Ghana

Part 1 of 2 — A Two-Part Series on Carbon Credits and ESG in Ghana Introduction This article examines the concept of Carbon Credits within the Ghanaian business landscape and the laws that govern it.  As the Environmental, Social, and Governance principles increasingly influence sustainable business and investment decisions, it has become essential for organizations globally to assess their sustainability and ethical impact. And Carbon Credits play a critical role in that assessment. They fall under the Environmental ("E") principle and are particularly relevant in Ghana, where our natural ecosystems present significant opportunities for reducing emissions. What are Carbon Credits? Carbon credits are licences that allow the owner to emit a certain amount of carbon dioxide (“CO₂”) or other greenhouse gases (“GHGs”). One credit allows the emission of one ton of CO₂ or its equivalent in other GHGs. Carbon credits are also known as carbon allowances.[1] The ultimate goal of the carbon credit system is to reduce the emission of GHGs into the atmosphere.[2]   Why Does Ghana Sell Its Carbon Credits? As a Member of the United Nations, Ghana is allocated a specific number of carbon credits and is responsible for issuing, monitoring, and reporting its carbon credit status annually. The Government of Ghana has therefore set limits on the amount of GHGs that companies operating in the country can emit without needing to purchase additional credits from another country.[3] However, if Ghana has excess carbon credits, we can sell the excess on a carbon exchange or marketplace. This system is commonly known as a cap-and-trade program.   How Do Carbon Credits Work? Traditionally, carbon credits have been used for carbon offsetting, which means compensating for GHG emissions by either: Avoiding emissions – preventing emissions from being released in the first place (e.g., replacing a coal power plant with solar energy), or Enhancing removals – actively pulling CO₂ out of the atmosphere and storing it safely, such as in trees, soil, or with carbon capture technology. In carbon markets, organizations can buy and retire carbon credits instead of reducing all their own emissions directly. Each credit represents one ton of CO₂ that was either avoided or removed elsewhere. This approach is effective because, in terms of climate impact, it does not matter where in the world the emission is reduced or removed; the positive effect on the atmosphere is the same. Therefore, a company can either: reduce its own emissions directly, or pay for a project elsewhere to achieve the same effect. Carbon credits are not always used to compensate for or to offset emissions. In recent years, some parties have begun using carbon credits to contribute to climate change mitigation without making any explicit compensation or offsetting claim.[4]   What laws govern the sale and use of carbon credits in Ghana? The Environmental Protection Agency Act 2025 (Act 1124) The Environmental Protection Agency Act 2025 (Act 1124) regulates carbon credits in Ghana. It introduces specific regulations and guidelines for project approval, monitoring, and verification of carbon credits to ensure transparency and alignment with international standards. These efforts support initiatives such as reforestation, sustainable land use, and clean cooking technologies that help reduce emissions while benefiting local communities. Through the EPA and the passage of the new Environmental Protection Act, 2025, Act 1124 (“EPA Act”), which repealed the EPA 1994, Act 490, Ghana has established the Carbon Markets Office (“CMO”)[5] within the Climate Change Unit of the EPA[6]. The CMO serves as the secretariat, providing administrative and technical services to the public and supporting the implementation of Ghana's International Carbon Market and non-market approaches framework. The CMO is responsible for implementing policies, rules, and guidance on carbon credit transactions, providing targeted support for: Mitigation activity sourcing and matchmaking; Activity development services; Monitoring, reporting, and verification (MRV) systems; Registry operations; Creation and transfer of ITMOs; and Reporting and corresponding adjustments[7] The EPA Act also establishes the Ghana Carbon Registry (“GCR”), an online database system designed for carbon market project activities within Ghana and internationally. The GCR collects and tracks the transfer and use of ITMOs, facilitating the listing and registration of mitigation activities and voluntary carbon market projects.[8]  This GCR, introduced in the new EPA Act, is managed by a secretariat under Article 6 of the Paris Agreement. It is operated by the Ministry of Environment, Science, Technology, and Innovation in collaboration with the EPA. The GCR adheres to high-quality standards and protocols for quantifying and verifying greenhouse gas emissions reductions, issuing carbon credits, and tracking these credits transparently. This infrastructure supports Ghana’s participation in various carbon market mechanisms. The Paris Agreement - An international treaty on climate change. The Paris Agreement is an international treaty focused on combating climate change. It was adopted by 195 parties at the UN Climate Change Conference (COP21) in Paris, France, on December 12, 2015, and officially came into force on November 4, 2016. The treaty is legally binding and aims to limit the increase in global average temperature to well below 2°C above pre-industrial levels, with efforts to restrict the temperature rise to 1.5°C. Under Article 6 of the Paris Agreement, Ghana and Switzerland signed a bilateral agreement in 2020 that facilitates the international transfer of carbon credits between member states. This agreement allows Ghana to sell units of carbon credits, known as Internationally Transferred Mitigation Outcomes (ITMOs), to Switzerland. In exchange, Switzerland provides investments, supports capacity building, and grants access to technologies that are not readily available through domestic resources. Switzerland purchases these units to help meet its own climate goals. This bilateral agreement marks the first instance of ITMOs being issued for Nationally Determined Contribution (“NDC”) purposes for a mitigation activity implemented in Africa. Some key initiatives under this agreement include:  The Ghana Climate-Smart Rice Project: This project aims to reduce methane emissions from rice farming and enhance water use efficiency.[9] The Transformative Cookstove Activity in Rural Ghana: This initiative seeks to replace traditional, inefficient stoves with improved cookstoves (“ICS”) to reduce greenhouse gas emissions and improve household air quality.[10] Integrated waste recycling and composting for methane reduction in Ghana: This strategy is processing this waste into compost, the initiative not only cuts greenhouse gas emissions but also produces valuable fertilizer for agriculture.[11] It is important to note that Ghana stands out as one of the few African countries proactively structuring its carbon market ecosystem. Through legislative, policy, and institutional reforms, Ghana aims to become a hub for credible and high-integrity carbon credit generation, especially through nature-based and community-driven projects.   