What are the different Company Structures in Ghana?

When a person develops a business idea, one of the primary questions is, “What vehicle should I employ to drive this idea?” Most people resolve to create a company; however, there also remains the question of what company structure to employ since the law allows for different types of companies to be created. In this article, we answer the question, “What are the different company structures in Ghana?”. 

Why Incorporate in Ghana?

Incorporating your company in Ghana has several benefits, general and particular, including:

1. Access to the Ghanaian market and economy.
2. Legal personality: Incorporating a company in Ghana gives it a legal identity, which can enter into contracts, sue or be sued, and own property. The company is recognised by law as a person of its own.
3. Access to capital: Incorporated companies tend to access capital more easily, by issuing shares or taking out loans to finance growth and expansion.
4. Limited liability: Incorporation can limit the personal liability of owners and shareholders, protecting their personal assets if the company incurs debt or is sued.
5. Tax benefits: Incorporated companies can take advantage of tax incentives and deductions the Ghanaian government offers, reducing their tax liability.
6. Improved credibility: Incorporation can enhance the credibility of a business, making it more attractive to potential customers, employees, and investors.
7. Ease of transfer of ownership: Incorporation makes it easier to transfer ownership of the company by selling shares or transferring them to a new owner.
8. Easier to attract foreign investment: Incorporated companies are seen as more stable and credible, making it easier to attract foreign investment and expand globally.
9. Compliance with regulations: Incorporation ensures compliance with local regulations, reducing the risk of legal consequences for non-compliance.
10. Better record-keeping: Incorporation requires companies to keep proper records, which can improve accountability and help in making informed business decisions.

What are the different Company Structures in Ghana?

Three main types of companies may be established in Ghana. These are:

• Company limited by shares: This type of business structure combines the characteristics of a partnership and a corporation. The liability of owners is limited to the amount of their investment in the company. This may be a private or public limited company. A private limited company is a type of business structure that offers limited liability protection to owners and restricts the transfer of ownership through the sale of shares. A public limited company, on the other hand, is a type of business structure that is allowed to offer shares to the public and is therefore required to comply with more stringent regulatory requirements.

• Company limited by guarantee: A corporation without share capital is known as a company limited by guarantee. It is a not-for-profit organization, so making money cannot be one of its goals. Instead of a board of directors, the corporation has an executive council, whose members are frequently referred to as “guarantors.” These kinds of businesses are typically utilized to shield their executives and members from personal liability that exceeds the amount they agreed to put toward the assets of the business in the event of its liquidation.

• Foreign Company: A foreign company is a company that is registered in another country but operates in Ghana. It can either be a branch office or a subsidiary of the foreign parent company.

Aside from these general types of Ghanaian company structures, some other variants of companies that may be created include:

Locally Owned Ghanaian Company

A Locally Owned Ghanaian Company is a type of company structure where the ownership and management of the company is based in Ghana. The majority of the shareholders and directors of the company must be Ghanaian citizens.

Some of the key benefits of a Locally Owned Ghanaian Company include:

1.      Access to government incentives: Locally Owned Ghanaian Companies may be eligible for various government incentives and tax benefits to promote local entrepreneurship and business growth.

2.      Better understanding of the local market: With local ownership and management, a Locally Owned Ghanaian Company is better positioned to understand the local market, cultural norms, and consumer preferences, giving it a competitive advantage.

3.      Stronger ties with local communities: Being locally owned and operated, a Locally Owned Ghanaian Company may have stronger ties with the local community, improving its reputation and credibility.

4.      Better alignment with government policies: A Locally Owned Ghanaian Company is more likely to align with government policies aimed at promoting local entrepreneurship and economic growth.

5.      Support from local networks: With local ownership, a Locally Owned Ghanaian Company may have access to a wider network of local suppliers, customers, and business partners, which can help it grow and succeed.

