1. Several objects; one company
Many foreign investors and generally several business start-ups begin their commercial enterprise with the view of using one entity as a launch pad to invest in several areas of business. The company’s code 1963, Act 179, Section 27 (1b) requires that all persons incorporating a business to clearly indicate the objectives of the business. It is common to see companies incorporate one business entity in Ghana with several activities as its objectives. For example a company can have mining, tourism, manufacturing, general trading, import, export and many more as its objectives. It is mostly the view of the project promoters to explore opportunities in a number of these investment areas, thereby adding-on several additional objects under one company. The resulting effects on their business compliance is high cost and bottlenecks in the processes. All businesses in Ghana depending on their objectives or nature of business have peculiar set of compliance, authorizations and permits to obtain before business commencement. Adding-on several objectives therefore means that you will be required to comply with several other compliances, meet a higher capital threshold and have a higher tax assessment than you would have ordinarily met if it had been just your main project (one or two projects/areas of investment you intend to start with). In our consulting and compliance experience, we have realized that in most cases when people indicate 3 to 4 different projects or sectors of investment in their company objectives, they are most likely equipped to start with only one project, and then later expand into those other areas.
Our advice is, before you incorporate your business in Ghana; clearly outline the business you want to do. Streamline the activities so that they are inter-related, possibly in the same value chain in the same sector, rather than several different activities in several sectors. Also, have different companies for different activities in different sectors. This will help reduce bottlenecks, cut down cost, lower capital threshold, lower tax assessment etc.
2. Transferring equity into personal account
Some years back, one of our foreign clients had come to Ghana to invest in an already operational resort,came to us requiring our services to register his business with the Ghana Investment Promotion Centre (GIPC). During the early years of his project, he had done a lot of transactions during the land acquisition, construction and civil works phases using his own personal accounts for the inflow of the foreign equity transfers. He converted a chunk of the equity inflows outside the banking system and did several other transactions through third party accounts. You can only imagine the frustrations he had, trying to get the money spent to be registered as his initial capital. Eventually we managed to help resolved this issue but it wasn’t without delay in the project and increased cost of the project.
Take note, transfer all your equity contributions, whether new investment or re-investment equity through your corporate account set up with any of the Ghana licensed Banks and always convert your foreign currencies at the bank so that your investment can dully be confirmed and recognized by the Bank of Ghana. This will guarantee you safety and ease of transferring your investment out through liquidation, sale or repatriation of profit.
3. A promise to buy is not a sale