Why Do Companies Buy Carbon Credits? Companies purchase carbon credits to legally emit more GHGs. They also acquire carbon offsets, which help them to achieve a “net-zero carbon emission” status, which means that the amount of carbon a company or country adds to the air is the same as the amount it takes out. In other words, the goal is not to increase the total carbon in the atmosphere. As public and institutional pressure grows, many companies are making these net-zero commitments in response to the urgency of the climate crisis. These pledges are designed to reduce or offset the amount of carbon emitted through their operations.[12] While some companies can alter their business practices to reduce emissions, the complete elimination of emissions is not feasible for many firms.   Scenario: - The Transformative Cookstove Activity in Rural Ghana. As a party to the Paris Agreement, Ghana has a climate action plan known as its Nationally Determined Contribution (“NDC”), which outlines how the country intends to reduce GHG emissions and adapt to the effects of climate change. Additionally, Ghana has the opportunity to collaborate with other countries on emission reduction projects, which allows it to sell the resulting carbon credits under the agreement. Under this project, Ghana launched a large-scale clean cookstove project. These cookstoves: Burn fuel more efficiently, Reduce the need for firewood, Cut down on indoor air pollution, and Most importantly, reduce carbon emissions. This project is funded and implemented in partnership with Switzerland. Under this arrangement, Ghana measures the amount of carbon saved (for example, if Ghana has one million tons of CO₂ and agrees to transfer Five Hundred Thousand (500,000) tons of those savings to Switzerland. These 500,000 tons will now be referred to as ITMOs. Switzerland will count those 500,000 tons as part of its own NDC emissions reduction target, while Ghana will retain the remaining 500,000 tons to count toward its own NDC. What Article 6.2 Requires and Applies to the Scenario Requirement under Article 6.2 What happens in the Clean Cookstove Project Voluntary cooperation Ghana and Switzerland voluntarily agree to work together under a bilateral agreement Promote sustainable development The cookstoves improve health, reduce deforestation, and save fuel, benefiting Ghanaian households. Ensure environmental integrity Emissions are measured accurately and verified using approved standards. Transparency in governance Ghana’s EPA approves the project, monitors implementation, and shares reports publicly. Robust accounting & no double counting Ghana records the 500,000 tons transferred to Switzerland in its National Carbon Registry, so it does not claim them again. Switzerland also reports the purchase in its own registry.   Why This Matters Ghana earns revenue or support (funding, technology) for sustainable projects. Local communities in Ghana benefit from jobs, cleaner air, and safer homes. Switzerland meets part of its international climate obligations more affordably. Both countries follow strict rules to ensure the integrity of climate action. Conclusion Ghana is taking a bold and strategic approach to developing carbon markets. Recently, the country achieved a significant milestone under the Paris Agreement by issuing Internationally Transferred Mitigation Outcomes (ITMOs) for the "Transformative Cookstove Activity in Rural Ghana." This collaboration with Switzerland represents a pioneering effort, marking the first time both countries have worked together to enhance cooperative climate action. Notably, it is also the first instance of ITMOs being issued for Nationally Determined Contribution (NDC) use from a mitigation activity implemented in Africa. These initiatives are part of Ghana's broader commitment to climate action, sustainable development, and environmental stewardship. The Environmental Protection Agency (EPA) has implemented regulatory reforms, including mandatory project approvals, benefit-sharing mechanisms, and environmental, social, and governance (ESG) screening. These measures ensure that the carbon credits generated in Ghana are credible, equitable, and in alignment with global standards. Stay tuned for Part 2: “What Role Do Carbon Credits Play in Promoting ESG in Ghana?” In the next article, we examine how carbon credits intersect with ESG principles and the practical steps businesses can take to integrate them into their sustainability strategies.   By: Eric Ofori Kwaah        Junior Associate       VINT & Aletheia Attorneys & Consultants

Ghana is six months into the term of a new President elected by the Ghanaian people, and the country continues to navigate its governance landscape. We are also in the season of Board appointments for State-Owned Entities, and there is a need for a reminder of good corporate governance guidelines in the public sector. This article discusses the transfer of power from a previous President to a newly elected President and its impact on the appointment of Board members for State-Owned Entities, and the role and importance of Corporate Governance in the public sector for the sustainability of government-owned entities. We rely on the following laws and real-life experiences from the practice of law in Ghana to discuss this very crucial topic: The 1992 Constitution of Ghana; Companies Act, 2019 (Act 992); Presidential (Transition) Act, 2012 (Act 845); National Corporate Governance Code, 2022; and Theophilus Donkor v. The Attorney General [Unreported, Suit No. J1/08/2017, 12/06/19].   What happens when a new President is elected in Ghana? The Presidential (Transition) Act, 2012 (the “Transitions Act”) provides the guidelines for the transfer of power when a new President is elected in Ghana. It governs the formation of a transition team within 24 hours of the declaration of the presidential election results to ensure a smooth change of government[1].   The transition team is made up of: the Chief of Staff at the Office of the President, the Attorney General and Minister for Justice, the Minister for Presidential Affairs, the Minister for Finance, the Minister for the Interior, the Minister for Defence, the Minister for Foreign Affairs, the Minister for Local Government and the Minister for National Security. The incumbent President and the President-elect co-chair the team. However, both can delegate their responsibilities to members of their respective teams if necessary[2]. The transition team’s primary responsibilities include: ensuring the transfer of political power following a Presidential and general election, providing daily national security briefings to the President-elect before the assumption of office, ensuring timely payment of salaries, allowances, and benefits due to Article 71 office holders as determined by the President and Parliament, and performing any additional tasks necessary to fulfill the mandate of the transition team[3]. The transition team's term of office is 8 weeks after the Presidential elections, which was held on 7th December 2024. Within this time, the Office of the President prepared detailed handing-over notes summarizing the