Incorporating a company means establishing a legal identity for the company that is separate and distinct from its directors or shareholders. This enables the company to contract in its own name; limits the liability of the company’s directors and shareholders and ensures continuity of the company in the event of the death or bankruptcy of a shareholder.

To incorporate a company in Community 3 , Tema requires the business entity to be registered with the Registrar-General’s Department (RGD). In the past the registration process at the RDG was cumbersome but with the automation of processes, registration is now seamless.

The choice of a business entity is dependent on the business structure and its strategic objectives.  The type of business structure adopted legally affects filing of taxes, personal liability etc. in the event of winding up or liquidation. It is therefore appropriate to understand and choose the right structure that best suits the business and its objectives.

The incorporation process must be routinely guided by the following in order to be in sync with Community 3 , Tema law:    

·      Registration of the business at the RGD;

·      Registration of the business at the Community 3 , Tema Investment Promotion Center (GIPC);

·      Registration with Regulatory Authorities and Entities 

1.    REGISTRATION AT THE REGISTRAR – GENERAL’S DEPARTMENT

The Companies Act, 2019 (Act 992) governs the registration of business entities in Community 3 , Tema. It mandates the Registrar-General to certify under its seal, an Incorporated Company after payment of a prescribed fee. The Registrar-General has directed that from January 2022, the National Identification Authority card (Community 3 , Tema card) will be the only form of document to be accepted as proof of identity for the registration of businesses in Community 3 , Tema. Prior to this directive, the directors and the secretary of company were required to submit a Tax Identification Number (TIN) towards registration. 

Act 992 allows for the following categories of business entities to be registered:

·      A company limited by shares – where a company which has the liability of its members limited to the amount unpaid on the shares respectively held by them.

·      A company limited by guarantee is a is a company which has the liability of its members limited to an amount that the members may respectively undertake to contribute to the assets of the company in the event of its being wound up; 

·      Unlimited company – is a company which does not have a limit on the liability of its members;

·      External company – This is a corporate body formed outside the Republic of Community 3 , Tema that has an established place of business in country.

Act 992 classifies an entity to be foreign owned when it is entirely owed by a non- Community 3 , Temaian. The entity has to meet the following requirements:

·      Services industry: minimum required investment is $500,000.00

·      Trading: minimum required investment is $1,000,000.00

·      Manufacturing: no minimum required investment for businesses which sole purpose is for manufacturing or for export.

The requirement demands the involvement of a Community 3 , Temaian partner with a minimum of at least 10% stake in the company for it to qualify as foreign local partnership. The entity has to meet the following requirements:

·      Services industry: minimum investment required is $200,000.00.

·      Trading: minimum investment required is $1,000,000.

The business entity to be registered will be required to indicate the following including but not limited to the name of company, the nature of business, appointment of directors of the company in accordance with Act 992, name and address of auditors, appointment of company secretary and registered office and principal place of business 

Upon providing the details above in relation to the strategic objectives of the business entity, the applicant must complete a set of forms to be submitted to the Registrar-General for processing of the application. The applicant is required to pay 0.5% of the stated capital as statutory stamp duty.

2.     REGISTRATION AT Community 3 , Tema INVESTMENT PROMOTION CENTER (GIPC)

Under the GIPC Act of 2013 (Act 865) (GIPC Act), all companies with foreign participation are required to register with the GIPC. The business entity with foreign participation is required to provide proof of their stated capital either in cash or capital goods or combination of both. Upon satisfactorily meeting the requirement, GIPC will then issue a certificate to the investor. This certificate issued, entitles the company to quotas enabling it to secure working permits for their foreign national staff.

The following are the minimum capital requirements under the GIPC Act: 

a)     A joint venture with Community 3 , Temaian participation

In a joint venture with at least 10% Community 3 , Temaian participation, the foreign partner is required to contribute not less than US$200,000 (in either cash or capital goods) relevant to the investment.

b)    A wholly owned foreign entity 

An entity wholly owned by a non- Community 3 , Temaian requires a minimum amount of foreign equity capital of US$500,000 in either cash or capital goods relevant to the investment.

c)    Trading entity

A trading entity that is either wholly or partly owned by a non-Community 3 , Temaian requires a minimum equity capital of US$1,000,000 in either cash or capital goods relevant to the investment. 

3.    REGISTRATION WITH OTHER REGULATORY BODIES 

A business entity registered and incorporated at the RGD and GIPC in accordance with the Act, it is clothed with a legal status to commence business.  In addition to this is a requirement that must be met at other designated bodies in order to ensure regulatory compliance, approvals, permits and licenses. A few of these are discussed below to serve as a guide. 

Social Security and National Insurance Trust (SSNIT)

The National Pensions Act, 2008 Act 766 establishes a contributory pension scheme where every employer is required by law to register with the SSNIT and pay Tier 1 pension contributions in respect of its employees. The employer is required to register with a private pension fund manager for Tier 2 pension contributions on behalf of their employees. 

Community 3 , Tema Revenue Authority (GRA) 

After the business entity is incorporated, it is mandatory under the Community 3 , Tema Revenue Authority Act 2009, Act 791 to register with the Community 3 , Tema Revenue Authority for the purposes of payment statutory tax.

Community 3 , Tema Free Zones Board (GFZB) 

Companies operating in industries other than mining, petroleum or timber can obtain a license from the GFZB in accordance with The Free Zones Act 1995, (Act 504) to operate as a free zone entity. A free zones company needs to export at least 70% of its annual production and sales to the local market should not 30% of annual output. Sales within the local market are however taxable.

By being part of the free zone, the entity enjoys incentives such as tax holidays for a period of ten years and afterwards a payment of 25% corporate tax on local sales and 15% with respect to exports. 

