Subsidiaries in Ghana

The facets like skilled labor, political stability, developed infrastructure, large resource pool, large consumer base, and different investor support schemes attract foreign companies to start and develop their businesses in Ghana. World Bank Ghana’s economy ranks the country as 75th globally in terms of Gross Domestic Product (GDP) for 2021, making it the 8th biggest economy in Africa.

Establishing a subsidiary in Ghana assists companies in building their presence in the country and acquiring the optimum advantages of their developing economy. It is one of the most accessible, uncomplicated, and cost-effective approaches to entering the Ghanaian market. Also, it needs relatively less paperwork and compliance.

The below guide explains all the critical information you should know before setting up a subsidiary in Ghana.

What are the Types of Subsidiaries in Ghana?

The below section explores the different subsidiary types you must know before setting up a subsidiary system in Ghana.

Companies Limited by Shares

• In this form of subsidiary business in Ghana, the shareholders’ liability is limited.
• The shareholder’s assets are protected, which will help when the company experiences liquidation. If liquidation happens, the shareholders will only lose the capital they have invested in the company.
• A company limited by shares can be private or public.
• Mostly, a private limited company is suitable for small companies.
• -At least two individuals signifying the company’s directors and at least an individual signifying a shareholder in the entity are required to register this form of the subsidiary. 

Companies Limited by Guarantee

• Permissible by Act 992, the companies limited by guarantee don’t have a shareholder or shares.
• The members commonly acknowledged as guarantors won’t have any profit distributed to them if a non-profit organization is registered under this subsidiary form.
• This form of subsidiary business in Ghana best outfits non-profit organizations that need a legal personality.
• The members’ liability is limited to a specific amount because they may contribute to the company’s assets in the event of liquidation. 

Company Unlimited by Shares

• In this form of subsidiary business in Ghana, the liability of the members has no limit concerning liabilities sustained by the company.
• The members own unlimited personal liability.
• If the company can’t meet its liabilities, creditors can assign the personal assets of the members to satisfy outstanding debts owed to them.

Incorporated Partnership

• At least two and at most twenty people can register an incorporated partnership. 
• This type of subsidiary business in Ghana doesn’t protect the members’ assets.
• The association members are partners, and the corresponding terms and conditions should be acknowledged in a Partnership Agreement.

Wholly Foreign Owned Company

• For a non-Ghanian citizen’s incorporation of a wholly owned subsidiary in Ghana, the minimum capital must be USD 500,000.

Joint Venture Company with Ghanaian Citizen

• In a joint venture company between a non-Ghanaian and a Ghanaian, the non-Ghanaian shareholder(s) should contribute USD 200,000 to the specified capital of the company.
• The GIPC Act 2013 stipulates that in a joint venture company, the Ghanaian citizen can’t hold less than 10% of the company’s equity.

How to Set Up a Subsidiary in Ghana?

The steps below will help with establishing a subsidiary company in Ghana and eliminate your confusion on how to register a subsidiary company in Ghana.

Step 1: Select a company name

• Companies should begin the registration process by determining the company name.
• Check with the Registrar General Department (RGD) whether their chosen business name is available. If the proposed name is already taken or quite similar to any existing corporation’s name, the company must choose a different name.

Step 2: Prepare the necessary documents

The foreign company must issue Powers of Attorney (POA) to its local authorized agent for registering the subsidiary system in Ghana.

Prepare articles of association and memorandum. The articles of association must specify the following details:

• Company objectives
• Subsidiary’s name and address
• Name of the beneficiaries and shareholders
• Shareholders’ contribution to the capital
• Internal regulations
• Details about the shares and their relevant rights

Step 3: Appoint directors and deposit capital

• Appoint a minimum of one shareholder and one director for the subsidiary. They can be companies or individuals.
• Prepare for a bank account and a lease. File for registration, pay the initial capital, and sign the corporate documents. 

Step 4: Register for VAT

• To register for VAT, you must obtain a TIN, fill VAT registration form, and attach copies of Business Registration documents.
• Now send the registration forms to the nearest Domestic Tax Revenue Division office. 

Step 5: Company registration

• Register with the Registrar General Department (RGD). Entity Registration form is required to be presented for company registration. 

Step 6: Business bank account

• Open a bank account for your subsidiary in Ghana.
• Depending on your subsidiary type, deposit the minimum share capital in the bank account.

