The New

Companies Act
2019 (Act 992)
Key changes you should know
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The Companies Act, 2019, (Act 992) which received Presidential assent on August 2, 2019
has introduced several significant changes in respect of the law relating to companies. The
information provided in this document is to provide some general information on some of the
key areas of the companies’ law that have changed following the passage of the Companies Act,
2019, (Act 992). This document is therefore not a comprehensive review of all the changes in the
law and is not tailored for any specific company, business or sector. Nor is it meant to be used to
address any specific company law issues. Please note that Ernst & Young does not provide legal
services in Ghana. The document is therefore not a substitute for obtaining professional legal
advice and does not create an attorney-client relationship.

Key changes in respect of:

1 General provisions on companies 2

2 Directors 2

3 Company secretaries 5

5 Auditors and audits 5

6 Accounting requirements/terminology 6

7 Dividends 6

8 Minutes and minutes books 7

9 Annual returns 7

10 Debentures 7

11 Major transactions 8

12 Derivative actions 8

13 The purchase of shares from a shareholder 9

14 The office of the Registrar of Companies 9

The New Companies Act 2019 (Act 992) 1

Subject title
Nature of the
change:
new or an
Details of the change
amendment or a
deletion

CHANGES IN THE PROVISIONS IN RESPECT OF COMPANIES GENERALLY

With exception of unlimited companies all other companies can decide not to have a registered
constitution (previously referred to in Act 179 as Regulations).
Company
constitution and The ultra vires rule has been abolished so a company can engage in a business or an activity even if
abolishment of ultra its registered constitution prohibits it.
vires rule
The capacity of the company to do an act shall not be affected by the fact that the act is not, or
would not be, in the best interests of a company.

It is a requirement to call:
• Private Companies Limited by Shares as “LTD”,
• Companies Limited by Guarantee as “LBG”;
• Public Companies Limited by Shares as “PLC”,
Company names
• Private Companies Unlimited by Shares as “PRUC”; and
• Public Companies Unlimited by Shares as “PUC”.

All companies limited by shares have 6 months after the Act’s commencement date to comply.

A company’s register of members must contain the details of each beneficial owner of the company
and must also contain a confirmation as to whether or not the person is a politically exposed
Disclosure of person.
beneficial ownership
This information must also be submitted to the Registrar within 2 months after the coming into
force of the Act.

Certification and
A document is deemed to have been duly authenticated by the company if it bears the signature of
authentication of
two directors and the Company Secretary.
documents

There is no longer a need to use a company seal with respect to the making, variation or discharge
of a contract.

Where a seal is used, it can only be used by the authority of the board of directors or of a
Use of company seal
committee of the directors authorised by the board of directors on their behalf, and an instrument
to which the seal is affixed shall be signed by a director, and shall be countersigned by the Company
Secretary or by a second director or by some other person appointed by the directors for the
purpose.

CHANGES IN THE PROVISIONS WHICH AFFECT DIRECTORS

The directors’ report must include:

• the particulars of the entries in the interests register during the financial year,
Contents of the • the corporate social responsibility activities of the company and any subsidiary and the
directors’ reports amounts spent during the financial year.
• the amount payable by way of audit fees.
• the steps taken to build the capacity of directors to discharge their duties.

Residence in Ghana
At least one of the directors of a company must be ordinarily resident in Ghana.
of directors

2 The New Companies Act 2019 (Act 992)

 A person shall not be appointed as a director of a company unless that person has, before the
appointment made a statutory declaration filed with the Registrar to indicate that he or she has not
within the preceding five years of the application for incorporation of the company been:
• charged with or convicted of a criminal offence involving fraud or dishonesty;
• charged with or convicted of a criminal offence relating to the promotion, incorporation or
management of a company; or
• a director or senior manager of a company that has become insolvent or if the person has
Appointment of been, the date of the insolvency and the particular company.
directors
All consents to act as a director must be filed with the Registrar within twenty-eight days of the
consent.

A shareholder or creditor of a company may apply to the Court to appoint one or more persons as
directors of the company, where there are no directors of a company or the number of directors
are less than the quorum required for a meeting of the board and it is not possible or practicable to
appoint directors in accordance with a company’s constitution.

