Efforts to revive Ghana's corporate governance landscape

The new Companies Act promotes prudence in management, effective boardroom practice and shareholder activism. The timing of this new law is ideal as 2018 saw a string of collapsed banks, many of which experienced a breakdown in their corporate governance regime. For the first time in Ghana’s corporate governance history, an Office of the Registrar of Companies (RoC) will be established, with an insolvency division dedicated solely to the registration and administration of companies.

Companies Act 2019

The act abolishes the ultra vires rule, enabling a company to set up operations without stating company objects at the incorporation stage – save for mandatory circumstances – in consonance with the dictates of a specific industry law. To ensure that directors adhere to the rules, and that the interests of shareholders are protected, section 145 of the law provides (with very limited exceptions) that a company cannot enter into major transactions unless already approved by either a special resolution (75% of shareholding) or contingent on an approval by special resolution. Furthermore, as a remedy for oppressed or dissenting shareholders, minority shareholders who are opposed and outvoted on a major transaction, company strategy or direction can, as an exit option, sell their shares to the company. A mandatory rotation is required for company auditors after a six-year period and there is a possibility for re-appointment only after a six-year cooling period.

Corporate Insolvency Bill 2019

When enacted, the Corporate Insolvency Bill will serve as a buttress to the Companies Act 2019 with respect to distressed and insolvent companies. With the inclusion of minimum qualifying criteria for insolvency practitioners, the new law will provide for the effective restructuring of distressed companies, and for the efficient, judicious and impartial proceedings for insolvent companies. Insolvency options envisaged under the bill are administration, receivership and liquidation, with the RoC named as the official liquidator. It is envisaged that the new OBG would like to thank B&P Associates for its contribution to THE REPORT Ghana 2020 law will repeal the existing Bodies, Corporate (Official Liquidation) Act 1963. However, existing regulations, notices, directions and any other acts performed thereunder shall remain in force.

Bank Governance Directive of 2018

The 2018 directive was issued in accordance with the Banks and Specialised Deposit-Taking Institutions Act 2016 to promote and restore public trust and confidence in the banking industry. Bank obligations range from submission of a thorough due diligence report on each candidate for directorship prior to appointment, to a detailed succession plan for the managing director.

Payment Systems & Services Act 2019

With the rapid increase in mobile money interoperability transactions, the enactment of the new payments systems law can be placed within the context of an urgent need to regulate and promote an all-inclusive, safe, sound and formal financial sector. The act applies to banks, specialised deposit-taking institutions, dedicated electronic money issuers, payment service providers, affiliates of banks, specialised deposit-taking institutions and financial holding companies, agents of banks, and dedicated electronic money issuers.

The prerequisite for the grant of a payment service licence is a 30% equity participation of a Ghanaian company or person. Such a licence is not to be transferred without the written approval of the Bank of Ghana.

African Continental Free Trade Area (AFCFTA)

The AfCFTA is the most important legal development in relation to regional trade and investment. The ratification of the AfCFTA presents investors with a guaranteed market of 1.2bn people, with a combined GDP of $3.4trn. It is reported to be the world’s largest free trade area since the formation of the World Trade Organisation. Ghana occupies a leading role, having been named the AfCFTA Secretariat in 2019.