Sometimes, people are oblivious to the fact that a Not-for-Profit or Non-Governmental Organization (NGO) is also termed as a company limited by guarantee. A private company limited by guarantee is a form of business structure often used by non-profit organizations, clubs, co-operatives, social enterprises, community projects, membership organizations and charities to serve social, charitable, community-based or other non-commercial causes.
Not-for-profit organisations or Guarantee companies typically retain any surplus income for re-investment or use it to promote the non-profit objectives of the business rather than distribute profits to members. Most Not-for-profits / NGOs are not within the tax net of the central government. We are happy to share with you procedures to follow as well as the requisites for registering a Non-Governmental Organization at the Registrar General’s Department.
Requirements for registering a company limited by guarantee (NGO / Not-for-profit)
- The name of the organisation (at least 2 names for name search
- An official fee of Two hundred and Seventy Ghana Cedis (GH₵ 270)
- Address of company (digital address, building name, street name, house number, location or area)
- Tax Identification Number for Executive Council Members, Subscribers, Secretary.
- Detailed particulars of Executive Council Members, Subscribers, Secretary.
- Passport biodata pages of Executive Council Members, Subscribers and Secretary (For TIN, where applicable)
- Name and address of Auditors
- Auditors consent letter
NB: The auditor or auditing firm must be credible.
- Address of registered office, principal place of business
What is the cost of registering an NGO / Not-for-Profit or Company limited by guarantee?
The total statutory cost for registering an external company in Ghana is 270 Cedis. This fee is payable directly to the Registrar General’s Department.
Procedures for registering a company limited by guarantee (Not-for-profit / NGO)
Applicants may purchase a set of prescribed regulatory documents and a set of form 3s from the Registrar General’s Department at GH₵9.50 or download all business registration forms online, http://rgd.gov.gh/index.php/forms/ . To register a company limited by guarantee, these are the necessary steps that applicants must undertake;
· STEP 1 – Company name search
A business name, also known as a company name, is simply a name or title under which an organization or other legal entity trades. If you want an exclusive right to that name, it is vital to do a name search of your intended name to check if a similar or identical name of an organization in your field does not exist before you can proceed.
In choosing the name for a Not-for-profit one must make sure that the name is;
- Meaningful– Does the name support the positioning and reflect the essence of the organization?
- Relevant– Is the name relevant to the key audiences you are trying to reach. ( target market, donors, volunteers)
- Distinctive- Does the name stand out from the names of other organizations in your community?
The RGD may reject names which in its opinion are too similar to existing names, misleading, offensive, and undesirable or violate existing trademarks. It is advisable to submit alternate company names. Be creative with the company names in order to avoid all being similar to existing company names or trademarks registered by the RGD.
· STEP 2- Apply for a Taxpayer Identification Number (TIN)
Applicants would be required to provide the TIN of the board members, subscribers and secretary. In case any of them do not have a TIN, there is a taxpayer identification number form applicants must complete in order to secure a tin.
Information required to complete an individual TIN form include;
- Name of applicant
- Photo ID details
- Mother’s maiden name
- Residential and postal
- Contact of applicant.
Please note that, for a Ghanaian applicant, you are required to add your Ghana card ID to the complete TIN form. Foreigners are required to attach a copy of the biodata page of their passport. For foreigners who do not reside in Ghana but intends to incorporate a company in Ghana, you must write a letter confirming that you live outside Ghana stating your foreign address. It must be notarized by a notary public in the foreigner’s home country. The letter must be addressed to the Registrar of Companies.
· STEP 3 – Complete Company limited by guarantee form 3B
Information required to complete the form 3B include;
Form 3B – Private Limited by Guarantee
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 place of business if any
- Personal details of Executive Council Members, secretary and subscribers (nationality, date of birth, occupation, contact, email and residential address)
- Tax Identification Number of Executive Council Members, Secretary and Subscribers
- 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 are 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
· STEP 4- Company limited by guarantee constitution form
Information required to complete the regulations form.
- Name of company
- Nature of business
- Name & TIN of members of the Executive Council
- Address description of the subscriber. This includes;
- Date of birth
- Business occupation
- Postal address of the applicant
- Signature of applicant
· STEP 5-Submission of forms
After completing the forms, an applicant should submit the forms together with the auditors consent letter to the office of the Registrar General Department with an official fee (in cash) of GH₵270. After a successful registration, the applicant would be given a Certificate of Incorporation, Certificate of Commencement, Form 3, and the Company’s Regulations.
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Licensing requirements for NGOs from the Department of Social Welfare
After registering the company with Registrar General’s Department, all NGOs are mandated to register with social welfare before the commencement of business. Below are the procedures for registration with social welfare.
Apply for NGO status at the department of social welfare which is the regulator of NGO in Ghana, by submitting five copies each of the following documents to the Accra Metropolitan Assembly (A.M.A.) within the District where the NGO is located.
Required Documents for registration with Social Welfare
- Company registration documents including certificate of incorporation and commencement, form 3&4 and regulations (for companies in the old system) or Certificate of incorporation, form 3 and Constitution (for companies in the new system).
- Application letter on the organization’s official letterhead
- The organization’s constitution
- An NGO profile form
- Memorandum of understanding between the NGO and the Government
- Articles of incorporation from the country of origin (if it is an external company).
- A social investigation report
- A recommended letter from the district, municipal or metropolitan assembly responsible for the area where your NGO is to be located.
- Brochure or publication about your organization.
