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1.1.1. Main Forms of Doing Business

Ghana provides several business forms for investors, of which the main forms include:

  • Company (Limited Liability or Public Limited or Free Zone)
  • Sole Proprietorship
  • Partnership
  • Joint Venture
  • External Company
  • Foreign Business (Subsidiary, Branch or Representative Office)

Company

Companies can be formed either as Limited Liability Companies or Companies Unlimited by Shares. Limited Liability Companies may be Companies Limited by Shares or Companies Limited by Guarantee. A Company Limited by Guarantee cannot be formed with the object of profit generation, consequently, these companies are exempt from corporate tax. A Company Unlimited by Shares is not a common form of doing business in the country and is typically formed by law firms and other professional entities.

A Company may also be a private or public company.

The key aspects of a Limited Liability Company include:

  • Can be formed by 1 shareholder of any nationality
  • Minimum 2 directors are required of any nationality, of which at least 1 should be ordinarily resident in Ghana
  • Shareholders’ liability is limited to their contribution in the company
  • Shareholders and directors can be individuals or companies
  • Minimum paid-up capital of USD 50,000 is required if the company is wholly foreign owned (increased to USD 300,000 if the company intends to make sales in Ghana)
  • Mandatory to appoint a company secretary and a licensed auditor and submit audited annual financial statements
  • Mandatory to suffix ‘Limited’ in the company name

The key aspects of Public Limited Company include:

  • Can offer shares to the public through listing on the GSE
  • Can be formed by 1 shareholder of any nationality
  • Minimum 2 directors are required of any nationality, of which at least 1 should be ordinarily resident in Ghana
  • Shareholders’ liability is limited to their contribution to the company
  • Shareholders and directors can be individuals or companies
  • Minimum paid-up capital of USD 30,000 is required. Minimum paid-up capital is USD 50,000 if the company is wholly foreign owned (increased to USD 300,000 if the company intends to make sales in Ghana)
  • Mandatory to appoint a company secretary and a licensed auditor and submit audited annual financial statements

The key aspects of Free Zone Company include:

Free zone companies are located in areas designated as free zones in Ghana.

  • Required to export at least 70% of their production
  • No minimum capital requirement
  • No requirement of resident director at the time of incorporation
  • Can be 100% foreign owned
  • May invest in any business except plastic manufacturing, timber related activities and exploration

Sole Proprietorship

A sole proprietor is a natural person who conducts business in his / her own name. The liability of the sole proprietor is unlimited.

Partnership

Under partnership two or more persons come together to carry on a business with a view to participate in profit or loss arising from such business activities. Maximum 25 partners are allowed in a partnership firm in Ghana. Partnerships can be formed as non-trading partnership, commercial partnership and limited partnership.

A limited partnership consists of a general partner and other limited partners. The general partner controls and manages the firm and assumes unlimited liability, whereas the limited partners take no part in the management of the firm and their liability is limited to the capital contribution in the firm. The name of the limited partnership generally consists of the names of the general partners followed by the words "Limited Partnership".

Joint Venture

Joint Venture is an agreement between at least 2 and more persons on mutually agreed terms and is subject to the general principles of law relating to partnerships as stated above. The joint venture partners share profits and losses that arise from the joint venture. Each partner has agreed rights in controlling the venture. A foreign investor may tie up with a Ghanaian entrepreneur or company for a joint venture, usually in the form of a partnership or a limited company. A minimum capital of USD 10,000 is required from any foreign investor who intends to enter into a joint venture partnership in Ghana.

External Company

An external company is a corporate body incorporated outside of Ghana but which has an established place of business in Ghana. This can take the form of a branch, management, registration office, factory, mine or other fixed place of business, but does not include an agency unless the agent is authorized to negotiate and conclude contracts on behalf of the outside company. An external company is required to be registered with the Register of External Companies.

An external company is regulated by the laws of its country of incorporation but is also subject to Ghanaian income tax laws.

Foreign Business (Subsidiary, Branch, Representative Office)

Foreign companies can conduct their operations in Ghana through the constitution of a subsidiary or branch office or a representative office.

Subsidiary is considered a separate legal entity from its foreign parent company. It can be formed as a Limited Liability Company or a Public Limited Company with 100% foreign holding or even as a Joint Venture.

A branch is considered as an extension of its foreign parent company. A branch office is required to appoint at least 1 resident representative on behalf of the foreign parent entity. A branch in Ghana is covered under the regulations for external company.

Representative office in the form of liaison office can be set up in Ghana. It is not considered as a separate legal entity from its foreign parent company and is not permitted to conduct commercial activities in Ghana. The representative office can conduct promotional activities or marketing of products of the foreign parent company in the country.

Further information on the general investment, tax and regulatory regime about the country is available at the following external references: