Ghana is well endowed with gold deposits and is one of the most attractive business markets in West Africa. Ghana's wealth of resources, democratic political system, and dynamic economy makes it undoubtedly one of Africa's leading and stable economy, more conducive to do business than expected. Ghana's gold deposit is evident in the gold reserves, which, according to the US Geological Survey, is estimated to be 50 million ounces (1,600 tons).
Ghana requires a particular method of setting up a mineral purchasing and export company with a license from the Minerals Commission.
The Minerals and Mining Act, 2006, as amended by the Minerals and Mining (Amendment) Act, 2015 (Act 900) provides a guide, on how one may set up a company licence to engage in gold export.
Incorporating a company means establishing a corporate legal entity that is distinct and separate from the legal identity of its directors and shareholders. It means that the business entity can transact in its corporate name, sue, and be sued. Also, the liabilities of its members are limited to the amount on the unpaid shares if it's a company limited by shares.
The Companies Act, 2019 (Act 992), governs the organization of companies in Ghana.
An incorporated company may either be.
- A company limited by shares;
- A company limited by guarantee;
- An unlimited company; and
- External company
For our discussions on general trading (gold purchase and export) in Ghana, the particular purpose vehicle, that is, the type of business structure required shall be that of an incorporated company limited by shares.
Processes for Setting Up A Company Limited by Shares.
The following basic steps must be followed to have a company limited by shares incorporated in Ghana.
First and foremost, the promoters must decide who will act as the company's first directors. A company incorporated and registered in Ghana must have a minimum of two directors, both natural persons over 18 years, one being ordinarily resident in Ghana. By virtue of section 173 of the Companies Act, 2019 (Act 992), the following persons are excluded to be appointed as a company director in Ghana.
- An infant
- A person adjudged to be of unsound mind.
- A body corporate
- A person convicted for fraudulent offences, including persons convicted for offences involving fraud or dishonesty and any other stipulations under section 177 of the Companies Act, 2019 (Act 992)
The directors also appoint the company secretary, who may be a natural person or a body corporate. As part of the new prescription by the companies act, among the persons qualified to be appointed a company secretary is a barrister or solicitor in good standing in the Republic of Ghana.
The directors are also mandated to appoint the first auditors of the company.
The company must choose a business name and must confirm with the Registrar of Companies whether the business name is available for use by the company.
The company must as well register with the Ghana Revenue Authority for the issuance of tax identification number (TIN) for its members if they don't have them already.
The Constitution of the company must be prepared. The Constitution of the company once prepared must be signed by one or more of the initial subscribers in the presence of an independent adult witness and must state:
- The name of the company
- The company's objects or authorized business
- That the company can enter into a legally binding agreement
- The name of the first directors of the company
- That the powers of the directors are limited under the law
- The number of shares in which the company is registered.
- The number of shares each subscriber will own on incorporation and the amount payable for the shares.
- A declaration that the liability of the members of the company is limited.
Where the Registrar is satisfied that the application for incorporation of a company complies with this Act, the Registrar shall, after payment of the prescribed fee, certify under the seal of the Registrar that the company is incorporated and, in the case of a limited liability company, that the liability of the members is limited. From the date of incorporation, the company becomes a body corporate by the name contained in the application for the formation of the company, and capable of performing the functions incidental to registered companies.
The law offices of Legalstone Solicitors shall offer corporate guidance for the registration of the Company at the Registrar General's Department.
For incorporation of the company to be completed, a fee (capital duty) charged at the rate of 1% of the company's stated share capital, in addition to the registration fee, must be submitted to the Registrar of Companies.
Registration of the company with the Ghana Investment Promotion Centre (GIPC)
The Ghana Investment Promotion Centre Act, 2013 (Act 865) exempts companies established for export trading and manufacturing. Export trading under the Act is considered an activity solely for the export of goods produced in Ghana. As such, gold export trading companies are exempted from meeting the minimum capital requirement set under the Act.
Incentives and Benefits Under the GIPC Act
The GIPC Act provides for substantive protection and benefits including the following:
- Customs Import Duty Exemptions (There are custom duties exemption for Plant, Machinery, Equipment, and parts thereof).
- Various Tax benefits (Subject to some conditions)
- Investment Guarantees (Free Transferability of Capital, Profits and Dividends and immigrant quotas depending on the amount of paid-up capital of the enterprise
- Automatic expatriate quotas (subject to some conditions). For instance, a company with a paid-up capital of up to $200,000 shall be entitled to one (1) automatic work quota, whiles a company with a paid-up capital of up to $500,000 shall be entitled to two (2) automatic work quota.
- Registration with the GIPC entitles a corporate entity to cafeteria Dispute Resolution Mechanism, including arbitration under UNCITRAL arbitration rules. Also, where there is any bilateral and multilateral investment protection agreement to which Ghana and the investor's home country are parties, the established dispute resolution mechanism shall be available to the investment. The dispute mechanism could include Investor Treaty Arbitration under ICSID Convention. The GIPC Act also afford parties recourse to any other national or international machinery for the settlement of investment dispute agreed to by the parties.