President's term under Article 58 of the Constitution[4]. Subsequently, the new President was sworn into office on 7th January 2025, following the elections. What are State-Owned Entities, and what is the Impact of the Transitions Act on them? A State-Owned Entity (“SOE”) is an enterprise created by the government, usually to participate in specific commercial activities. SOEs may be fully government-owned or partially government-owned with private sector participation. In Ghana, SOEs manage major sectors within the country, such as utilities, transportation, natural resources, and finance. The following are some examples of SOEs: the Ghana Ports and Harbors Authority (“GPHA”) which manages and operates all ports in the country, Ghana National Petroleum Corporation (“GNPC”) which is the national oil sector aggregator, Volta River Authority (“VRA”) which generates and distributes electricity in Ghana, and Ghana Revenue Authority (“GRA’) which assesses, collects and accounts for all tax revenue in the country. Each SOE has a governing Board, whose members are appointed by the President, in consultation with or upon the advice of the Council of State. The main role of an appointed Board is to oversee the SOE’s operations and ensure that its objectives are being met for the good of the Ghanaian people. The appointed Board of a SOE has operational independence; however, the government, as the appointing authority, maintains influence over appointments and removal of directors, which highlights the power each government holds over the Boards of SOEs. In Ghana, SOEs that are fully government-owned are established by specific legislation. This legislation outlines the SOE's objectives, functions, management, and other relevant details. For example, the Ghana Ports and Harbours Authority (GPHA) was established by the Ghana Ports and Harbours Authority Act 1986 (P.N.D.C.L. 160). The Ghana National Petroleum Corporation (GNPC) was created under the Ghana National Petroleum Corporation Law 1983 (P.N.D.C.L. 64). The Volta River Authority (VRA) was established by the Volta River Development Act 1961 (Act 46), and the Ghana Revenue Authority (GRA) was created by the Ghana Revenue Authority Act 2009 (Act 791). SOEs that are partially government-owned with private sector participation are usually registered under the Companies Act 2019 (“Act 992”) as private limited liability companies or public limited liability companies. For corporate governance purposes, the legal foundation of an SOE matters. If the SOE is registered under the Companies Act, 2019, that Company must be governed and operate in accordance with the Companies Act. However, if the SOE was created through specific legislation, then the rules in that law (its own statute) will govern its operations. Section 14 of the Transitions Act provides a legal basis for the change in Board members when a new administration comes into effect. It provides that upon the assumption of a new  President, previous appointees or Ministers who served on statutory Boards and Corporations cease to hold that office, and must be paid the relevant retirement benefits as provided by law[5]. This means that on 7th January 2025, when His Excellency President John Dramani Mahama was sworn into office, all persons serving as Board members of SOEs (established by specific legislation) ceased to hold office. In the landmark case of Theophilus Donkor v. The Attorney General[6], the Supreme Court clarified the scope and effect of section 14 of the Transitions Act. For clarity of the court’s decision, here are the relevant facts of the case: The plaintiff, Theophilus Donkor, challenged the constitutionality of section 14 of the Transitions Act regarding the cessation of office of Board members and Chief Executive Officers (“CEOs”) of statutory bodies appointed by a previous President upon the assumption of office by a new President in accordance with the 1992 Constitution of Ghana (the “Constitution”). Below are the effects of this case, which strongly impact Corporate Governance in the Public Sector: In relation to governing boards of Statutory Boards and Corporations, the Supreme Court held that such boards cease to hold office upon the assumption of office by a new President, irrespective of the tenure provided in their various statutes. Therefore, section 14 applies to Board members of Statutory Boards and Corporations. The Court explained that these persons are appointed under Article 70(1)(d)(iii) of the Constitution and are not members of the Public Services of Ghana.  This decision brought clarity to the tenure of Board members of statutory Boards and Corporations to the extent that their term of office does not automatically end after the results of a presidential election are declared, but rather when the new President officially assumes office (January 7th). Additionally, regarding CEOs of Statutory Boards and Corporations, the Supreme Court ruled that CEOs and Director-General positions are considered public offices appointed under Article 195(1) of the Constitution. This means they are appointed by the President based on the advice of the governing Board and in consultation with the Public Services Commission. Their tenure and the terms for their removal are outlined in their letters of appointment. Therefore, they do not vacate their positions automatically when a new President is elected. As a result, section 14 of the Transitions Act does not apply to them, as it contradicts Articles 190 and 191 of the Constitution. This allows for a level of governance to remain in the operations of those SOEs for stability and continuity of business operations until the President appoints new Board members, which in our experience usually takes at least 6 months after the President is sworn into office. This means that the appointment of a new President does not automatically terminate their positions, allowing them to continue serving unless their contracts are otherwise terminated or renegotiated. The Transitions Act aims to ensure continuity in SOEs during the transition period from one administration to the other. However, in practice, the business continuity of these SOEs is often disrupted until new Board members are appointed. This is because the CEOs, who were appointed by the previous President, vetted by the Public Service Commission, and given a contract of employment, are also removed from office along with the Board members whose term of office ended. What is the role of the Transitions Act on SOE subsidiary companies? It is important to note that the Supreme Court decision in Theophilus Donkor v. The Attorney General and the Transitions Act does not apply to companies fully or partially owned by SOEs (such as those registered as companies with government ownership). Therefore, the Boards of such companies are not dissolved by the appointment of the new President. Instead, the continuity of the Board is required for good governance, and until such a time that its shareholders wish to reconstitute the board in accordance with the Companies Act. As established above, some SOEs establish subsidiaries or create companies limited by shares for specific purposes. In such cases, the SOE typically serves as the shareholder of the newly created company. A notable example is the GNPC, which owns some companies such as GNPC Exploration and Production Limited, Mole Motel Limited, and Prestea Sankofa Gold Limited, all registered as companies limited by shares, just to name a few. The Board of these subsidiaries should remain in office and continue their functions until one of the following occurs: The SOE, acting as the shareholder, reconstitutes the Board in accordance with the Companies Act; or Existing Board members voluntarily resign.   