Doing Business In Comparative Guide

1 Legal framework

1.1 Does your jurisdiction have a civil law system, a common law system or a hybrid system?

Ghana is a common law jurisdiction. The 1992 Constitution, as amended, is the supreme law of the country. Other sources of law include:

• parliamentary enactments;
• subsidiary legislation;
• common law; and
• the 'existing law', which comprises the written and unwritten laws of Ghana in existence before the entry into force of the 1992 Constitution.

The common law of Ghana is a blend of:

• the rules of law generally known as the common law;
• the rules generally known as the doctrines of equity; and
• the rules of customary law, including those determined by the courts.

1.2 Which legislative and regulatory provisions primarily govern the establishment and operation of enterprises in your jurisdiction?

The Registration of Business Names Act, 1962 (151) governs the establishment and operation of sole proprietorship business. Among other things, it sets out:

• the manner of persons that should be registered under the act; and
• the particulars, process and timelines for registration.

The Incorporated Private Partnerships (IPP) Act, 1962 (152):

• governs the registration and operations of partnerships in Ghana; and
• regulates matters including:
• • the powers of partners to bind the partnership;
  • the nature of liability of the partnership; and
  • the fiduciary relationship of partners to the partnership.

The Companies Act, 2019 (992):

• governs the establishment and operations of companies in Ghana; and
• regulates matters including:
• • the company incorporation process;
  • the powers and limits of authority of a company;
  • the duties and liabilities of the members and directors;
  • the keeping of accounting records and preparations of financial statements;
  • the requirements for registration of charges and the submission of annual returns; and
  • the dissolution and winding up of companies.

Companies that have foreign participation must register with the Ghana Investment Promotion Centre (GIPC) under the GIPC Act, 2013 (865).

Other laws affecting the governance of public listed companies include:

• the Securities Industry Act 2016 (929);
• the Securities and Exchange Commission (SEC) Regulations 2003 (LI 1728);
• the Listing Rules of the Ghana Stock Exchange (GSE); and
• the SEC Code on Takeovers & Mergers, 2008.

1.3 Which bodies are responsible for drafting and enforcing these provisions? What powers do they have?

Generally:

• the Parliament of Ghana is the branch of government responsible for law making; and
• the executive is the branch of government concerned with the enforcement and implementation of the laws.

The Constitution empowers Parliament to make laws in Ghana through the passage of bills that must be presented to the president of Ghana for assent after passage. A bill cannot be enforced until it has been:

• duly passed into law;
• assented to in accordance with the Constitution; and
• published in the Official Gazette.

Based on the instructions of the executive branch of government (which is made up of ministries, departments and agencies), the legislative drafting division of the Office of the Attorney General and Ministry of Justice is responsible for the drafting of:

• bills and the explanatory memoranda for bills;
• subsidiary legislation (constitutional instruments, legislative instruments, executive instruments, bylaws); and
• gazette notices of a legal nature.

The executive branch of government exercises the authority to enforce and implement laws through the president either directly or by officers subordinate to him.

With respect to business enterprises in particular, the Office of the Registrar of Companies (ORC), established under the Companies Act, is the specific institution within the executive branch of government that is responsible for the enforcement of the Companies Act and other legislation governing the establishment and operation of business enterprises in Ghana.

In addition to the ORC, the SEC and the GSE are primarily responsible for enforcing the corporate regulatory regime applicable to listed companies in Ghana.

1.4 Do any codes of practice or other soft law instruments apply to private enterprises or corporate groups in your jurisdiction?

A range of generally applicable 'soft law' requirements apply to enterprises in Ghana.

For example, in 2022, the National Corporate Governance Code was launched. The code was drafted by the Institute of Directors-Ghana, which partnered with the SEC, the Bank of Ghana and other regulators, and aims to:

• harmonise existing industry and sector-specific governance standards; and
• promote sound governance practices in the country.

A novel feature is the inclusion of a code for small and medium-sized enterprises and companies in the informal sector, which:

• comprise approximately 85% of all businesses operating in Ghana; and
• contribute about 70% of Ghana's annual gross domestic product.

Public listed companies, in particular, must comply with a number of codes of practices and other instruments, including:

• the Listing Rules of the GSE;
• the Code on Takeovers and Mergers; and
• the SEC's Corporate Governance Code 2020

There are also numerous sector-specific 'soft law' instruments that apply. Relevant sector-specific regulatory bodies frequently publish notices, directives, rules, guidance manuals and guidelines that aim to establish best practices and standards on matters such as:

• operations;
• corporate governance;
• disclosure and reporting;
• customer due diligence requirements; and
• local content and participation requirements.

2 Types of business structures

2.1 What are the main types of business structures in your jurisdiction and what are their key features?

The most common forms of business structures in Ghana are as follows.

Sole proprietorships: Unincorporated businesses controlled and owned by a single or sole person. No legal status is conferred on a sole proprietorship which is separate from the owner of the business. The liability of the sole proprietor is unlimited and the sole proprietor as business owner makes all the management decisions, typically without a formal organisational structure.

Partnerships: An association of two or more individuals carrying on business for the purpose of making profit. Partners must be natural persons, not companies, and a partnership can have no more than 20 partners. A partnership must be duly registered in accordance with the IPP Act prior to the commencement of business. Every partner is deemed an agent of the firm for the purpose of carrying out the business of the firm and each partner has unlimited liability. Ghana does not currently have a limited liability partnership vehicle available.

Companies: Private or public companies limited by shares are the most common corporate vehicles in Ghana. Each shareholder or 'member' has limited liability, generally up to the amount unpaid on its shares, and the company has separate legal personality.

A company limited by guarantee is the vehicle most often used for non-profit entities. The liability of the members of a company limited by guarantee is limited to the amount that the members undertake to guarantee. Companies limited by guarantee are prohibited from carrying on business for the purpose of making profit.

Unlimited companies do not limit the liability of shareholders. This type of vehicle is typically used by professional service companies whose professional rules prevent them from operating through an entity whose liability is limited in any form.

Foreign companies may operate in Ghana through a branch, registration office, factory, mine or other fixed place of business, subject to certain sector-specific limitations, by registering as an 'external company' instead of incorporating a local subsidiary. External companies must appoint a local manager resident in Ghana to administer their affairs.

2.2 What capital requirements apply to these different types of business structures?

There is no minimum share capital for wholly owned Ghanaian companies, though in practice, the Office of the Registrar of Companies (ORC) will require some stated capital to be provided for as part of the registration process. Where there is foreign participation in the company, the minimum capital requirements referred to in question 5.3 apply.

2.3 What is the process for establishing these different types of business structures? What procedural and substantive requirements apply in this regard? What is the typical timeline for their establishment?

To incorporate a company limited by shares, the promoters must complete and submit incorporation forms and supporting documents to the ORC setting out the particulars of the company, including information on:

• the directors;
• the shareholders;
• the beneficial owners;
• the secretary and auditors;
• capital details; and
• the proposed constitution (where applicable) of the company.

The registration fee and capital duty on the company's initial stated capital must be paid on incorporation. Foreign directors, officers and beneficial owners will require a Ghanaian tax identification number as part of the incorporation process.

Once the ORC is satisfied that all the information contained in the application forms and the supporting documents is in order, a certificate of incorporation is issued, typically within 10 working days. The processes for incorporating a company limited by guarantee and an unlimited company are similar to the process for incorporating a company limited by shares.

To register an external company, the promoters must complete and submit the prescribed forms to the ORC, setting out the relevant details of the foreign company and its established place of business in Ghana. These forms must be accompanied by:

• notarised supporting documents; and
• the payment of the prescribed fees.

Once the application is filed, a certificate of registration will generally be issued by the ORC within 10 working days.

2.4 What requirements and restrictions apply to foreign players that wish to establish a business directly in your jurisdiction?

If a foreign player wishes to do business directly in Ghana by registering a local subsidiary or an external company, it will need to consider:

• general Ghanaian legal requirements, including employment law; and
• relevant sector-specific requirements and restrictions. For example:
• • in the oil and gas sector, only locally registered entities may be party to a petroleum agreement; and
  • in the mining sector, only companies incorporated in Ghana can generally hold rights to undertake reconnaissance, exploration or mining operations.

2.5 What other opportunities, using people/entities not connected with the main person, are there to do business in your jurisdiction (eg, agency, resale); and what requirements and restrictions apply in this regard?

