Last week, we posted part 1 of our series on becoming a commercial upstream player in the petroleum industry, which was read widely on all our social media platforms. If you missed it, you can check it out here: Ghana’s exploration history and the industry structure.
This week’s article focuses on what businesses “need to know” to operate effectively as an oil and gas company in the upstream sector. There are two main steps involved in setting up an oil and gas production company in Ghana. Firstly, the business must be incorporated at the Companies Registry and then, secondly, the business must be registered with the relevant regulatory bodies.
1. INCORPORATION AT THE COMPANIES REGISTRY
The incorporation of companies is governed by the Companies Act, 2019 (Act 992) and regulated by the Companies Registry. A person seeking to do business in the upstream sector has to incorporate a local company such as a company limited by shares. Previously, a person could incorporate an external company in the upstream sector; however, the provisions of section 70 of the Petroleum (Exploration and Production) Act, 2016 (Act 919) require that a company be incorporated locally. A duly incorporated company is then issued with a Certificate of Incorporation and a document that lists all the details of the registered company known as the Company Profile.
1.1. Local Company or Company limited by shares
A local company or a company limited by shares incorporated under the laws of the Republic of Ghana may either be an indigenous (i.e. a wholly Ghanaian owned company) or non-indigenous company (i.e. wholly foreign owned company). According to Regulation 49 of the Petroleum (Local Content and Local Participation) Regulations, 2013 (LI 2204), an indigenous company is a company that:
- has been incorporated under Act 992;
- has at least fifty-one percent (51%) of its equity owned by a Ghanaian(s);
- has at least eighty percent (80%) of Ghanaian(s) in executive and senior management positions; and
- has one hundred percent (100%) of Ghanaians in non-managerial and other positions.
1.2. Joint Venture Companies
For the purposes of upstream petroleum operations, a joint venture company (“JVC”) is a company incorporated in Ghana by the partnership of a non-indigenous company and an indigenous company to undertake petroleum activities. With regard to JVCs, the indigenous partner must have a minimum of ten percent (10%) equity participation. This is to create an enabling environment for indigenous companies to effectively participate in the industry.
1.3. External Company or Branch Office
An external company is a body corporate that has its parent company outside the Republic of Ghana, and which has an established place of business (i.e. a branch office, registration office or any other fixed place of business) in the country. As indicated earlier in this article, it is pertinent to note that in the upstream sector, external companies are no longer allowed to register with the Petroleum Commission unless they partner with an indigenous company to form a JVC.
2. REGISTRATION WITH THE REGULATORY BODIES
Once incorporated at the Companies Registry, the company must register with the Ghana Investment Promotion Centre (“GIPC”) and the Petroleum Commission (the “Commission”).
GIPC is the statutory body responsible for promoting investment in Ghana and is governed by the Ghana Investment Promotion Centre Act, 2013 (Act 865). Companies with foreign participation must register with GIPC and meet the minimum capital requirements as provided for in Act 865. Registration with GIPC entitles the company to certain privileges and incentives stated in Act 865.
The Commission is the regulator of the upstream sector, and is responsible for issuing authorizations, permits and licences to companies that wish to operate in this sector. The Commission is governed by the Petroleum Commission Act, 2011 (Act 821). Companies must apply for authorizations, permits or licences and the Commission, if satisfied that the company has fulfilled the requirements for registration, will issue the company with the requisite authorization, permit or licence to operate.
It is mandatory under Ghanaian law for all businesses to be registered with the Ghana Revenue Authority and the Social Security and National Insurance Trust. Evidence of registration with these statutory bodies would be required by the Commission upon registration for authorization, permits or licences.
We will be happy to assist you with the incorporation and registration processes should you require same.
Look out for next week’s article on the “need to knows” in the downstream industry in Ghana.
By Ewoenam Yawa Sybil Genevieve Atiase
Veritas International Nominees & Trustees || Aletheia Law
w: Veritas International Nominees and Trustees
t: 030 296 4498
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