How can a foreigner open a company in Ghana?

Ghana is one of the most politically stable countries in West Africa. It is a state with great potential, enormous business opportunities, abundant natural resources, a booming economy and a growing middle class. It is also well known for the exceptional hospitality of its people.

Registration of a company in Ghana opens up excellent opportunities for growth and expansion in the huge African market. Ghana has become a hub for foreign investors and companies looking to expand. Combined with its growing population and unique location in West Africa, the country provides a friendly business environment for investors. Ghana's business laws are in line with international standards and best practices. They cover all aspects of business, including copyrights, patents, trademarks, dispute resolution and labor relations.

Registering a company in Ghana is simple, but at the same time it can be quite confusing if you do not understand the laws and procedures that apply to foreign nationals. The problem that most investors face is — it is a bureaucratic process of registering a company in that country. Registration models and procedures vary depending on the business and registration option the investor chooses.

The Ghana Investment Promotion Center (GIPC) Act sets out the basic requirements for foreign nationals starting a business in the country.

State capital and property requirements

In Ghana, every company with a foreign owner, after registration, must register with the GIPC and meet certain capital and ownership requirements, namely:

Company with 100% foreign capital

A company that is wholly owned by a non-Ghanaian foreigner must have a minimum declared capital of US$500,000.

Joint venture with a Ghanaian citizen

In a joint venture formed by a Ghanaian and a foreign national, the non-Ghanaian shareholders must contribute US$200,000 to the stated capital of the company. The GIPC Act 2013 provides that in any joint venture company incorporated with a Ghanaian, the Ghanaian cannot own less than 10% of the capital of the company.

External company

An external company originally registered in another jurisdiction but carrying on business in Ghana does not need to meet any capital requirements. However, when an external company registers with the GIPC, its fees become higher (currently about $11,000). This structure is not ideal for some industries, such as the procurement and export of gold: the Minerals Commission will insist on registration of a limited company before it can be licensed. Always seek legal advice before forming such an entity.

Trading enterprise

Notwithstanding the above capital requirements of US$500,000 and US$200,000 for companies wholly owned by foreigners and jointly owned by Ghanaians and foreign nationals, there is a capital requirement of US$1 million for trading establishments in which the intention is to non-Ghanaian citizen to participate. According to the GIPC Act 2013, "Trade Establishment" is defined as “the purchase and sale of imported goods or services.”

A foreign national, whether participating in a joint venture with a Ghanaian or a wholly foreign-owned company, will be required to meet a capital requirement of US$1 million.

Production and export

If a non-Ghanaian citizen intends to register a company in Ghana with manufacturing and/or export facilities, the minimum capital amount is only 500 Ghana cedis.

Compliance with capital requirements

Minimum capital requirements can be met by foreign-owned companies by either raising US$1 million, US$500,000 or US$200,000 in cash or business equipment, or a combination thereof.

Activities for Ghanaians only

Foreign nationals are not permitted to engage in the following activities as they are intended for Ghanaians only:

• Sale of goods or provision of services in the market, small trade or distribution, or sale of goods in a stall anywhere;
• Operation of a taxi or car rental service in an enterprise with a fleet of less than 25 cars;
• Operation of a beauty salon or hairdresser;
• Printing scratch cards for recharging accounts for use by subscribers of telecommunication services;
• Production of notebooks and other basic stationery products;
• Retail trade of finished pharmaceutical products;
• Production and retail sale of packaged water;
• All aspects of the pool betting and lottery business, except football pool.

Automatic quotas

As an incentive for foreigners intending to open a business in Ghana, the GIPC ACT 2013 offers free work and residence permits to those companies in Ghana that can invest capital under certain requirements. These work and residence permits are known as “automatic quotas.”

The paid-up capital of the company determines the number of quotas:

• An amount from 50,000 to 250,000 US dollars entitles you to 1 automatic quota;
• An amount from 250,000 to 500,000 US dollars entitles you to 2 automatic quotas;
• An amount from 500,000 to 700,000 US dollars entitles you to 3 automatic quotas;
• An amount above USD 700,000 entitles you to 4 automatic quotas.

Company registration process

Investors, whether local or foreign, must undergo the following necessary procedures when registering a company:

Get a Taxpayer Identification Number (TIN)

Before proceeding with company registration, the applicant must obtain a Tax Identification Number, and the TIN form is purchased along with the applicant's identification card, which is issued free of charge. The total time to obtain a TIN can average two days. The Registrar General's Department or the Ghana Revenue Authority will make the form available to interested applicants.

