Insolvency, Companies bills to be laid before Parliament

The Corporate Insolvency Bill, which is expected to provide a framework for restructuring viable but temporarily distressed businesses and the New Companies Bill, which includes a clause on beneficial ownership, are expected to be laid before Parliament soon, the Ghana Association of Restructuring and Insolvency Advisors (GARIA) has indicated.

Currently, the two bills are before Cabinet awaiting approval and will soon be laid before Parliament after Caninet’s approval.

The President of GARIA, Mr Felix Addo, speaking in an interview with the GRAPHIC BUSINESS on the sidelines of a forum held by the American Chamber of Commerce (AMCHAM) and GARIA said the Attorney General (AG) was working assiduously to get the two bills approved by Cabinet and subsequently b Parliament.

“Parliament has its own schedule but we understand they plan to pass these two bills soonest so within a year, we should expect these two bills passed into law,” he noted.

He said in Ghana, most companies faced serious financial problems and most financial institutions carried huge non-performing loan portfolios.

“In such an environment, it is imperative that effective insolvency laws and institutions are established,” he stated.

“Companies do go through trying times and, therefore, need restructuring under a supervisory regime so you don’t abuse your creditors”, he added

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Insolvency Bill

The Corporate Insolvency Bill is expected to promote efficient closure and transfer of assets of businesses which are no longer viable and a proper winding up of businesses where the members, for other reasons, decide to cease operations.

This forms part of the reform agenda of GARIA to set the legal framework for corporate bodies and their administrators when they become insolvent.

The bill, when passed into law, would provide a framework for the regulation of insolvency practitioners and also facilitate access to timely, efficient and impartial insolvency proceedings.

It is also expected to reduce the burden of insolvency through potentially higher and equitable distribution of assets of failed companies to creditors, as well as provide the framework for effective creditor participation in insolvency proceedings either directly or through the creditor’s committees.

The new law would also permit insolvency practitioners to accept appointment as liquidators of insolvent companies.

Setback

The association was unsuccessful in laying the bill last year and its dream of having it passed early this year also suffered a setback due to the change in government which meant that the bill, which had already received Cabinet approval from the previous government, had to go before the current Cabinet.

Companies Bill

The Company’s Law on registration of companies which was passed in 1962 was amended in 2016 is awaiting parliamentary approval.

The new Companies Bill now includes a clause on beneficial ownership which requires that every company in Ghana would have to provide information on who its beneficial owners are, their interests, nationality, residential and postal addresses, their dates of birth and possibly contact numbers to enable the Registrar-Generals Department to contact them, if need be.

Per the beneficial ownership provision, companies who will fail to provide information on beneficial ownership would face prescribed sanctions.

The bill also requires the country to establish a central register on beneficial ownership and also provide for the inclusion of the names of and particulars of beneficial owners of companies in the register of members, to establish a central register and to provide for related matters.

Currently, none of the country’s laws catered for beneficial ownership, making it easier for individuals and groups to hide behind others and do business.

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AG’s commitment

The Attorney General (AG) and Minister for Justice, Ms Gloria Akuffo, in a speech read on her behalf said she was committed to ensuring that the Companies Bill and the Insolvency Bill were passed as soon as possible.

She said reforming the Companies Law would go a long way of improving the ease of doing business in the country as it seeks to discontinue a number of requirements and make incorporation of companies less burdensome.

She also pointed out that the Insolvency Bill would address the restructuring of viable but financially troubled companies and ensure a careful balance between liquidation and restructuring.

“It is ,therefore, my hope that when these legislations are enacted, we can all one day share a common experience that demonstrate our best efforts at making the ease of doing business a sustainable phenomenon,” she stated.— GB