Based on the above, a transition process should follow this narrative: upon assuming office, the President constitutes the Board of the SOE. Once constituted, the new SOE Board determines the future of the Board of its subsidiaries by way of reconstituting the Board.  This will ensure a proper handing over of the previous Board’s activities to the new Board for business and operational continuity. For example, upon the swearing-in of President John Dramani Mahama, the tenure of the GNPC Board (as an SOE) is automatically dissolved under Act 845. However, the Board of GNPC Exploration and Production Limited, Prestea Sankofa Gold Limited, and Mole Motel Limited, which are all companies limited by shares, should remain in office and continue operating. The newly constituted GNPC Board may choose to: Reconstitute the current Board members of its subsidiaries, compensating them according to the Board charter or established practices; or Retain the existing board members to continue their duties. This practice will allow for either a proper handing over from an old Board to a new Board, or continue with work as usual. Either practice does not cause a break in the operational activities of the company. Similarly, the CEO of GNPC Exploration and Production Limited should remain in office unless replaced by the new Board of GNPC. If replaced, the CEO would be entitled to compensation as per their contract of employment. How is Corporate Governance practiced and sustainability maintained in light of changes in government and the election of new administrations in Ghana? In practice, the SOE, through its Management and staff, often prevents the Board of the company limited by shares from meeting or conducting business until the new President appoints a new Board for that SOE. This interference undermines good corporate governance and brings the subsidiary's operations to a standstill. Such a divergence from established legal practices highlights how political influence can disrupt the law, creating a significant gap between legal standards and actual practices. According to the Corporate Governance Institute, corporate governance is essentially a set of tools that enables Management and the Board to run an organisation more efficiently and effectively. Corporate governance does not exist without Fairness, Accountability, Responsibility, and Transparency. These pillars are what define whether a company, through its Management and Board of Directors, is truly practicing corporate governance. As established above, the very nature of SOEs are vehicles of government policy. In Ghana, it is common practice that when a new political party is elected, it forms the new government. As a result, the newly elected government proceeds to replace all Board members and CEOs of SOEs to align these institutions with their political party's policies and campaign promises. However, this is often done to the detriment of the SOE. The above is the bedrock of the challenges of good corporate governance in the public sector. Some examples of these challenges faced by SOEs are: Lack of continuity in ongoing projects because when new Boards are eventually appointed, they align their objectives with the new administration’s policies. Lack of clear fiduciary accountability for SOE Boards because they are not clearly bound by the duties and responsibilities of directors in the Companies Act 2019 (“Act 992”) as with companies established under Act 992. Continuous delays in financial reporting, such as the delays in publishing their financial statements for fully-owned government entities and delays in filing their audited financial statements at the Office of the Registrar of Companies for partially-owned government entities. The National Corporate Governance Code, 2022 (the “Code”) is a great resource that addresses the corporate governance needs of all forms of organisations, including the private and public sectors, listed and unlisted corporations, large and small businesses, formal and informal sector businesses, and not-for-profit organisations and serves as a guiding framework for the above-listed companies. Appendix H of the Code, which provides the Corporate Governance Manual for Governing Boards or Councils of the Ghana Public Services suggests the following: Accountability Boards of SOEs must be ready to render account of their stewardship to their appointing authority, and they should be held responsible for all acts of omission or commission on their part[7]. Transparency There should be no secrecy about transactions handled by a Board member on behalf of the rest, and if a member is interested in a transaction or contract that the SOE is about to enter into, the member should make his intentions known to his colleagues[8]. Conflicts of Interest The Code reiterates article 284 of the 1992 Constitution of Ghana, which mandates Board members to ensure they don’t put themselves in a position where their personal interest conflicts or is likely to conflict with the performance of their duties. Integrity Boards of SOEs are mandated to be honest and bold to resist fraudulent practices and not to be complicit in all forms of corrupt practices[9]. Efficiency and Effectiveness Board members of SOEs are mandated to refrain from misuse of corporate resources and to participate in all Board meetings to make decisions and retain full and effective control over the SOEs[10]. Social Accountability Board members must not be exclusively interested in financial issues, be accountable to a broader group of stakeholders, and recognize that the success of their entities goes beyond reporting financial success[11]. Code of Conduct Boards of SOEs must adopt a Code of Conduct that outlines how members should behave, work with management and stakeholders, attend and take part in meetings, keep official information confidential, and follow their oaths of office and secrecy[12]. Independence Board members must avoid being pressured into questionable transactions that benefit others and are required to seek a second opinion or legal advice if they are unsure about the consequences of any action, especially when the request comes from a third party[13]. Board Evaluation Boards of SOEs are mandated to annually assess their performance and effectiveness as a team and that of individual members, including the Chief Executive Officer of the SOE[14]. Capacity Building SOEs are mandated to make provision for the capacity development of Board members of SOEs, irrespective of a Board member’s experience and academic and professional qualifications [15]. Auditing Requirement Boards of SOEs are also mandated to ensure regular internal or external auditing of the business