The Managing Director of Tropical Cable and Conductor Limited, Mr Tony Oteng-Gyasi, is confident that the Companies Act 2019 will help promote transparency and reduce acts of corruption associated with the ownership of businesses in the country.
It would achieve that by mandating all beneficiary owners of companies to publicly own up or risk losing their rights and the businesses to their nominee companies/shareholders, he told the Daily Graphic in an interview.
“This should eliminate the shadiness associated with ownership of businesses, which is a fertile ground for corruption in the country,” he said.
Unlike the soon-to-be replaced Companies Code, 1963 (Act 179), which allowed beneficiary owners to remain anonymous, the former President of the Association of Ghana Industries (AGI) said, the new law made it compulsory for such owners to be disclosed when a company was being incorporated or shares were exchanging hands.
“It is a way of fighting corruption actually,” he explained.
Mr Oteng-Gyasi is a member of the Committee of Experts of the Business Law Reforms Commission which oversaw the passage of the Companies Act 2019.
He noted that the issue of beneficiary ownership and nominee shareholding was popular among politically exposed persons, who normally sought ways to disguise their business links.
“Sometimes you see politically exposed people do these things and they give some nominee sitting in The Seychelles or some funny place somewhere and it looks like they own the thing.
“Even in Ghana, they can give it to a nephew or a friend.
“Now, if you do not disclose that it is you who are the real owner, then if the person (nominee) says he/she is the beneficiary and signs on to it, he/she is under no obligation to give it to you again,” Mr Oteng-Gyasi said.
He explained that the measure did not mean that the owner could not have a nominee, adding: “What it means is that it has to be disclosed.”
Headed by Professor Justice Samuel Date-Bah, a retired Supreme Court judge, the five-member committee was established in 2008 and tasked to reform laws governing the operations of businesses in the country.
After more than a decade of work that transitioned four Presidents, four sessions of Parliament and five Attorneys-General, the committee successfully got the Sixth Parliament of the Fourth Republic to pass a new Companies Act to replace the 56-year-old law.
It was passed on May 2 and is now awaiting Presidential assent to make it operational.
Once it becomes operational, it will guide the incorporation and operation of companies in the country, particularly on governance issues.
One key development in the new act is the requirement that the registration of companies be hived off the Registrar-General’s Department (RGD) and given to an Office of the Registrar of Companies, which will be established when the law becomes operational.
Impact on transparency
While lauding the new law as modern, business-friendly and a point of attraction for investments, Mr Oteng-Gyasi said it was also a feather in the cap of the country in the fight against corruption in the corporate field.
“There is a portion on beneficiary shareholders, so that you cannot hide behind a nominee and things like that and not disclose exactly who owns or gets the fruits of the company.
“Sometimes people hide behind nominees and you do not know the real people behind the company,” he said.
“If you say that someone is the nominee shareholder of a company without owning up, then you cannot turn around one day and say that ‘I put him there and he was actually looking after my interest’.
That used to happen a lot under the old regime,” he explained.
Point of disclosure
Asked at what point the real/beneficiary owner was mandated to disclose his/her interest, Mr Oteng-Gyasi said it must be done during the registration and anytime shares in the company changed hands.
“The person to whose hands the shares are going is presumed to be the beneficiary owner unless you (the beneficiary owner) indicate that he/she is holding the shares on your behalf,” he said.
The industrialist commended the other members of the committee and other stakeholders for the successful passage of the act, but said it was now time for Parliament to shift to the Insolvency Bill, where substantial work had also been done.
“When the committee was set up, it was to look into reforming all business laws and the Companies Code was the first one we looked at.
“Along the line, we also looked at an Insolvency Bill which we worked on and we again brought some modern provisions to help insolvent companies to be protected to enable them to reorganise themselves.
“That one is yet to go to Parliament, so I urge that that one too be looked at,” he said.
A nominee shareholder is an individual or institution holding shares in a company on behalf of a beneficiary shareholder/investor.
In the company’s records, the name of the nominee shareholder appears, although the nominee does not enjoy benefits arising from the company.
A beneficiary owner, on the other hand, is the actual owner of the shares of the company.
The beneficiary owner is entitled to dividend and incomes from the company in question but is only represented by the nominee shareholder in the company’s records.