Report On Establishing A Financial Institution In Ghana

There are a number of Financial Institutions in Ghana an they are listed as follows:

Banks
Savings and loans
Finance Houses
Representative Offices in Ghana
Deposit-taking microfinance institutions
Microcredit institutions.

This report is however made for the purpose of providing insight as to what it entails to establish a bank or specialized deposit-taking institution in Ghana. The permissible activities regarding these institutions as according to section 18 of Act 930 are:

acceptance of deposits and other repayable funds from the public
lending
financial leasing
investment in financial securities
money transmission services
issuing and administering of means of payment including credit cards, traveller's cheques, bankers' drafts and electronic money
guarantees and commitments
trading for own account or for account of customers in
1. money market instruments
2. foreign exchange, or
3. transferable securities

participation in securities issues and provision of services related to those issues
advice to undertakings on capital structure, acquisition and merger of undertaking
portfolio management and advice
keeping and administration of securities
credit reference services
safe custody of valuables
electronic banking
payment and collection services
bancassurance
non interest banking services
any other services that the Bank of Ghana may determine.

INCORPORATION OF COMPANY – SECTION 13

The first step in establishing a bank or SDI is to incorporate the company according to the laws of Ghana as stated in the Companies Act, 2019 (Act 992).

The application must be made to the Registrar of Companies in the prescribed form. The applicant must include the following information regarding the bank or SDI:

the name of the company
an indication of the type of proposed company
the nature of the proposed business in the case of a company registered with an object
the address of the proposed registered office and principal place of business of the company in the Republic, telephone number and the post office box, private mail bag or digital address of the registered office of the company
the electronic mail address and website of the company, if available
the following particulars of each subscriber:
1. the date and place of birth
2. the present full name and any former name
3. the residential, occupational, postal and electronic mail addresses and telephone contact; and
4. the nationality
the following particulars of each proposed director of the proposed company:
1. the present full name and any former name
2. the particulars of any business occupation and other directorships held by the director as provided by section 215; and
3. the residential, occupational, postal and electronic mail addresses and telephone contact;
a statutory declaration by each proposed director of the proposed company indicating that within the preceding five years, that proposed director has not been
1. charged with or convicted of a criminal offence involving fraud or dishonesty
2. charged with or convicted of a criminal offence relating to the promotion, incorporation or management of a company; or
3. declared insolvent or if that proposed director has been insolvent, the date of the insolvency and the particulars of that company
the consent of each proposed director
the following particulars of the proposed Company Secretary of the proposed company:
1. the present full name and any former name;
2. the usual postal, occupational and electronic mail address
3. the residential address in the case of an individual; and
4. the business occupation
the following particulars of the proposed auditor of the proposed company:
1. the present full name and any former name;
2. the postal and electronic mail addresses and telephone number;
3. the residential address in the case of an individual; and
4. the consent of the auditor;
the following particulars of each subscriber for a proposed company with shares:
1. the full name and any former or other name;
2. the date and place of birth
3. the telephone number
4. the nationality and proof of identity
5. the residential, postal or email address, if any
6. place of work and position held
the following particulars in respect of each beneficial owner of the proposed company:
1. the full name and any former or other name
2. the date and place of birth
3. the telephone number
4. the nationality, national identity number, passport number or other appropriate identification and proof of identity
5. the residential, postal or email address, if any
6. place of work and position held
7. the nature of the interest including the details of the legal, financial, security, debenture or informal arrangement giving rise to the beneficial ownership; and
8. confirmation as to whether the beneficial owner is a politically exposed person
the following details in the case of a company that has shares:
1. the amount of proposed stated capital, as defined in section 68
2. the number of authorised shares of the company for each class; and

INCORPORATION

Where the Registrar is satisfied that the application for incorporation of a company complies with this Act, the Registrar shall, after payment of the prescribed fee, certify under the seal of the Registrar that the company is incorporated and in the case of a limited liability company, that the liability of the members is limited.

APPLICATION OF A LICENCE

Per section 5 of Act 930, the Bank of Ghana has the sole responsibility of issuing licences to banks and specialized deposit-taking institutions, granting approval to foreign banks with respect to the establishment of representative offices and the registration of financial holding companies.