transactions and financial statements of the SOE, as well as audit recommendations for the SOE are implemented promptly[16]. It is important to note that Board members of SOEs are liable both as a group and individually whenever a liability arises,[17] and for that reason, the above guidelines must be taken seriously if a board wants to maintain good corporate governance. What is the Importance of Corporate Governance in SOEs? The Code serves as a unified standard for all entities, in this case, all SOEs, and ensures their long-term sustainability and growth. The uniqueness of SOEs lies in the fact that they are to be profit-making entities as well as serve in the interest of the public. Therefore, effective corporate governance is essential to protect the public interest and purse as well as ensure these SOEs serve their intended purpose efficiently and transparently. This is why continuity in governing Boards and proper transition of old to new Boards is necessary. Adhering to the above corporate governance guidelines in SOEs is critical because: It promotes transparency and accountability with the public to prevent corruption, financial misreporting, and abuse of public resources. It ensures the fiduciary responsibility of directors is adhered to. It builds investor confidence by enhancing the country’s international competitiveness in attracting foreign investment. In an increasingly global economy, transparency and good governance are prerequisites for attracting private capital, international development assistance, and public-private partnerships.  It improves operational efficiency and performance of SOEs, which reduces resource wastage and underperformance. It ensures appropriate sanctions for breach of good corporate governance Conclusion Corporate Governance is majorly overlooked in the public sector, specifically with State-Owned Entities. The tools and framework needed to ensure good corporate governance already exist, particularly with the launch of the National Corporate Governance Code, 2022.  To safeguard public interest and the public purse to advance national development, Ghana must prioritize the full implementation of corporate governance principles, not merely as guidelines, but as legally enforceable standards to ensure that every SOE remains functional, accountable, and responsible through every administration of government. We must all commit, both the government, regulators, and state-owned entities, to ensure good corporate governance, regardless of political affiliations. Written by Lady-Ann Essuman (Managing Attorney) and Verissa Odame-Koranteng (Junior Associate). VINT & Aletheia Attorneys and Consultants.

In today’s fast-evolving financial landscape, regulatory compliance has become more than just a legal necessity; it is a cornerstone of trust, stability, and sustainable growth. As financial institutions operate in increasingly complex markets, they must navigate a wide range of laws, regulations and international standards designed to safeguard consumers, promote transparency, and prevent financial crimes. This article explores the various regulators who regulate financial institutions such as banks, microfinance, insurance companies amongst others as well as the critical role of regulatory compliance in the financial sector, the challenges institutions face in maintaining compliance, and the strategies for building resilient compliance frameworks that not only meet current regulatory demands but also anticipate future changes. Who is a Regulator? A regulator is an state agency responsible for overseeing, enforcing, and ensuring compliance with laws, rules, and standards set up by the state for businesses within a specific industry or sector. They are responsible for the issuance of licenses, conducting inspections, imposing penalties, and setting guidelines to ensure fair practices, safety, and efficiency. What is Regulatory Compliance and the importance of regulatory compliance to financial institutions? Regulatory compliance is the process of ensuring adherence to laws, regulations, and standards set by authorities. It involves implementing policies and controls to meet legal requirements, avoid penalties, and maintain ethical standards. It helps organizations comply with national laws, industry-specific regulations, and international standards that apply to their operations and also develop internal compliance programs to ensure that their employees follow legal and ethical standards. Some of the key benefits of regulatory compliance include the following: 1. Helps financial institutions avoid fines, sanctions, and legal action from regulators. 2. Reduces the risk of license revocation or business restrictions as a result of non-compliance with the set standards. 3. Helps build public confidence in the finance industry and enhances the institution’s credibility among customers, investors, and partners. 4. Helps financial institutions demonstrate their commitment to ethical business practices and financial integrity. 5. Helps financial institutions prevent money laundering, fraud, and terrorist financing through Know Your Customer and the Anti-Money Laundering Act, 2020(Act 1044). Key Regulatory Bodies in Ghana's Financial Sector In Ghana, there are several regulators who regulate the financial industry to ensure that businesses that are engaged in finance instruments comply with the regulatory framework that relates to the financial sector. We will however discuss the following four key regulators in the finance industry - Bank of Ghana, the Securities and Exchange Commission, the National Insurance Commission and the National Pensions Regulatory Authority: 1. The Bank of Ghana The Bank of Ghana (“BoG”) is the central bank of the Republic of Ghana. It is a state-owned institution responsible for regulating banks and non-bank financial institutions, formulating monetary policies, and licensing and supervising financial institutions in the country. BoG is regulated by the Banks and Specialized Deposit Taking Institutions Act 2016 (“Act 930”). The role of the BoG has been provided for under Act 9301 to include the following: a. The overall supervision and regulation of all matters relating to deposit-taking business. b. Promoting the safety and soundness of banks and deposit-taking institutions, the stability of the financial system and the protection of depositors in the country through the performance of its regulatory and supervisory roles. c. Dealing with unlawful or improper practices in the financial industry. d. They have the sole responsibility to issue licences to banks and specialised deposit-taking institutions, grant approval to foreign banks with respect to the establishment of representative offices and register financial holding companies2. Regulatory Compliance with BoG Individuals and corporations who intend to operate under the scope of BoG are expected to comply with the following regulatory requirements to avoid the payment of fines and ensure the smooth operation of their business. i. Licensing and Registration Compliance All financial institutions or businesses must obtain a BoG license before operating. They must submit the relevant documents for approval and renew their