GIPC’s New Law: Foreign trading companies in danger

On Friday March 15 2013, Mrs. MawuenaTrebarh, Chief Executive Officer of the Ghana Investment Promotion (GIPC) appeared before the Parliamentary Select Committee on Trade and presented to them a New GIPC Bill which has serious implications for Foreign Trading Companies in Ghana.

She requested that if the GIPC Bill is to be laid before Parliament it should be done under a Certificate of Urgency and pledged her Centre’s commitment to see the bill passed into Law as soon as possible.

Your authoritative SCANDAL chanced upon a copy of the Bill and can confirm that the bill is the most comprehensive one ever to be presented by the GIPC and will clearly ruffle a lot of feathers in the business community and the economy as a whole if all of it is to be endorsed by Parliament.

There are many good things in this bill but sections 26 and 27 under the headings “ACTIVITIES RESERVED FOR GHANAIANS AND GHANAIAN OWNED ENTERPRISES” and “ENTERPRISES ELIGIBLE FOR FOREIGN PARTICIPATION AND MINIMUM FOREIGN CAPITAL REQUIREMENT”, are worth flagging for serious attention.

For instance, Section 26 (1) says among other things that “A person who is not a citizen or an enterprise which is not wholly owned by citizens shall not invest or participate in;(a) the sale of goods or provisions of services in a market, petty trading or hawking or selling of goods in a stall or at any place.”

We do not know the ownership structure of entities like the Melcoms, Koala, Compu-data, Furniture City and many others and what this new bill will mean to them, but it is important that even as Parliament meets to consider this bill, some clarity is brought to bear on some of these propositions.

In Section 27 (2) the bill says “Despite subsection (1), a trading enterprise that is principally engaged in the purchase and sale of goods shall not be wholly owned by a person who is not a citizen but shall operate by way of joint venture with a partner who is a citizen.”

(3) “A person who is a citizen in an enterprise referred to in subsection (2) shall a) have not less than thirty percent equity participation in the joint enterprise; and b) shall not Transfer the equity participation to a person who is not a citizen.”

(4) “A person who is not a citizen but who engages in an enterprise referred to in subsection (2) shall invest in that enterprise not less than One Million United States Dollars in cash or goods relevant to the investment or a combination of both by way of equity capital.”

(6) ”For the purposes of this section “trading” includes the purchasing and selling of imported goods and services.”

In her presentation to the Parliamentary Select Committee on Trade, the CEO of GIPC acknowledged the contributions of her predecessors Mr. Aboagye, Dr. Lindsay and the Board Chairman Dr. Yamson for working on the core elements of the bill.