Ghana’s legal system is premised on English Common Law. The laws of the country comprise: the Constitution; statutes enacted by Parliament; orders, rules and regulations made by any person or authority under a power conferred by the Constitution; the existing law; and the Common Law, made up of the rules of law generally known as the doctrines of equity and the rules of customary law, such as rules of law which by custom are applicable to particular communities in the country, including those determined by the Superior Court of Judicature.
General Framework For Investment
The Directive Principles of State Policy, prescribed under the 1992 Republican Constitution of Ghana, emphasise the encouragement of foreign investment, subject to any law that is in force and regulates investment in Ghana. The Ghana Investment Promotion Centre (GIPC) Act 2013 (Act 865) and the Free Zones Act 1995 (Act 504), respectively, promote economic development and regulate the activities of investors. The GIPC law regulates companies in all sectors of the economy. The Ghana Free Zones Board (GFZB) has the mandate to regulate businesses, excluding banking and insurance, classified as free zone companies which export at least 70% of their products and services. Investment guarantees include:
• Non-discriminatory application of rights and obligations under investment laws;
• Safeguards against expropriation;
• Guaranteed transferability of capital, profits, proceeds of sale and liquidation, interest and dividends, and personal remittances attributable to the investments or the net of all taxes and other obligations, subject to directives that the Bank of Ghana (BoG) may issue on foreign exchange (forex) transactions;
• Payments in respect of foreign loan servicing;
• Fees and charges in respect of technology transfer agreements registered with the GIPC;
• Amicable settlement of disputes in respect of an enterprise between a foreign investor and the government and submission to arbitration under the United Nations Commission on International Trade Law (UNCITRAL);
• Application of the framework of the bilateral or multilateral agreements on investment protection to which the government and the country of which the foreign investor is a national are parties; and
• Application of any other national or international mechanisms for the settlement of investment disputes agreed to by the parties. Additionally, free zone companies enjoy exemptions
• Direct and indirect taxes;
• Income tax on profits for the first 10 years from the date of commencement of the operation, with a subsequent income tax rate of 15%; and
• Payment of withholding tax by shareholders on divIn the “Budget Statement and Economic Policy of the Government of Ghana for the 2015 Financial Year”, the government proposed a review of the Free Zones Act to enhance the relevance of business activities undertaken in these areas so as to ensure greater emphasis is placed on manufacturing and value addition. Parliament is yet to consider this.
Choosing The Corporate Vehicle
In Ghana the Companies Act 1963 (Act 179), as amended, is the main law that sets out the types of corporate vehicles. Under the law, a local entity may be established by:
• The incorporation of a private or public company limited or unlimited by shares (for profit) or by guarantee (not for profit); or
• Registration of an external company, i.e., a branch of a company (for profit or not for profit) incorporated outside of Ghana.
The minimum capitalisation requirements set out in the GIPC Act 2013 (Act 865) for a local entity is determined by the nationality of the shareholders and nature of business. The capital can comprise cash or capital goods relevant to the investment or a combination of both. The minimum foreign capital required is as follows:
• A joint venture company made up of Ghanaian and foreign shareholders requires a minimum foreign capital of $200,000, with the Ghanaian partner having not less than 10% equity participation;
• Where the company is wholly foreign owned, the minimum foreign capital required to be invested is $500,000; and
• For trading, a minimum foreign capital of $1m should be invested. Additionally, the company is required to employ at least 20 skilled Ghanaians.
In accordance with the GIPC Act, companies with foreign participation are required to register with the GIPC after incorporation and prior to the commencement of operations. Although the evidence of the fulfilment of the stated capital requirement is not required at incorporation, it is a mandatory requirement that the company show evidence of the transfer of capital into Ghana either in the form of cash or capital goods relevant to the investment to be registered with the GIPC. The minimum foreign capital requirements stated above do not apply to a foreign spouse of a Ghanaian citizen, ordinarily resident in Ghana for a continuous period of five years or holding an indefinite resident permit prior to registration of a company. Additionally, a citizen of Ghana who loses their citizenship by reason of the assumption of the citizenship of another country shall not be required to comply with the minimum capital requirement stated above. There are no minimum capitalisation requirements for external companies. However, if automatic expatriate quotas are required by an external company, the paid-up capital requirements stated above have to be fulfilled.