The Minerals Commission is responsible for the regulation and management of the development of mineral resources of Ghana. It is also responsible for coordinating and implementing policies related to mining in Ghana. It is also responsible for the grant of licenses to corporate entities to undertake the business of purchase and export of gold in Ghana. All applications for permits, including the permission to trade in gold, shall be made to the Minerals Commission for approval.
The following must be satisfied before the application of the licence shall be made:
- Must be an incorporated company in Ghana.
- Must have been registered with Ghana Investment Promotion Center.
- Registered with the Ghana Revenue Authority.
- Register with Social Security and National Insurance Trust (SSNIT).
- Must have a registered office.
Application for License to Export Gold by an Established Entity
Additionally, the Minerals and Mining (General) Regulations, 2012 (L.I 2173) provides that a corporate body seeking to apply for a license to engage in the export of gold must be prepared to provide the following:
- Particulars of financial and technical resources available to the applicant.
- An estimate of the amount of money proposed to be spent.
- A business plan or details of the program of the proposed operations; and
- A localization program in accordance with these Regulations L.I 2173.
The Minister of Lands and Natural Resources upon receipt of these particulars and forms may grant a license to an applicant where the Minister is satisfied that, the business plan or details of the program of the proposed operations include:
- The refining or polishing of the minerals in Ghana before export.
- The purchase of only refined or polished minerals for export; or
- The supply of a percentage of the minerals determined by the Minister to lead refineries to ensure regular supply to local users; and
- The applicant must demonstrate that it has access to adequate financial resources, technical competence, and experience to carry out the operations effectively.
Once the license is granted, the holder is required to submit monthly and annual returns to the Minerals Commission on all exports of minerals made. The holder is also expected to comply with the conditions specified in the license and any other terms that the Minister may determine.
Application for Export License by Holder of Mining Lease
Different sets of rules apply to holders of mining leases that intend to apply for a license to engage in the export, sale, and disposal of minerals in Ghana.
An application by a holder of a mining lease for a license to export, sell or dispose of gold or other precious minerals produced by the holder shall be submitted to the Minister responsible for Mines and Natural Resources. The application shall be accompanied by the following:
- A refining contract and
- Sales and marketing agreement.
Once the Minister is satisfied, the license shall be granted to the applicant. The license holder is however required to notify the Minerals Commission of particulars of shipment of minerals, details of the quantity and grade of the minerals to be shipped and access for samples to be taken by a government-designated laboratory for assaying purposes.
Duration of License
A license granted shall be for an initial period of 3 years and subject to renewal for a further three (3) years.
There are associated fees for incorporation of the business as well as payments for various stages leading to the grant of the licence.
Other Mandatory Institutions
Once a business successfully undertakes the above-stipulated steps, it acquires the legal status to operate as a corporate entity in Ghana. Be it as it may be the established corporate entity is by law mandated to register with other institutions.
These institutions include the following:
A. The Ghana Revenue Authority
All incorporated companies are by law demanded to register with the Ghana Revenue Authority. The registration is essential for the payment of taxes. On registration and the payment of the initial tax assessment, the company shall be issued with a tax clearance certificate.
B. Register with Social Security and National Insurance Trust (SSNIT)
The Social Security and National Insurance Trust (SSNIT) is a statutory public Trust charged under the National Pensions Act, 2008 Act 766 with the administration of Ghana's Basic National Social Security Scheme. Its mandate is to cater for the First Tier of the Three-Tier Pension Scheme. The Trust is currently the largest non-bank financial institution in Ghana. The law demands all incorporated entities to register and contribute for their employees towards their retirement. It is a mandatory act.
C. Apply for Business Operating Permit from the Metropolitan, Municipal or District Assembly
The law demands incorporated companies to pay and obtain permits from the District, Municipal or Metropolitan Assembly where the activity of the corporate entity is centered or situated. This is a mandatory act.
D. Register with the Data Protection Commission
All organizations that collect personal data from individuals must register with the Commission to have a license to collect such information and know-how to use them. The Data Protection Act 2012 established the Data Protection Commission (DPC) to protect individual and personal data privacy.
Open a Business Account
An incorporated entity that has to meet the minimum capital requirement and issued with the GIPC Certificate shall have the right to operate a corporate account and enjoy all the benefits that come with it, including transfer of funds out of the jurisdiction.
Tax Liabilities for Doing Business in Ghana.
It is crucial for every start-up business to understand Ghana's tax structure to aid them in fulfilling their obligation to the government.
The Ghana Revenue Authority (GRA) is the regulatory body for assessing and collecting taxes on behalf of the Government. The Ministry of Finance (MOF) oversee the activities of GRA.
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.