A person is automatically disqualified from appointment as a director or acting as a director of a

company for a period of five years if that person has:
• been convicted within the last five years of an offence involving fraud or dishonesty, or the
promotion, formation or running of a company,
• has been a director or senior executive of a company that has become insolvent within the last
Automatic five years on account of or partly as a result of the culpable activities of that director, or
disqualification from • has been disqualified from acting as a Company Secretary, receiver, manager or liquidator of a
appointment as a company.
director •
In addition, where a person convicted within the last five years of an offence involving fraud or
dishonesty, or relating to the promotion, formation or running of a company, is subsequently
subject to a:
• second conviction, that person shall be automatically disqualified for a period of ten years; and
• third conviction, that person shall be permanently disqualified.

A director who becomes aware of being disqualified from acting as a director must report the
disqualification to the Board and the Company Secretary immediately. Failure to do so within
twenty-one days of the disqualification will result in a penalty of a minimum jail term of two years.
Reporting
Where the removal of a disqualified director results in the number of directors falling below the
requirements
legal minimum number of directors, the vacancy must be filled within 28 days and notice of the
in respect of
disqualified director must be submitted to the Registrar within 28 days of the company becoming
disqualified
aware of the disqualification or the relevant court order is made. The sanction for failing to do so
directors
is that the company and any director and member of the company that is in default will be liable to
pay to the Registrar, an administrative penalty for each day during which it so carries on business
after the expiration of the 28-day period without filling the vacancy and subsequently notifying the
Registrar.

An application can be brought to obtain an order to restrain a person from being a director of or
in any way, whether directly or indirectly, being concerned or take part in the management of a
company or act as auditor, receiver or liquidator of a company:
• Where a person has been convicted, whether in the Republic or elsewhere, of an offence
Restraining
involving insider dealing, or any other criminal offence which is not a misdemeanour;
fraudulent persons
• where it appears that a person is debarred by the competent authority from being a member
of a recognised professional body as the result of a disciplinary inquiry; or
• where there is an ongoing investigation by a criminal investigating body or by the Registrar or
the equivalent in a foreign jurisdiction.

The New Companies Act 2019 (Act 992) 3

Sanction for The sanction for acting as a director when one does not meet the criteria required now includes a
unqualified directors minimum jail term of two years.

Alternate directors are not the agents of their appointers but are deemed to be officers of the
Alternate directors
company.

Remuneration
and benefits for The remuneration and benefits for directors can be expressly stated in a registered constitution.
directors

Notice of a meeting Notice of a meeting does not have to be given to a director who is absent from Ghana.

There is now an express requirement for directors to exercise independent judgment when taking
decision and to consider the long-term consequences of the decision as well as its impact on the
environment and the community and the reputation of the business.

Duties and liabilities Directors who exceed their powers; or act or omit to act in contravention of the restriction on their
of directors powers shall be personally liable and jointly and severally liable to pay to the company or to any
other person, the amount of moneys lost to the company or to the other person or the monetary
value of the damages caused to, or suffered by, the company or that person as a result of the
failure, act or omission and the amount of money due and payable may be recovered as a civil debt
by the company or that other person.

Act 992 provides that the duty of a director to avoid conflict is not infringed if the situation cannot
reasonably be regarded as likely to give rise to a conflict of interest (which covers both conflict of
interest and conflict of duties); or the matter has been authorised by the directors.

The board of directors of a private company may authorise a conflict of interest by a director if
nothing in the company’s constitution invalidates the authorisation.

Conflict of interest: The board of directors of a public company may authorise a conflict of interest by a director where
the company’s constitution includes provisions enabling the directors to authorise the matter.

A director can be remunerated for work done in a professional capacity provided that a disclosure
of the conflict of interest has been made.

A director must enter any conflict of interest in the Interest Register and disclose the interest to the
Board at a meeting or by written notice immediately on becoming aware of the conflict.

A director who obtains information on the company by virtue of his/her capacity as a director or
employee cannot make use of the said information except:
• for the purposes of the company;
• as required by law; or
• in any other circumstances
• Authorised by the constitution of the Company; or
• Approved by the Company by a written resolution circulated to all the members entitled
to attend and vote on the resolution at a general meeting; or
• Approved by the company by an ordinary resolution of the company passed at a general
meeting at which neither the director concerned nor the holder of any share in which
the director is beneficially interested, directly or indirectly has voted as a member on the
Conflict of interest:
resolution or where the holder has voted and the vote is not counted.

A Board of directors may authorise a director to disclose, make use of, or act on information where
the board is satisfied that to do so is not likely to affect the company. A director so authorised
may disclose the information to: a person whose interests the director represents; or a person in
accordance with whose directions or instructions the director may be required or is accustomed
to act in relation to the powers and duties of the director subject to the director entering the
particulars of the authorisation and the name of the person to whom the information is disclosed in
the Interest Register.