A company seeking to do business in Ghana may acquire an equity stake in an existing company (investee company). Such an acquisition does not obviate the obligation to comply with the minimum capitalisation requirements.
Where the industry or sector in which an investee company operates is regulated, the approval of the regulator may be required. Additionally, the approval of the Securities and Exchange Commission (SEC) is necessary where an investee company is listed on the Ghana Stock Exchange (GSE). Acquisitions of 30% or more of the shares of a listed company or its holding company trigger a mandatory takeover offer and are therefore regulated by the SEC.
The Companies ( Amendment) Act 2016 requires that the names and particulars of beneficial owners of companies be included in the register of members. This is to ensure transparency and prevent people from hiding behind complex business organisations to evade tax and engage in corruption. This amendment is in compliance with protocols of the Financial Action Task Force for best practices, which the country has acceded to.
Banking & Financial Services
The BoG must approve any agreement or arrangement that would result in a change in the control of all banks and non-banking financial institutions or their holding companies. Consequently, the sale, disposal or transfer of 10% or more of the capital or voting rights of a company (significant interest), an amalgamation or merger requires the approval of BoG.
Ghana’s capital markets are regulated by the SEC and the GSE which has the mandate to protect investors and maintain the integrity of the securities market and the GSE. The SEC Rules ( Takeover and Mergers Code) governs mergers, substantial acquisitions, takeovers and schemes of arrangement. Acquisitions of 30% or more of the shares of a publicly listed company, or its holding company trigger a mandatory takeover offer and require the approval of the SEC. There is also the Ghana Alternative Market (GAX), which is a parallel market to the GSE and which focuses on small and medium-sized businesses (SMEs) with potential, including start-ups. The GAX affords companies the opportunity to secure long-term capital, broaden their investor base and provide liquidity for their shareholders and investors.
Hedge Funds & Private Equity
The new Securities Industry Act 2016 (Act 929) expands the powers of the SEC to include advising the minister on matters relating to the securities industry, maintaining surveillance over activities in securities to ensure orderly, fair and equitable dealings in securities, the formulation of principles for the guidance of the industry, monitoring the solvency of licence holders and taking measures to protect the interest of customers where the solvency of a licence holder is in doubt. The SEC is also required to protect the integrity of the securities market against any abuses arising from dealing in securities, including insider trading. The ambit of the securities industry that it regulates has also been expanded to include commodity exchanges, credit rating agencies, hedge funds, nominee account operators, private equity funds and venture capital funds, which cannot operate without a licence from the SEC.
Ghana Export-Import Bank
Parliament has passed the Ghana Export-Import Bank Act 2016 (Act 911). The law will assist exporters to compete internationally by providing insurance and finance facilities to support their overseas activities and promote the acceleration of Ghana’s drive towards achieving a more diversified economy. It is anticipated that the bank will help boost exports by equipping Ghanaian businesses, particularly SMEs, with the right financing mix required and thereby transforming the economy of the country into an export-oriented one.
In the insurance sector, the acquisition or sale of a significant interest in an insurance company also requires the prior written approval of the National Insurance Commission (NIC). A significant interest is any holding in the company that entitles a person to control 10% or more of the voting rights, dividends or share in any distribution of the surplus assets of the company. The NIC will not grant approval unless it is satisfied that the acquirer is qualified to have an interest in the insurance company.
The acquisition of a stake in a mining firm which vests in a person, either alone or with an associate or associates, control of more than 20% of the voting power at any general meeting of a mining company or of its holding company requires the approval of the minister responsible for mines. The Mining Act is being reviewed in order to tighten regulation of revenue, licensing and protection of the environment.
