RGD to prosecute ‘fronters’ under new company law

The Registrar General’s Department (RGD) has sent a strong warning to all persons who wish to or have acted as ‘fronts’ for foreigners doing business in the country, saying they will be prosecuted as the new Companies Act is now in full force.

The new Companies Act 2019 (Act 992) has given way for the compilation of a Central Beneficial Ownership (CBO) register, which is meant to identify the natural persons who exercise significant influence over a company and benefit from it but are not legal owners.

The RGD believes this new law will help curb the issue of fronting, as clear sanctions have been outlined for persons who are found to have been dishonest in their provision of names for all persons who have influence over and profit from the operations of a company; or persons who put up their names as the owner of a business but are not – a move which allows foreigners to avoid or evade payment of the right levies, thereby denying the state of needed revenue.

Speaking to the B&FT in an interview, the Registrar-General, Jemima Oware said: “People do not realise that there is such a law in place, so they boldly come to the office and put the names of different people as owners of the company; but we have done this job for a long time, and so we get to know that this foreigner is the Beneficial Owner.

“They do this because they want to avoid paying taxes or the duties that are linked to the Ghana Investment Promotion Centre (GIPC) law, wherein you have a trading object and the capital on it is like US$1million. They do not want to pay that, so they will put the Ghanaian as the shareholder. If eventually we find out, there are severe sanctions linked to such an act. You can face a maximum 3-year jail sentence plus a fine and a number of sanctions,” she said.

The RGD said it will be conducting some sensitization programmes at the major central business districts across the country, in a bid to educate Ghanaian traders on the sanctions to deter them from engaging in such acts.

“We know that some Ghanaians engage in fronting, but some of them are unaware of the dangers they are in. We need to educate and sensitise them; there is nothing wrong disclosing that this person is really the owner of a job – but it is when you refuse to do so. Then, it is clear you are hiding something. And when the state finds out, the sanctions will kick-in.

“This is being done so that the nation will be able to rake-in the needed revenue. If you front, you are denying the state some revenue – and you have to be punished for that,” Mrs. Oware said.

The Ghana Union of Traders Association (GUTA) has in the past lamented over foreigners unlawfully engaging in trading activities reserved for locals. They have even gone to the extent of locking up shops they suspected were operated by foreigners, onlt to find out after investigation that the shops are registered and owned by Ghanaians who, in some instances, worked with the foreigners – especially the Chinese.

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