Foreign Participation in Enterprises

Introduction:

This note will discuss the regulation of foreign participation in enterprises under the Ghana Investment Promotion Centre Act, 2013 (Act 865).

The Ghana Investment Promotion Centre Act, 2013 (Act 865):

This is:

An Act to provide for the Ghana Investment Promotion Centre as the agency of Government responsible for the encouragement and promotion of investments in Ghana, to provide for the creation of an attractive incentive framework and a transparent, predictable, and facilitating environment for investments in Ghana and for related matters.

In Section 2 of Act 865, the Ghana Investment Promotion Center is established. In Seciton 3, its object is to:

1. create an enhanced, transparent and responsive environment for investment and the development of the Ghanaian economy through investment; and
2. encourage, promote and facilitate investment in the country.

Requirements that Enterprises with a Foreign Participation Registers with the Ghana Investment Promotion Centre:

In Section 24 of Act 865, it is provided that:

1) An enterprise in which foreign participation is permitted under this Act shall after its incorporation or registration and before commencement of operations be registered with the Centre.

For enterprises which are wholly owned by a Ghanaian, however, the Act does not make registration mandatory.

Activities Reserved For Ghanaians and Ghanaian Owned Enterprises:

In Section 27 of Act 865, it is provided that:

(1) A person who is not a citizen or an enterprise which is not wholly owned by citizen shall not invest or participate in—

a. the sale of goods or provision of services in a market, petty trading or hawking or selling of goods in a stall at any place;

b. the operation of taxi or car hire service in an enterprise that has a fleet of less than twenty-five vehicles;

c. the operation of a beauty salon or a barber shop; d. the printing of recharge scratch cards for the use of subscribers of telecommunication services;

e. the production of exercise books and other basic stationery;

f. the retail of finished pharmaceutical products;

g. the production, supply and retail of sachet water; and

h. all aspects of pool betting business and lotteries, except football pool.

(2) The Minister in consultation with the Board may by legislative instrument amend the list of enterprises reserved for citizens and enterprises wholly owned by citizens.

Enterprises Eligible for Foreign Participation and Minimum Foreign Capital Requirement:

Other than the enterprises expressly mentioned in Section 27(1) , and those that have been added to the list pursuant to Section 27(2), a non-citizen can participate in all other enterprises if:

1. The Enterprise is a Joint Enterprise and:

1. A partner of the enterprise is a Ghanaian.
2. The Ghanaian has ten percent or more equity participation in the joint enterprise.
3. The non-citizen invests a foreign capital of not less than two hundred thousand dollars ($200,000) in cash or capital goods.

2. The enterprise is wholly owned by the non-citizenwho invests a foreign capital of not less than five hundred thousand United States dollars in cash or capital goods relevant to the investment or a combination of both by way of equity capital in the enterprise.

3. The enterprise is a trading enterprise and:

1. The non-citizen invest not less than one million United States dollars in cash or goods and services relevant to the investments.
2. The enterprise employs at least twenty skilled Ghanaians.

Conclusion:

Foreign participation in enterprises in Ghana is subject to various limitations under Act 856. Among others, the Act expressly prevents non-citizens from participating in certain enterprises and requires that certain minimum capital requirements be satisfied before a non-citizen participates in enterprises from which they are not expressly prevented from participating in.