The recently enacted Petroleum (Exploration and Production) Act 2016 (Act 919) is the main legislation that regulates the granting of licences for upstream oil and gas activities, and regulates the exploration, development and production of petroleum in Ghana. The law provides for an enabling environment for increased private participation and investment in Ghana’s petroleum sector to achieve optimal long-term petroleum resources, exploitation and utilisation. The act permits the minister of energy to grant rights and enter into agreements for the exploration and production of oil and gas subject to the ratification of such rights or agreements by Parliament. The petroleum agreement can only be entered into after an open, transparent and competitive public tender process and prescribes the terms that must be included in a petroleum agreement.
There is a local content requirement for a non-transferable minimum of 5% shareholding by Ghanaian firms operating in the upstream sector. This requirement can only be waived on the authority of the minister for lands and natural resources. The downstream sector covers the import, export, re-export, shipment, processing, refining, storage, distribution, marketing and sale of petroleum products. A maximum 50% stake may be acquired by a non-Ghanaian in the downstream sector.
Pricing Of Petroleum Products
The National Petroleum Authority Act (as amended) seeks to give effect to the government’s full deregulation policy, which halts the intervention of the government in the pricing of petroleum products in the country. It also adds price liberalisation into the downstream business and allows competition and market forces to determine prices. It also seeks to ensure there is a full cost recovery and uniformity in pricing of petroleum products that would be determined by the market and competition therein.
The Nuclear Regulatory Authority Act has been passed. The act establishes a Nuclear Regulatory Authority to oversee and manage activities and practices for the peaceful use of nuclear material and energy, radioactive material or radiation. The act also provides for the protection of the population and the environment against the harmful effects of radiation-related hazards.
The passage of the law is a key step in showcasing Ghana’s commitment to harnessing the potential of nuclear in the country’s energy mix and is expected to generate interest in investment in the future production of nuclear energy generation.
In the communications sector, the National Communications Authority must approve the transfer of shares in a licensee company if the transfer would result in a change of control of that company and cause that company to breach licence terms relating to its ownership structure.
Under the Fisheries Act 2002 (Act 625) fishing vessels operating in Ghana’s coastal waters and rivers in connection with any fishing activity are required to procure a licence for their activities. Licences granted under the act are not transferable to another person or business without the prior permission of the Fisheries Commission.
Consequently, where a merger or an acquisition leads to the formation of a new company, a licence granted to a fishing vessel owned by the old company cannot be transferred to the new company unless the permission of the Fisheries Commission has been obtained. Furthermore, there are nationality restrictions that apply which are likely to affect an acquisition transaction in this sector.
Protection Of Ip Rights
Intellectual property (IP) is increasingly viewed as an important asset from which companies can extract maximum value. Consequently, businesses must be able to take advantage of the use of their intangible assets in order to create wealth. The country has various laws that protect the IP of businesses. Under Ghana’s IP laws, IP rights and protections may be acquired in particular for the following categories of intangible assets:
• Innovative products and processes through patents: inventions, products or a process that provides a new way of doing something or offers a solution in the field of technology;
• Cultural, artistic and literary works through copyright and related rights protection. The Copyright Act seeks to protect written or artistic expressions fixed in a tangible medium, such as novels, poems, songs or movies;
• Creative designs including textile designs through industrial design rights and the protection for innovations of a rather incremental character through utility models;
• Distinctive signs, mostly through protection of trademarks including collective marks. A trademark is a name, phrase, sound or symbol used in association with services or products;
• The layout designs or topographies of integrated circuits in intermediate form or having at least one active element, interconnected and/or intended to perform an electronic function;
• Denominations for goods of a given quality or reputation attributable to the geographical origin through protection of geographical indication; and
• Unfair competition which regulates unregistered trademarks. There are civil and criminal sanctions for the infringement of IP legislation in Ghana. There is a proposed Plant Breeders’ Bill, which is currently before Parliament and yet to be passed, as there is an ongoing debate on the impact it will have on the agriculture sector. Additionally, Ghana is a member of the World Intellectual Property Organisation (WIPO) and a signatory to the WIPO-administered treaties including:
• Singapore Treaty on the Law of Trademark;
• Patent Law Treaty;
• WIPO Copyright Treaty;
• Paris Convention for the Protection of Industrial Property;
• Washington Treaty on Intellectual Property and Respect of Integrated Circuits;
• The Hague Agreement concerning the International Deposit of Industrial Designs;
• Protocol Relating to the Madrid Agreement concerning the International Registration of Marks; and
• WIPO Performance and Phonograms Treaty.
