A Technology Transfer Agreement (TTA) is a legally binding contract between a Ghanaian company (Transferee) and a foreign entity (Transferor) lasting for not less than eighteen (18) months which involves:

1. The transfer, sale, or licensing of industrial property (except trademarks, unless they are part of the technology being transferred).
2. The provision of technical expertise, including feasibility studies, designs, training, and advisory services.
3. The provision of technological knowledge needed to install, operate, and manage equipment, plants, and turnkey projects; and
4. The provision of technological knowledge on using machinery, raw materials, or intermediate goods obtained through purchase, lease, or other means.

TTAs do not cover the sale of goods; instead, they focus on services that enhance industrial and commercial capabilities.

Legal Framework Governing TTAs in Ghana

TTAs in Ghana are primarily regulated by:

1. Ghana Investment Promotion Centre (GIPC) Act, 2013 (Act 865) – This mandates the registration of TTAs with the GIPC.
2. Technology Transfer Regulations, 1992 (L.I. 1547) – This regulates the registration of TTAs.

According to Section 37 of the GIPC Act, every TTA must be registered with the GIPC. The GIPC is responsible for:

1. Reviewing submitted TTAs.
2. Registering TTAs
3. Monitoring and ensuring compliance with the terms and conditions of TTAs.

Some Mandatory Requirements for TTA Registration

For a TTA to be registered and enforceable, it must meet certain specific requirements. These include:

1. Services provided must not be readily available in Ghana.
2. The governing law must be the laws of Ghana.
3. Training of local personnel is mandatory.
4. Taxes on royalties are to be paid by the Transferor (foreign company).
5. Fees payable are subject to thresholds set by the GIPC.
6. TTAs cannot include certain unfair restrictions such as:
   1. Requiring the local company to buy all inputs exclusively from the foreign transferor.
   2. Imposing unnecessary royalty payments after industrial property rights expiration, termination or invalidation.
   3. Prohibiting the local company from improving or modifying the technology.
7. The duration of the TTA should not be more than ten (10) years. If both parties agree, it can be renewed, but each renewal cannot exceed five (5) years.
8. The TTA is effective on the date it is registered by the GIPC.

Threshold of Fees Payable Under a TTA

Fees payable by the Ghanaian company to the foreign Transferor are capped as follows:

If a company requires approval for fees exceeding these limits, an application must be made to the GIPC for special consideration.

Registration Process for TTAs

To register a TTA, the following steps must be followed:

Submission of Required Documents

• 1. Completed GIPC TTA registration form.
  2. Certified copies of the company’s incorporation documents.
  3. Three original/notarised copies of the TTA agreement.
  4. A detailed training schedule for Ghanaian staff for the entire duration of the agreement.
  5. Five years of audited financial statements (if applicable).
  6. A forecast of the fees payable by the Ghanaian company to the foreign company for the services to be provided.
  7. A full description of the technology and all necessary information/documents in the English language.

Payment of Fees

• 1. Initial application: GH₵ 15,206
  2. Renewal application: GH₵22,809
  3. Registration fee (to be determined by GIPC since it varies based on transfer amount)

Processing & Approval

The processing period for TTA registration is not fixed. While it is generally estimated at 4-6 weeks, in reality, it may take several months, depending on the complexity of the agreement and the consultants involved. One of the primary causes of delays is that agreements are often drafted by external consultants, who may structure the agreements based on their legal framework rather than aligning them with the TTA regulations.

Avoiding Delays in TTA Registration

To facilitate a smoother registration process, companies should consider the following:

1. Engage consultants with experience in TTAs: A consultant who is familiar with TTA regulations can help draft or review the agreement to ensure compliance and reduce back-and-forth revisions.
2. Ensure flexibility in negotiations: The parties to the TTA must be agile in agreeing on provisions that meet GIPC’s recommendations to avoid unnecessary delays.
3. Provide clear documentation: Incomplete or inconsistent documentation is a common cause of delays. Ensuring all required documents are properly prepared before submission can expedite processing.
4. Communicate with GIPC early: Early engagement with the GIPC to understand specific concerns can help preempt potential objections.

Validity and Renewal

Once registered, the GIPC will issue the applicant with a TTA certificate which is valid for ten (10) years. Upon expiration, the agreement may be renewed if the parties can justify the continued need for the technology transfer. The renewal process requires:

1. All documents required for TTA registration
2. Proof of the provision of the service(s) under the previous Agreement.
3. Written confirmation from certified auditors that fees transferred by the Transferee to the Transferor under the registered Agreement for the period were compliant with provisions of the Technology Transfer Agreement.
4. Certified Audited Financial Statements covering the duration of the Agreement
5. Technology adopted or assimilated by the Transferee under the previous Agreement
6. Challenges to full assimilation of the technology and the estimated period it will take the Transferee to completely assimilate the technology.
7. Justification for the renewal of the Agreement.
8. Training programmes organized for personnel of the Transferee under the previous Agreement.

Consequences of non-registration

Failure to register a TTA with the GIPC has legal and financial consequences, including:

1. Unenforceability of the agreement.
2. Inability to transfer fees to the foreign company under the agreement.
3. Legal penalties, including fines and possible restrictions on business operations.

Some benefits of TTA Registration

1. Corporate tax benefit: Payments made under a registered TTA (e.g., royalties, technical service fees, management fees) may be tax-deductible expenses for the local company. This can reduce the company’s taxable income, lowering its corporate tax liability.
2. Withholding tax benefit: Registered TTAs can qualify for reduced withholding tax rates under Ghana’s double taxation agreements (DTAs). The standard withholding tax on royalties is 15%, but this may be lower depending on the DTA between Ghana and the foreign entity’s home country.
3. Repatriation of Funds: Foreign companies can legally repatriate profits earned from TTA fees, knowing that the transactions comply with the law. Without registration, such payments could be flagged as unauthorized, leading to restrictions by the Bank of Ghana or tax liabilities with the Ghana Revenue Authority.

Conclusion

Technology Transfer Agreements are essential in advancing Ghana’s industrial and business landscape. However, compliance with the GIPC Act and TTA regulations is crucial to ensuring legal protection and the smooth transfer of technology. Companies looking to engage in TTAs should seek expert legal guidance to go through the process effectively.

Also read on registering a business with GIPC