An application for a banking licence or specialized deposit-taking institution licence must be made to the Bank of Ghana and must be in writing. The application must be accompanied with the following:

a certified true copy of the Company Regulations or other relevant instrument relating to the proposed bank or specialised deposit-taking institution under which the person proposing to carry on a deposit-taking business was established
the names, addresses, occupations, business and professional history, certified financial positions, and corporate affiliations of the significant shareholders and the respective values of the shares
a complete organisational structure including a diagram of the group, direct and indirect affiliates and associates of the bank or specialised deposit-taking institution, and the nature of the relationship to the group if the bank or SDI is a part of a corporate group
the particulars of the proposed directors and key management personnel concerned with the management of the deposit-taking business, including
1. their qualifications and experience,
2. business and professional history for the preceding ten years or a longer period that the Bank of Ghana may determine,
3. certified financial position,
4. business interests, and
5. the performance of the business concerns under their control or management;

feasibility report including a business plan and financial projections for the first five years and tide area of activity intended;
documentary evidence of the capital of the proposed bank or specialised deposit-taking institution, including the original sources of funds and any other source of funds;
in the case of a foreign applicant
1. an authenticated copy of the certificate of incorporation and the Company Regulations or other relevant instrument and by-laws or similar documents, and
2. a written confirmation from the supervisory authority in the country of incorporation of the applicant or head office, if different, that the supervisory authority has no objection to the proposal of the applicant to carry on a deposit-taking business in the country and that that supervisory authority exercises global consolidated supervision over that bank or specialised deposit-taking institution;

a statement on measures and structures that the applicant intends to adopt to ensure that business is conducted in accordance with sound corporate governance principles;
a statutory declaration for each proposed director, key management personnel and significant shareholder of the proposed bank or specialised deposit-taking institution, disclosing, where applicable,
1. a conviction for an offence by a court of competent jurisdiction,
2. a personal bankruptcy filing,
3. a disqualification from practising a profession, or
4. a past or present involvement in a managerial function of a body corporate or other undertaking that is subject to insolvency or liquidation proceedings;

the processing fee that the Bank of Ghana may by notice specify; and
any other particulars that the Bank of Ghana may require

The application must clearly state the type of licence sought after.

NB: Company Regulations" means the Regulations of a company incorporated under the Companies Act, 2019 (Act 992)

NB: "Key Management Personnel" means the chief executive officer or managing director, deputy chief executive officer, chief operating officer, chief finance officer, Board secretary, treasurer, chief internal auditor, the chief risk officer, the head of compliance, the anti-money laundering reporting officer, the head of internal control functions, the chief legal officer, the manager of a significant business unit of the Regulated Financial Institution.

INTERVIEW

For the purposes of verifying the particulars submitted, the Bank of Ghana may interview a promoter, proposed director or key management personnel in the course of the verification and inspect the books, records and premises intended for use by the bank or specialised deposit-taking institution. – Section 7(4)

Subsequently, within 10 working days of the receipt of an application, BoG will acknowledge the receipt of the application in writing and shall communicate its decision in writing to the applicant within 6 months after the receipt of the application. It should be noted that if BoG believes further information or investigation is necessary, the applicant shall be notified within a reasonable time after the 6-month period after which its decision shall be communicated to the applicant.

PRE-REQUISITES FOR A LICENCE

The Bank of Ghana must be satisfied of the following:

the feasibility report submitted by the applicant is based on sound analysis under reasonable assumptions
the proposed directors and key management personnel of the applicant are fit and proper persons;
the significant shareholders are suitable and the ownership structure of the proposed bank or specialised deposit-taking institution will not hinder effective supervision, including supervision on a consolidated basis;
the paid-up capital of the applicant is adequate and the original sources of capital are acceptable and do not include borrowed funds;
the arrangements for governance, including accounting, risk management, and internal control systems and records of the applicant are adequate;
the applicant is not a shell company; and
the applicant has complied with this Act, the Regulations, directives, and other legally-binding instruments made under this Act and any conditions that the Bank of Ghana may impose

MINIMUM PAID-UP CAPITAL, APPLICATION PROCESSING AND LICENSING FEES

	Bank	SDI
	GH¢	GH¢
Minimum Paid Up Capital	400,000,000	15,000,000
Application Processing Fee	20,000	5,000
Initial Licensing Fee	100,000	10,000
Annual Licensing Fee	10,000	5,000

An application for a licence must be accompanied by an application processing fee
After final approval is granted, the applicant would be required to pay the initial licensing fee before the licence will be issued, and
A licensed institution is required to pay an annual licensing fee on or before 31st January of each year

All the above stated fees are payable by cheque or payment order to the Bank of Ghana. All banks and specialised deposit-taking institutions applications require an initial paid-up capital that the Bank of Ghana may by notice specify. In the case of foreign ownership of a bank, not less than 60% of the required capitalization or contribution shall be brought into Ghana in convertible currency.

RESTRICTIONS

A bank, specialized deposit taking institution or financial holding company is not permitted to engage directly in a commercial, agricultural or industrial undertaking.

