The Ongoing Debate on Stated Capital Requirements
Although Ghana has made substantial progress in attracting foreign investment, the fees imposed by the Office of the Registrar of Companies (ORC), the country’s business registration authority, remain a contentious issue.
Despite the recent declaration by Yofi Grant of the Ghana Investment Promotion Centre (GIPC) in July 2024 that the minimum capital requirements would be eliminated, thereby eliminating the requirement for foreign businesses to arrive in Ghana with proof of a minimum of $200,000, the elimination has not yet taken place, and ORC continues to collect a 1% fee on stated capital, which remains a barrier to entry for many international investors. The GIPC Bill has recently prompted discussions that have brought this issue to the forefront. ORC has clarified that the current fees will remain in effect until the bill is signed into law, despite the fact that the bill suggests eliminating the minimum capital requirements. This inconsistency has resulted in investor perplexity and has prompted inquiries regarding the government’s dedication to fostering a business-friendly environment.
The Influence on Foreign Investment
The requirement to pay a 1% fee on stated capital, which is equivalent to US$2,000 or GH¢31,000 plus associated fees (see attached example), at ORC can be substantial for both minor and large-scale investments. This can discourage foreign investors from establishing operations in Ghana. The $2,000 1% stated capital charge by ORC is applicable to joint ventures, while a $5000 upfront fee is required for a wholly foreign company. The Fees and Charges Act has authorized the 1% that ORC collects on the stated capital; therefore, it is not arbitrarily determined. However, the present GIPC law has not been repealed, and as a result, GIPC will be mandating that companies enter the country with a minimum of US$200,000, with ORC taking 1%.
Seven out of ten international clients who contact my firm and are informed about the market entry requirements opt not to enter the Ghanaian market. Particularly when the cost of online company registration in the United States is less than $20 and in the United Kingdom it is less than 20 pounds.
The country is currently endeavoring to attract more international capital and create employment, and the high fees that are presently in place at GIPC and ORC until the GIPC bill is passed, add an unnecessary financial burden. Additionally, the government’s inconsistent messaging has the potential to undermine investor confidence and impede the country’s economic expansion.
The Importance of Consistency and Clarity In order to resolve this matter, it is essential for the government to offer explicit direction regarding the future of ORC’s payments.
The swift passage of the GIPC Bill, which would eradicate the requirement for a 1% fee on stated capital, would send a strong signal to foreign investors that Ghana is dedicated to establishing a favorable business environment. Additionally, it is imperative that ORC evaluate its fee structure and devise strategies to alleviate the financial burden on foreign enterprises. In doing so, the government can enhance Ghana’s appeal as an investment destination and promote economic expansion. In conclusion, the ongoing accumulation of a 1% fee on stated capital by ORC remains a barrier to foreign investment in Ghana, despite the positive step of eliminating minimum capital requirements. In order to completely capitalize on the advantages of this policy change, the government must rectify this inconsistency and establish a more favorable business environment for international investors.
For the sake of clarification, the ORC does not employ an exchange rate of US$1.00 to Ghc1.00 to determine the amount of stated capital (1% of US$200.000). Consequently, the minimum stated capital and all other associated fees at the ORC are 31000 ghc.
If this onerous requirement were not in place, we would have a 1000% increase in the number of foreign enterprises that would be able to bring jobs to Ghanaians. It is anticipated that Gipc will resolve this matter upon the bill’s passage.