Step 7: Register for TIN

• The Ghana Revenue Authority will give you the Tax Identification Number (TIN).
• You must keep several documents ready for registration with the tax authority. These documents include a TIN form, a Certificate of Incorporation, a Certificate to commence business and a Company’s Regulation, and a colored copy of a National ID card. 

Step 8: Register for Social Security

• Register your business with the Social Security and National Insurance Trust (SSNIT).
• A list of employees, their corresponding salaries, the certificate to commence business, and the company certificate of incorporation are some required documents.

Step 9: Obtain license and permits

• Fill out the Business Operating Permit application form and submit it to the Revenue Mobilization Officer (RMO) at your District Assembly’s office.

Step 9: Conduct general meetings

• Organize general meetings of the supervisory board or the shareholders to establish a board of directors. Subsequently, you can start your subsidiary business in Ghana. 

Benefits of Setting Up a Ghana Subsidiary

The benefits of a subsidiary company in Ghana indicate how worthwhile it is. Here are the exceptional benefits of setting up a subsidiary in Ghana.

• The incorporation of a foreign subsidiary in Ghana lets a company contract in its name. It restricts the liability of the company’s shareholders and directors and guarantees the continuity of the company in the situations of the demise or liquidation of a shareholder.
• Several foreign subsidiaries in Ghana function more like a branch of the parent company rather than independent businesses. So, the incorporation of a foreign subsidiary in Ghana maintains the company’s operations consistent across borders.
• The subsidiary business in Ghana combines institutional knowledge and resources to accelerate product development.
• One of the key benefits of a subsidiary company in Ghana is it facilitates better deals with suppliers by integrating the parent company’s purchasing power and the subsidiary.
• It integrates IT and financial systems to decrease costs.
• It assists large businesses in decreasing costs by growing their resource pool.

Documents to Prepare When Opening a Subsidiary in Ghana

Companies willing to start a subsidiary business in Ghana must prepare the following documents:

• Memorandum and Articles of Association
• Certificate of incorporation stipulating that the subsidiary is legally incorporated in Ghana.
• Certificate of Registration
• Investor Registration Forms
• Application form for subsidiary’s incorporation
• The company name’s consultation certificate
• Identification documents (ID card or passport) of the shareholders, directors, company secretary, and legal and judicial representative.
• Tax Identification Number (TIN) form
• Evidence of enrollment in Social Security
• Bank certificate for proof of deposit of capital
• Proof of residence for the company partners/administrator
• Complete identification of the subscribers (whether individuals or corporate body)
• A statement stipulating that the partners are not banned by law or by opinion from establishing a company
• Tax Clearance Certificate from the Ghana Revenue Authority (GRA)
• Copies of the local managers’ or directors’ valid ID (Voter’s ID, driver’s license, passport)
• A prescribed Form C from the in-house bank
• Subsidiary Name Registration Certificate
• Business Operating Permit application form
• An application for exemption of VAT, import duties, or excise duties on equipment/plant/parts
• Signatures of the authorized company representatives
• Consent letter from an auditor who is certified by the Institute of Chartered Auditor and should be registered as a partnership or sole proprietorship.
• Evidence of residence of authorized signatories
• Two passport-size photographs of signatories

What Business Forms can Ghana Subsidiaries Take?

In Ghana, subsidiaries can assume one of the following standard subsidiary forms:

•   Limited liability companies
•   Unlimited companies

The company can choose the most suitable subsidiary form according to the requirements and business objectives.

Ghana Subsidiary Laws

Companies intending to establish a subsidiary business in Ghana must consider the below laws:

• According to the business type, the subsidiary may acquire licenses and permits from the corresponding authorities in Ghana.
• Before establishing a subsidiary business in Ghana, the company must have a registered office wherein formal communication can be obtained and legal documents can be delivered.
• Within 28 days of receiving the certificate of incorporation, the company should complete and send a statement of company particulars, shareholding (Form 3), and a declaration of receipt of payment for (Form 4) to the Registrar of Companies.
• All companies with partial or complete foreign ownership must register with the Ghana Investment Promotion Centre (GIPC).
• According to GIPC Act 2013, in any joint venture company registered with a Ghanaian citizen, the Ghanaian citizen can’t hold below 10% of the company’s equity.
• A company wholly owned by a non-Ghanaian citizen should own a minimum capital of USD 500,000.