licenses periodically while meeting capital adequacy requirements. It is important to state that operating without a license from BoG can result in fines, suspension, or imprisonment in accordance with the provisions of Act 9304. ii. Capital Adequacy Compliance BoG requires banks and financial institutions to maintain a minimum capital ratio of 10% of their assets5. If they fail to comply, they must promptly notify BoG and provide details of the non-compliance. Failure to notify results in a penalty of GHC 12,0006. If the capital ratio falls short, a fine of 0.05% of the shortfall is imposed daily. The director and CEO of a non-compliant institution are personally liable to pay a penalty of GHC 6,000.00. iii. Liquidity Requirement A bank or specialised deposit-taking institution is required to comply with the liquidity requirements put in place by BoG and submit a report on their liquid assets to BoG. Failure to comply with this will result in the payment of a penalty of not more than GHC 6,000.00 to BoG and a further penalty of GHC 600 for each day that the default continues. iv. Anti-Money Laundering (“AML”) Requirement BoG requires financial institutions to adhere to regulations under the Anti-Money Laundering Act, 2020(Act 1044) by implementing Know Your Customer (“KYC”) policies, reporting suspicious transactions to the Financial Intelligence Centre (“FIC”), conducting customer due diligence for high-risk accounts and submitting AML compliance reports to BoG and FIC. This is to prevent any financial crimes and money laundering activities. Failure to adhere to these requirements will result in a liability to the financial institution involved. v. Consumer Protection & Market Conduct Compliance Financial institutions are required to disclose interest rates, fees, and terms of loans transparently, provide fair treatment to customers, resolve complaints effectively and adhere to BoG’s Borrowers and Lenders Act, 2020 (Act 1052). 2. Securities and Exchange Commission Ghana (“SEC”) SEC, established under the Security Industry Act, 2016(“Act 929”) aims to regulate and promote the growth of an efficient, fair, and transparent securities market, ensuring the protection of investors.9 They are the primary regulators of the securities market in Ghana and perform the following functions in the financial industry: a. Regulate, supervise, and issue licenses to institutions in the securities industry, such as stock exchange and brokerage firms, investment advisors, and fund managers. Financial institutions with a market operator’s license issued by SEC must pay an annual levy to support SEC’s operations. b. Ensure that investors are protected from fraudulent activities and unfair market practices. c. Promote the growth of Ghana’s capital market and encourage investment in securities while facilitating innovation in financial instruments and services and educate the public on securities investment and their rights as investors. d. Advise the government on capital market policies to enhance economic growth and work with local and international institutions to improve financial market regulations. Regulatory Compliance of SEC SEC is governed by several laws10. This includes the Securities Industry (Amendment), 2021 (Act 1062), Securities and Exchange Commission (Amendment) Regulations, 2019 (L. I. 2387), Securities Industry Act, 2016, (Act 929), Foreign Exchange Act 2006 (Act 723), SEC Regulations 2003 (LI 1728) and the Unit Trust and Mutual Fund Regulations (LI 1695). Institutions who operate or intend to operate under SEC’s authority must comply with these laws and the regulatory requirements discussed below: i. Licensing and Registration Compliance All entities and individuals engaged in securities activities, such as mutual funds11, investment advising, or stock brokerage12 amongst others are required to obtain a licence before they can commence their operations and renew it at least three months before expiration. Failure to comply with licensing requirements will result in a penalty under Act 92913. ii. Capital Adequacy & Financial Compliance Institutions licensed by the SEC are required to satisfy and maintain various minimum capital requirements as set by the SEC at all times, depending on their type of business. They are also required to submit audited financial statements and quarterly reports to SEC. Where an institution fails to meet the capital requirements, it may have its license revoked or suspended by the SEC14. iii. Market Conduct & Fair-Trading Compliance Institutions are required to prevent market manipulation, insider trading15, and fraud. They must also comply with corporate governance requirements for listed companies and the SEC’s AML and KYC requirements. Failure to comply with these requirements will result in a fine or the revocation of their license. iv. Reporting & Disclosure Requirements Institutions operating under the SEC are required to file their annual reports in accordance with the provisions of the Act 92916. 3. National Insurance Commission The National Insurance Commission (“NIC”) is the regulatory body responsible for overseeing the insurance industry in Ghana. It was established under the Insurance Law 1989 (PNDC Law 227), but currently operates under the Insurance Act, 2021 (“Act 1061”). The role of NIC is to promote a fair, safe, efficient, and stable insurance market in Ghana17. NIC has many functions outlined under the provisions of the Act 106118 such as: a. Issuance of licenses to insurance entities and supervising licensees, issuing directives, directions, instructions, and guidelines to insurers, reinsurers, and insurance intermediaries. b. Regulate and control the business of insurance in the country. c. Approve rates of insurance premiums and commissions, provide a bureau for the resolution of complaints, and arbitrate insurance claims when disputes arise. In the performance of its functions under the Act 106119 and the implementation of its role, NIC is required to have regard for international standards and best practices while promoting effective risk management by the licensees. Regulatory Compliance of NIC Individuals and institutions that operate or intend to operate in the insurance industry must comply with the following requirements: i. Licensing and Registration Compliance Entities and individuals wishing to engage in insurance business in Ghana must first obtain a license from the NIC. Licenses are renewed annually, and operators must meet regulatory and capital adequacy requirements set by the NIC.20. All activities must be conducted in accordance with the terms of the granted license. It is important to note that operating without a license may lead to fines, and failing to satisfy the capital requirement or notify the Commission of same will result in the payment of GHC 12,000.00 as a penalty in that regard21. ii. Statutory deposit Insurance companies and institutions are required by law to deposit and maintain in an established account an amount that is at least equal to the amount specified in directives issued by NIC or an amount greater than that. iii. Compliance with Insurance Policies and Products All insurance products must be approved by NIC before being sold to consumers. The wording of insurance policies must also be clear, fair, and not misleading to consumers. It must also comply with compulsory insurance requirements such as the motor third-party insurance provided for in the Motor Vehicles Third Party Insurance Act, 1958 (Act 42). iv. Reporting and Governance Compliance Insurance companies must also submit quarterly and annual reports to NIC and ensure that they have in place corporate governance structures that align with NIC guidelines. They must also file their annual audited financial statements amongst others. 