A director must account to the company for any monetary gain made from that information.

4 The New Companies Act 2019 (Act 992)

 A director of a company must, within 28 days of the occurrence of any transaction, give notice in
writing of the:
• number and details of the shares he/she owns in the company or an associate; and
• debentures of the company or an associated company of which that director is the holder or
in which that director has, directly or indirectly, a beneficial interest or right to acquire, or of
which that director has an option to buy or sell.

Requirement to The company shall maintain an Interests Register which shall record the interests that directors
keep an Interests declare in respect of their conflicts of interests and failure to do so will result in a company being
Register liable to pay to the Registrar, an administrative penalty.

CHANGES IN THE PROVISIONS ON COMPANY SECRETARIES

Directors may not appoint a person as a Company Secretary unless that person:
• has obtained a professional qualification or a tertiary level qualification (in a discipline with
an offering in company law practice and administration) that enables that person to have the
requisite knowledge and experience to perform the functions of a Company Secretary,
• has held office, before the appointment, as an apprentice or has been articled under the
supervision of a qualified Company Secretary for a period of at least three years,
• is a member in good standing of:
• the Institute of Chartered Secretaries and Administrators, or
• the Institute of Chartered Accountants, Ghana, or
• having been enrolled to practice, is in good standing as a barrister or solicitor in the Republic,
or
• having been enrolled to practice, is in good standing as a barrister or solicitor in the Republic,
or
• by virtue of an academic qualification, or as a member of a professional body, appears to the
directors as capable of performing the functions of secretary of the company.

A person has to lodge with the Registrar, a written consent to serve as Company Secretary before
Qualifications and
assuming office.
duties for Company
Secretaries
The duties of a Company Secretary are spelt out as follows:
• assisting the Board to comply with the constitution of the company if it has one and with any
relevant enactment;
• keeping the books and records of the company;
• ensuring that the minutes of the meetings of the shareholders and the directors are properly
recorded in the form required by the Act;
• preparing and issuing out notices in the name of the company;
• ensuring that the company’s annual financial statements are despatched to every person
entitled to the statements as required by the Act;
• ensuring that all statutory forms and returns are duly filed with the Registrar;
• maintaining the statutory registers of the company;
• providing the Board with guidance as to its duties, responsibilities and powers and on the
changes and development in the laws affecting the operation of companies;
• informing the Board of legislation relevant to or affecting meetings of shareholders and
directors and the failure to comply with the legislation and reporting accordingly at any
meeting; and
• advising the directors on their responsibilities as directors.

CHANGES IN THE PROVISIONS ON AUDITORS AND AUDITS

Compliance with
The audit of the financial statements of a public or private company must comply with the
international audit
international standards on auditing adopted by the Institute of Chartered Accountants, Ghana.
standards

An auditor shall hold office for a term of not more than six years and is eligible for appointment
Mandatory auditor after a cooling off period of not less than six years.
rotation
Notice of change of auditor must be filed with the Registrar General’s within 14 days.

The New Companies Act 2019 (Act 992) 5

 A company’s financial statements must state the remuneration offered to auditors of the company
for any service rendered.
Remuneration of the
auditors
The remuneration payable to an auditor of the company shall be subject to confirmation by
members of the company.

Restriction on Auditors can no longer undertake obligations to the company in respect of the detection of
Auditors defalcations, and advice on accounting, costing, taxation, raising of finance and other matters.

CHANGES IN ACCOUNTING REQUIREMENTS/TERMINOLOGY

There has been a change of terminology:

• the income statement, balance sheet and cash flow statement are now referred to collectively
as the financial statements;
Change in
• group financial statements are referred to as consolidated financial statements
terminology
• statement of financial position rather than balance sheet
• surplus is now referred to as reserves.
• income surplus is now referred to as retained earnings.

Books of accounts of a company must be kept in Ghana.

The financial statements and where applicable the consolidated statements of a company shall:
• comprise of
• statement of financial position;
• Statement of comprehensive income;
• statement of cash flows,
• statement of changes in equity; and
• summary of significant accounting policies and other explanatory notes to the financial
statements; and
• be prepared in compliance with international financial reporting standards approved
by the Institute of Chartered Accountants, Ghana or any other standards approved or
adopted by the Institute.
Requirements in
respect of financial
In addition, the indebtedness of a company has to be shown if it has not been discharged as and
statements
when payment is due.