It is common in Ghana for foreign entities and multinationals to operate in partnership with local businesses. That partnership can take a range of forms, from a full equity joint venture arrangement to a simple contractual collaboration, agency or distribution arrangement.

Again, it is important to consider relevant sector-specific requirements and restrictions when implementing such structures. For example, in the oil and gas industry, the Petroleum Commission has published Guidelines for the Formation of Joint Venture Companies in the Upstream Petroleum Industry of Ghana, which are intended to guide upstream petroleum industry players on the formation and structuring of joint venture companies in compliance with the relevant local content and local participation requirements.

3 Directors and management

3.1 How is management typically organised in the different types of business structures in your jurisdiction?

The management structure of a company in Ghana includes:

• shareholders;
• directors;
• a chief executive officer (CEO) or managing director; and
• other officers.

Board of directors: The directors manage the business of the company. Ghanaian boards are single-tier boards made up of executive and non-executive directors who collectively direct the business. Directors have a fiduciary relationship towards the company and derive their powers to act from the Companies Act and its constitution. They have oversight responsibility and direct the company's operational and financial affairs. The board elects one of its members to act as chairperson for its meetings. The directors may also delegate their powers to a committee consisting of one or more of their numbers.

CEO or managing director (MD): The Companies Act establishes the role of managing director, responsible for daily business management. The MD, appointed by the board, exercises powers conferred by the board. The MD collaborates with key roles in:

• finance;
• operations;
• risk;
• compliance;
• human resources; and
• legal.

In regulated sectors such as finance, these individuals are part of the executive committee.

Shareholders: Shareholders do not run the daily operations but must approve major decisions, such as:

• appointing or removing an auditor or director; and
• determining directors' remuneration.

Shareholders must approve 'major transactions' made by the company, including the acquisition and disposal of assets that exceed 75% of the value of the business's assets. A company's constitution may include provisions requiring shareholder approval for certain reserved matters. Shareholders exercise their decision-making power:

• through general meetings; and
• by passing special or ordinary resolutions.

See questions 2.1, 4.4 and 10.1 for further details.

3.2 Is the establishment of specialist committees recommended or mandated for certain types of enterprises? If so, which areas should they cover?

Specialist committees are recommended for companies for good corporate governance practice. The Companies Act allows a board to exercise powers through board specialist committees if the company's constitution does not prevent it.

The Corporate Governance Code requires companies listed on the Ghana Stock Exchange (GSE) to establish at least audit, risk, remuneration and nominating committees.

Additionally, other sector-specific requirements may apply. For example, a company that is SEC licensed to perform functions in the securities market in Ghana or is Bank of Ghana regulated must have at least audit and risk board committees.

3.3 Is the appointment of corporate directors permitted in your jurisdiction?

No, the appointment of a corporate director is not permitted in Ghana.

3.4 What requirements and restrictions apply to the appointment of directors, in terms of factors such as number, residence, independence, diversity etc?

A Ghanaian company must have at least two directors. There are no nationality requirements, but at least one of the directors must be ordinarily resident in Ghana.

Public companies whose constitution authorises cumulative voting in the appointment of directors must have three directors on the board.

Listed companies on the GSE must have a majority of non-executive directors, with at least two independent non-executive directors, one of whom must be responsible for protecting minority shareholders' interests.

Sector-specific legislation also specifies additional requirements on the number, competence, qualifications and specifications of executive and non-executive directors of the board. This includes statutes such as:

• the Banks and Specialised Deposit-Taking Institution Act;
• the Banking Business-Corporate Governance Directive;
• the Fit and Proper Person Directive, 2019;
• the Listing Rules; and
• the Corporate Governance Code

The Bank of Ghana (BoG) and the SEC have a fit and proper assessment criterion, which includes competencies and qualifications, which must be met before appointment as a director or key management person of a financial institution. Financial institution boards must have a minimum of five and a maximum of 13 directors, with a majority of non-executive directors resident in Ghana. These financial institution boards should also have at least 30% Ghanaian nationals and 30% independent directors.

3.5 How are directors selected, appointed and removed? Do any restrictions or recommendations apply to their tenure?

Appointment: The Companies Act and the company's constitution regulate the appointment of directors. The first directors are selected by the members and named in the incorporation documents. Any subsequent board appointment is done by a shareholder's ordinary resolution. A company's constitution can provide for the appointment of directors by:

• a class of shareholders;
• creditors;
• debenture holders;
• employees; and
• any other person.

Where there is a casual vacancy on the board, the remaining directors can appoint a director to fill the vacancy.

Where it is impossible to appoint a director, in accordance with the constitution or because there is no quorum for a directors' meeting, the shareholder or creditor can apply to court in such limited circumstances, for the director position to be filled.

All preconditions for appointing a director must be met. A person must give prior written consent for the appointment as a director. A statutory declaration must be sworn by the nominated director that they have not been convicted of a criminal offence involving fraud or dishonesty within the last five preceding years. Before prior approval is given for their appointment, nominated directors for financial institutions must pass the fit and proper test, on their:

• integrity;
• probity;
• competence; and
• soundness of judgements.

Tenure: There is no limit on the tenure of directors for a private company, but such a limit could be set out in a company's constitution. For public companies, unless otherwise specified in the constitution, at least one-third of the board must retire by rotation every year. Retiring directors are eligible for re-election. The managing director is not required to retire.

Removal: A member has the power to remove a director despite any provision in a company's constitution. The Companies Act sets out the procedure for removing a director by members, which must be strictly complied with for a valid removal. The requirements include:

• giving notice of the intended removal resolution to the director; and
• allowing the concerned director to be heard at the physical meeting where the removal resolution will be passed, all within prescribed timelines.

A director's position will be vacated:

• if they:
• • resign by written notice;
  • cease to hold a share qualification; or
  • are incompetent to act; or
• in accordance with any additional provision in a company's constitution.

3.6 What are the directors' primary roles and responsibilities, and how are these exercised?

The primary role of directors is to manage the company's business. Specific roles and responsibilities may be set out in the company's constitution.

Directors exercise their roles through regular meetings to consider relevant information and approve decisions. Ghanaian boards must meet at least once every six months in each year. Directors may also take decisions through written resolutions passed in accordance with the Companies Act.

3.7 Are the roles of individual directors restricted? Is this common in practice?

No, this is not a common practice.

3.8 What are the legal duties of individual directors? To whom are these duties owed?

Directors of Ghanaian companies stand in a fiduciary relationship and owe their duties to the company (not the shareholder that appointed them).

The primary duty of a director is to act in utmost good faith towards the company in all transactions. A director must act in the company's best interests to:

• preserve its assets;
• further the business; and
• promote the purposes for the company's formation.

A director must do so in the manner that a faithful, diligent, careful and ordinarily skilful director would act, having regard:

• the likely long-term consequence of any decision;
• the impact of the company's operations on the community and the environment; and
• the company's desirability to maintain a reputation for high standards of business conduct.

Other directors' duties include:

• acting in accordance with the company's constitution;
• only exercising conferred powers;
• exercising independent judgement;
• avoiding conflicts of interest and duties;
• not disclosing or making use of the company's information except as:
• • permitted by the company;
  • required by law; or
  • authorised by the constitution; and
• exercising diligent care and ordinary skill.

3.9 To what civil and criminal liabilities are individual directors primarily potentially subject?

Directors could face a range of potential civil and criminal liabilities for their acts or omissions or a breach of their duties.

Civil liabilities for breach:

• Compensation for loss: If a director breaches a duty imposed on them by law or the constitution of the company, or exercises excess powers, and such act results in a loss to the company, any director who knowingly participated in such act is liable to fully compensate the company for the loss.
• Account for profits made: A director who breaches their legal duties must account to the company for profits made. The profit will be recoverable to the company as a civil debt.
• Rescission of contract: Any contract or other transaction entered by a director in breach is voidable and can be rescinded by the company.
• Injunctive relief: A member can start a court action and apply for an injunction to restrain the director from a threatened breach of duty.

Criminal liabilities for breach:

• Failure to disclose interest by a director: Where a director fails to disclose a conflict of interest to the board and have it registered in the interest register, the director commits an offence and is liable on summary conviction to an administrative fine.
• Provision of false information on an affidavit of solvency: In a voluntary winding-up process, if the directors resolve that the company is solvent and can pay off its debts within a period of 12 months but does not have any reasonable grounds for making such an opinion, the directors commit an offence and will be liable on summary conviction to a fine and/or a term of imprisonment of between six months to one year.
• Failure to keep proper accounting records: Where a director wilfully fails to take steps to ensure that financial statements are prepared in accordance with the Companies Act, the director will be liable on summary conviction to an administrative fine and/or a term of imprisonment of between one and two years.
• General criminal liability: Where a director engages in fraud, bribery, money laundering or other criminal activity, the director will be prosecuted in accordance with the criminal laws of Ghana.