They shall also not build, purchase or take a lease of immovable property except for the provision of business premises or for the purpose of housing staff, or for the provision of amenities for staff.

They may however accept immovable property as collateral security for a debt or other liability and may acquire an interest which a bank, SDI or financial holding company may lawfully acquire in the satisfaction of a debt due that bank, SDI or financial holding company. Such an interest must however be disposed of within a year after the acquisiti0n or a longer period as may be determined by BoG.

QUALIFICATION OF SHAREHOLDERS

The fitness and propriety of Significant Shareholders are assessed against the following criteria:

financial integrity
reputation
Demonstration of sufficient appreciation of the business of banking and the rules that pertains.

NB: "Significant shareholders" means a shareholder with direct or indirect holdings which represents 5% (five percent) or more of the capital or of the voting rights.

QUALIFICATION AN APPOINTMENT OF DIRECTORS AND KMP

(1) The first directors of a company shall be named in an application for incorporation.

(2) A person shall not be appointed as a director of a company unless the person has, before the appointment

(a) made a statutory declaration submitted to the company and subsequently filed with the Registrar to the effect that, the person has not within the preceding five years of the application for incorporation been

charged with or convicted of a criminal offence involving fraud or dishonesty
charged with or convicted of a criminal offence relating to the promotion, incorporation or management of a company; or
a director or senior manager of a company that has become insolvent or if the person has been, the date of the insolvency and the particular company; and

(b) consented in writing to be a director and filed the consent within twenty-eight days.

Directors and Key Management Personnel shall be assessed for fitness and propriety against the following criteria:

financial integrity
reputation
academic/professional qualification
experience
conflicts of interest
time commitment
collective suitability

DISQUALIFICATION OF A DIRECTOR AND KEY MANAGEMENT PERSONNEL S.58 of ACT930

(1) A person shall not be appointed or elected or, accept an appointment or election, as a director or key management personnel of a bank, specialised deposit-taking institution or financial holding company if that person

(a) has been adjudged to be of unsound mind or is detained as a person with a mental disorder under any relevant enactment;

(b) has been declared insolvent or has entered into agreement with another person for payment of the debt of that person and has suspended payment of the debt;

(d) has been a director, key management personnel or associated with the management of an institution which is being or has been wound up by a court of competent jurisdiction on account of bankruptcy or an offence committed under an enactment;

(e) is a director or Key Management Personnel of another bank, specialised deposit taking institution or financial holding company in the country;

(f) is under the age of eighteen years (18 years);

(g) does not have the prior written approval of the Bank of Ghana; or

(h) has defaulted in the repayment of the financial exposure of that person.

INTERVENTION OF BANK OF GHANA IN APPOINTMENTS

A Regulated Financial Institution shall seek prior written approval of the Bank of Ghana before it appoints a Chief Executive Officer or a Deputy Chief Executive Officer, each of whom shall be ordinarily resident in the country;
A Regulated Financial Institution shall not appoint a Key Management Personnel without the prior written approval of the Bank of Ghana;
The Bank of Ghana shall not grant approval for a person to be appointed as a Chief Executive or Deputy Chief Executive of a Regulated Financial Institution, if in the opinion of the Bank of Ghana that person is not a "fit and proper person, in accordance with Act 930" to be appointed in that capacity;
Where the Bank of Ghana considers, after hearing representations made by that Regulated Financial Institution, that a director or Key Management Personnel is not a fit and proper person, to act in that capacity, the Bank of Ghana shall direct the removal of such person(s) from the Board within one (1) month from the date of the directive.

BOARD SIZE AND STRUCTURE

The Board shall have at least five (5) members including the Chairperson and a maximum of thirteen (13) members, the majority of which must be non-executive and ordinarily resident in Ghana. There shall be an appropriate balance of power and authority on the Board between the executive and non-executive directors such that no one individual or group shall dominate the Board's decision-making process.
Where a Regulated Financial Institution is a member of a financial holding company, NOT more than two (2) Related Persons shall be allowed to serve on the Boards of the bank and the financial holding company.

APPOINTMENT OF KEY MANAGEMENT PERSONNEL

Every Regulated Financial Institution shall submit to the Bank of Ghana before it appoints a Key Management Personnel, a comprehensive report on the due diligence conducted on proposed nominees as Key Management Personnel. This submission shall be made in conjunction with the requirements under of Section 60 of Act 930.