The sanctions for breaching the requirements in respect of the financial accounts and audit of a
company now include a minimum jail term of one year.

In the Statement of Comprehensive Income, the following must be shown separately income from
investments distinguishing between, income from:
• Associated companies;
• Other trade investments; and
• Other investments

In the report of the auditors it must be expressly stated whether the auditors were independent of
the company under audit pursuant to section 143 of Act 992.

CHANGES IN THE PROVISIONS ON DIVIDENDS

Dividends must be paid within 60 days after the passage of the shareholder resolution confirming
the payment of a dividend or after the dividend becomes payable.
Payment of
Dividends
Shareholders must be notified of the amount of dividend recommended for payment by the
directors.

6 The New Companies Act 2019 (Act 992)

 A new section on unclaimed dividends has been introduced which provides that:
• An interest-bearing account must be opened.
• All dividends not claimed for a period of 3 months must be paid into same.
• All unclaimed dividends after a further 12-month period must be transferred to the Registrar
of Companies who will pay same into an interest-bearing account.
• The Company shall notify all affected shareholders or their estates of the above.
• Affected shareholders or their estates shall be entitled on the provision of satisfactory
Unclaimed dividends evidence to the dividend amount and interest.
• The Registrar shall print the names and details of shareholders whose dividends have been
transferred to him/her in the Companies Bulletin and a state-owned newspaper of national
circulation.

If after seven years dividends remain unclaimed then the Registrar will transfer 50% to the
consolidated fund and use the remaining 50% for investor education and other specified company
law related activities.

CHANGES IN THE PROVISIONS ON MINUTES AND MINUTES BOOKS

Minutes books can now be kept by a system of electronic recording.

Keeping of minutes An administrative penalty of two hundred and fifty penalty units is payable for defaults in respect of
and sanctions for the provisions on the minutes of general meetings.
default
An administrative penalty is payable to the Registrar for breaches of the provisions in respect of the
inspection of minutes books.

CHANGES IN THE PROVISIONS ON ANNUAL RETURNS

A company’s annual return must contain the following additional information:

• A company’s website address where it has one.
• The following particulars on each beneficial owner of the company:
• The full name and any other former or other name;
• The date and place of birth;
• The telephone number;
• The nationality, national identity number, passport number or other appropriate
identification, and proof of identity;
• The residential postal and e-mail address, if any;
Contents of annual
• The place of work and position held;
returns
• The nature of interest including the details of the legal, financial, security, debenture or
informal arrangement giving rise to the beneficial ownership; and
• A confirmation as to whether the beneficial owner is a politically exposed person.
• The number of directors’ meetings held within the year.
• The date of the last Annual General Meeting and the number of Extraordinary General
Meetings held within the year.
• The financial statements and the audited independent report.
• The date of filing the last Annual Returns.
• The details of all unclaimed dividends.

CHANGES IN THE PROVISIONS ON DEBENTURES

The period for registering charges created by companies has been increased from twenty eight days
to forty-five days.

When dealing with the creation of charges the definition of the company’s property has been
expanded to include the undertaking of the company and the unpaid liability in its shares.
Creation,
registration and
All companies must within 6 months of the passing of the Act submit a statutory declaration signed
enforcement of
by a director and the Company Secretary stating whether or not there are charges that need to
charges
be registered and confirming that the particulars of those charges have been duly delivered to the
Registrar for registration.

The notice of the appointment of a receiver or enforcement of a security shall be published by the
Registrar in the Companies Bulletin.

The New Companies Act 2019 (Act 992) 7

DETAILS ON THE PROVISIONS IN RESPECT OF MAJOR TRANSACTIONS

A company shall not enter into a major transaction unless the transaction is:
• approved by special resolution; or
• contingent on approval by special resolution.

A major transaction is defined as:

• the acquisition of, or an agreement to acquire, whether contingent or otherwise, assets the
value of which is more than seventy-five percent of the value of the company’s assets before
the acquisition; or
• the disposition of, or an agreement to dispose of, whether contingent or otherwise, assets
Approvals required of the company the value of which is more than seventy-five per cent of the value of the
in respect of major company’s assets before the disposition; or
transactions • a transaction that has or is likely to have the effect of the company acquiring rights or
interests or incurring obligations or liabilities, including contingent liabilities , the value of
which is seventy five percent of the value of the company’s assets before the transaction.
•
There is however no requirement for a special resolution for:
• an agreement entered into by a company to give a charge secured over the assets of that
company the value of which is more than seventy-five percent of the company’s assets, for the
purpose of securing the repayment of money or the performance of an obligation; or
• a major transaction entered into by a receiver appointed pursuant to an instrument that
creates a charge over the whole of or a substantial part of the property of a company.