4 Shareholders/members

4.1 What requirements and restrictions apply to shareholders/members in your jurisdiction, in terms of factors such as age, bankruptcy status etc?

A person must be 18 years and above to be a shareholder/member of a company. Infants under 18 must have their shares held in trust for them. Company directors may refuse the registration of share transfers to infants.

The Companies Act also prohibits the registration of share transfers to individuals who are or have been declared to be of unsound mind by a court of competent jurisdiction.

There are no general requirements prohibiting persons who have filed for bankruptcy from being shareholders of a company. However, in certain regulated sectors, such as the banking payments industry, the bankruptcy status of a person is taken into consideration in determining whether the person is 'fit and proper' to be a shareholder of a regulated entity. Other requirements affecting shareholders in the banking and payments sector include:

• convictions for criminal offences;
• disqualifications from practising a profession; and
• involvement with insolvent or liquidated entities.

4.2 What rights do shareholders/members enjoy with regard to the company in which they have invested?

Rights enjoyed by shareholders under the Companies Act, 2019 (992) include the following, among others:

• the right to receive notices of general meetings and copies of members circulars;
• the right to receive audited financial statements of the company, with copies of the directors' and auditors' reports;
• the right to attend general meetings of the company and to speak and vote on a resolution before the meeting;
• the right to have the name of the shareholder entered in the register of members;
• the right to share in the profits of the company through the declaration and payment of dividends;
• the right to appoint and remove directors and auditors;
• the right to determine the remuneration of directors and auditors;
• the right to share in the distribution of the net assets of the company when the company is liquidated;
• the right to bring an action against the company to:
• • restrain it from engaging in illegal or irregular activity; or
  • seek remedy against minority oppression;
• the right to bring an action against directors for a breach of their duties to the company; and
• the right to bring or defend an action in the name or on behalf of the company where the company fails to act diligently in any relevant matter.

The constitution of a company may also confer additional rights on either all shareholders or a class of them.

4.3 How do shareholders/members exercise these rights? Do they have a right to call shareholders' meetings and, if so, in what circumstances?

Shareholders primarily exercise their rights in a company by attending and voting at general meetings of the company.

Shareholders have a right to requisition for meetings. Two or more shareholders of a private company or a single shareholder holding at least 10% of the company's shares can requisition an extraordinary general meeting of the company. For public companies, shareholders with 5% voting rights can requisition for an extraordinary general meeting of the company.

For most matters, shareholders may also make decisions through written resolutions passed in accordance with the Companies Act.

Shareholders may also exercise their rights by bringing proceedings in court on specified grounds to:

• restrain the company and/or its officers from acting in a specified manner; or
• compel them to act in a specified manner.

4.4 What influence can shareholders/members exert on the appointment and operations of the directors?

Shareholders exercise significant influence on the appointment of directors. Other than the first directors of a company named during incorporation and any appointments made by persons specifically authorised by the company's constitution, every subsequent director must either be appointed or have their appointments ratified by the shareholders (in the case of directors appointed during a casual vacancy by the continuing directors of the company).

Additionally, under the Companies Act, certain decisions and/or actions require shareholder approval. Among other things, these include:

• the issuance of new or unissued shares, other than treasury shares, except to the existing shareholders or classes thereof on a pro rata basis;
• voluntary contributions in any financial year to a charitable or any other fund (other than pension funds for the benefit of employees of the company or an associated company), of a specified amount;
• the borrowing of money or charging of any of the company's assets in excess of the company's stated capital; and
• major transactions involving:
• • the acquisition or disposal of more than 75% of the value of the company's assets; or
  • the acquisition of rights or interests, or obligations or liabilities, constituting 75% or more of the value of the company's assets.

Where the directors wish to exceed the powers conferred on them by the Companies Act or the company's constitution, shareholder approval in the form of an ordinary resolution is required.

4.5 What are the legal duties/responsibilities and potential liabilities, if any, of shareholders/members?

The shareholders of a company have a duty to pay any outstanding liability on their shares:

• in accordance with the relevant terms of subscription;
• in the event of a call validly made by the company in respect of those shares; or
• in the event of the winding up of the company.

Shareholders of a company may also be held liable for certain actions and inactions of the company, including the following:

• Where a company continues to carry on business for more than four weeks with fewer than two directors, the company, the directors and each shareholder in default will be liable to pay an administrative penalty. During this time, every director and shareholder that is aware of the situation will be jointly and severally liable for the debts and liabilities incurred by the company during the relevant period.
• Where a payment, return or distribution of company assets is made to shareholders in contravention of the distribution test, every shareholder is liable to restore to the company the amount of money received by that shareholder.
• Where a company passes a resolution to reduce its stated capital or any unpaid liability on its shares or return capital or assets to shareholders, and a creditor of the company is unable to oppose same due to ignorance of the proceedings, every shareholder of the company at the date of conformation of the resolution is liable to contribute an amount of money that is not more than the amount which they would have been liable to:
• • contribute on the winding up of the company, if the company fails to pay the debt; or
  • claim after confirmation of the resolution.

4.6 To what civil and criminal liabilities might individual shareholders/members be subject?

Generally, individual shareholders are not personally liable for the actions of a company, as the company is a separate legal entity from its shareholders. However, in certain instances –such as where fraud has been perpetrated by the shareholders of the company or contractual obligations have been deliberately evaded – the corporate veil may be pierced and individual shareholders may be held liable for the actions of the company.

4.7 Are there rules governing the issuance of further securities in a company? Do rights of pre-emption exist and, if so, how do they operate? Can they be circumvented? If so, how and to what extent?

Yes, there are rules governing the issuance of further securities in a company and rights of pre-emption do exist.

Under the Companies Act, newly issued shares must first be offered on the same terms and conditions to all the existing shareholders or to all the holders of shares of the class being issued in proportion to their existing holdings, unless this requirement is dispensed with by shareholders through an ordinary resolution.

Where new shares are to be issued to a director or past director of the company or of an associated company, or to the nominee of that director or to a body corporate controlled by that director, the above rights of pre-emption for existing shareholders will apply despite:

• any contradictory provisions in the company's constitution; or
• any resolution of the company in general meeting.

This restriction may, however, be disapplied by way of an ordinary resolution by the shareholders of a public company whose shares are listed or are in the process of being listed on an approved stock exchange.

4.8 Are there any rules on the public disclosure of levels of shareholding and/or stake building?

Yes, there are rules on the public disclosure of levels of shareholding and stake building in Ghana.

For listed companies, under the Listing Rules and the Securities and Exchange Commission Regulations, 2003 (LI 1728), as amended by LI 2397, a person that sells or purchases shares in a listed company must disclose to the market when its holdings reach, exceed or fall below each 5% threshold, starting from 10% up to 50% plus one. This disclosure must be made to the public within 48 hours of the occurrence of the relevant transaction through an announcement on the Ghana Stock Exchange and in the news media. Where the same person controls or is deemed to control certain shares and/or voting rights in a listed company, the relevant shares must be consolidated for the purpose of determining whether any relevant thresholds have been crossed by the person or a company which is under its control.

LI 1728, as amended, generally requires issuers of corporate securities to disclose to the public substantial changes in the issuer's shareholding structure, determined by reference to a 30% shareholding threshold.

In addition, all companies must:

• maintain a register of their beneficial owners; and
• file beneficial ownership information with the Office of the Registrar of Companies.

The annual return of a company must include details of every member and beneficial owner of the company.

5 Operations

5.1 What are the main routes for obtaining working capital in your jurisdiction? What are the advantages and disadvantages of each?

Many startups in Ghana are funded through bootstrapping, using the initial capital from their founding members and funds raised from their own operations.

The main routes for obtaining additional working capital in Ghana externally generally fall under the broad categories of equity or debt financing. Equity and debt funding may be sought from a wide range of sources, including:

• early-stage funding from family and/or friends;
• equity financing from:
• • angel investors;
  • venture capital or private equity funds;
  • impact funds; or
  • other investors; and
• debt financing arrangements such as trade credit and overdrafts and business loans from banks and other financial institutions.