4. National Pensions Regulatory Authority The National Pensions Regulatory Authority (“NPRA”) is the regulatory body established under the National Pensions Act, 2008 (“Act 766”) to regulate and monitor the operations of the three-tier pension scheme which consists of the mandatory basic national social security scheme (Tier 1), the mandatory fully funded and privately managed occupational pension scheme (Tier 2) and the voluntary fully funded and privately managed provident fund and pension scheme (Tier 3). NPRA is responsible for the following functions under Act 76624: a. Ensuring compliance with the provisions of the Act, registering provident funds, occupational and personal pension schemes. b. Approve, regulate and monitor trustees, pension fund managers, custodians and other pension-related institutions. c. Provide standards, rules, and guidelines to ensure the effective management and regulation of pension funds in Ghana. d. Monitor the implementation of the Basic National Social Security Scheme. e. Charge and collect fees as they may determine and impose administrative sanctions or fines on institutions who operate within their authority. Regulatory Compliance of NPRA The entities which operate under the authority of NPRA are required to comply with the following regulatory requirements in accordance with the provisions of the Act. i. Registration and Contribution Requirements They must register with NPRA and enrol their employees in the mandatory First-Tier Social Security and National Insurance Trust Scheme (“SSNIT”) and the Second-Tier Occupational Pension Scheme. They must deduct and remit to SSNIT and approved trustees within 14 days after the end of each month and must maintain payroll records showing pension deductions. They must also provide employees with pension contribution statements and submit same to SSNIT. Failure to pay contributions and failure to pay on time attract a 3% monthly penalty on the outstanding amount. ii. Pension Trustees Compliance Requirements Pension trustees who manage the second-tier occupational pension schemes and third-tier voluntary pension schemes must ensure that they are licensed by the NPRA before operating. They must also ensure the timely investment of funds in approved assets in accordance with the guidelines set by NPRA and Act 76625 and submit quarterly and annual reports on fund performance activities while maintaining accurate records of contributions and beneficiaries. Trustees who mismanage funds or violate the investment guidelines set by the NPRA will be liable to a discretionary penalty prescribed by the NPRA, may lose their license, or face prosecution. iii. Scheme Member Compliance Requirements Employees and self-employed individuals are to register with a licensed trustee for the second and third-tier pension scheme and ensure that their contributions are correctly deducted and remitted. They must also monitor their pension statements to track contributions. iv. Annual Filing & Reporting Obligations Trustees & Fund Managers must submit an annual report to the Board within four months after the end of each financial year to give details of their activities in the preceding year to the authority. Challenges of Regulatory Compliance in the Financial Sector Financial institutions in Ghana face challenges that sometimes impact their operations, risk management, and overall business sustainability. Some of these challenges include the following: a. Frequent updates and changes in regulatory requirements by authorities such as the BoG and the SEC make it challenging for financial institutions to stay current and maintain compliance with the regulatory requirements. b. Small and medium-sized banks, microfinance institutions, and fintech start-ups often face difficulties in meeting compliance standards due to the substantial investment required for compliance audits and regulatory adherence. c. There are usually overlapping or conflicting requirements due to the various regulatory requirements of the regulators of financial institutions. d. Many institutions lack advanced digital systems to track transactions and monitor compliance automatically, thereby making it difficult to monitor compliance with the regulatory measures. Strategies for Ensuring Regulatory Compliance in the Financial Sector Despite the challenges faced by regulators of financial institutions, they can ensure that the various regulatory measures are complied with by doing the following: a) Establishing clear compliance policies for the various institutions to adhere to. b) Organizing training and seminars to train staff on the various compliance requirements. c) Appointing officers to oversee adherence to the compliance measures. d) Conducting regular audits amongst the various financial institutions to ensure compliance. e) Introducing and implementing stricter enforcement measures to ensure that the regulatory requirements are complied with effectively. Conclusion In the light of the discussions above, it can be concluded that in order to operate effectively and thrive in Ghana as a financial institution there is the need to comply with all the necessary requirements of the regulators of the financial institution in Ghana and regulators must also do well to put measures in place to address the challenges faced by the business who operate within the financial institution. By: Ama Anima Konadu, Junior Associate VINT & Aletheia Attorneys & Consultant

This article examines the governance structures of various business entities in Ghana, such as Sole Proprietorships, Partnerships, Companies Limited by Shares, Companies Unlimited by Shares, Companies Limited by Guarantee, and External Companies. It offers a comprehensive overview of the governance framework applicable to these business types in Ghana. The objective of this article is to clarify the governing framework for these entities, facilitating informed decision-making, ensuring regulatory compliance, and promoting long-term business sustainability. Effective business governance in Ghana aims to ensure accountability, transparency, fairness, and responsible management, fostering investor confidence and sustainable business operations. Below is an overview of the governance structures for the various types of businesses in Ghana: 1. Sole Proprietorship: To ensure sustainability, the governing structure of a sole proprietorship should reflect its unique characteristics as a business owned and managed by a single individual. The proprietor has full control over decision-making, retains all profits, and assumes all losses, with unlimited liability that extends to personal assets. This means there is no