Corporate forms in Ghana
•Corporate environment is made up of registered companies, statutorycorporations, sole proprietorships, incorporated private partnerships,cooperatives and incorporated trusts.
•Each is established and governed by separate legislation.
•Incorporated companies are registered under the provisions of theCompanies Act, 1963 (Act 179);
•Statutory corporations are established under the Statutory Corporations Act,1964 (Act 232);
•Sole proprietorships are registered under the Registration of BusinessNames Act, 1962 (Act 151);
• Incorporated partnerships are established pursuant to theIncorporated Private Partnership Act, 1962 (Act 152);
• Incorporated trusts are established pursuant to the Trustee(Incorporation) Act, 1962 (Act 106).
Statutory Corperations
•Statutory Corporation Act, 1964 (Act 232).
•This law places the establishment and dissolution of a statutorycorporation not in the hands of the Registrar General, but thePresident by way of Legislative Instrument.
• In 1993 a number of statutory corporations including the now ADBBank, Bank for Housing and Construction, GCB Bank, SIC wereconverted into companies registered under Act 179.
•Government thus only retained shares in the companies.
•Upon being established under the Statutory Corporation Act, it isclothed with a perpetual succession and a common seal.
•It may sue and be sued in its own name.
•Has the power for any purposes which in the opinion of its governingbody is necessary for the proper exercise of its functions.
•Can acquire and hold any property, and enter into any transaction.
SOLE PROPRIETORSHIPS
•One typically registers a business and carries on business as the onlyowner, bearing all of the benefits, liabilities and debts, if any.
•Registration of Business Names Act, 1962 (Act 151) requires everybusiness name, other than a business operating under the truepersonal name or surname or initials of the proprietor, to beregistered.
•The name must not be misleading
•Applicant must be at least 21 years old.
•The registration is valid for a year and must be renewed annually elseit lapses.
•No perpetual succession
•The Act only protects the exclusive use and right of the personregistering the business name.
•Means unlike incorporated companies, one’s personal liability in soleproprietorship is not distinct from the business liability.
•Consequently all of one’s personal and business assets may beattached to satisfy any liability or debt of that person.
•In other words, the health and life of a sole proprietorship isinevitably linked to the health and life of the sole proprietor himself.
INCORPORATED TRUSTS
•Trustees of an unincorporated voluntary association of persons or bodyestablished for any religious, educational, literary, scientific, sports, socialor charitable purpose may be incorporated as a body corporate under theprovisions of the Trustee (Incorporation) Act, 1962 (Act 106).
•In the case of the incorporation of a sole trustee, body corporate includes acorporation sole.
•The trustees shall apply, in a prescribed form to the Minister, and not theRegistrar, for a Certificate of Incorporation as a body corporate.
•A Certificate of Incorporation is conclusive evidence of the date of incorporation and of the factthat all preliminary requisitions required in respect of incorporation have been complied with.
•The Minister may accordingly grant a certificate having regard to the extent, nature, and object orother circumstance of such body or association.
•Minister may insert into the certificate such conditions or directions as he thinks fit.
•These are binding on the trustees and they are bound to perform or observe them as trusts of thebody or association.
•Where they do not comply or activities are contrary to public order or morality, Minister mayapply to the High Court for the cancellation of the certificate.
•Upon the grant of the Certificate of Incorporation, the trusteesbecome a body corporate.
•Can therefore sue and be sued
•Has the effect of vesting in the body corporate all lands of whatevernature and tenure belonging to, or held in trust for the benefit of theassociation.
•Means they can hold, acquire, or demise any land belonging to orheld for the benefit of the association, or held for the benefit of thatbody in the same manner as the association, in accordance with theconditions and directions contained in the said Certificate.
•Therefore every donation, gift, and disposition of land lawfully madeby deed or will in favour of the association, or the trustees, takeseffect as if the same had been made to, or in favour of the corporatebody.
INCORPORATED PRIVATEPARTNERSHIPS
•An association of between 2 and 20 individuals carrying on businessjointly for the purpose of making profits.
•Generally, the sharing of net profits of a business is a prima facieevidence of a partnership.
•But the remuneration of a servant or agent of a person engaged inbusiness by a share of profits of the business does not of itself makethe servant or agent a partner.
•Similarly, a person is not considered to be a partner if it is shown thathe did not participate in the carrying on of the business and was notauthorized to do so.
•Furthermore, family ownership or co-ownership of property does notin itself create a partnership whether or not the family or co-ownersshare any profits made by the use of that property.
•Only registration under the Incorporated Private Partnership Act,1962 (Act 152) creates a partnership.
• the following are therefore not partnerships:
•An association of members of a company, body corporate, orunincorporated association formed under any other enactment.
•An association of members of a body corporate formed in accordancewith the law of any foreign country whether or not carrying onbusiness in Ghana is not a partnership.
•An association of members of a joint venture without a firm name forone or more specific operations is not a partnership.
•Every partnership must be duly registered with the RG.
•Partnerships operating before the coming into force of Act 152 havethree (3) months grace period after which they are required toregister.
•To register, one must deliver to the RG:
•a copy of the partnership agreement
•a statement in a prescribed form signed by all the partners which, amongothers, contains:
•the firm name of the partnership;
•the general nature of the business;
•The address and Post Office Box number of both the principal and other places ofbusiness of the partnership;
•The names including any former names, residential addresses and businessoccupations of the partners;
•The date of commencement of the partnership
•Registration of a partnership confers a corporate status.
•However, each partner is personally liable for all the debts andliabilities of the partnership.
•The property and rights of the partnership vest in its members orpartners. So on change in membership the partnership assets must betransferred to the new members.
Exercise
•Daniel trades in ATM cards as a sole proprietor. His business isgrowing and he has decided to incorporate a limited liabilitycompany/company limited by shares to take over his business.
•He has approached you for advice particularly regarding theadvantages and disadvantages of a limited liability company.
•Advice him