A public company limited by shares may also raise capital through a public offer of its shares, including a rights issue or other secondary equity raise.

Each funding method and each funding source has its own advantages and disadvantages, and what is best for any Ghanaian business will depend on the needs, commercial position and strategy of such business.

Equity versus debt funding: The advantages and disadvantages of debt versus equity funding in Ghana are similar to those in other jurisdictions. Debt financing generally preserves ownership and decision-making power. It may also offer tax advantages, as interest payments are generally tax deductible. However, it requires fixed repayments and failure to pay can lead to default with consequences. Debt often necessitates security over assets, which is usually enforceable under the Borrowers and Lenders Act, 2020 (1052) without court proceedings.

Equity financing, by contrast, does not typically require fixed repayments and provides flexibility in fund allocation. However, raising equity dilutes ownership and control and is often complex and time-consuming. Unlike debt, dividends and capital returns are not tax deductible.

Debt finance providers generally have priority on a liquidation or business dissolution over members.

Sector-specific requirements will also need to be considered and may impose restrictions on equity funding in particular, including local ownership and participation requirements.

Funding sources: Family and friends typically provide early-stage capital with flexible terms, but minimal formalities can create disputes over ownership and management.

Private equity and venture capital are increasingly important sources of both debt and equity funding in Ghana. A key advantage of private equity and venture capital funding is the support and expertise that these investors commonly provide investee companies through 'technical assistance' programmes. For example, a number of Ghanaian funds offer technical assistance programmes to their portfolio companies to provide finance and technical support to help achieve growth. In addition, private equity and, in particular, venture capital investors may be more willing to provide catalytic funding to early-stage, growth businesses that may not have the established track record or balance sheet needed to obtain funding from banks or other more traditional funding sources, which are not in the business of providing catalytic risk capital. The key disadvantage of private equity and venture capital, as with equity investment more generally, is that these investors typically require a significant ownership stake and significant control rights in return for their investment, which can result in a loss of ownership and control for founders. Even when holding minority equity stakes, private equity and venture capital will typically require a suite of reserved matters and management control rights.

With a growing global focus on environmental, social and governance matters and sustainability, impact investing is now an important source of working capital for businesses in Ghana. Impact funding can take various forms, including:

• grants;
• equity investments and debt financing; and
• other types of financing.

The common thread is that impact investments aim to achieve a financial return as well as a positive, measurable, social or environmental impact.

5.2 What are the main routes for the return of proceeds in your jurisdiction? What are the advantages and disadvantages of each?

Dividends: Companies with shares may pay dividends to members. Dividends are typically paid in cash, though the Companies Act permits non-cash dividends. Dividends are paid out of a company's retained earnings and only if the 'distribution test' is satisfied – that is, if:

• the value to be paid does not exceed its retained earnings immediately before payment; and
• after payment, the company can meet its debts as they fall due.

Typically, the directors of a company recommend the amount for declaration to members, who then declare a dividend by ordinary resolution.

Dividends are usually the simplest route of returning proceeds to members. However, they are constrained by:

• available retained earnings; and
• the distribution test.

Illegal distributions expose directors and members to liability, requiring repayment with interest.

Reduction of capital: An unlimited company may reduce its stated capital by ordinary resolution. Limited companies may reduce their stated capital by a special resolution approved by the court, in accordance with the Companies Act.

The key advantage of capital reduction is that it allows a company to return capital to members. The Companies Act's capital maintenance rules otherwise generally prohibit a company from reducing its stated capital in any circumstances. The drawback, however, is the costly, time-consuming and complex administrative process, including court approval and creditor consent.

Share buyback: While Ghanaian law generally prohibits companies from acquiring their own shares, exceptions exist, including:

• the redemption of preference shares;
• buybacks of up to 15% of issued capital using a credit balance on the share deals account or transfers from retained earnings; and
• forfeiture of shares issued with an unpaid liability.

Unlike capital reductions, buybacks do not require court approval or creditor consent, making them a more efficient option. However, restrictions apply, including in:

• funding mechanisms;
• threshold limitations; and
• share pricing.

5.3 What requirements and restrictions apply to foreign direct investment in your jurisdiction?

The Ghana Investment Promotion Centre (GIPC) Act reserves certain business operations for Ghanaians or wholly Ghanaian owned enterprises, including:

• market sales, petty trading, hawking or stall-based retail;
• taxi or car hire services with a fleet of less than 25 vehicles;
• beauty salons or barber shops;
• recharge card printing for telecommunications services;
• basic stationery production;
• retail of finished pharmaceuticals;
• the production, supply and retail of sachet water; and
• all aspects of pool betting business and lotteries, except football pool.

Enterprises in Ghana with foreign participation must register with the GIPC and satisfy the following minimum capital requirements:

• $200,000 in cash and/or capital goods for enterprises with at least 10% Ghanaian ownership;
• $500,000 in cash and/or capital goods for wholly foreign-owned non-trading enterprises; and
• $1 million in cash or capital goods for trading enterprises, which must also employ at least 20 skilled Ghanaians.

These minimum capital requirements do not apply to:

• portfolio investments – that is, investments in companies listed on the Ghana Stock Exchange; or
• enterprises set up solely for export trading and manufacturing.

GIPC registration requires renewal every two years.

Foreign companies may operate in Ghana through a branch, registration office, factory, mine or other fixed place of business, subject to sector-specific limitations, by registering as an 'external company' instead of incorporating a local subsidiary. External companies must:

• appoint a resident local manager;
• register with the GIPC; and
• satisfy the minimum capital requirements discussed above.

Additionally, certain industries have sector-specific local content and participation rules. For example:

• in the upstream petroleum sector, at least 5% Ghanaian equity participation is required for a petroleum licence or agreement; and
• in the payment systems and services industry, at least 30% Ghanaian equity participation is required.

In addition, the Constitution prohibits non-citizens from holding a freehold interest in land, permitting only leaseholds for a maximum of 50 years at a time. The Land Act, 2020 (1036) classifies enterprises with more than 40% foreign ownership as non-citizens.

5.4 What exchange control requirements apply in your jurisdiction?

The Foreign Exchange Act, 2006 (723) regulates the exchange of foreign currency, international payment transactions, and foreign exchange transfers in Ghana and is enforced by the Bank of Ghana (BoG). Among other things, the Foreign Exchange Act provides that:

• in order to engage in the business of dealing in foreign exchange – that is, the purchase, sale, receipt, payment, import, export, lending or borrowing of foreign currency – a person must obtain a licence from the BoG;
• each payment in foreign currency to or from Ghana involving a non-resident of Ghana must be made through a bank; and
• each transfer of foreign exchange to or from Ghana must be made by a person licensed to carry out the business of money transfers or any other authorised dealer.

The prohibition on receipt, payment and dealing in foreign exchange covers the pricing, advertising and receipt or payment for goods and services in foreign currency in Ghana.

The BoG also has broad powers to make other rules by notice, including:

• imposing temporary restrictions where there is a severe deterioration in Ghana's balance of payments; and
• prescribing conditions required to carry out the business of foreign exchange transfers.

In addition, as mentioned in question 15, the BoG has the power to block international payments under technology transfer agreements that have not been registered as required under the GIPC Act and we are seeing increasing enforcement in this area.

5.5 What role do stakeholders such as employees, pensioners, creditors, customers and suppliers play in shaping business operations in your jurisdiction? What other influence can they exert on an enterprise?

From a legal perspective, companies owe employees, pensioners, creditors, customers and suppliers various duties under law. For example, the Labour Act, 2003 (651) imposes a range of obligations in relation to employees, as discussed further in question 8.

In addition, the Companies Act specifically requires directors of companies to consider the interests of employees when considering their director duties and whether a particular course of action is in the best interests of the company. More broadly, the Companies Act also requires directors to consider:

• the impact of the company's operations on the community and the environment; and
• the desirability of the company maintaining a reputation for high standards of business conduct.

With respect to customers, while Ghana does not have a primary consumer protection law, suppliers are compelled to protect the health, safety, privacy and wellbeing of their customers through various regulatory regimes that include consumer protection elements, such as:

• the Ghana Standards Authority;
• the Food and Drugs Authority;
• the Data Protection Commission; and
• various other sector-specific bodies.

In addition to legal obligations, stakeholder representative groups play an important role in working with the government to develop and review policy proposals that shape business operations in Ghana, including consulting on proposed legislation.