The Protection against Unfair Competition Act 2000 (Act 589) codifies the common law tort of passing off. The act sets out the various practices deemed as unfair competition, defines these practices and outlines the extent of protection provided under Ghanaian law and other related matters. Major practices considered as unfair under the law include causing confusion with respect to another’s enterprise or its activities, damaging another person’s goodwill or reputation, misleading the public, discrediting another person’s enterprise or its activities, unfair competition in respect of secret information, and unfair competition in respect of both national and international obligations.
A technology transfer agreement entered into under the GIPC Act and the Technology Transfer Regulations 1992 (LI 1547) may cover any of the following:
• The assignment, sale and licensing of all forms of industrial property, except trademarks, service marks and trade names when they are not part of the transfer of technology;
• The provision of technical expertise in the form of feasibility studies, plans, diagrams, models, instructions, guides, formulae, basic or detailed engineering designs, specifications and equipment for training, services involving technical advisory and managerial personnel and personnel training;
• The provision of technological knowledge necessary for the installation, operation and functioning of the plant and equipment, as well as turnkey projects; and
• The provision of technological knowledge necessary to acquire, install and use machinery, equipment, intermediate goods or raw materials acquired by purchase, lease or other means. Technology transfer agreements entered into under the Investment Act and Technology Transfer Regulations, 1992, LI 1547 must be registered with the GIPC. The Technology Transfer Regulations, 1992, LI 1547 provides that royalties in respect of know-how, patents and other industrial property rights shall range from 0% to 6%. This is calculated on the net sales of the recipient. The regulations provide that the duration of a technology transfer agreement shall be for a period not exceeding 10 years, but an agreement may be renewed for subsequent terms, each not exceeding five years. LI 1547 provides the mandatory conditions that must be contained in a technology transfer agreement and the provisions which shall be deemed unenforceable. Mandatory clauses include:
• Provision of requisite training of the transferee’s personnel with an attached detailed training schedule;
• Payment of taxes on royalties by the transfer of the technology;
• Description of the technology and supporting documentation in English;
• Obligations of holder of the technology to ensure: (i) efficient performance of the technology; (ii) continuous availability of spare parts; (iii) access by the transferee of improvements and innovations; and (iv) process performance guarantees covering large project involving technical complexity;
• Confidentiality restriction on sub-licensing;
• Duration of 10 years, renewable by the parties for subsequent terms each not exceeding five years;
• Application of Ghanaian law where the technology transfer agreement is made under the GIPC Act and its regulations; and
• Amicable settlement, or where there is no settlement, the dispute may be submitted to arbitration under the following options: (i) within UNCITRAL rules; (ii) rules of any bilateral agreement; and (iii) other international dispute settlement agencies. The inclusion of provisions governing the underlisted issues in a technology transfer agreement are unenforceable under the legislative framework:
• Transfer of technology freely and easily available in Ghana;
• Restriction on volume of production and resale in transferee’s country;
• Prohibition on export to certain geographical areas apart from that agreed on by the transferor;
• Procurement of equipment and inputs from transferor or specific source unless not available otherwise;
• Compulsory employment of transferor personnel, unless considered essential, with remuneration comparable to what exists in the international market under a properly drawn up management or technical services agreement;
• Obligatory transfer of improvements to technology unless mutual or reciprocal;
• Payment for rights after their expiration, termination or invalidation;
• Restriction on use of rights after expiration of agreement;
• Restriction on judicial proceedings regarding validity of rights;
• Restriction on research and development;
• Restriction on the production of similar products as subject of technology transfer;
• Need for consent of transferor prior to modifications, except where technology is being used under a licence or trademark; and
• Obligation to sell the subject matter of a technology transfer to the transferor or persons designated by the transferor at a particular price, unless the production is solely for the benefit of the transferor, or the transferor enjoys special distribution rights or the market the item is destined for is exclusive.
