WHAT TO KNOW ABOUT THE NEW COMPANIES ACT
Enyimnyam Paintsil Esq.
On Friday 2ND August 2019, His Excellency Nana Akuffo-Addo, President of the republic of Ghana gave his assent to the new Companies Act, Act 992, replacing the old Companies Act of 1963. The new Companies Act, Act 992 undoubtedly will reform company practice in Ghana. This post highlights key provisions in the new Companies Act.
A. REGISTRATION OF A COMPANY UNDER THE COMPANIES ACT 2019, ACT 992
1. Who can register a company under the Companies Act 2019, Act 992?
Under the Companies Act 2019, Act 992, any one or more persons may register a company (Section 6, Act 992) as long as said person or group of persons is above 18 years (Section 12, Act 992).
2. What are the duties of a promoter under the Companies Act 2019, Act 992?
Under Section 10, Act 992, a promoter of a company is defined as
"a person who is or who has been engaged or interested in the formation of that company; this is exclusive of persons rendering services to the company in their professional capacity hired by persons engaged in procuring the formation of a company."
The duties of said promoter include the following:
i. Stand in a fiduciary relationship to the company
ii. Observe utmost good faith towards the company in a transaction with the company or on behalf of the company
iii. Compensate the company for any loss suffered by the company by reason of the failure of the promoter to observe utmost good faith
iv. Account for any properties, information or profits arising from the use and acquisition of any properties or information that the promoter may acquire in circumstances in which it was his/her duty as a fiduciary to acquire said property or information on behalf of the company
3. What are the requirements to be met for registration under the Companies Act 2019, Act 922?
Section 13, of Act 992 which adds on the requirements in Section 14 of the old Companies Act 1963, provides that all applications to register a company must include the following:
i. The name of the company and an indication of the type of proposed company;
ii. The nature of the proposed business if the company is registered with an object;
iii. The address of the proposed registered office, principal place of business of the company in the Republic, telephone number and the post office box, private mail bag or digital address of the registered office of the company;
iv. The electronic mail address and website of the company, if available;
v. The following particulars of each subscriber:
a. date, place of birth and nationality;
b. present full name and any former name;
c. residential, occupational, postal and electronic mail addresses and telephone contact; and
vi. The following particulars of each proposed director of the proposed company:
a. present full name and any former name;
b. particulars of any business occupation and other directorships held by the director
c. residential, occupational, postal and electronic mail addresses and telephone contact;
vii. A statutory declaration by each proposed director of the proposed company indicating that within the preceding 5 years, that he/she has not been
a. charged with or convicted of a criminal offence involving fraud or dishonesty;
b. charged with or convicted of a criminal offence relating to the promotion, incorporation or management of a company; or
c. declared insolvent or if that proposed director has been insolvent, the date of the insolvency and the particulars of that company;
viii. The consent of each proposed director;
ix. The following particulars of the proposed company secretary of the proposed company:
a. present full name and any former name;
b. usual postal, occupational and electronic mail address;
c. residential address in the case of an individual; and
d. business occupation
x. The following particulars of the proposed auditor of the proposed company:
a. present full name and any former name;
b. postal and electronic mail addresses and telephone number;
c. residential address in the case of an individual;
d. consent of the auditor;
xi. The following particulars of each subscriber for a proposed company with shares:
a. present full name and any former or other name;
b. date and place of birth;
c. telephone number;
d. nationality and proof of identity;
e. residential, postal or email address, if any;
f. place of work and position held;
xii. The following particulars in respect of each beneficial owner of the proposed company:
a.full name and any former or other name;
b. date and place of birth;
c. telephone number;
d. nationality, national identity number, passport number or other appropriate identification and proof of identity;
e. residential, postal or email address, if any;
f. place of work and position held;
g. the nature of the interest including the details of the legal, financial, security, debenture or informal arrangement giving rise to the beneficial ownership; and
h. confirmation as to whether the beneficial owner is a politically exposed person;
xiii. The following details in the case of a company that has shares:
a. the amount of proposed stated capital
b. the number of authorised shares of the company for each class
xiv. In the case of a proposed company limited by guarantee the specified amount up to which the member under- takes to contribute to the assets of the company, in the event of the company being wound up while that person is a member or within a stipulated period after ceasing to be a member, for payment of the costs, charges and expenses of winding up, and the adjustments of the rights amongst members.
xv. Evidence of the identity and place of residence of the applicant(s) at the time of the delivery of the completed application form for incorporation.
Additionally, the application must be endorsed with a signature of each subscriber if the company is registered with shares. The signature of the subscriber must be accompanied by name of the subscriber, the number of shares the subscriber takes and the cash price payable for the shares.
Furthermore, at the time of incorporation, the proposed company should have at least 2 directors with one director ordinarily resident in Ghana (Section 171, Act 992)
4. When does incorporation become effective?
The proposed company becomes a body corporate on the date of incorporation after payment of the prescribed fees (Section 14, Act 992) and issuance of a certificate of incorporation to the company by the Registrar.
5. What to consider when naming a company to be registered under the Companies Act 2019, Act 922?
According to the Companies Act 2019, Act 992, the last names of any company are as follows:
i. In cases of a private company limited by shares, "Limited Company" or the abbreviation "LTD";
ii. In cases of a public company limited by shares, "Public Limited Company" or the abbreviation "PLC";
iii. In cases of a company limited by guarantee, "Limited by Guarantee" or the abbreviation "LBG";
iv. In cases of a private company unlimited by shares, "Private Unlimited" or the abbreviation "PU";
v. In cases of a public company unlimited by shares, "Public Unlimited Company" or the abbreviation "PUC".
This differs from the corresponding provision in the old Companies Act 1963 which only catered for private companies.