5.6 What key concerns and considerations should be borne in mind with regard to general business operations in your jurisdiction?

Regulatory compliance is a key concern in Ghana throughout a company's operations, from establishment to dissolution. The past few years have seen the enactment of a raft of significant new or updated legislation in Ghana, including the following:

• the Companies Act, which set out the first comprehensive update of Ghanaian company law for more than 50 years, replacing the old Companies Act, 1963 (179);
• the Companies Regulations, 2023 (LI 2473), which introduce administrative and other provisions for the effective implementation of the provisions of the new Companies Act;
• the Land Act, 2020 (1036), which consolidates Ghana's complex and disparate laws regarding land ownership and administration into a single act and introduced a number of innovations, including:
• • the creation of a Customary Land Secretariat;
  • an update to the registration system; and
  • provision for future implementation of electronic conveyancing;
• the Corporate Insolvency and Restructuring Act, 2020 (1015), which introduces the concept of the administration of companies in financial distress in Ghana;
• the Borrowers and Lenders Act, 2020 (1052), which provides a revised legal framework for lending and the creation, registration and enforcement of security interests;
• the Public Private Partnership Act, 2020 (1039), which regulates contracts between public authorities and private parties for the provision of public infrastructure and services;
• the Insurance Act, 2021 (1061), which introduced a full update of regulations applicable to the insurance sector, including requiring certain mandatory insurance policies to be maintained by all businesses operating in Ghana;
• the Anti-money Laundering Act, 2020 (1044), which aims to bring Ghana's anti-money laundering rules into line with international standards;
• the Ghana Standards Authority Act, 2022 (1078), which updates and consolidates the law relating to standardisation, conformity assessment and metrology, replacing the old Standards Authority Act, 1973 (NRCD 173); and
• the Environmental Protection Act, 2025 (1124), which replaced the old Environmental Protection Act, 1994 (490) and introduced a range of compliance requirements to promote environmental sustainability.

With so much new legislation to get to grips with:

• compliance is a critical focus for all businesses in Ghana; and
• legal and regulatory capacity building is essential.

A particular area of focus of some of Ghana's recent regulatory developments has been local content and local participation requirements, as described in more detail under question 14.

6 Accounting reporting

6.1 What primary accounting reporting obligations apply in your jurisdiction?

For the purposes of this Q&A, we have focused on companies' reporting obligations, rather than those applicable to partnerships and sole proprietorships.

Accounting records and financial statements: Ghanaian companies must:

• maintain proper accounting records, which must provide a true and fair view of the company's state of affairs; and
• prepare a set of annual financial statements that must comply with:
• • the International Financial Reporting Standards (IFRS), as adopted by the Institute of Chartered Accountants, Ghana; and
  • the requirements of the Companies Act.

The annual financial statements must be:

• approved by the company's directors;
• signed by at least two directors; and
• circulated to members and debenture holders within 18 of incorporation and at least once every calendar year at intervals of up to 15 months.

The financial statements must be accompanied by:

• a report by the company's directors, which must be approved by the company's directors and signed by at least two directors; and
• a report by the auditors of the company, which must be signed by the auditors.

These documents must be laid before the company in each annual general meeting (unless the requirement for an annual general meeting is waived).

Specific rules apply for external companies.

Annual returns: Companies must file annual returns at least once a year, within 36 days of circulating financial statements and accompanying reports to members and debenture holders. Annual returns must include details of:

• members;
• beneficial owners;
• share capital;
• debts;
• director changes; and
• corporate governance disclosures.

A newly incorporated company is exempt from filing annual returns in its first year but must do so within 36 days of its first financial statement circulation.

Companies must also file other periodic returns to the Office of the Registrar of Companies for registration within a specified period (usually within 28 days) after the occurrence of certain specified events.

Other reporting obligations: Ghanaian companies are also subject to a range of other reporting obligations. For example:

• public companies listed on the Ghana Stock Exchange (GSE) face additional disclosure and reporting requirements;
• companies registered under the Ghana Investment Promotion Centre Act must provide biannual progress reports on their investment projects; and
• certain industries have specialised reporting requirements.

6.2 What role do the directors play in this regard?

Directors have a duty to ensure that:

• all legal reporting requirements are duly complied with; and
• information provided in these reports is accurate.

Directors must also:

• approve and sign the annual financial statements; and
• prepare the directors' report to be circulated to all members and debenture holders of the company.

6.3 What role do accountants and auditors play in this regard?

Although there is no specific provision in the Companies Act requiring companies to appoint accountants, in practice, accountants are usually engaged to:

• assist management in the preparation of financial statements; and
• ensure that financial records are accurate.

Auditors are responsible for:

• reviewing and verifying the accuracy of financial records of a company; and
• ensuring that the company complies with:
• • accounting and tax regulations; and
  • accepted accounting principles.

The auditors are required under the Companies Act to prepare a report on the accounting records and financial statements of the company. Auditors act as fiduciaries of the company and on this basis must exercise diligence and care in the performance of their functions.

6.4 What key concerns and considerations should be borne in mind with regard to accounting reporting in your jurisdiction?

Ghanaian companies must comply with the Companies Act requirements for financial statements and accounting records, which align with IFRS adopted by the Institute of Chartered Accountants, Ghana. To meet these obligations, companies must:

• establish comprehensive reporting and record-keeping policies from inception; and
• ensure that they have the necessary technical and human resources.

One increasing area of reporting focus in Ghana concerns environmental, social and governance (ESG) matters, as the following examples bear out:

• In November 2022, the GSE, in collaboration with the Global Reporting Initiative (GRI) and others, launched the ESG Disclosures Guidance Manual to guide listed companies in Ghana and other organisations interested in ESG on how to collect, analyse and publicly disclose important ESG information using an approach that meets international standards in sustainability reporting. To help reduce uncertainties on which framework or standards to apply, the ESG manual recommends the adoption of the GRI's Global Reporting Initiative Sustainability Reporting Standards, 2021.
• The GSE has announced that intends to incorporate the GRI standards into the Listing Rules and the ESG manual has been integrated into the Ghana Capital Market Master Plan, to promote sustainability and transparency.
• It is expected that the IFRS sustainability disclosure standards will be adopted by the Institute of Chartered Accountants, Ghana in due course, and therefore will form part of the Companies Act requirements. Currently, the IFRS sustainability disclosure standards are generally voluntary.
• ESG and sustainability issues are also increasingly being considered in sector-specific reporting requirements. For example, in the banking and finance industry:
• • financial institutions must comply with the Sustainable Banking Principles and Sector Guidelines Notes and the Climate-Related Financial Risk Directive; and
  • the Securities Industry Green Bonds Guidelines outline reporting and disclosure obligations for financial institutions and market participants issuing sustainability linked bonds.
• Additionally, several ESG disclosure regulations provide further guidance on sustainability reporting requirements.

7 Executive performance and compensation

7.1 How is executive compensation regulated in your jurisdiction?

Executive board compensation is legally regulated. The Companies Act states that any remuneration to a director for services provided to the company must be determined by ordinary resolution of the member.

Listed companies must comply with the Securities and Exchange Commission's Corporate Governance Code, which mandates remuneration committees to oversee executive compensation policies.

In regulated sectors such as banking, the Bank of Ghana's (BoG) Corporate Governance Directive specifies requirements for executive remuneration structures and policies. Banks must have board-approved remuneration policies that:

• align with prudent risk-taking; and
• comply with the BOG's compensation directives.

7.2 How is executive compensation determined? Do any disclosure requirements apply?

The shareholders set the remuneration for directors by an ordinary resolution. In practice, the board of directors will decide on the remuneration for executive directors, which may include:

• salary;
• commission;
• profit-sharing; and
• participation in pension schemes for their services.

This recommendation is then submitted to the shareholders for approval. Directors must fulfil their legal duties when determining executive compensation, ensuring that it reflects the value of services. They will consider:

• performance;
• experience;
• qualifications; and
• prevailing rates.

Companies must disclose directors' remuneration in their financial statements, including aggregate amounts of:

• fees;
• salaries;
• expenses;
• allowances;
• pensions; and
• other emoluments.

Listed companies in Ghana must also periodically publish their financial statements for investors. Companies in other regulated sectors, including the financial sector, must also publish and report financial statements that include compensation information.

7.3 How is executive performance monitored and managed?

Under the Companies Act, directors are responsible for managing the business and can exercise all powers reserved for this purpose, including overseeing executive management.