Labour & Immigration
The Labour Act 2004 (Act 654) governs the rights and obligations of employers and employees, excluding the employees of security agencies and intelligence organisations. The National Labour Commission (NLC) is the administrative body responsible for the administration of the Labour Act and the settlement of labour disputes. The NLC employs negotiation, mediation and voluntary or compulsory arbitration in the exercise of its mandate. The orders of the NLC are enforceable only upon the orders of the High Court.
The labour law regulates three categories of workers: permanent, casual and temporary. The law makes it mandatory that a person who is employed for a period exceeding six months – either in a single stretch or a cumulative number of days within a year – is deemed to be permanently employed, and an employer is thus required to secure the terms and conditions by means of a contract. A person engaged on a seasonal or intermittent basis for a period of less than six months is categorised as a seasonal worker. A temporary worker on the other hand is a person who is employed continuously for a minimum of one month, but is neither a permanent nor seasonal worker. No formal contract is required in respect of temporary or casual workers, and remuneration is calculated on a daily basis. A contract of employment must contain the following mandatory provisions:
• Name of employer and employee;
• Date of first appointment;
• Job title or grade;
• Rate, method and intervals of pay;
• Hours of work;
• Compensated annual leave;
• Conditions relating to incapacity to work due to sickness or injury and the details of related remuneration;
• Details of social security or pension scheme;
• Notice period for termination for employees and employer;
• Disciplinary rules;
• Grievances or dispute procedure; and
• Overtime payment where applicable.
Termination Of Employment
The Labour Act provides the employer with the right to terminate the employment of an employee. However, the act provides the boundaries within which an employer can exercise this discretion.
A termination prescribed by the employer, except for cases related to redundancy or certain causes, is deemed fair in the following circumstances:
• By mutual agreement;
• Incompetence or lack of qualification;
• Legal restrictions prohibiting the worker from performing his or her duties; and
• The inability of the employee to carry out his or her duties due to a medical condition, sickness or an accident.
Termination is deemed to be unfair in the following circumstances, and the law puts the onus of proof of the fairness of the termination on the employer:
• Involvement by an employee in trade union activities (which will apply only to unionised workers) or seeking office as a workers’ representative;
• Victimisation as a result of a worker’s complaint;
• Race, gender, colour, ethnicity, religion, creed, social, economic or political status;
• Where the qualifications required for the position are different from what was required at the time of employment; and
• Ill treatment by an employer or failure by an employer to take action on repeated complaints of sexual harassment that compels the employee to leave his or her employment. The employer is required to provide the employee with written notice of the termination or make payment in lieu of such notice, except for proven misconduct, which could warrant a summary dismissal.
Remedies For Unfair Termination
The employee will be entitled to the following benefits upon the termination of appointment:
• Remuneration earned prior to the termination;
• Deferred salary due to the termination, if any;
• Grants and awards;
• Compensation with respect to sickness or accident; and
• Where the employee is employed under a foreign contract (i.e., a contract where the employee is recruited outside of Ghana to work in the country), the employer is also required to pay – in addition to the above – the costs incurred by the employee and his or her dependants for repatriation to his or her home country.
