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Registering a Subsidiary Company in Ghana

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Are you a foreign investor looking to explore your business opportunities in Ghana? Are you interested in setting up a subsidiary company in the country but are unsure how to go about it? Even more, are you simply curious about how foreign subsidiaries are established in Ghana? If you’ve answered yes to any of these questions, then you’ve come to the right place. In this article, we will address the steps necessary to set up a subsidiary in Ghana. We also go over the subsidiary laws in the country, as well as the benefits you will enjoy from setting up your subsidiary there. Finally, we’ll discuss the different types of companies you can set up in Ghana, going into detail about each one.

How to set up a Ghana subsidiary

Setting up a subsidiary operation in another country is exciting; however, there are usually a couple of things you need to do beforehand. When it comes to establishing a subsidiary in Ghana, the best way to start would be to carry out your research before incorporation. When researching, one of the first things you need to do is find a welcoming location for foreign investors and investments. Ideally, this location should be able to offer you the right cost, availability, and a host of other factors. 

In Ghana, different areas come with unique subsidiary laws, so it is advisable to work alongside a consultant that is well versed in that regard. For the most part, they’ll be able to help you find the most suitable location. This is especially beneficial if you do not have a good knowledge of regions in Ghana. Once you’ve found a good location, you can go ahead to begin the subsidiary setup process. In Ghana, this process differs depending on the entity. 

There are several types of entities, including public limited companies, limited liability companies (LLC), free zone companies, and branch offices. You can decide to incorporate as any one of these; however, an LLC is the most common option because it comes with the freedom and flexibility to operate as a resident/local company in Ghana.

To set up your subsidiary as a limited liability company in Ghana, you need to carry out the following steps:

  • Register your office, your primary place of business, and your postal address.
  • Authorize the number of shares and issue them.
  • Put down the names and addresses of your shareholders.
  • Hire a company secretary.
  • File and submit documentation stating the name of the company as well as the nature of the company’s business. 
  • File and document information on at least two directors. 
  • File and document the name and address of your auditor. 
  • Obtain certificates of incorporation and commencement of business. 
  • Obtain a certified and accurate copy of the company’s regulations.

Subsidiary Laws in Ghana

Depending on the type of entity you choose, there are specific subsidiary laws you need to follow. Because an LLC is the most popular entity selected by foreign investors, we will be going over the laws that govern that company type.

To start with, LLCs in Ghana are required to have at least one shareholder and two directors. Nevertheless, it is perfectly acceptable for all three to be foreigners. However, one of the directors has to be a resident of Ghana. Besides, if you are setting up a wholly-owned foreign company, you need to have a minimum of 500,000 U.S dollars in paid-up share capital. 

If you are setting up your subsidiary as a trading company, that amount rises to 1 million dollars. Furthermore, if you are investing in a joint venture with a residential Ghanaian citizen, then the law states that you must contribute 200,000 dollars. More so, the subsidiary laws in Ghana demand that you must designate a company secretary and a licensed local auditor if you operate as an LLC. 

They will be responsible for auditing your yearly financial statements. It will equally be best if you also had a registered office that comes with a post office box to receive all your notices and communication. Finally, all your accounting and statutory records have to be kept in your registered office according to the subsidiary laws.

Benefits of the Ghana Subsidiary Setup Process

Setting up your subsidiary in Ghana can take a while, usually up to a year. However, there are several benefits of operating in the country. First of all, if you set up your company as an LLC, you will never have to worry about any issues or liabilities between your parent company and the subsidiary, as both can operate independently of each other.

Company entity aside, there are many other advantages of setting up shop in Ghana as a foreign investor. A few of them are as follows:

Skilled labor force

Ghana is known for having a widely educated workforce. For several years, education has received a big chunk of the government’s yearly budget, which has led to immense development in the country’s educational institutions. This presents itself as a benefit because it means that your company will have access to some of the most educated and skilled workforces in the whole of western Africa.

Good investment location

Thanks to the Ghana Investment Promotion Center (GIPC), Ghana has become one of the most attractive investment locations in Africa and the world. The GIPC and other agencies have successfully created a business environment that allows both local and foreign companies to flourish. This has led to an increase in the number of private and public businesses established in the country.

Stable political environment

It is common knowledge that politically driven incidents such as electoral violence, civil wars, and terrorist movements hurt business activities in a country. In Ghana, you never have to worry about these issues as the country is known for being one of the most politically stable economies in sub-Saharan Africa. Over the last two decades, it has provided both local and foreign residents a peaceful environment for living and operating businesses.