For the financial sector, the BoG Corporate Governance Directive mandates that the board oversee and assess the performance of senior management in managing the affairs of the regulated financial institution. The board must:

• establish and monitor performance criteria; and
• evaluate senior management against these criteria.

Companies can create their own frameworks to monitor and manage executive performance through contracts and internal policies.

7.4 What key concerns and considerations should be borne in mind with regard to executive performance and compensation in your jurisdiction?

Executive compensation and performance vary depending on:

• the industry; and
• the size and structure of the business.

Market research should be conducted to help in the determination of the appropriate compensation to ensure a good balance between attracting the right talent and not overburdening the company. Companies should ensure stringent compliance with the shareholders' approval of the remuneration of directors. Managerial and performance tools should be used to monitor performance. Bonus-related targets can be set by the company for accountability. There should be transparency in the financial statements of the company of directors' emoluments. Executive compensation income should be taxed appropriately.

8 Employment

8.1 What is the applicable employment regime in your jurisdiction and what are its key features?

Ghana's employment system is governed by laws and market practices. The main laws include the following:

• Constitution: This provides a framework for the protection of the rights of workers and employers. Each person:
• • has the right to work under satisfactory, safe and healthy conditions; and
  • should receive equal pay for equal work without discrimination.
• The Labour Act and the Labour Regulations, 2007 (LI 1833): These apply to all workers and employers except the security forces. The Labour Act addresses various employment-related issues to safeguard employment, including:
• • the rights and duties of employers and workers;
  • required employment contract information;
  • restrictions on employment conditions;
  • fair termination rules;
  • leave entitlements;
  • working hours; and
  • rest periods.
• The Labour Act establishes the National Labour Commission to resolve industrial disputes and investigate labour complaints.
• The National Pensions Act, 2008 (766) and the Pensions Regulations: These provide the regulatory framework for pensions in Ghana, as discussed in question 8.5. The Social Security National Insurance Trust manages Tier 1, while trustees approved by the National Pensions Regulatory Authority handle Tiers 2 and 3.
• Workmen's Compensation Act: This applies to all employees except the Armed Forces. The act provides for payment of compensation for personal injury or death of an employee due to a work-related accident.
• Factory, Offices and Shops Act 1970 (328): This includes mandatory provisions for the health, welfare, and safety of workers in factories, offices and shops.
• International Labour Conventions: Ghana joined the International Labour Organization (ILO) in 1957. It has ratified several key ILO conventions, some of which are reflected in the Labour Act. These include:
• • conventions on:
  • • hours of work in industry;
    • weekly rest;
    • minimum wage fixing;
    • labour inspection;
    • underground work by women;
    • employment service;
    • night work by women;
    • social policy;
    • working environment;
    • child labour;
    • labour administration; and
  • conventions that:
  • • enshrine the right and freedom to form or join unions;
    • enshrine the right to collective bargaining;
    • prohibit forced labour; and
    • enshrine the right to equal treatment.

8.2 Are trade unions or other types of employee representation recognised in your jurisdiction?

Trade unions are recognised in Ghana. Two or more workers in a company can form or join a trade union. Employees have strong protections in trade unionism for the protection of their economic and social interests. Under the Labour Act, employers cannot:

• require a person to form, join or avoid joining a trade union;
• require a person to avoid or participate in lawful trade union activities;
• refuse employment due to trade union membership; or
• promise benefits for not participating in trade union activities.

However, certain personnel cannot form or join unions, including those:

• involved in policy or decision making;
• in management;
• in positions of trust;
• with highly confidential duties; or
• who serve as agents of shareholders.

These classifications must be agreed upon by employers and unions, considering the organisational structure and job functions.

Terminating an employee solely for trade union involvement is unfair.

Where an employer plans significant changes in production, programme, organisation, structure or technology that may result in employee terminations, the employer must inform the chief labour officer and the relevant trade union in writing. This notification should:

• be issued at least three months before the proposed changes; and
• include:
• • the reasons for any terminations;
  • the number and categories of potentially affected workers; and
  • the timeframe within which terminations will occur.

Employers must consult the relevant trade union on measures to avert or minimise terminations and mitigate the adverse effects on the affected workers, such as finding alternative employment.

8.3 How are dismissals, both individual and collective, governed in your jurisdiction? What is the process for effecting dismissals?

Although the Labour Act does not explicitly list dismissal as a remedy for ending employment, it acknowledges the common law right of employers to dismiss employees. Dismissal acts and effects are governed by:

• collective agreements;
• service conditions; and
• employment contracts.

Summary dismissal allows an employer to terminate an employee immediately for actions that threaten the business or harm its reputation. Examples include:

• gross misconduct;
• dishonesty;
• criminality;
• competition with the employer's business;
• violence;
• drunkenness;
• insubordination; and
• dereliction of duty.

The Supreme Court has affirmed that an employer can summarily dismiss an employee for conduct incompatible with their duties.

Dismissals must follow the terms of an employment contract or collective agreement. If an employer cannot prove a summary dismissal aligns with these terms, it may be considered wrongful and could be invalidated by the courts.

8.4 How can specialist talent be attracted from overseas where necessary?

There is no specific guide for attracting and retaining overseas specialist talent in Ghana. Requirements vary by company and the skills needed. The company should identify job requirements, interview candidates and apply for work and residence permits once a suitable candidate is found for the specialist role. To ensure that local content requirements are met:

• the employer will have to provide written justification of the need for a specialist role for a non-Ghanaian; and
• there must be a plan for a Ghanaian to understudy a foreign specialist.

There are automatic expatriate quotas for Ghana Investment Promotion Centre registered companies, which enable these companies to efficiently attract and secure residence and work permits for foreign talent. The Ghana Immigration Service can deny a visa to an expatriate if it believes that the individual is undesirable for entry into the country.

8.5 What key concerns and considerations should be borne in mind with regard to employment in your jurisdiction?

Mandatory pension scheme: The National Pensions Act and its regulations establish a contributory three-tier pension scheme:

• Tier 1: A mandatory basic national social security scheme.
• Tier 2: A mandatory fully funded and privately managed occupational pension scheme.
• Tier 3: A voluntarily fully funded and privately managed provident fund and personal pension scheme.

An employer must deduct from the salary of every worker immediately at the end of the month a contribution of an amount of 5.5% of the worker's salary for the period, irrespective of whether the salary is actually paid to the worker. An employer must pay for each month in respect of each worker an employer's contribution of an amount equal to 13% of the worker's salary during the month. Out of the total contribution of 18.5%, an employer must, within 14 days of the end of each month, transfer the following remittances to the mandatory schemes on behalf of each employee:

• 13.5% to the Tier 1 scheme; and
• 5% to the Tier 2 scheme.

Failure to do so in the right form and within the prescribed timeframe without reasonable excuse is an offence punishable on summary conviction to:

• a fine of up to GHS 30,000;
• imprisonment for up to five years; or
• both.

In the case of a company, each director or officer is deemed to have committed the offence.

Annual leave: In Ghana, all employees are entitled to a minimum of 15 working days of leave with full pay for each calendar year of continuous service. Any agreement that attempts to waive this entitlement is considered void under Ghanaian law.

Hours of work: Ghana's Labour laws limit employees to:

• eight hours a day; or
• 40 hours a week.

Any additional hours are considered overtime and require fixed rates of pay. Workers cannot be forced to do overtime:

• unless the job's nature requires it for viability; or
• in case of emergencies that threaten life or property.

Income tax/pay as you earn: Individual income tax rates and thresholds are periodically adjusted. They depend on the individual's chargeable income, ranging from a tax rate of zero to 35%.

National daily minimum wage: As of March 2025, the minimum daily wage in Ghana is GHS 19.97, representing a 10% increase from the previous minimum wage of GHS 18.15 per day.

9 Tax

9.1 What is the applicable tax regime in your jurisdiction and what are its key features?

The tax regime in Ghana encompasses both direct taxes and indirect taxes. These include:

• income tax on employment, business and investment;
• value-added tax (VAT);
• the National Health Insurance levy (NHIL);
• the Ghana Education Trust Fund (GETFund) levy;
• the COVID-19 health recovery levy;
• customs and excise duties;
• communication service tax; and
• airport taxes.

Direct taxes: Ghana operates a worldwide income tax regime and thus residents of Ghana are taxed on their income from employment, business and investments (regardless of source), after deducting any allowable expenses. Capital gains are:

• included in the business income of a company; and
• subject to tax at the applicable corporate tax rate.

