Oak & Wuuds Law

DOING BUSINESS IN GHANA: THE LEGAL REGIME

REGISTRATION OF BUSINESSES IN GHANA

To do business in Ghana, an investor must register a wholly-owned limited liability company, a joint venture with a Ghanaian partner or a branch office in Ghana at the Registrar-General’s department. A Certificate of Incorporation and a Certificate to Commence Business is issued by the Registrar after submission of the required information, payment of requisite fees and capital duty at 0.5% of the stated capital of the company on incorporation.

REGISTRATION WITH THE GHANA INVESTMENT PROMOTION CENTRE

Entities with foreign participation must register with the Ghana Investment Promotion Centre (“GIPC”). This however does not apply to entities which are set up to engage exclusively in mining and petroleum, as well as entities registered as free zone entities.

Eligibility for foreign participation and capital requirements

The law prescribes applicable minimum requirements. A joint enterprise comprising of foreign participation and a citizen partner is permitted where there is investment by the foreign capital of not less than US$ 10,000.00 or its equivalent worth in capital goods by way of equity participation, or a wholly owned enterprise with an investment of foreign capital of at least US$ 50,000.00 or its equivalent worth in capital goods by way of equity capital.

In the case of a trading enterprise involving only the purchasing and selling of goods which is wholly or partly owned by a non-Ghanaian, there shall be an investment of foreign capital or its equivalent in goods worth at least US$ 300,000.00 by way of equity capital. Besides, certain industry-specific legislation impose certain minimum capital requirements.

Immigrant Quotas

Business entities that register with the GIPC have the benefit of an immigrant quota (that is, the maximum number of expatriates the foreign investor can employ), which is based on the company's paid up capital.

Investment Guarantees

Registration with the GIPC guarantees unconditional transferability of:

i. dividends or net profits attributable to the investment,

ii. payments in respect of loan servicing where a foreign loan has been obtained,

iii. fees and charges in respect of any technology transfer agreement registered with the GIPC, and

iv. proceeds (net of all taxes and other obligations) in the event of sale or liquidation of the enterprise, or any interest attributable to the investment through any authorised dealer bank in freely convertible currency.

Expatriate personnel may do personal remittances through authorised banks.

Guarantee against Expropriation

An enterprise shall not be nationalised or expropriated by the Government and a person who owns the capital of an enterprise shall not be compelled by law to cede that interest in the capital to any other person.

Dispute resolution procedures

Where a dispute arises between an investor and the Government of the Republic of Ghana in respect of an enterprise, all efforts must be made through mutual discussion to reach an amicable settlement. Any dispute which is not amicably settled through mutual discussion may be submitted at the option of the aggrieved party to arbitration as follows:

i. in accordance with the rules of procedure for arbitration of the United Nations Commission of International Trade Law (UNCITRAL Rules); or

ii. in the case of a foreign investor, within the framework of any bilateral or multilateral agreement on investment protection to which the Government and the country of which the investor is a national are parties; or

iii. in accordance with any other national or international machinery for the settlement of investment disputes agreed to by the parties. Where in respect of any dispute, there is disagreement between the investor and the Government of the Republic of Ghana as to the method of dispute settlement to be adopted, the choice of the investor will prevail.

EMPLOYMENT & TAX

In Ghana, the Constitution which is the supreme law guarantees every person the right to work under satisfactory, safe and healthy conditions, with the right to receive equal pay for equal work.

The relationship between employer-employee is regulated by a number of Laws to ensure protection for both parties. Expatriate employees, consultants or agents require work permits. All expatriate employee contracts must be registered with the Internal Revenue division of the Ghana Revenue Authority.

Employers are obliged to deduct from the salary of its employees immediately at the end of the month, the employees’ contribution, equal to 5.5% of each employee's salary for the period, whether the salary is actually paid to the employee or not. Employers are obliged to pay for each month in respect of each employee, the employer's contribution of 13% of each employee's salary for each month. These contributions will be held in trust by the employer for and on behalf of each employee until remitted. The minimum contribution must be 18.5% (comprising 13.5% and 5% respectively) of the approved monthly equivalent of the national daily minimum wage.

Tax

The Judiciary

In the event arising in the course or business or otherwise, the investor can seek redress in the Law courts of Ghana. Ghana has an independent judiciary which comprises the lower and superior courts of Judicature. The Superior Courts are constituted by the Supreme Court, the Court of Appeal, the High Court and Regional Tribunals. The lower courts consist of Circuit Courts and District Courts. The High Court has a Commercial Court Division that deals specifically with disputes that arise in the course of commerce.

Arbitration and mediation is known to our law to allow for speedy resolution of disputes. The Alternative Dispute Resolution Act, 2010 (Act 798) regulates the conduct of arbitration and mediation proceedings in Ghana. Foreign arbitral awards are also enforceable in Ghana. Such awrds are enforced if the High Court is satisfied that:

a. the award was made by a competent authority under the laws of the country in which the award was made;

b. a reciprocal arrangement exists between Ghana and the country in which the award was made or the award was made under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards or under any other international convention on arbitration ratified by Parliament; c. the party that seeks to enforce the award has produced the original award and the agreement pursuant to which the award was made (or duly authenticated copies); and

d. there is no appeal pending against the award in any court under the law applicable to the arbitration.