OTHER ENGAGEMENTS OF DIRECTORS

To ensure that directors give greater time commitment to their oversight function in the Regulated Financial Institution, no director shall hold more than five (5) directorship positions at a time in both financial and non-financial companies (including off-shore engagements) subject to the restriction against concurrent directorships in banks under section 58(1)(e) of Act 930. Directors' other engagements shall be disclosed in the annual accounts of the Regulated Financial Institution.

CHIEF INTERNAL AUDITOR

Every Regulated Financial Institution shall have a Chief Internal Auditor (CIA) as set out in Appendix 1 who shall be an independent Key Management Personnel who has no involvement in the audited activities and business line responsibilities of the Regulated Financial Institution. The CIA shall be competent to examine all areas in which the Regulated Financial Institution operates and shall;

a) have the professional competence to collect and analyze financial information as well as evaluate audit evidence and to communicate with the stakeholders of the internal audit function;

b) possess sufficient knowledge of auditing techniques and methodologies;

c) be a member of a relevant recognized professional body;

COOLING-OFF PERIOD

Former Bank of Ghana officers, directors or senior executives shall not be eligible for appointment as a director of a Regulated Financial Institution until after a period of two (2) years following the expiration or termination of their contract of employment or service from the Bank of Ghana.
A practicing audit professional or partner who is rendering services or had rendered auditing services in the banking industry shall not be appointed as a director of a bank until one (1) year has elapsed since last engagement with any Regulated Financial Institution by that person.

DOCUMENTATION REQUIRED BY BANK OF GHANA

The following documents shall be submitted to the Bank of Ghana for the fit and proper assessment of a Qualifying Person:

Application letter for approval from the Regulated Financial Institution
Updated Curriculum Vitae
Completed Personality Note Form, including;
- Original Tax Clearance Certificate
- Certified Financial Statement of Affairs of the Qualifying Person
- Professional and Educational Certificates of the Qualifying Person
Completed Enhanced Due Diligence Questionnaire of the Qualifying Person.
The Regulated Financial Institution comprehensive report on the due diligence conducted on proposed Qualifying Person in line with the Corporate Governance Directive and Fit and Proper Persons Directive.
A clearance note from the Ghana Police Service in respect of Qualifying Persons or from the appropriate authority of the relevant jurisdiction in the case of foreign Qualifying Persons.
Collective Suitability and Financial Integrity Report from the Regulated Financial Institution.
Any other document that the Bank of Ghana may require.

In the case of a Qualifying Persons that are corporate entities, the following documents should be submitted:-

Copy of the company's certificate of incorporation, Certificate to Commence Business, Company's Regulations and other instrument of incorporation.
Where applicable copies of audited financial statements of the company concerned, immediately preceding its application or for each year it has been in operation, if less than three years.
A full disclosure of beneficial owners of the entity.
A full disclosure of all affiliates that exist in the group to which the Qualifying Person belongs.
Any other document that the Bank of Ghana may require.

NB: "Qualifying Persons" means Shareholders, Directors and Key Management Personnel.

PRE-OPERATING CONDITIONS

Approved applicant shall not commence business until they have obtained a final licence from Bank of Ghana. The Bank of Ghana shall not issue a licence to an applicant unless the Bank of Ghana is satisfied that:

The feasibility report submitted by the applicant is based on sound analysis under reasonable assumptions;
The premises of the proposed applicant has;

sufficient title deeds/lease agreements
approvals by relevant authorities
adequate business space, staff operating area, ventilation, lighting, etc.
adequate security of premises including adequacy of alarm systems, fire extinguishers, vaults or safes, etc.
insurance – fire, burglary, fidelity guarantee, etc.

The arrangement for governance, including accounting, risk management, and internal control systems and records of the applicant are adequate;
The significant shareholder(s) is/are suitable and the ownership structure of the applicant will not hinder effective supervision, including supervision on a consolidated basis;
The paid-up capital of the applicant is adequate and the original sources of capital are acceptable and do not include borrowed funds;
The proposed directors and key management personnel of the applicant are fit and proper persons
The applicant is not a shell company;
The applicant has obtained a Data Protection registration certificate from the Data Protection Commission, Ghana; and
The applicant has complied with the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the Regulations, directives, and other legally-binding instruments made under Act 930 and any conditions that the Bank of Ghana may impose.

DISQUALIFICATION OF A DIRECTOR AND KEY MANAGEMENT PERSONNEL - S.58 of ACT930

(a) has been adjudged to be of unsound mind or is detained as a person with a mental disorder under any relevant enactment;

(b) has been declared insolvent or has entered into agreement with another person for payment of the debt of that person and has suspended payment of the debt;

REGULATORY BODIES

Bank of Ghana
Registrar of Companies

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Ghana: Report On Establishing A Financial Institution In Ghana