Parliament passes Companies Bill; State Interest and Governance Accountability Law

Parliament on Thursday evening passed the new Companies Bill, 2018, which replaces the Companies Act of 1963, to deal exclusively with company registration and regulation in the country.

The amendment to the Bill would establish a new Office of the Registrar of Companies out of the existing Registrar-General’s Department.

The Bill, a 428-page document, with 368 clauses, was laid before the House by Ms Gloria Akufo, the Attorney General and Minister of Justice on July 9, 2018, to create a new office to perform functions relating to incorporated partnerships and registered business names.

This new office will be responsible for the appointment of inspectors and will assume the functions of the Official Liquidator under the Bodies Corporate (Official Liquidations) Act 1963.

It will further undertake public education programmes on the operations of companies.

As part of the transitional arrangements, the office is to assume the status of a category III subvented agency under the Subvented Agency Act, 2006 (Act 706) and operate under the Ministry of Justice.

Under the new legislation, arrangements have been made to ensure that relevant personnel are transferred from the Registrar-General’s Department to the new office.

The office will have financial autonomy and be funded from income sources such as moneys approved by parliament, fees and charges, proceeds from sale of the Companies Bulletin, donations, grants and investment income.

The law, when it becomes operational, grants that an individual can register or start a business at the age of 18, revised downwards from 21 years.

It also gives room for dissenting minority shareholders to have rights to compel their companies to buy out their shares. Such shareholders will be entitled to request the company to purchase their share at a fair value.

It also seeks a complete abolition of ultra vires doctrine to companies in Ghana. Per the provisions of the Bill, companies will have the option to state the nature of their businesses or their objects.

The implication is that companies that will state their objects will be restricted to operate within the scope of their objects but those who opt not to state their object will have no restrictions and can do any legitimate business.

An issue that attracted attention during the consideration stage was whether to acknowledge personalities that made enormous contributions into the drafting and processing of the legislation, a matter which was finally determined that the names should not be part of the main.

Rather, Professor Aaron Michael Oquaye, the Speaker of Parliament expressed appreciation to contribution of the notables and directed that their names should be captured in the Hansard.

The House also passed the State Interests and Governance Authority Bill, 2019 to establish a State Interests and Governance Authority to oversee and administer the State’s interests in state-owned enterprises, joint venture companies and other entities in which the State has an interest and further, to ensure that these entities adhere to good corporate practices to promote growth of industry and commerce.

The Bill seeks to reform the governance structure of all state entities, among others.

A report of the Finance Committee of Parliament’s Finance explained that the “Government has resolved to adopt the single entity model to help harmonize guidelines and policies to overseer and administer entities which the state has interest as well as State-Owned Entities”.

The model would involve the establishment of an Authority to enhance coordination in the management of interests and ensure a clear line of accountability from State-Owned enterprises and other state interests.

Since 1959 Ghana’s legal framework which governs state-owned enterprises has undergone extensive reforms in pursuit of making these enterprises effective and more relevant within the economic development agenda.

Despite these reforms, the performance of state-owned enterprises has been constrained by issues of liquidity, capitalization and indebtedness, compounded by poor governance practices and perceived fragmented oversight by the multiplicity of other government organizations.

Throughout the years, many of the state-owned enterprises have consistently underperformed regarding their objectives, while others continue to incur loses.

The Government of Ghana in collaboration with the World Bank carried out an assessment of the corporate governance framework of the state-owned enterprise sector from 2013 to 2015.

The assessment sought to identify the core issues facing the state owned enterprises in terms of the existing governance and oversight arrangements.

The assessment, which focused on 39 wholly-owned state-owned enterprises, revealed an aggregate loss of approximately GH¢15 Million as at the end of the 2012 financial year.

The study further noted that the un-coordinated oversight of state-owned enterprises by different Government institutions and a lack of clearly defined ownership frameworks accounted for the poor performance of state-owned enterprises.

Another review carried out on four financial and economic regulators and a Trust, also revealed that these entities suffered from identical corporate governance challenges mainly in the arrears of transparency and accountability.