The general rate of corporate tax for resident companies is 25%. Companies operating in specific industries may be taxed at varied rates depending on the industry in which they operate. For instance, the applicable rate for companies engaged in mineral and petroleum operations is 35%. Resident individuals are taxed at graduated rates, while other taxable persons such as companies and trusts are taxed at specific rates depending on the industry in which they operate.

Shareholders of a company are liable to tax separately from the company. Dividends, which are payable out of post-tax profits, are subject to a withholding tax of 8% and must be paid net of this amount.

Non-resident companies that operate through a permanent establishment or branch or which may be deemed to have a permanent establishment in Ghana are taxed at the same rates as Ghanaian resident companies on any income connected to that Ghanaian permanent establishment, irrespective of the source of the income. Non-resident companies with permanent establishments in Ghana may also be entitled to certain reliefs in respect of repatriation of branch profits outside the country. The income of a non-resident person without a Ghanaian permanent establishment from employment, business or investment for a year of assessment is subject to tax in Ghana, to the extent that the income has a source in Ghana.

Income taxes are payable by:

• withholding;
• instalment; or
• assessment.

Withholding tax payments must be paid to the commissioner-general within 15 days of the end of each calendar month. Taxes may be paid by instalment on a quarterly basis if the taxable person derives or expects to derive assessable income during a year of assessment. In practice, this applies to resident companies and permanent establishments of non-resident companies. Instalment payments are due on or before the last day of each three-month period during the year of assessment. Regarding assessments, taxpayers must file with the commissioner-general, no later than four months after the end of each year of assessment, a return of income for that year, specifying:

• relevant details relating to the assessable income of the person; and
• tax paid for the year of assessment.

Indirect taxes: Indirect taxes in Ghana are primarily composed of:

• VAT;
• excise duties;
• customs duties; and
• levies.

These taxes are imposed on goods and services rather than directly on income or profits.

VAT is the most significant indirect tax in Ghana, currently set at a standard rate of 15%, or a flat rate of 3% for retailers that make taxable supplies of between GHS 200,000 and GHS 500,000 within a 12-month period. VAT applies to most goods and services, both imported and domestically produced, although exemptions exist for essential items such as:

• raw food products;
• education products; and
• healthcare products.

In addition to VAT, NHIL of 2.5%, the GETFund levy of 2.5% and the COVID-19 levy of 1% are imposed on the value of taxable goods and services that are subject to VAT. All of these payments are made on a monthly basis, along with the submission of prescribed returns.

Excise duties are imposed on specific goods imported into or produced in Ghana, including:

• alcoholic beverages;
• tobacco products; and
• petroleum.

The rates vary depending on the product. These duties are aimed at:

• controlling the consumption of certain goods;
• generating revenue; and
• addressing public health concerns.

Customs duties are levied on imported goods based on their classification in the Harmonized Commodity Description and Coding System. Ghana imposes a range of customs duties, generally between 5% and 35%, depending on the type of goods imported. In addition, imports are subject to VAT, the NHIL and the GETFund levy.

9.2 What taxes apply to capital inflows and outflows?

Equity contributions to Ghanaian companies are subject to 1% capital duty. This is charged:

• at the point of formation of a new company; or
• upon the filing of statutory returns relating to a fresh share issuance by an existing company.

Stamp duty is chargeable on certain documents brought into being for the purposes of recording transactions. Depending on the type of document and/or transaction, the tax may be charged at a nominal or ad valorem rate.

Dividends paid to shareholders of a Ghanaian company are taxed at a rate of 8%. Dividend tax must be:

• withheld by a company at the point of payment to the shareholder; and
• remitted to the Ghana Revenue Authority (GRA) on the shareholder's behalf.

Interest on loans made to Ghanaian companies by foreign lenders are also subject to tax. Interest payments on foreign debt are taxed at a tax of 8% and must be withheld by the resident borrower; however, the payment may be grossed up to account for the tax withheld. Royalties are taxable at a rate of 15%, which must also be withheld and remitted to the GRA by the payer.

Gains on capital are subject to tax. The capital gains tax rate for individuals is 15%, chargeable on the gains derived from the disposal of chargeable assets. Gains derived by a company from the disposal of chargeable assets are:

• included in the business income of the company for the year of assessment; and
• taxed at the underlying rate applicable to the company.

9.3 What key exemptions and incentives are available to encourage enterprises to do business in your jurisdiction?

Ghana offers a variety of tax exemptions and incentives aimed at attracting investment and encouraging business operations across different sectors. These tax incentives are structured to:

• promote economic growth;
• increase foreign direct investment; and
• enhance industrial development.

Income tax exemptions: Income tax exemptions are amounts that are either reduced or eliminated from taxable income and must be clearly outlined during the filing process. Exempt income sources include:

• gains from life insurance policies paid by resident insurers; and
• income from non-resident businesses operating ships or aircraft, provided that equivalent exemptions are recognised by the non-resident's country.

The following are tax exempt:

• dividends paid to resident companies controlling at least 25% of the voting power in the paying company;
• gains from government-issued bonds; and
• income from approved:
• • unit trusts;
  • mutual funds; and
  • real estate investment trusts.

Free zone incentives: The Exemptions Act, 2022 (1083) provides a range of incentives to businesses operating in designated free zones. Profits derived by free zone companies from export of goods or services are:

• exempt from income tax for a concessionary period of 10 years; and
• taxed post-concessionary period at a rate of 15%.

Free zone enterprises also enjoy exemptions from customs duties and taxes when importing goods into designated zones. However, companies licensed as free zone enterprises that fail to export at least 70% of their output, or the percentage specified in their licences, may be made to pay 300% of all due taxes.

Corporate income tax incentives: Several sectors in Ghana benefit from reduced corporate income tax rates:

• Manufacturing companies located in regional capitals, excluding Accra and Tema, are subject to a tax rate of 18.5%; and
• Those outside of these areas enjoy a lower rate of 12.5%.

Agricultural enterprises also benefit from reduced rates:

• Those situated in Accra and Tema are taxed at 20%; and
• Those in other regional capitals, excluding the Northern Savannah Ecological Zone, are taxed at 15%.

In the Northern Savannah Ecological Zone, agricultural enterprises are taxed lower at 5%. Hotels are taxed at a rate of 22%.

For exports of non-traditional goods, a rate of 8% applies; while income from loans to agricultural businesses and leasing companies is taxed at 20%. Additional tax incentives may also be negotiated for strategic projects on a case-by-case basis.

Exemptions for young entrepreneurs: Ghana offers tax exemptions for young entrepreneurs who establish businesses in priority sectors. Young entrepreneurs aged 35 and under:

• enjoy a five-year tax holiday; and
• thereafter face varied rates of reduced corporate income tax based on their location, with the applicable rates ranging from 5% in the three northern regions to 15% in Accra and Tema.

Exemptions from VAT: In Ghana, certain supplies are exempt from VAT to alleviate the financial burden on consumers. These include:

• a variety of raw or minimally processed food items;
• live animals;
• specified agricultural and fishing inputs;
• water supply (excluding bottled water); and
• electricity supply (within set consumption limits).

Other exemptions cover:

• educational services;
• medical services and supplies;
• specified pharmaceuticals;
• fuels such as:
• • petrol;
  • diesel;
  • liquefied petroleum gas;
  • natural petroleum gas; and
  • kerosene;
• financial services provided without a fee;
• life insurance and reinsurance;
• land utilised for specified purposes;
• plant and machinery imported under the Ghana Automotive Manufacturing Programme; and
• management fees charged by local fund managers for licensed private equity or mutual funds.

Double taxation agreements (DTAs): To avoid double taxation of foreign investors, Ghana has entered into DTAs with the following countries:

• the United Kingdom;
• France;
• Belgium;
• the Netherlands;
• Germany;
• South Africa;
• Italy;
• Switzerland;
• Denmark;
• Mauritius;
• the Czech Republic;
• Morocco;
• Singapore; and
• Qatar.

These agreements:

• prevent income derived by taxable persons from being taxed twice; and
• provide clarity on the tax treatment of cross-border transactions.

Investors from countries with DTAs can take advantage of reduced tax rates on dividends, interest and royalties.

9.4 What key concerns and considerations should be borne in mind with regard to tax in your jurisdiction?

The nature of the tax system necessitates an understanding of compliance and reporting requirements to avoid penalties. Tax incentives and exemptions are available, particularly in sectors such as agriculture and manufacturing, but accessing these can be bureaucratic. Staying informed about changes in tax legislation is essential; as is understanding DTAs to optimise tax positions in cross-border dealings.