Ghana’s labour laws allow employees, with the exception of those responsible for policy decisions and management or performing duties that are highly confidential, to form or join trade unions of their choice for the promotion and protection of their economic and social rights. The terms and conditions of unionised workers are negotiated between the union and their employers and prescribed within a collective bargaining agreements.
Working Conditions Of Staff
Under the Factories, Offices & Shops Act 1970 (Act 328), an employer is required to provide a healthy and safe working environment and to report any accident, dangerous occurrences and industrial diseases.
Employment Of Expatriates
An application for a work permit for expatriate staff may be made directly to the Ghana Immigration Service (GIS) or through selected sector regulators. These work permits are generally short term, may be renewed and are not transferable. The number of automatic immigrant quotas allowed by the GIPC law are dependent on the capital investment made by the company. Immigrant quotas are issued by the GIPC in consultation with GIS. These quotas have an indefinite duration and can be transferred by a company to expatriate employees. The capital investment and quota prescribed by the GIPC are as follows:
• One person for capital between $50,000 and $250,000;
• Two people for capital between $250,000 and $500,000;
• Three people for capital between $500,000 and $700,000; and
• Four people for capital above $700,000.
Payment Of Pensions
Ghana operates a threetier social security system. The first two tiers are mandatory, and the third is voluntary. All businesses (employers) registered in Ghana are required to contribute to the first and second tiers irrespective of the number of employees or whether the company contributes to another scheme for its employees, locally or internationally.
Employers are required to contribute 13% and an employee contributes an amount equal to 5.5% (deducted at the source by the employer) of the employee’s basic salary to the Social Security and National Insurance Trust (SSNIT). This money is to be invested (in trust) for the employee’s pension. Of the 18.5%, the employer will remit 13.5% to the Tier-1 Basic Social Security Scheme, which is publicly managed, and the remaining 5% to a Tier-2 privately managed pension scheme, which is chosen by the employer, for investment.
Social security contributions are portable, that is they can be transferred from one social security scheme in one country to that in another country, and are to be paid in respect of both local and expatriate staff. The guidelines issued by the SSNIT exempt the following categories of expatriates from contributing to the Tier-1 scheme:
• Expatriate workers engaged on a short-term assignment; and
• Expatriate workers who contribute to a pension scheme in their home country, with evidence to be provided in the form of pay slips showing deductions to the scheme. Additionally, a non-Ghanaian member of the scheme, who satisfies SSNIT that the member is emigrating or has emigrated permanently from Ghana, shall be paid a lump-sum benefit.
Capital & Profit Transfer
Investments registered with the GIPC and the GFZB are guaranteed unconditional transfer of dividends or net profits attributable to the investment made in the enterprise, payments in servicing foreign loans, fees and charges arising from technology transfer agreements registered under the GIPC Act, and remittance of proceeds, net of all taxes and other obligations from the sale or liquidation of the enterprise or any interest attributable to the investment in the enterprise.
Ghana’s forex regime is governed by the Foreign Exchange Act 2006 (Act 723). The BoG regulates forex business and transfers between residents and non-residents. Payments to or from Ghana between residents and/or non-residents must be made through a bank. However, transfers to or from Ghana must be made through a bank, a dealer or person licensed to carry out the business of money transfers. The BoG periodically issues directives on forex transactions.
Foreign Currency Accounts
Both residents and non-residents are allowed to maintain foreign currency accounts. The foreign currency accounts may be credited with transfers in foreign currency or other foreign currency accounts. Balances are freely transferable and may be debited for payment of transfers to other foreign accounts and for the purchase of external currency.
Residents are permitted to maintain forex accounts. These accounts can be credited with forex earnings that are not converted into cedi balances. Generally, balances on these accounts can be transferred with the necessary supporting documentation. The BoG periodically issues directives on limits on forex transactions.
Pursuant to the Anti-Money Laundering Act 2008 (Act 749) the Financial Intelligence Centre has been established within the BoG to provide assistance with the identification of proceeds of unlawful activities, as well as to combat money laundering in Ghana. Banks are required under the law to apply comprehensive Know Your Customer due diligence on existing and potential clients with respect to financial transactions.