- The district office (A.M.A) after inspection and evaluation write a report to the national or regional office by submitting 3 copies of an endorsement letter of the department of social welfare.
What is the cost of registering an NGO with Social Welfare?
The official fee for registering a company limited by guarantee with the Department of Social Welfare is ¢1,200 for local NGOs and $1,500 for foreign NGOs who have their branches registered in Ghana.
Taxes for Companies Limited by Guarantee in Ghana
Unlike before, all companies limited by guarantee were excluded from Corporate Taxes and Value Added Tax (VAT). Currently, to qualify for any exemption, the company is required to write an official letter to the Commissioner General of Ghana Revenue Authority for the authority to assess, determine and if deemed necessary, grant the exempts based on the nature of business activities and where there will be any estimated profits or not from their operations. Where the Commissioner has established that the company or NGO is exempt, then the NGO is exempted from paying corporate taxes. Corporate tax is the tax imposed on the net income of the company, in other words, it is a levy placed on the profit of a firm to raise taxes.
Moreover, they are exempted from paying Value Added Tax (VAT). This is because Companies limited by guarantee do not have tradable goods and services that attract VAT. VAT is charged on the supply of goods and services in Ghana, imported goods and the supply of imported services at a rate of 15%. In a case where the NGO starts to engage in buying and selling, the company is obliged to comply with the law and pay tax as the law demands. In other words, it does not become NGO anymore since the activity does not include trading for profit.
However, all Companies limited by guarantee are mandated to pay income taxes on the earnings of their employees. Thus Pay-As-You-Earn commonly termed as PAYE. In Ghana, tax is deducted from an employee’s personal income at source through a ‘pay-as-you-earn’ scheme. The highest income tax rate payable by an individual resident in Ghana is 25%.
It is the employer’s responsibility to file monthly tax returns on behalf of its employees. The employer is required to withhold the employee’s taxes and pay to the Ghana Revenue Authority. The tax withheld must be filed and payment made by the 15th of the month following the month in which the tax was withheld. Failure to do so attracts penalty.
In order not to be caught up with the law, Investors, businessmen and all charity organization who wish to set up a business or company in Ghana must endeavor to comply with all the laws of Ghana. This adds up to the credibility of the individual and the company as a whole.
NGO as a Corporate Shareholder of a Company Limited by Shares
Most people know that both companies and individuals can have shares in a company. Surprisingly, most people do not think Non-Governmental Organization can be a corporate shareholder in a limited liability company. I guess this is due to the fact that, NGO is notably a non-profit making company so it is quite interesting for an NGO to have shares in a profit making company. The fact is, Yes! An NGO can be a corporate shareholder in a limited liability company. However, the law mandates that the profits accrued from the business operation of the company of which the NGO holds shares would be ploughed back or reinvested in the business to promote the objectives of the NGO.
Annual General Meetings for Company Limited by Guarantee
Pursuant to section 149 of the companies Act – ‘Except as provided in subsection (3) of this section, every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meetings as the annual general meeting in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting and the next;
Provided that, so long as a company holds its first annual general meeting within eighteen months of its incorporation, it need not to hold it in the year of its incorporation or in the following year
Filing Annual Returns for the Company
As required by section 122 of the companies Act, 1963, all registered companies are to file annual returns each year, after 18 months of incorporation.
Section122. (1) states- Every company shall once at least in every year, deliver to the Registrar for registration of an annual return, including particulars of every member of the company, and in the form and relating to the matters prescribed in the third schedule to the companies code;
(2) The annual return shall be completed and within forty-two days of the date on which the statements, accounts, and reports of the company are sent to the members and debenture holders pursuant to section 124 of this code, and shall be signed by a director and the secretary of the company.
The cost of annual returns is ¢50 for companies limited by guarantee.
To file for annual returns, these are the requirements;
- A complete annual returns form from Registrar General’s Department
- Financial Statement for the year of filling. (It must be proved and signed by directors of the company at the Annual General Meeting of the company).
- Fee of ¢50.
Changes after Registration of Company Limited by Guarantee
After registration of a company, the subscribers may choose to make amendments like change of business address, directors, change of subscribers, change of business name, activity etc. All these amendments must be done at the Registrar General’s Department.
There are forms to be completed depending on the nature of change and written resolutions prepared by the company secretary, dully signed by both subscribers and directors. For Change of directors, both resignation and acceptance letter from the old director and new director respectively, must be attached.
Can an NGO be converted into a Company Limited by Shares?
Converting an NGO into a company limited by shares is allowed and can be done at the Registrar General’s Department. Aside the change in company regulations and possibly nature of activity at the Registrar General’s Department, there are other tax compliances that the company would have to comply in order to operate as a profit making company. Depending on the new nature of activity, the new company may be required to comply with other regulatory compliances.
According to the company code, Act 179, section 10
1) A company limited by guarantee may not lawfully be incorporated with the object of carrying on business for the purpose of making profits.
(2) If any company limited by guarantee shall carry on business for the purpose of making profits, all officers and members thereof who shall be cognisant of the fact that it is so carrying on business shall be jointly and severally liable for the payment and discharge of all the debts and liabilities of the company incurred in carrying on such business, and the company and every such officer and member shall be liable to a fine not exceeding five pounds for every day during which it shall carry on such business.
The registration process is fairly easy and not significantly different from other forms of business registrations in Ghana.
We will be happy to facilitate the registration process of your not-for-profit organization in Ghana and help you acquire all necessary licensing to commence business.
Let us know what your experiences have been in starting a not-for-profit in Ghana.