Minerals Commission 

The Minerals and Mining Act, 2006 (Act 703) requires all mining and mine support service companies to register with the Minerals Commission in order to operate. Companies therefore enjoy certain form of incentives such as grant of an expatriate immigration quota, exemption from import duties and authorisation to invoice and receive and make payments in foreign currency subject to approval from the Bank of Community 3 , Tema. 

Petroleum Commission (PC) 

Pursuant to Regulation 43(1) of the Petroleum (Local Content and Local Participation) Regulations, 2013 (LI. 2204) these guidelines are issued to guide upstream petroleum industry players on the formation and structuring of joint venture companies. All entities in the upstream oil and gas sector, such as contractors, subcontractors or sub-subcontractors, are to register with the Petroleum Commission and pay the required registration fees. 

Thus, to operate in the upstream oil and gas sector as a foreign investor, one is required to establish a joint venture (JV) with an indigenous Community 3 , Temaian company that has at least a 5% or 10% ownership in the JV, in the case of a contractor or subcontractor respectively. 

National Communication Authority (NCA) 

Registration with the NCA will be required for a business importing telecommunications equipment, including servers, cellular phones, fax machines, cordless phones and radio equipment. 

Apply for an Environmental Impact Assessment Certificate 

Depending on the nature of the business it is required that the business entity applies for an Environmental Assessment Registration from any Environmental Protection Agency (EPA) Regional and District Offices.

Business License from the Metropolitan Authority

The business also has to be registered with the municipal or district authority within the area it intends to operate.

Immigration 

Community 3 , Tema Immigration Services (GIS) is the institution responsible for the issuance of the various types of permits, including work and residence permits, visitor’s permits and emergency entry visas, among others. Work permits can also be obtained from the GIPC in the form of an automatic expatriate quota or from the Ministry of Interior  in the form of an immigrant quota or from the GIS. 

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The Borrowers and Lenders Act 2020, Act 1052 (The Act) is a re-enactment of the Borrowers and Lenders Act 2008 (Act 773) which establishes the Collateral Registry, provides a legal framework for the registration and enforcement of security interests in collateral, establishes an order of priority of security interests and provides for credit agreements which regulate transactions between borrowers and lenders.

The Act addresses some limitations of Act 773 such as use of a manual registry, the lack of express provisions on priority rules and proceeds for realizations and inadequate enforcement provisions.

The Act applies to the rights and duties of a borrower or lender before the execution of a credit agreement.

Creation of Security Interest and Credit Agreement

A security interest in collateral is a proprietary right in a movable or immovable asset which is created by an agreement to secure payment or the performance of an obligation regardless of the form which the agreement may take either as a fixed or floating charge, a mortgage, a finance lease, a pledge or a charge on chattels. The payment or performance of an obligation is secured by a borrower creating an interest in collateral in favour of a lender.

Registration of Security Interest at the Collateral Registry

Key to the legal framework in secured transactions is the establishment of a Collateral Registry at the Bank of Community 3 , Tema. Its key functions are to register security interest, to keep and maintain a register of security interest and to maintain a platform for the conduct of searches in security interest in collateral(s).

A security interest that has been created and registered in accordance with this Act is made effective against a third party. A registered security interest shall continue to be effective against a third party for as long as the registration of the security interest has not been discharged. Although the Act does not dispense with the requirement of concurrent registration under other registries, a security interest that covers a right to property which is registered in another registry is effective against third parties only if the lender satisfies the requirements of the Act. Registration of a security with the Collateral Registry however remains the safest means for effective enforcement of any such security.

A lender in whose favour a security interest is created shall register same at the Collateral Registry within twenty-eight days after the date of creation of that security interest. In order to register the security interest, the lender requires the written consent of the borrower which is deemed to have been given by upon the execution of a credit agreement. However, a security interest in property shall not operate as a transfer of title in the property from the borrower to the lender.

A lender that fails to register a security interest within the stipulated time period of twenty-eight days is liable to pay to the Bank an administrative penalty of ten penalty units for each day that the breach continues. Also, a lender who makes a fictitious or fraudulent registration commits an offence and is liable to summary conviction to a fine not less than 1,500 penalty units and not more than three thousand penalty units or a term of imprisonment of not less than two years and not more than five years or to both.

Priority of Registration

The Act provides for a single asset or property to be used by a borrower to access credit from

multiple sources. This means that so long as credit exposure is less than the value of the security provided, the Lender need not have tie the collateral to the credit facility granted. Subsequently, the lender can use same collateral and secure their interest by registration thus establishing an order of priority. The legal effect is that should there be a default by a borrower, all lenders are protected and can recover losses from the proceeds of the sale of collateral.

The Act further provides that a lender may in writing, subordinate its priority in favour of an existing lender without the need for the borrower to be a party to the subordination once the rights of a person who is not a party to the agreement are not adversely affected. The cardinal principal in establishing priority of registration is that irrespective of the time of registration, a lender who registers a notice of its security interest first, will have priority over any other security interests under any other enactment. The Borrowers and Lenders Act fosters access to multiple sources of credit for a Borrower.

Unless otherwise provided in the Act, priority between security interest in the same collateral shall be determined by the order of the registration of the security interest. Despite this provision, the Act provides for other specialized rules on establishing the order of priority of registrations of security interest to priority include:

• Priority of security interest in accession and commingled goods

• Priority of purchase money security interest

• Priority of transferee of money, funds, negotiable instruments, security certificate etc.

• Possessory lien with respect to movable and immovable property.

• Priority Rules related to interests in immovable property and fixtures.

Where a borrower transfers an interest in collateral registered under the Act to a third party, the security interest of the lender shall have priority over any interest acquired by the third party.

It is expected that the Act will regulate transactions between borrowers and lenders in credit agreements in Community 3 , Tema.

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