre (GIPC)

Every company with foreign shareholders must register with GIPC. This includes both wholly foreign-owned companies and joint venture companies. The Centre requires that these types of companies have a minimum amount of capital to invest in their companies. This minimum capital requirement can be in cash or capital goods. For wholly foreign-owned companies, the minimum capital requirement is US$500,000 and for joint ventures, the minimum capital requirement is US$200,000. In the case of joint venture companies, the Ghanaian partner must contribute at least 10% of the equity. For trading companies, the minimum capital requirement is US$1,000,000 regardless of ownership structure and they must employ at least 20 skilled Ghanaians.

How to register with GIPC

Before registering with GIPC, a company must open a company bank account in Ghana. The minimum capital requirement must then be transferred from the shareholders’ bank accounts to the company’s bank account. These funds are called equity capital.  When this is done, the company’s bank must request approval of the equity capital from the Bank of Ghana (BOG). If all checks out, BOG will send a letter to GIPC confirming that the company has the necessary capital and will also send a letter to the company’s bank notifying them that the approval has been completed. Please note that the GIPC registration cannot start without BOG’s approval of the equity contributions.

Once the above process has been done, the company must complete and submit a GIPC registration form along with copies of their incorporation documents, namely, Certificate of Incorporation, Form 3, and Company Constitution. In the past, submissions could be made in person at GIPC’s office but they must now be done by email. Thus, one must send all application documents to investor.s[email protected] When the application materials have been submitted and vetted, GIPC will send an invoice to the email address that was used for submission. This invoice will have the account number and directives for payment of the registration fee.

If everything is in order, a GIPC Certificate of Registration is issued to the company within 5 to 7 business days.

Duration of GIPC registration

GIPC registrations must be renewed every two years. 

Registration with Data Protection Commission (DPC)

The Data Protection Act, 2012 (Act 843) (DPA) was passed in 2012 to provide guidance on how personal information should be protected and processed. According to the DPA, personal data is defined as information about an individual which can be used to identify that individual. The DPA established the Data Protection Commission (DPC) to implement and monitor compliance with the DPA.

Who must register with DPC?

Where a person/entity determines the purpose and manner in which personal data is processed, the DPA terms this person/entity as a data controller. All data controllers are required to register with the Data Protection Commission. 

How to register with DPC

DPC uses an online registration process. The first step is to create an account on the Data Protection Commission’s website (https://app.dataprotection.org.gh/en/register/). One must then add administrators to the account who will access the system to manage the account. Next, the registrant must click on the “Register Entity” tab on the page to begin the process of uploading the required information.

Once registration is completed, the system will generate the fees to be paid. The applicable fees are dependent on the size of the company, its annual turnover and the number of customers or clients it has. The fees range between GHS 120 to GHS 1800. Payment can be made with a debit card or through an offline bank payment. If the offline payment option is selected, an invoice will be generated with a 10-digit number. That invoice number can be taken to any Ecobank branch in Ghana for the payment to be made.

A data protection certificate will be issued within 21 days after registration payment is made.

Duration of Registration

Industry Specific Licences and Authorizations

Companies in certain industries must obtain licences from the regulatory body that oversees that industry. For example, radio and television stations must obtain licences from the National Communications Authority and mining companies must obtain a Mineral’s Commission’s licence. A company must check with its regulatory body to see if it is required to obtain a license. 

Conclusion

In the course of this three-part article series, we have presented a holistic overview of the incorporation process and carefully walked readers through what must be done before, during, and after the incorporation process. Once again, we must stress the need to go beyond registering a company with RGD to obtain the post-incorporation registrations because as explained in our introduction, failure to comply with these additional registrations can essentially weaken the very purpose of incorporating a company.

While these articles present in-depth information that can guide a company through its incorporation, certain situations may require specialized professional advice. As readers know, the legal landscape is a vast and deep terrain with many confusing twists and turns. We therefore advise those looking to incorporate a company to consider involving a competent lawyer to ensure that they are fully compliant with the law. Nevertheless, we trust that we have shared valuable knowledge that can be a reference point for you.

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