DETAILS ON THE PROVISIONS IN RESPECT OF DERIVATIVE ACTIONS

A new section on derivative actions has been introduced which provides that: a court may on
application from a shareholder or director of the company grant the said shareholder or director
leave to:
• bring proceedings in the name and on behalf of the company or its subsidiary; or
• intervene in proceedings to which the company or any related company is a party for the
purpose of continuing, defending, or discontinuing the proceedings on behalf of the company
or its subsidiary, as the case may be.
This leave will however only be granted if:
• the company or related company does not intend to bring, diligently continue or defend, or
discontinue, the proceedings, as the case may be; or
• it is in the interest of the company or its subsidiary that the conduct of the proceedings should
not be left to the directors or to the determination of the shareholders as a whole.

Where leave has been granted:

• the Court can on the application of the shareholder or director to whom leave was granted
Provision on
order that the whole or part of the reasonable costs of bringing or intervening in the
derivative actions
proceedings, including any costs relating to any settlement, compromise, or approved
discontinuance be met by the company unless the Court considers that it would be unjust or
inequitable for the company to bear those costs.”

The court has the power to:

• make an order authorising the member or any other person to control the conduct of the
proceedings;
• give directions for the conduct of the proceedings;
• make an order requiring the company or the directors to provide information or assistance in
relation to the proceedings; or
• make an order directing that any amount ordered to be paid by a defendant in the proceedings
shall be paid, in whole or part, to former and present members of the company or its
subsidiary instead of the company or the related company.

No proceedings can be settled or compromised or discontinued without the approval of the Court.

8 The New Companies Act 2019 (Act 992)

DETAILS OF THE PROVISIONS IN RESPECT OF THE PURCHASE OF SHARES FROM A SHAREHOLDER

A member may require a company to purchase the shares of that member where members of a
company by special resolution resolve to:
• amend the constitution of the company with a view to varying or dispensing with the business
activities or objects of the company;
• approve
• a major transaction under section 145;
• an arrangement, merger or both of the company under Part T of Chapter Two of the Act; or
Circumstances
• the variation of class rights under section 50.
under which a
member may require
and that member voted wholly against the resolution.
a company to
purchase his/her its
There are also provisions on:
shares
• the process for purchasing a member’s shares
• the process where member objects to the price offered
• the circumstances under which a company can apply to court to seek exemption from
purchasing a member’s shares;
• the circumstances under which a member’s shares can be reinstated
• the circumstances under which a company can be exempted from purchasing a member’s
shares.

UNANIMOUS AGREEMENTS BY SHAREHOLDERS

All the shareholders of a private company can agree to or concur in any action which has been
taken or is to be taken by the company and the taking of that action will be deemed to be validly
authorised by the company despite any provision in the registered constitution of the company or
the provisions in any of the constitutions referred to in the Second, Third and Fourth Schedules of
Act 992.

The matters which may be agreed to or concurred in by all the shareholders of a private company
include inter alia:
Ratification of a
• the issue of shares by the company;
private company’s
• the making of a distribution by the company;
decisions by
• the repurchase or redemption of shares in the company;
shareholders
• the giving of financial assistance by a company for the purpose of, or in connection with, the
purchase of shares in the company;
• the payment of remuneration to a director, or the making of a loan to a director or a member
or the conferral of any other benefit on a director or member;
• the making of a contract between an interested director or a member and the company;
• the entry into a major transaction; or
• the ratification after the event of any action which could have been authorised under this
section.

PROVISIONS IN RESPECT OF REGISTRAR OF COMPANIES

The Act establishes:

• the Office of the Registrar of Companies as a separate body with financial autonomy and
provides that the Office of the Registrar of Companies must be set up within 2 years of the
coming into force of the Act.;
Details on the Office • the Companies Bulletin as an official bulletin to be kept in hard copy and electronic format.
of the Registrar of • a register known as the Central Register to capture beneficial ownership data of legal persons
Companies and arrangements which will allow the Registrar to keep information in both manual and
electronic formats.

The Act also provides that after five years from the commencement of the Act matters that may be
effected electronically will only be effected electronically.

The New Companies Act 2019 (Act 992) 9