Land Acquisition, Planning & Use
The ownership of land is prescribed by the Constitution and related statutes. The legal regime distinguishes between the rights of ownership and use. The 1992 Constitution provides three categories of ownership:
• Public/vested lands: Public lands are lands that belong to the state, and vested lands are lands in which the state takes over the legal incidents of ownership, that is the right to sell, lease, etc., from the customary landowners and holds the said land in trust for the land-owning community. The landowners retain the equitable interest in the land.
These lands are managed by the Public and Vested Lands Management Division (PVLMD) of the Lands Commission;
• Stool/skin lands: These are community lands vested in a traditional council or community leaders on behalf of and in trust for the subjects of the stool, traditional leaders, in accordance with customary law and usage. Transactions in connection with these lands must receive the approval of the PVLMD to make the grant valid; and
• Private and family/clan lands: Lands owned by individuals, families and clans in the community.
Acquisition Of Titles To Land
In Ghana land can be owned by a body corporate which may have acquired its interest either from the PVLMD, a stool or a family. The terms of the transfer of interests in land that exceeds three years must be provided in a contract. It is a constitutional requirement that an interest in land cannot be granted to a non-foreigner in excess of 50 years. The use of land is subject to a number of restrictions, which are:
• Compulsory acquisition: Under the Constitution, the state has authority to compulsorily acquire the rights in land for the benefit of society. This interest is often necessary for the social and economic development of the country, and thus such an acquisition requires finding the balance between the public need for land on the one hand as opposed to the provision of land tenure security and the protection of private property rights of an individual on the other hand; and
• Disposition and development of stool lands: Where one acquires stool land, its disposition and development must be governed by customary law. The Constitution further provides that there shall be no disposition or development unless the Regional Lands Commission of the region in which the land is situated has certified that the disposition or development is consistent with the development plan of the planning authority for the area concerned.
Mitigating Land Acquisition Risks
Ghanaian law also provides for regulations that mitigate the risks related to land acquisition. They are as follows:
• The purchaser must request for all documentation on the land in order to obtain appropriate information;
• The purchaser must conduct a search at the Lands Commission to ascertain whether the vendor is the appropriate person to transfer interest in the land;
• The purchaser must conduct a search at the Collateral Registry and Company Registry if the land is owned by a company to ascertain if any charges have been created on the land;
• The purchaser must conduct a search at the Town and Country Planning Department or the local authority to ascertain the suitability of the land for the purpose for which it is being acquired;
• The purchaser must visit the land to ascertain if there are any physical encumbrances on the land that would affect the purchase; and
• The terms for payment must be structured to ensure that the ownership of land is confirmed before any payment is made.
Land Use & Spatial Planning
Under the recently passed Land Use and Spatial Planning Act 2016 (Act 925) the Land Use and Spatial Planning Authority has been established to oversee the sustainable development of land and human settlements through a decentralised planning system and to ensure the judicious use of land. The act regulates the use or development of any land in Ghana, which must conform to a zoning scheme approved by a local planning authority where the land is situated. It also introduces land use concepts such as the development permits for various types of physical developments, change of use authentication and land use certificates.
Loan & Security Transactions
Under Ghana law moveable and immoveable property can be used as security for a loan transaction. The use of land as security is reflected by the Mortgages Law, Land Law and Company’s Act, under which the security is created by a company. Moveables including receivables, shares and securities may be used as security for transactions by the creation of fixed or floating charges in respect of the identified security. To assess whether a proposed security is free of liens and can be used as security for a transaction, searches must be conducted on the property at the Companies Registry and the Collateral Registry of the BoG and at the Lands Registry in respect of landed property.