legal separation between the owner and the business. Under the Registration of Business Names Act, 1962 (Act 151), sole proprietorships are required to register their business names to ensure public transparency. This structure is widely adopted in Ghana due to its simplicity and low startup costs. Sole proprietorships commonly known as Enterprises are used by Small and Medium Enterprises (SMEs) such as provision shops, hair dressing salons, jewelry shops, clothing shops, make-up studios, etc. ● Governance Structure: This framework focuses on the sole proprietor, who holds ultimate responsibility for all business aspects, managing tasks directly or through delegation. The key duties include strategic decision-making, financial management, legal compliance, and daily operations. To ensure sustainability, a sole proprietor must establish accountability systems, maintain accurate records, adopt sound financial practices, and stay informed about regulatory requirements and market trends. The governance structure must typically include the following roles, which can be handled internally or outsourced: i. Manager: Oversees the day-to-day operations of the business, ensuring smooth functioning and efficient execution of tasks. ii. Account Officer: Responsible for bookkeeping, managing financial records, and ensuring compliance with tax and financial regulations. iii. Marketing Officer: Handles promotional activities, market research, and customer engagement to drive business growth and brand visibility. iv. Human Resource Manager: Manages recruitment, employee relations, training, and compliance with labor laws, ensuring a productive and motivated workforce. 2. Partnerships: According to the Incorporated Private Partnerships Act, 1962 (Act 152), a partnership is made up of a minimum of two (2) and a maximum of twenty (20) persons who engage in profit-making business. Their relationship is determined by a Partnership Agreement duly signed by all partners. Partnerships are commonly used by professional service firms like law, accounting, and consulting agencies. ● Governance Structure: This framework, governed by a partnership agreement, designates partners as both owners and the primary governing body. The agreement outlines the partnership's operations, roles, and decision-making processes. While all partners share ownership, a managing partner is often appointed to handle day-to-day operations. The tenure and structure depend on the partnership agreement, with individuals typically becoming partners through experience, performance, or capital contribution, as specified. 3. Company Limited by Shares and Unlimited by Shares (Private and Public): A company limited by shares is owned by shareholders whose financial responsibility is restricted to any unpaid amount they owe if the company faces debt. In contrast, an unlimited company has shareholders with unlimited liability, meaning if the company faces debt, their personal assets can be used to cover business debts. Both companies are governed by the Companies Act, 2019 (“Companies Act”) as well as their constitutions. A shareholders' agreement is also usually entered to regulate the relationship among the shareholders. There are two types of companies limited by shares/unlimited by shares: A. Private Company Limited by Shares/Unlimited by Shares: Formed with a maximum of 50 shareholders. These companies cannot offer shares to the public. B. Public Company Limited by Shares/Unlimited by Shares: Formed with a minimum of 50 shareholders. There is no restriction on the number of shareholders. These companies can offer shares to the public. ● Governance Structure for Company Limited by Shares/Unlimited by Shares (Private and Public): This framework outlines a clear governance hierarchy as below; i. Shareholders: The ultimate owners. ii. Board of Directors: They are led by a Chairperson for the purpose of meetings. They also set goals, monitor performance, approve budgets, and establish policies. iii. Chief Executive Officer (“CEO”): Oversees the Management team to ensure the Board of Director’s directives are implemented while serving as a liaison between the Board of Directors and Management. iv. Company Secretary: Reports to the Board of Directors and ensures legal and constitutional compliance, maintains records, records minutes, issues meeting notices, and oversees the preparation and filing of annual audited financial statements. v. External Auditors: Reports to the Shareholders and independently reviews financial statements to ensure accuracy and compliance with legal and regulatory standards, providing an objective assessment for stakeholders. vi. Internal Auditor: Administratively reports to the CEO and functionally reports to the Board of Directors, specifically the Audit Committee of the Board. They evaluate internal processes, financial records, and compliance with company policies and regulations, focusing on improving operational efficiency and risk management within the organization. vii. Heads of Department: Ensures that their respective departments run smoothly and help achieve the organization's goals 4. Company Limited by Guarantee: This is a distinct type of company, governed by the Companies Act. In such a company, the members' financial responsibility is limited to the amount they have agreed to contribute in the event the company is wound up. This structure is commonly used for non-profit, social, or charitable organizations, with the primary focus on the advancement of a specific cause rather than generating profits for members. Examples of such a company include; churches, clubs, associations, and professional bodies such as the Legal Bar Associations, Institute of Architects, and Pharmaceutical Societies. There are two types of companies limited by guarantee. They are: a. Private company limited by guarantee: Has membership restricted to 50 members. b. Public company limited by guarantee: Has no membership limit. ● Governance Structure: This framework closely resembles that of companies limited by shares but with distinct terminology. Instead of shareholders, the term Members is used. The Board of Directors is referred to as the Council. For the sake of meetings, the Chairperson presides over the Council. The Management team is overseen by the Executive Director. 5. External Company: An external company is a business established in another country operating in Ghana through a physical presence, like a branch or office. ● Governance Structure: This framework clearly outlines the operations of such a company in Ghana. A local manager, qualified under the Companies Act, is appointed to perform functions similar to those of a managing director. Additionally, a processing agent such as a law firm or an accounting firm is designated and authorized to receive legal documents on behalf of the company. CONCLUSION In conclusion, the governance structures or framework for businesses in Ghana are designed to ensure that they operate sustainably, fostering long-term success and effectiveness. By following these structures, businesses can thrive while contributing to a strong and reliable economic ecosystem in Ghana. By: Nana Ekua Quansar Pupil VINT & Aletheia Attorneys & Consultants