Everything You Need to Establish a Subsidiary in Ghana

Setting up a subsidiary in Ghana is hardly a complex process, although it can take up a significant amount of time. If you plan to set up your subsidiary company in Ghana, you need to make the necessary preparations to set your business up for success. There are three important things you’ll need to establish your subsidiary in the country; they are time, money, and a lawyer/consultant. You need to set aside some time for the subsidiary setup process. 

As aforementioned, it can be time-consuming. Besides, you need to be present to look over locations, register your office and postal address, submit the necessary documents and hire the required staff. All of these tasks can also take up a bit of time, so it is advised that you clear your schedule for at least a year so you can oversee all the required steps of the setup. You equally need a significant amount of money to set up your subsidiary successfully. 

As stated, you have to contribute at least 200,000 dollars, and this is only if you are setting up a joint venture with a Ghanaian citizen. This amount can go up to 500,000 or 1 million dollars, depending on your level of involvement in your subsidiary; hence it is necessary to set aside an appropriate amount of funds. Finally, you need to involve a lawyer or consultant who is familiar with the Ghana subsidiary laws. This individual will help you set up your subsidiary in a manner that abides by the law and ensure that you remain compliant even after the setup process.  

Types of Companies in Ghana

There are six types of companies that can be legally registered in Ghana. As a foreign investor looking to set up a subsidiary in the country, it is essential to know these six types of business entities to make an informed decision when choosing how your business will operate. These company types are as follows:

A company limited by shares

This type of company requires that the business be registered at the Registrar General’s Department. It comprises at least two directors and at least one person acting shareholder (company or individual), with objects typically for profit generation. A company limited by shares has limited liability; hence, its members’ liability is entirely confined to the value of their shares.

A company limited by guarantee

If you want to set up a not-for-profit organization, this will be the most suitable type of entity. This is because if the company’s objects are limited by guarantee they cannot be used to generate profit. Because of that, these companies are exempted from corporate tax, although they will have to pay income tax if they employ any salaried workers. Companies limited by guarantee and companies limited by shares are jointly referred to as limited liability companies (LLC) because the member’s personal assets are protected from liability.

Company unlimited by shares

This company type is mimics companies limited by shares. The business is required to be registered at the Registrar General’s Department. It is also necessary to have at least two directors and one shareholder (which could be an individual or a company) with objects for profit generation. The difference is in the nature of the liability involved. With a company limited by shares, the liability is limited to shares belonging to its members. With a company unlimited by shares, its members’ liability can extend beyond their shares to their personal assets. This type of company is mostly common amongst businesses that offer professional advice and services, such as law and accounting firms.

Sole proprietorship

A sole proprietorship is an entity that is entirely owned by a single individual. Hence, this person is entitled to all of the profits made by the business. They are also liable to all the liabilities of the company. If you are setting up a sole proprietorship in Ghana, you do not need to register it at the Registrar General’s Department. However, if the owner of such an entity wants to operate under a business name, they need to register the business name at the RGD.

External company

An External company is typically a company or corporate body that is incorporated outside of Ghana but wants to set up a place of business or subsidiary within Ghana. This type of company is subjected to the Ghanaian income and corporate tax laws; however, they generally operate under the law of the country where they are originally incorporated.

Incorporated partnership

If two to twenty people want to come together to establish a business for the purpose of profit generation, they have the option of doing so by setting up an incorporated partnership. This type of company has to be registered at the Registrar General’s Department. With an incorporated company, the partners’ personal assets are not protected and so are liable to liability. Also, the actions of a single partner affect and bind the entire partnership.

Registering a Subsidiary Company in Ghana – Summary

Setting up a company in Ghana is usually a straightforward process. For the most part, all you need is time, the required amount of money, and an expert lawyer or consultant to guide you through the entire process. Although the setup process can occasionally be time-consuming, it is usually worth it in the end, as you would have access to one of the largest, most diverse markets in the entire Sub-Saharan Africa. Besides, there are many benefits of establishing a subsidiary in Ghana. Your chances of succeeding are high from access to an educated workforce to a stable political and economic environment. If you have enjoyed this article, please make sure to like it, comment and share.

FAQS

Do subsidiary companies need to be registered?