GIPC Non-trading company

A GIPC Non-Trading Company is a type of company structure in Ghana registered with the Ghana Investment Promotion Centre (GIPC). The main purpose of a GIPC Non-Trading Company is to hold assets or intellectual property, such as trademarks, patents, or copyrights, rather than engage in commercial activities.

Some of the key benefits of a GIPC Non-Trading Company include:

1.      Protecting intellectual property: A GIPC Non-Trading Company can be used to hold and protect intellectual property, reducing the risk of theft or infringement.

2.      Lower costs: As a GIPC Non-Trading Company does not engage in commercial activities, it is typically subject to lower costs, such as lower registration fees, taxes, and ongoing compliance costs.

3.      Simplified compliance: A GIPC Non-Trading Company is subject to less stringent regulatory requirements, making it easier to comply with legal and tax obligations.

4.      Flexibility: A GIPC Non-Trading Company can be used to hold assets in a flexible manner, allowing owners to transfer or sell their assets as needed.

5.      Confidentiality: A GIPC Non-Trading Company can provide a degree of confidentiality, as its assets are not publicly disclosed.

However, it’s important to note that the GIPC Non-Trading Company may still be subject to restrictions, such as requirements for a minimum number of local directors and shareholders, and limitations on the use of its intellectual property.

GIPC trading company

A GIPC Trading Company is a type of company structure in Ghana registered with the Ghana Investment Promotion Centre (GIPC). The main purpose of a GIPC Trading Company is to engage in commercial activities, such as buying, selling, or importing goods or services.

Some of the key benefits of a GIPC Trading Company include:

1.      Access to government incentives: GIPC Trading Companies may be eligible for various government incentives and tax benefits to promote foreign investment and business growth in Ghana.

2.      Simplified compliance: As a registered company with the GIPC, a Trading Company may have access to streamlined compliance procedures, reducing the time and cost of complying with regulatory requirements.

3.      Attraction of foreign investment: A GIPC Trading Company can attract foreign investment, as it provides stability and credibility for investors.

4.      Improved access to markets: A GIPC Trading Company can be used to expand into new markets in Ghana and beyond, improving the reach and competitiveness of the business.

5.      Protection of intellectual property: A GIPC Trading Company can be used to hold and protect intellectual property, reducing the risk of theft or infringement.

However, it’s important to note that a GIPC Trading Company may be subject to restrictions, such as requirements for a minimum number of local directors and shareholders, and limitations on the use of its intellectual property.

GIPC joint venture

A GIPC Joint Venture is a type of company structure in Ghana registered with the Ghana Investment Promotion Centre (GIPC). A GIPC Joint Venture is a partnership between two or more companies, where each partner contributes resources, such as capital, expertise, or technology, to a common commercial enterprise.

Some of the key benefits of a GIPC Joint Venture include:

1.  Shared risk: By pooling resources, a Joint Venture can reduce the risks associated with starting a new business, as each partner shares in the potential costs and benefits.

2.  Access to complementary expertise: A Joint Venture can bring together partners with different skills and experience, improving the enterprise’s chances of success and competitiveness.

3.    Improved access to markets: A Joint Venture can be used to expand into new markets, improving the reach and competitiveness of the business.

4.  Access to government incentives: As a registered company with the GIPC, a Joint Venture may be eligible for various government incentives and tax benefits to promote foreign investment and business growth in Ghana.

5.    Pooled capital: By pooling capital, a Joint Venture can have greater resources to invest in its business, improving its chances of success and competitiveness.

However, it is important to note that a Joint Venture may also bring challenges, such as disagreements between partners over strategy, decision-making, and the distribution of profits. Therefore, it is essential to have a clear and detailed agreement between the partners to manage these risks and ensure a successful outcome.

Incorporating any of the different company structures in Ghana remains one of the most efficient ways of doing business in the Ghanaian market. If you need help incorporating your business in Ghana, Norebase helps you set up a structure that is beneficial, especially as a non-resident of Ghana. Click here to learn more.