15 May Technology Transfer Agreements (“TTAs”)

Posted at 04:01h in Blog by

The Ghana Investment Promotion Centre (“GIPC”), is a Government agency responsible for encouraging investment and economic development and regulating businesses in all sectors of the economy within the legislative framework of the Ghana Investment Promotion Centre Act, 2013 (Act 865).

It is mandatory for business entities with foreign ownership, permitted pursuant to Act 865 to register with GIPC, and to do so, following the incorporation of the Company in Ghana.

It is also required by Act 865, the only law with the mandate to regulate Technology Transfer Agreements (“TTAs”), that a TTA between an entity registered in Ghana (“the transferee”) and a foreign entity (“the transferor”), are registered with the GIPC and in accordance with the Technology Transfer Regulations, 1992 (L.I. 1547).

 

What are TTAs?

TTAs are defined within Act 865 as agreements with an enterprise which have a duration of not less than 18 months, and which involve the following:

  • the assignment, sale and licensing of all forms of industrial property with the exception of trademarks and patents which are not part of the transfer of technology;
  • provision of technical expertise such as feasibility studies, plans, models, guides, basic or detailed engineering designs etc;
  • provision of technical knowledge on installation and operation of plants and equipment
  • provision of managerial services and training.

 

What are the essentials of TTAs?

  • TTAs must be executed between a Ghanaian incorporated company (“the transferee”) and a foreign company (“the transferor”).
  • The TTA must be for a duration of at least 18 months and a maximum duration of ten (10) years after which, the TTA may be renewed, on application for an additional five (5) years.
  • It is pre-requisite that the services under the TTA must not be readily available in Ghana.
  • Fees for the payment of services under the TTA must be made under a registered agreement and the transferor is liable to pay for taxes on the fees due under the agreement, subject to the laws of Ghana.
  • The Transferor is required to provide training to the transferee for the effective utilisation of the relevant services.
  • All TTAs must be governed by Ghanaian Law.

 

How is a TTA Registered?

It usually takes about 4-8 weeks for the GIPC to review and register a TTA. The following documents are required to be submitted with the TTA registration Form:

  • A certified true copy of the certificate of incorporation of the Transferee Company
  • A copy of the Regulations of the Transferee Company
  • Original copies of the TTA
  • A detailed schedule outlining the envisaged training under the TTA
  • Annual projection of fees for the payment of services under the TTA
  • Audited accounts of the Transferee company
  • A copy of the GIPC Registration Certificate
  • Payment of a non-refundable application fee quoted by the GIPC at the time of application, plus an approval fee based on the value of the transfer.

 

What is Cost of Transferor services rendered under a TTA?

Depending on the service transfer stipulated in the TTA, the Transferor is mandated by law to charge fees within certain thresholds. The thresholds are as follows:

  1. Royalties for Intellectual Property – 0-6 % of net sales
  2. Technical Services                  – 0-3% of net sales
  3. Provision of Technical Knowledge – 0-2% of net sales
  4. Management Services -0-2% of profit before tax

Where a Transferor provides all the services listed above by virtue of a single TTA to the Transferee, the total fee shall not exceed 8% of the net sales of the Transferee.

 

What happens when a TTA is not registered?

Failure to register a TTA with the GIPC is an offence under Act 865 and is liable to a summary conviction of a fine.

Any fees due to the Transferor in relation to the unregistered TTA cannot be legally transferred.

The GIPC also has the discretion to suspend, cancel or revoke the registration of a Company and advise the Bank of Ghana to prohibit any remittances or incentives granted the company.

 

TIP:

TTAs that are drafted with little or no consideration to the local laws of Ghana, may result in delayed processing or outright rejection of the application by the GIPC. It is therefore crucial that, all TTAs, irrespective of the jurisdiction of the Transferor, are drafted in accordance with the laws of Ghana.

 

This Blog post is intended to provide general information on the subject matter.
The values of Transferor fees quoted is subject to confirmation at the time a particular application is made at the GIPC.
We suggest that professional legal advice, which may be obtained from a member of the B & P ASSOCIATES Legal Team, is sought for specific circumstances.

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