As a business owner, you may decide to start a company. As new opportunities come along, you may also choose to set up additional business lines, i.e., subsidiaries, to take advantage of these opportunities. You can choose to retain your subsidiaries and have them operate within your existing business. However, you may also choose to have them formally operate independently. If you want your subsidiary to work independently, you can have it registered as a legally separate entity. Otherwise, you don’t have to. The decision to have your subsidiary company lies solely in the business owner or parent company’s hands. Subsidiary companies aren’t legally obligated to be registered, so it is all up to you.

How much does it cost to register a company in Ghana?

How much it costs to register a company in Ghana depends on the type of company you are registering. There are six types of entities you can register in Ghana, and they all attract different registration costs.

  • If you want to register a sole proprietorship business, the business name registration costs 50 CEDIS. Additional costs, including the costs of a true certified copy, filling of the form, and annual renewal, all amount to 60 cedis.
  • To register a partnership company, the cost is 150 cedis. Additional charges are between 120 and 280 cedis.
  • For a company limited by shares, the incorporation cost is 200 cedis. Additional fees are between 1300 to 5000 cedis.
  • For a company limited by guarantee, the registration cost is also 200 cedis, and additional costs amount to 320 to 2000 cedis.
  • For an external company, the cost is 1200 cedis, and it attracts an additional charge of 850 cedis.

How do I register a group of companies in Ghana?

There are five main steps you need to take to register a group of companies in Ghana. They are as follows:

STEP 1- Company name search: You need to start by conducting a name search at the RGD to ensure that the name you want your company registered under is available. Once this is confirmed, you need to apply to have that name reserved for 30 days.

STEP 2- Registration of taxpayer identification number: This step is necessary and requires registering for a taxpayer identification number for all your company directors, shareholders, and secretary. Information required for this registration includes name, occupation, photo ID, mother’s maiden name, residential and postal address, and contact.

STEP 3- Completion of forms and company regulation: You need to complete two primary forms for this step. They are known as forms 3 and 4. Form 3 is the ‘returns of particulars of the company limited by the shares registration form,’ and form 4 is the ‘form for company registration.’ You will also need to complete the ‘regulations of a private company limited by shares’ form.

STEP 4- Payment of stamp duty, business incorporation, and filing fees: It is necessary to complete these payments to move on to the final step. At this stage, you also need to state proof of your stated capital as required by the Ghanaian laws, which can range from 200,000 to 1 million dollars.

STEP 5- Collection of business registration certificates: Once all your forms are submitted, and fees paid, you will be issued your credentials, which will include a certificate of incorporation and commencement. This usually takes around two weeks.

Can a foreigner open a business in Ghana?

A foreigner is free to open a business in Ghana. The company code 1963 (Act 179) states that a foreigner can set up a business in Ghana. This was done to promote foreign investment in the country.

However, depending on the kind of company they want to open, they must comply with Ghana’s laws. For example, if they are setting up a company limited by shares or a company unlimited by shares, they need to have at least one shareholder and two directors, one of which must reside in Ghana.

How much does it cost to register a sole proprietorship in Ghana?

Registering a sole proprietorship in Ghana is a very straightforward and affordable process. To do this, you need to pay to register your business name, which typically costs about 50 cedis. You might also need to pay some additional costs, such as a certified true copy, costing 10 cedis, a filing of form D, costing 25 cedis, and an annual renewal fee, which costs 25 cedis yearly.

What business can I start with little money in Ghana?

There are a handful of profitable businesses you can start in Ghana with a little over 500 cedis. Some of these businesses include liquid soap production, selling second-hand shoes, freelance writing, selling office supplies, and opening a hairdresser shop or barbing salon. All of these businesses can be started with less than 500 cedis, and over time, can grow into very profitable establishments if appropriately managed.

Can a foreigner buy land in Ghana?

Ghana does not restrict foreigners from buying land. You are legally allowed to purchase and own land, even if you are not a citizen of the country. However, it is essential to note that there are different types of land in Ghana, and not all of them can be privately owned. There are four types of land: government land, Vested land, Customary land, and Private land. Only customary and private land can be bought and owned by individuals.

Is Ghana a good place to do business?

Many things make Ghana a good place to do business, both as a local and foreign investor. To start, the country has a very stable political environment, which means that your business activities will not be disrupted by political unrest. Ghana is also home to well educated and aware citizens, meaning that you don’t only gain access to an educated workforce, but you also gain access to a large market. More so, Ghana provides you with expansion opportunities for your business if it starts to grow.

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