As under the old Companies Act 1963, the new Companies Act 2019, Act 992 gives the Registrar the power to refuse or deny registration of a company name if said name is misleading or undesirable.
Furthermore, the proposed company is prevented from selecting names if the proposed name is the name of a company that has been dissolved within the preceding five years of the intended registration.
Company names may be changed by a special resolution together with the written approval of the Registrar, after which another certificate of incorporation shall All successful changes in name shall be advertised in the Companies Bulletin, the website of the Office of the Registrar of Companies and in one daily newspaper published in the Republic and circulating in the district in which the registered office of the company is situated.
6. Can company names be reserved?
Like the old Companies Act 1963, the Companies Act 2019, Act 992 allows applicant to reserve a name for up to 2 months. The period of reservation may be renewed for another period of 2 months on expiration of the initial reservation period. While the name is under reservation, the Registrar may refuse to register company names which bear a semblance to the reserved name.
7. Are there any minimum capital requirements?
Under the new regime created by the Companies Act 2019, Act 992, the only capital requirements pertain to foreign companies or ventures, which provision is captured under the Ghana Investment Promotion Centre Act (GIPC) 2013, (Act 865) as follows:
i. In a joint enterprise with a Ghanaian partner, the minimum capital requirement is US$200,000.00 or its equivalent in capital goods;
ii. In a wholly foreign owned enterprise, the minimum capital requirement is US$500,000.00 or its equivalent worth in capital goods;
iii. In the case of a trading enterprise irrespective of whether it is wholly or partly owned by a non-Ghanaian the minimum capital requirement is US$1,000,000.00 and the enterprise shall be required to employ at least 20 skilled Ghanaians
Previously the old Companies Act 1963 placed a minimum capital requirement of GHC500 for Ghanaian-owned private companies limited by shares and GHC1000 for public companies, however, this requirement has been removed by the Companies Act 2019, Act 992 and as such the only capital requirements that exist, are in respect of foreign enterprises as stated above.
B. APPOINTMENT OF DIRECTORS UNDER THE COMPANIES ACT 2019, ACT 992
1. What are the qualifications for a director under the Companies Act 2019, Act 992?
The Companies Act 2019, Act 992, stipulates that a person would not be appointed as a as a director of a company unless he/she has, before said appointment made a statutory declaration submitted to the company and subsequently filed with the Registrar to the effect that, the person has not within the preceding 5 years of the application for incorporation been
i. charged with or convicted of a criminal offence involving fraud or dishonesty;
ii. charged with or convicted of a criminal offence relating to the promotion, incorporation or management of a company; or
iii. a director or senior manager of a company that has become insolvent or if the person has been, the date of the insolvency and the particular company;
AND
iv. has consented in writing to be a director and filed the consent within twenty-eight days.
Similar to the provisions under the old Companies Act, a person is disqualified or deemed incompetent to be a director if said person is
i. an infant
ii. a body corporate
iii. has been adjudged to be of unsound mind
iv. has been convicted either in Ghana or elsewhere of an offence involving fraud or dishonesty, an offence in connection with the promotion, formation or management of a body corporate, or an offence involving insider dealing, or of any other felonies subject to leave of the Court
v. an undischarged bankrupt under who has not been granted leave by the Court (domestic and international) that made the declaration
vi. culpable of a criminal offence, whether convicted or not, in relation to a body corporate or of fraud or breach of duty in relation to a body corporate subject to leave of the Court
vii. seems to be debarred by the competent authority from being a member of a recognised professional body as the result of a disciplinary inquiry subject to leave of the Court
viii. is the subject of an ongoing investigation by a criminal investigating body or by the Registrar or the equivalent in a foreign jurisdiction subject to leave of the Court
Additionally, a person is automatically disqualified for appointment as director or to act as a director of a company for a period of 5 years if he/she has
i. been convicted within the last 5 years of an offence involving fraud or dishonesty, or relating to the promotion, formation or running of a company,
ii. has been a director or senior executive of a company that has become insolvent within the last five years on account of or partly as a result of the culpable activities of that director, or
iii. has been disqualified to act as Company Secretary, receiver, manager or liquidator of a company.
Where a person previously disqualified under the above is subsequently subject to a second conviction, that person shall be automatically disqualified for a period of 10 years. If said person is convicted a third time, he/she shall be permanently disqualified as a director or to act as a director.
C. APPOINTMENT OF AUDITORS UNDER THE COMPANIES ACT 2019, ACT 992
Under the new Companies Act 2019, Act 992, the qualifications for an auditor are as follows:
i. He/she must first be qualified and licensed in accordance with the Chartered Accountants Act, 1963 (Act 170)
ii. He/she subsequently should not be
a. an officer of the company or of an associated company;
b. a partner of, or in the employment of, an officer of the company or of an associated company;
c. an infant;
d. found by a court of competent jurisdiction to be a person of unsound mind;
e. a body corporate, however, an incorporated partnership may be appointed as an auditor in name and the appointment shall be deemed to be an appointment of the partners of the firm who, at the time of the appointment, are duly qualified.
f. convicted either in Ghana or elsewhere of an offence involving fraud or dishonesty, an offence in connection with the promotion, formation or management of a body corporate, or an offence involving insider dealing, or of any other felonies subject to leave of the Court
g. an undischarged bankrupt under who has not been granted leave by the Court (domestic and international) that made the declaration
h. culpable of a criminal offence, whether convicted or not, in relation to a body corporate or of fraud or breach of duty in relation to a body corporate subject to leave of the Court
i. seems to be debarred by the competent authority from being a member of a recognised professional body as the result of a disciplinary inquiry subject to leave of the Court
j. for the time being disqualified from acting as an auditor of a company by order of the Registrar.
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