Post-Incorporation Compliance

The checklist for incorporation of foreign subsidiary in Ghana involves the following aspects:

• Get the business certificate of commencement within 180 days of starting a subsidiary business in Ghana.
• Get the unique company number and incorporation certificate as supplied by the Registrar of Companies.
• You should establish the company’s registered office within 30 days of the subsidiary’s incorporation. The corresponding office address will allow all formal communication from different authorities [according to Section 12(1)].
• After establishing your Ghana subsidiary, you should manage banking principles, payroll withholdings, local tax laws, and employment requirements.
• The shareholder must get a share certificate within 60 days of the subsidiary’s incorporation date.
• The registered companies in Ghana should send their annual returns to the Registrar at the Ghana Business Registry within 42 days of the subsidiary’s incorporation.
• The BOD will appoint the first auditor of the company within 30 days of the subsidiary’s incorporation. Specifically, the first auditor will oversee the office administration until the first AGM (Annual General Meeting) continues.
• The company must file form INC-20A within 180 days of incorporation of subsidiary business in Ghana. But, the company can’t start its business operations until the commencement announcement is filed with the ROC [according to the provisions of the Companies Act, 2013].
• Before making national pension contributions on an employee’s behalf, the employer should register their employees with the Social Security and National Insurance Trust scheme.

Taxes on Subsidiaries in Ghana

A subsidiary system in Ghana is subject to the following taxes:

Tax Incentives for Businesses Setting Up a Subsidiary in Ghana

It is essential to consider tax incentives while focusing on the incorporation of a foreign subsidiary in Ghana. Your subsidiary business in Ghana can benefit from the following tax incentives, irrespective of the business sector:

The Ghana Investment Promotion Centre (GIPC) Act and other relevant legislations provide a complete package of incentives for inbound investment. These incentives are provided to businesses undertaking manufacturing activities in Ghana.

• The eligibility criteria set for the tax incentives are location-specific, industry-specific, and product specific.
• There is an exemption related to the taxation of foreign subsidiaries in Ghana on excise duties or import duties for plant, parts, equipment, or machinery [according to the GIPC Act 2013(Act 865)].
• An approved Real Estate Investment Trust’s income is exempted from tax.
• Companies involved in the export of non-traditional products (like horticultural products, processed and raw agricultural products cultivated in Ghana, etc.) get a concessionary tax rate of 8%.
• Certain sector-specific businesses pay a 1% tax during their tax holidays and are delegated to pay the original tax rates after the tax holidays expire. These businesses are agro-processing, tree crop farming, cocoa-by-product, cattle farming, cash crops or livestock, rural banks, waste processing, and real estate.
• Manufacturing companies in all regional capitals except Accra and Tema benefit from an 18.75% corporate income tax incentive.
• Manufacturing companies located outside regional capitals benefit from a 12.50% corporate income tax incentive. 

Other Important Considerations

Along with the checklist for incorporation of a foreign subsidiary in Ghana, you should also consider a few other significant considerations, as mentioned below.

• The completed forms, the registration fee, and the capital duty imposed at 0.5% of the company’s stated share capital should be submitted to the Registrar of Companies. If the Registrar approves all the submitted documents, it will issue the company a certificate to commence business.
• A company is officially registered only after the Registrar of Companies grants a certificate of incorporation.
• No fees or salaries may be paid to any director except with the consent of the Registrar of Companies.
• Those businesses owned solely by Ghanaians without foreign ownership don’t have to register with the GIPC.
• Make sure to be acquainted with your business activities and the purposes of registering before commencing the process of subsidiary company formation in Ghana.
• The subsidiary incorporation process must be trustworthy and accurate. Any errors can lead to penalties, fines, and extra setup time.
• To establish a subsidiary system in Ghana, you should consider residence permits, registration with the federal tax administration, and registration for any licenses (if needed). 

How Can Multiplier’s Employer of Record Help You Hire & Expand in Ghana?

It is crucial to devote adequate time and investment to grow your business in a foreign country. Also, it requires considerable time and effort to conform to a country’s labor rules and industry standards. You can obtain the optimum benefits from the services from a third-party service company like Multiplier to set up a subsidiary system in Ghana.

Multiplier oversees various aspects, from recruiting talented employees to payroll processing, when developing the business in a foreign country. It discards the need to set up a subsidiary. Furthermore, Multiplier assists you in recruiting local and global talent when assuring compliance with Ghana’s regulations and labor laws.