A private company unlimited by Shares, according to the Ghana’s Companies Act, 2019 (Act 992, section 9C is a company with no limit on the liability of its members and registering such companies follows certain guidelines. An unlimited liability company is a hybrid company incorporated with or without a share capital and the legal liability of the shareholders or members is not limited. The joint, several and non-limited liability of the members or shareholders to meet any insufficiency in the assets of the company apply only upon the formal liquidation of the company.
Simply put, an unlimited liability is one in which the liability of the shareholders for the debts of the company is unlimited. There is no separation between personal and company resources of the shareholders in situations where the company has to pay debts. There is maximum exposure to risks.
Unlimited liability is the exact opposite of the limited liability where the liability of the investors or owners of a company is limited to the amount of money that they have contributed or invested in the business.
Countries that have unlimited liability companies include the United Kingdom, Ireland, Hong Kong, Pakistan, Nigeria, India, Australia, New Zealand and other jurisdictions where the company law is derived from English law. They can also be found in Germany, France, Macao, Czech Republic and in three jurisdictions in Canada (Alberta, British Columbia, and Nova Scotia), where they are called unlimited liability corporations.
Who can register a Private Company Unlimited by Shares?
In Ghana, a category of workers are obligated to register a private company unlimited by shares. They include lawyers, architects and auditors. Foreigners are also allowed to own an unlimited liability company.
How different is Unlimited Liability Company from a Limited Liability company?
The benefits and incorporation status of an Unlimited liability company is the same as its limited liability counterpart. However, the reason for choosing unlimited liability as an alternative business model is due to the ability to shield its financial affairs from the public, media and industry competitors. Unlimited liability companies are not obligated to give out the state of their finances to an outsider. This prevents the general public from probing into the affairs of the company. Creditors and trade financial institutions who are clients and stakeholders of unlimited liability companies have great assurance and confidence during transactional duties. They are assured that should there be any bankruptcy or liquidation, the personal shares and assets of the shareholders can be accessed.
All regulatory acts, procedures and functions stated in the company’s code with regards to Limited Liability companies such as annual general meetings, filing of annual returns and amendments applies to Unlimited Liability Companies.
See below statistics of business registrations at Ghana’s Registrar’s General Department;
How to Register a Company Unlimited by Shares
To ensure smooth registration and incorporation of an unlimited liability company, there are steps to follow through;
Step 1- Company Name Search at RGD
To register any company in Ghana, a name search needs to be conducted to ensure the availability of the proposed business name for the company. After the name search, company promoters may apply to have their business name reserved for a period of 30 days. The business name must be meaningful, relevant and distinctive. Business names that are too similar to existing names are likely to be rejected by the Registrar General’s Department. However, applicants will be advised to amend their company name accordingly. The choice of a business name must be relevant to the nature of activity of the company. Moreover, the business name must not be offensive and undesirable or violate existing trademarks.
STEP 2 – Taxpayer Identification Number (TIN) registration
All company directors, secretaries and shareholders are required to register and obtain a TIN. TIN forms must be completed with a copy of photo ID added. TIN numbers are created at any Ghana Revenue Authority office at gratis within 24 to 48 hours. Corporate organizations or entities require TIN numbers. In the event where the shares of the company being registered belong to a corporate entity, the entity will fill an organizational TIN form and attach a letter of introduction. A TIN number will subsequently be created for the corporate shareholder. Information required to complete an individual TIN form include;
- Photo ID details
- Mother’s maiden name
- Residential and postal address
TIN forms are downloaded from the Ghana Revenue Authority website or Registrar General Department’s website. Quick links include;
STEP 3 – Completion Form 3
Information required to complete form 3 includes;
Information required to complete the form
- Company Name
- Nature of Business (Give a brief description of the company’s business activities
- Registered Office
- Digital Address
- House Number/Building or Flat Name
- Street Name
- Principal Place of Business
- Digital Address
- House Number/Building or Flat Name
- Street Name
- Other places of business if any
- Personal details of Directors, Secretary and Shareholders (nationality, date of birth, occupation, contact, email and residential address)
- Tax Identification Number of Directors, Secretary and Shareholders
- Auditor’s details
- Form 26(A) – Consent to act as a company director form.
Section 172 (2)(b) of the Companies Act, 2019, Act 992 states that;
“ (2) A person shall not be appointed as a director of a company unless the person has, before appointment;
(b) Consented in writing to be a director and filed the consent twenty-eight days.”
iii. Form 26(B) – Consent to act as a company secretary form.
According to the Companies Act, 2019, Act 992, section 211(8);
“The Company Secretary shall, before assuming office, lodge with the company for onward transmission to the Registrar, the written consent to serve as a Company Secretary”.
Information required to complete this form
- Company Name
- Personal details of the secretary (Name, Residential Address, Postal Address, Mobile Number and qualification)
- Form 26 (C) – Statutory declaration form.
This is a form that is required to be completed by the directors of the company to declare that the information provided is true.
According to the Companies Act 179, all companies are required to have at least two initial directors and a secretary during the company registration process. At least one of the company directors or secretary must be resident in Ghana.
- v. Beneficial Ownership Form
This form is to disclose the beneficial owners of the company. Complete BO1 and BO2.
Information required to complete the form;
- Purpose of Beneficial Ownership Information (You select “Company Registration)
- Company Information
- List of the Beneficial Ownership.
- Details of the Beneficial Ownership
- Type of Company
CHECK OUT OUR: Business Registration Cost Calculator
STEP 4. Pay stamp duty, business incorporation and filing fees
There are two main statutory fees to be paid at the Office of the Registrar of Companies during company registration. These are; Stamp duty & Incorporation and filing fees.
Stamp duty is 1% of the stated capital. For example, a stated capital of 100,000 Cedis is equivalent to a stamp duty of 1% x 100,000 Cedis = 1,000 Ghana Cedis.
The minimum amount of stated capital for all 100% Ghanaian owned unlimited liability companies is 500 Cedis. However, companies with joint 100% foreign ownership have different stated capital requirements. The stated capital requirement for companies in these categories are;
- 100% foreign ownership –US $ 500,000
- Joint venture between foreigner and Ghanaian – US $ 200,000
- Trading enterprise (whether jointly owned or 100% foreign owned) – US $ 1,000,000
Incorporation and filing fees are also required to be paid upon submission of business registration forms. The total cost is GHS450, which is payable directly to the Office of the Registrar of Companies by cash.
STEP 5 – Collect Business registration documents
One should expect to have the process completed in 2 weeks, upon submission of forms. The following documents will be issued;
- Certificate of incorporation
- Form 3
- Beneficial Ownership Details
These are the legal documents of proof of company’s existence in Ghana. The documents will indicate clearly the business name, activities, business address, directors’ details, company TIN as well as shareholders information among others. The business certificates can be used for any business transaction or open a corporate bank account with any of the commercial banks in Ghana.
Though registering unlimited liability company is not as common as the registration of other types of companies, we believe that having a widened scope and knowledge on all types of business registrations is important. We hope this article provides the needed information and steps on how to register an unlimited liability company. We will be delighted to read your comments and answer all questions.