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Registering a Private Company Unlimited by Shares (Unlimited liability company)
A private company unlimited by Shares, according to the Ghana’s company’s code 1963, Act 179, section 9C is a company with no limit on the liability of its members.
An unlimited liability company is a hybrid company incorporated with or without a share capital and the legal liability of the shareholders or members is not limited. The joint, several and non-limited liability of the members or shareholders to meet any insufficiency in the assets of the company apply only upon the formal liquidation of the company.
Simply put, an unlimited liability is one in which the liability of the shareholders for the debts of the company is unlimited. There is no separation between personal and company resources of the shareholders in situations where the company has to pay debts. There is maximum exposure to risks.
Unlimited liability is the exact opposite of the limited liability where the liability of the investors or owners of a company is limited to the amount of money that they have contributed or invested in the business.
Countries that have unlimited liability companies include the United Kingdom, Ireland, Hong Kong, Pakistan, Nigeria, India, Australia, New Zealand and other jurisdictions where the company law is derived from English law. They can also be found in Germany, France, Macao, Czech Republic and in three jurisdictions in Canada (Alberta, British Columbia, and Nova Scotia), where they are called unlimited liability corporations.
Who can register a Private Company Unlimited by Shares?
In Ghana, a category of workers are obligated to register a private company unlimited by shares. They include lawyers, architects and auditors. Foreigners are also allowed to own an unlimited liability company.
How different is Unlimited Liability Company from a Limited Liability company?
The benefits and incorporation status of an Unlimited liability company is the same as its limited liability counterpart. However, the reason for choosing unlimited liability as an alternative business model is due to the ability to shield its financial affairs from the public, media and industry competitors. Unlimited liability companies are not obligated to give out the state of their finances to an outsider. This prevents the general public from probing into the affairs of the company. Creditors and trade financial institutions who are clients and stakeholders of unlimited liability companies have great assurance and confidence during transactional duties. They are assured that should there be any bankruptcy or liquidation, the personal shares and assets of the shareholders can be accessed.
All regulatory acts, procedures and functions stated in the company’s code with regards to Limited Liability companies such as annual general meetings, filing of annual returns and amendments applies to Unlimited Liability Companies.
How to Register a Company Unlimited by Shares
To ensure smooth registration and incorporation of an unlimited liability company, there are steps to follow through;
Step 1- Company Name Search at RGD
To register any company in Ghana, a name search needs to be conducted to ensure the availability of the proposed business name for the company. After the name search, company promoters may apply to have their business name reserved for a period of 30 days. The business name must be meaningful, relevant and distinctive. Business names that are too similar to existing names are likely to be rejected by the Registrar General’s Department. However, applicants will be advised to amend their company name accordingly. The choice of a business name must be relevant to the nature of activity of the company. Moreover, the business name must not be offensive and undesirable or violate existing trademarks.
STEP 2 – Taxpayer Identification Number (TIN) registration
All company directors, secretaries and shareholders are required to register and obtain a TIN. TIN forms must be completed with a copy of photo ID added. TIN numbers are created at any Ghana Revenue Authority office at gratis within 24 to 48 hours. Corporate organizations or entities require TIN numbers. In the event where the shares of the company being registered belong to a corporate entity, the entity will fill an organizational TIN form and attach a letter of introduction. A TIN number will subsequently be created for the corporate shareholder. Information required to complete an individual TIN form include;
- Photo ID details
- Mother’s maiden name
- Residential and postal address
STEP 3 – Completion of form 3, form 4 and company regulations
The next step is to download and complete the following forms;
- Company limited by shares registration – Form 3
- Company limited by shares registration- Form 4
- Regulations of a Private company unlimited by shares
Please note that the forms to be completed are the same as the forms for private limited by shares except the regulation form.
Information required completing the incorporation forms include
- Company name
- Registered address
- Postal address
- Principal place of business
- Business objects or activities
- Auditors details
- Authorized and issued shares
- Stated capital
- Shareholding structure
- Personal details of directors, secretary and shareholders (nationality, date of birth, occupation, residential address)
According to the Companies Act 179, all companies are required to have at least two initial directors and a secretary during the company registration process. At least one of the company directors or secretary must be resident in Ghana.
After forms are duly completed, the directors, secretary and shareholders have to sign on relevant pages before submission.
STEP 4 -Pay stamp duty, business incorporation and filing fees
There are two main statutory fees to be paid at the Registrar General’s Department during company registration. These are; Stamp duty & Incorporation and filing fees.
Stamp duty is 0.5% of the stated capital. For example a stated capital of 100,000 Cedis is equivalent to a stamp duty of 0.5% x 100,000 Cedis = 500 Ghana Cedis.
The minimum amount of stated capital for all 100% Ghanaian owned unlimited liability companies is 500 Cedis. However, companies with joint 100% foreign ownership have different stated capital requirements. The stated capital requirement for companies in these categories are;
- 100% foreign ownership –US $ 500,000
- Joint venture between foreigner and Ghanaian – US $ 200,000
- Trading enterprise (whether jointly owned or 100% foreign owned) – US $ 1,000,000
Incorporation and filing fees are also required to be paid upon submission of business registration forms. The total cost is 330 Ghana cedis, which is payable directly at the RGD by cash.
STEP 5 – Collect Business registration certificates
One should expect to have the process completed in 2 weeks, upon submission of forms. The following documents will be issued;
- Certificate of incorporation
- Certificate of commencement ` `
- Form 3 & 4
- Company regulations
These are the legal documents of proof of company’s existence in Ghana. The documents will indicate clearly the business name, activities, business address, directors’ details, company TIN as well as shareholders information among others. The business certificates can be used for any business transaction or open a corporate bank account with any of the commercial banks in Ghana.
Though registering unlimited liability company is not as common as the registration of other types of companies, we believe that having a widened scope and knowledge on all types of business registrations is important. We hope this article provides the needed information and steps on how to register an unlimited liability company. We will be delighted to read your comments and answer all questions.