Define company name

Investors need to check for company names and provide company documents to obtain a certificate of incorporation. Initially, the applicant can obtain Form A of the established form from his bank, which must be submitted to the bank. The company registrar will not only review and issue a business registration certificate, but will also certify a true copy of the form, which will be submitted as an attachment. The form must include the following information: name of the company, nature of the business the subscribers intend to carry on in Ghana, full names of subscribers and shareholders, their addresses, percentage of shares, occupation, and details of any directorship in any other company. The company must have at least 2 directors, and at least one director must be a resident of Ghana.

In addition, the full name and address of the company secretary and auditors, as well as a letter of agreement to act as auditor, are attached. It is necessary to provide information about the number of shares for which the company will be registered and the declared capital. An assurance that the minimum nominal capital complies with the requirement that a 100% Ghanaian owned company must have a minimum nominal capital of not less than 500 Ghana Cedis.

Investors must complete a form for tax purposes with the Office of the Registrar General. Ghana Revenue Authority officials and staff will assist in the creation of a Tax Identification Number for both the company and all employees of the company who will be registered upon completion of the form. The General Registrar Department issues a Taxpayer Identification Number (certificate) on behalf of the registered company, where four or five copies of the company regulations and Forms 3 and 4 are required. Auditors, banks, lawyers, company secretaries may require one copy each, which must be provided. Another important point — a letter from the audit firm must also be submitted at the time of filing.

Authenticate the forms by the Commissioner of Oaths

In order for a certified company to commence business, the Commissioner of Oaths located in the Office of the Registrar General usually does so within a day and the Registrar of Companies automatically registers the new companies with the IRS in Ghana.

Deposit paid capital into account

In order to deposit paid-up capital into a bank account, investors must provide copies of the following documents: the company's articles of association, certificate of incorporation and certificate of commencement of business, as well as signatures of authorized representatives of the company.

Apply for a business license from the Metropolitan Administration

A business license is also known as a business permit (BOP), and it is an official permit to operate a business that gives the go-ahead to begin operations. The important thing is that if investors do not receive permission before starting business, this will lead to some problems with the capital authorities. The cost of submitting documents to the capital authorities depends on the category of business, and local or foreign entrepreneurs should take this into account. In addition, they must submit documents by type of establishment, for example, restaurants must have permits from the fire department and the Town and Country Planning Authority, as well as an inspection certificate from the Ghana Tourism Board, among other documents.

Conduct an inspection of work premises by the capital authorities

When the investors have completed the previously stated steps, a management officer will visit the commercial premises and report to the Metropolitan Assembly Revenue Accountant, submitting a report to the Metropolitan Assembly Revenue Mobilization Sub-Committee. The subcommittee will then meet to discuss the report and then make a recommendation to the Metropolitan Executive Committee to determine whether any adjustments are required or not.

Apply for Social Security

All business owners register their employees and themselves with the Social Security and National Investment Trust (SSNIT) to contribute to their pension. The company must attach a list of employees, their respective salaries and social security numbers, a certificate of company registration and a certificate of commencement of business to apply for social security purposes.

Limited Liability Company (LLC)

A limited liability company must have a registered office which will be used to maintain the statutory and accounting records of the company in Ghana. Investors wishing to set up a public limited company in Ghana must contribute a minimum of US$150,000 as capital, 20% of which will be required to register the company. If the company is wholly owned by foreign capital, the required amount of capital will be increased to US$50,000. For an external company, it is mandatory to create a branch in which one representative must be appointed.

The representative can be of any nationality, but must be a citizen of Ghana. Like a limited company, a branch office should have a postal address to help maintain proper communications. After completing the company registration process, investors must fill out Forms 3 and 4, which contain the name, address of the qualified editor, members of the company, the amount of the company's stated capital and the issued or unissued shares of the company.

The General Directorate of Registration charges the company 0.5% of the declared capital, to which is added the start-up tax, registration fee and form filling fee. 15% value added tax (VAT) will be charged, and 2.5% — National Health Insurance Levy (NHIL). In accordance with the Know Your Customer procedure, most banks require an introductory letter, and sometimes banks may conduct an audit to ensure the company is transparent.

The capital administration allows the activities of any company that is completely dependent on the category of business. Different types of businesses receive permission from different authorities.

To obtain a license, investors must pay 270 Ghana cedis and the total processing time will take 7 days. It takes 4 weeks to create a limited liability company, a public limited liability company and a branch, and to create a free zone — 6 weeks. Within 4 weeks, all types of commercial organizations in Ghana will be able to open a bank account in the name of the company. In addition, all types of business entities must file an annual tax return, with the exception of free zones. The Government of Ghana will provide investment guarantees to all types of (foreign/local) investors in accordance with the GIPC Act. There are several procedures for registering a GIPC. Initially, the company needs to open a corporate bank account and make a bank transfer, the cost of which ranges from 1000 to 5000 US dollars depending on the company structure.