The Transfer Pricing Regulations, 2012 (LI 2188) and related laws are vital and relevant businesses must maintain proper documentation that indicate compliance with arm's-length principles. The impact of COVID-19 has led to temporary tax relief measures and the introduction of new levies, which require ongoing attention to government updates. It is important for taxpayers to seek professional advice to ensure compliance with tax obligations.

Technical difficulties may also constitute a hindrance to taxpayers. For instance, disputed tax debts and assessments cannot be contested without a percentage first being paid to the GRA, with the taxpayer being entitled to a refund only should the dispute be resolved in their favour.

Despite the challenges faced, Ghana continues to reform its tax regimes to streamline and simplify the process of tax assessment and payment while encouraging innovation, business and regulatory compliance.

10 M&A

10.1 What provisions govern mergers and acquisitions in your jurisdiction and what are their key features?

Most mergers and acquisitions in Ghana occur through private share sales. Asset sales are less common, due to:

• challenges in transferring title, particularly for land; and
• potentially higher tax burdens.

Statutory mergers under the Companies Act: The Companies Act provides various statutory routes for implementing statutory arrangements, mergers, compromise, division or acquisition. Two primary forms of statutory mergers are:

• merger by absorption, where one or more companies transfer their assets, liabilities and undertakings to an existing company; and
• merger by formation of a new company, where at least two companies transfer their assets and liabilities to a newly created company, with shareholders receiving shares in the new entity, possibly with cash compensation. The Companies Act provides for a short-form merger procedure for companies within the same group of companies where:
• • companies are merging with their subsidiaries; or
  • two subsidiaries are merging.

Other statutory routes under the Companies Act to implement a statutory arrangement, merger, compromise, division or acquisition include:

• an arrangement or merger by sale of undertaking, in which the transferor company is put into a voluntary members' liquidation and the liquidator is authorised to:
• • sell the whole or part of the undertaking or assets of the company to a transferee company, in consideration or part consideration of shares, debentures or other similar interests in the transferee company; and
  • distribute those shares, debentures or other like interests to the company's members in accordance with their rights in the liquidation; and
• an arrangement or compromise implemented with court approval, in which an arrangement or compromise is:
• • proposed between a company and its creditors or any class of creditors, or its members or any class of its members; and
  • effected with the approval of the court.

Public Companies – the Takeover Code: The Securities and Exchange Commission (SEC) is authorised under the Securities Industry Act, 2016 (929) to review, approve and regulate:

• takeovers;
• mergers;
• acquisitions; and
• all forms of business combinations.

The SEC has published the Takeover Code, which regulates takeovers and mergers by, between or affecting public companies.

Companies Act major transactions regime: The Companies Act includes a regime requiring shareholder approval for certain major transactions, which can often be triggered in the context of M&A transactions. Ghanaian companies are prohibited from entering into a major transaction unless that transaction is:

• approved by shareholders by special resolution; or
• made conditional on such approval.

A 'major transaction' is defined as:

• the acquisition of, or an agreement to acquire, assets whose value is more than 75% of the value of the assets of the company before the acquisition;
• the disposition of, or an agreement to dispose of, assets of the company whose is more than 75% of the value of the assets of the company before the disposition; or
• a transaction that has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities, including contingent liabilities, whose value is 75% of the value of the assets of the company before the transaction.

Sector-specific legislation: Mergers and acquisitions within certain specific industries or sectors are regulated under the relevant sector-specific laws. The key features of the provisions governing mergers and acquisitions vary between sectors but frequently require:

• regulatory notification; and
• approval of M&A transactions.

10.2 How are mergers and acquisitions regulated from a competition perspective in your jurisdiction?

There is currently no general legislation regulating mergers and acquisitions from a competition perspective in Ghana. However, mergers and acquisitions within certain specific industries or sectors are regulated under the relevant sector-specific laws. The key features of the provisions governing mergers and acquisitions vary between sectors but frequently require regulatory notification and approval of M&A transactions.

A draft Competition and Fair Trade Practices Bill has been proposed which would, among other things:

• provide for the creation of a Competition Commission of Ghana; and
• introduce a merger control regime.

This bill was introduced some time ago and has not yet been tabled for consideration by Parliament. We understand that the bill is currently in the process of being reviewed, including to take into account the requirements of the African Continental Free Trade Area Agreement and the Competition Protocol to be issued thereunder. No details of any proposed amendments to the bill are yet available and the timeline for its implementation is not fixed.

Ghana is also a signatory to the Economic Community of West African States Regional Competition Rules.

10.3 How are mergers and acquisitions regulated from an employment perspective in your jurisdiction?

Employment considerations are a crucial aspect of M&A transactions in Ghana and can significantly impact deal structure and timing. The key employment-related aspects of M&A transactions are governed by the Labour Act and its regulations.

Transfer of employment rights: Where a business is transferred from an employer to another as a going concern, the Labour Act and the Labour Regulations protect employment rights. Employment contracts do not automatically transfer when a business changes hands. Employers need written consent from employees and approval from the chief labour officer (CLO). The CLO ensures that employee consent is given freely, without undue influence or coercion. If these requirements are not complied with by the employer, the CLO can refuse to endorse the transfer, which may render the transfer void. In practice, consultations are held with affected employees on:

• the timing of the transfer;
• the reasons for the transfer; and
• the legal/social and economic implications for employees.

Redundancy: Where a business transfer causes redundancy, the Labour Act requires the CLO and the relevant trade union to be notified three months in advance.

Further, an employee must be paid redundancy pay by the employer if:

• the merger or acquisition causes the severance of the legal relationship between the employer and the employee as it was before the merger or acquisition; and
• consequently, the employee becomes unemployed or suffers any diminution of the terms and conditions of employment. A diminution of the terms and conditions of employment may be determined by considering any past services and accumulated benefits of the employee prior to the merger or acquisition.

The terms and conditions of the redundancy pay may be negotiated between the employer and the employees or their respective representatives. Any disputes arising from the negotiation may be referred to the Labour Commission for settlement. An employer must notify the director of immigration where foreign employees on work permits are affected by a redundancy exercise or transfer of business exercise. These redundancy provisions in the Labour Act do not apply to:

• casual employees;
• employees on probation; or
• fixed-term contract workers.

The 2024 Labour Bill proposes changes to redundancy provisions but is not yet in force.

Variation of employment rights: Where employment contracts are assigned as part of a business transfer, any variation in the terms of the employment contract must be consented and mutually agreed between the employer and the employee. Unilateral variation of employment contracts is not permitted in Ghana.

Statutory pension payment obligations: After a company merger or acquisition, the transferee company must continue the employer's responsibilities regarding mandatory contributions for employees' pensions, as required by the contributory three-tier pension scheme established under the National Pensions Act.

10.4 What key concerns and considerations should be borne in mind with regard to M&A activity in your jurisdiction?

Proactive regulatory and governmental engagement remains critical for a successful M&A transaction in Ghana. Although the country does not yet have a general merger control regime, it does have sector-specific rules, which have become more expansive and significant in recent years, particularly with respect to local content requirements. For example:

• prior notice must be given to the National Communications Authority for mergers involving communications entities; and
• transactions involving financial institutions, electronic money issuers and payment service providers will likely require the approval of the Bank of Ghana.

Successful M&A transactions in Ghana require early engagement with relevant regulatory authorities and careful structuring to address these various regulatory requirements while achieving commercial objectives. Professional advisers with deep local knowledge are essential to navigate these complexities effectively.

Investors are increasingly making environmental, social and governance (ESG) related due diligence a central part of the M&A process and it is becoming standard for:

• deal terms, including representations and warranties, to expressly cater for ESG risks; and
• parties to agree material ongoing ESG-related covenants.

Ghana's recent economic challenges have also forced M&A teams to adopt a considered and nuanced approach to valuation and deal terms. Sellers may argue that recent financial statements may not reflect the true underlying value of a business, particularly for those that have been hit hardest by the domestic debt exchange programme or have been significantly affected by currency fluctuations; while buyers may have less confidence in potential synergies and expansion opportunities in an uncertain economic situation. To bridge these perspectives, and the valuation gap that results, we have seen an increasing use of earnouts, vendor financing and deferred consideration structures, as well as retention accounts and holdback mechanisms, to provide additional comfort to buyers.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.