27 Sep Beneficial Ownership
Many a time you are confronted with a situation where the named members of a company are different from its substantive beneficial owners. Beneficial ownership is one of the inroads of the Companies Act, 2019 (Act 992) (the “Act”).
Who then is a Beneficial owner?
The Act defines a Beneficial Owner (“BO”) as one who has substantial and significant financial interest or control over a company.[1] This interest may be direct; as a named member of the company or indirect; via one or more holding company.
Identifying the Beneficial Owners
To enhance transparency in doing business in Ghana and in adherence to international obligations, the Act requires companies to file particulars of their BOs with the Registrar of Companies. In order to maintain accurate records with the Registrar, annual BO updates will be filed by companies through the Annual Returns filing process.
Additionally, the Act makes provision for a Beneficial Ownership Register in which all companies, including external companies, are required to record the particulars of their BOs. Reportable BOs are classified into three main categories; natural persons, companies owned by government and publicly listed companies.
In determining the BOs of a company, it may be useful to refer to some of the following documents, among others:
- Share certificates;
- Shareholders’ Agreements;
- Share Subscription Agreements;
- Deed of Transfer (if applicable);
- Company Profile; and
- Incorporation Documents.
Threshold Required
[2]In the case of a natural person, BO details must be reported where that person directly or indirectly holds a financial interest in the company of:
- 5% or more ownership where the reporting company is classified under high-risk sectors (which includes the extractives and financial sectors, insurance, real estate, etc.);
- 20% or more for low-risk sectors;
- 5% or more ownership if the BO is a non-Ghanaian Politically Exposed Person (PEP); and
- any percentage of ownership, if the BO is a Ghanaian PEP.
A PEP is one who is or has been entrusted with a prominent public function in Ghana, a foreign country or an international organisation. Being a family member or close associate of a person in prominent public function also makes one a PEP.
Fig. 1. Case study on Beneficial Ownership
From Figure 1 above, the BOs of Alpha LTD are Mrs. A, Company X, Mr. B and Gamma PLC.
Alpha LTD is a company limited by shares. It is a renewable energy company, hence it is classified under the low-risk sector. Its shareholders are Company X, Beta LTD and Ms. A who hold 30%, 40% and 30% shares, respectively. Beta LTD, has two shareholders; Mr. B and Gamma PLC who hold 30% and 70% shares, respectively. The reportable BOs of Alpha LTD are–
- A: 30% (Direct Interest);
- Company X: 30% (Direct Interest); and
- Gamma PLC: 28% (Indirect Interest).
Mr. B is not a PEP and also, his indirect interest of 12% in Alpha LTD does not meet the reporting threshold. Hence, Mr. B is not a reportable BO. It is important to note that the total BO (direct and indirect) interest of the company must sum up to 100%.
The introduction of BO reporting is a fairly new development in Ghana. It is therefore important for businesses to gain a basic understanding of what the new BO regime entails in order to properly support and promote the enhanced transparency agenda.
[1] Section 383 (First Schedule), Act 992
[2]BO FAQ https://rgd.gov.gh/docs/FAQs%20Exercise.pdf (last accessed 14th September, 2021)