The Public Procurement Act 2003 (Act 663), as amended by the Public Procurement (Amendment) Act 2016 (Act 914), was passed as an integral part of Ghana’s public finance management good governance reforms and in order to instil propriety and accountability in public sector financial management and expenditure. The law regulates the procurement of goods, works and services financed in whole or in part from public funds and the disposal of government stores. Additionally, all government agencies, institutions and establishments in which the government has a majority interest are mandated to comply with the law. Under the law, foreign firms competing to be awarded non-emergency consultancy assignments are required to include local experts and firms in their teams.
The application of the law is, however, subject to two key exceptions. The first is the power vested in the minister of finance to direct the use of a different procurement procedure where the minister determines that it is in the national interest to do so. Where the minister makes such a determination the procurement method shall be published in the Gazette. The second exception is in respect of the procurement of goods, works and services financed by loans taken or guaranteed by the state, or aid granted under an international agreement that prescribes the procurement procedures to be employed.
Public Financial Management
Parliament has recently passed the Public Financial Management Act 2016 (Act 921) which seeks to strengthen the public financial management systems to ensure fiscal discipline and the effective and efficient use of public resources for the delivery of improved public services. Additionally, the law seeks to promote discipline, transparency and accountability in the management of public funds and property of the government and how to deal with the management of public debt.
Investment opportunities in Ghana may include some direct government involvement. Government, therefore, remains a critical party to most foreign investment arrangements in Ghana. The country’s 1992 Constitution provides that “international business or economic transactions to which the government is a party shall, with necessary modification by Parliament, apply to an international business or economic transaction to which the government is a party as it applies to a loan”, that is loan agreements require the approval of Parliament.
One of the pertinent concerns of investors is the nature of the ultimate approval required for the validity and enforceability of such agreements. Increasingly, the concern has become more pervasive since the decision of the Supreme Court of Ghana in the cases of: Attorney General v Balkan Energy Ghana Ltd, Balkan Energy LL and Philip David Elders; Martin Alamisi Amidu v Attorney General, Waterville Holding (BVI) Ltd, and Alfred Agbesi Woyome; and Martin Alamisi v Attorney General, Isofoton S.A and Anane-Agyei Forson. In all the above cases, agreements executed between a private party and the government were held to be invalid and unenforceable as they were not approved by Parliament as required by the 1992 Constitution and other laws of Ghana. From the various decisions of the Supreme Court, the following agreements may qualify as international transactions:
• Agreement for business transactions between a foreign or non-resident company and the government of Ghana;
• Agreement for business transactions between a resident company (incorporated in Ghana) and the government of Ghana where the shareholders are non-Ghanaian; and
• Project agreements which fall under the above for which the funding or loan agreement has been approved by Parliament. The Supreme Court, in the Balkan case, ruled that issues to be taken into account may include: (i) source of funding originating outside Ghana; (ii) jurisdiction of the originator of the project is not Ghana; (iii) jurisdiction of the project sponsor is not Ghana; (iv) individuals negotiating with the government are foreign nationals; (v) the place of management of the project company is outside Ghana; and (vi) international arbitration clauses included in the agreement.
There are a number of exemptions applicable. For example, where the agreement is regarded as “minor”, parliamentary approval may be dispensed with. The determination of what is minor will be determined on a case-by-case basis by reference to the attorney general’s opinion.
Generally, businesses have access to courts for the settlement of their disputes. Furthermore, specialised commercial, industrial and land courts have been set up to handle commercial, industrial and land disputes. The processes adopted by these courts facilitate the expedited determination of suits. The GIPC Act 2013 (Act 865) makes provision for an amicable settlement of a dispute that may arise between an investor and the government in respect of investment company business.
Ppps & Infrastructure Development
The Public Private Partnership (PPP) Bill, which seeks to create an environment that enables private entities to participate in partnership projects and offer value for money to the public sector, is currently before Parliament. When passed into law, it will promote private sector participation in the economic development of the country through PPP arrangements and foster the use of private sector resources for the provision of public infrastructure and services.
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