Deputy AG touts CIRA to bridge business “trust deficit”

By Kingsley Webora TANKEH

The Deputy Attorney-General and Deputy Minister for Justice, Justice Srem-Sai, has touted the  Corporate Insolvency and Restructuring Act (CIRA), 2020 (Act 1015), as the panacea to bridging the “trust  deficit” in Ghana’s business community, capable of attracting investors into the country.

Speaking at a stakeholders forum in Accra, the Deputy Justice Minister enumerated six reasons that possibly contributed to Ghana’s economic stagnation. “People have brilliant ideas of how to make money. But they have no money to start. Some people have money and are looking for ideas to invest the money in, but cannot trust the person to give the money to,” he noted.

To buttress his point, he cited poor corporate governance and regulatory oversight in an ongoing criminal investigation, where a principal accused person in the case claimed that his co-director and co-shareholder had disappeared after they incorporated their company 15 years ago.

He noted that Ghana is at the stage where “the people who have the money but don’t have the ideas can’t trust the people who have the ideas to give their money.”

This distrust, he argued, is what stifles economic growth in the country. However, with CIRA, he maintained  that investors can now have the assurance that their investments will be protected by the law.

The Corporate Insolvency and Restructuring Act (CIRA), 2020 (Act 1015) provides procedures and guidelines to resuscitate businesses in distress, moving away from the outdated Companies Act of 1963, which offered not much beyond liquidation—a very painful process that often meant selling assets, job losses and creditors recovering pennies on their invested dollar.

It provides a mechanism for struggling but viable companies to enter “administration.” This creates safe environment free from panic creditor lawsuits and allows the company ample breathing space to reorganise its debts, renegotiate contracts and restructure its operations under the guidance of a licensed practitioner.

CIRA empowers creditors by giving them voting rights on restructuring plans and access to crucial financial information. The law also incorporates principles from the UNCITRAL model law on cross-border insolvency. This means if a multinational company with assets in Ghana faces trouble, the process is coordinated effectively, protecting foreign investments.

The Head of the Insolvency and Liquidation Services Directorate at the Office of the Registrar of Companies (ORC), Jones Ansah, passionately christened CIRA the “Saviour Act.”

“Some time ago, the reasons why companies go down [included] poor oversight, mismanagement, money being diverted. With this new act, it gives opportunity to creditors; it gives opportunity to business owners, it gives courage to investors,” he noted.

Mr. Srem-Sai said CIRA also eliminates unqualified practitioners, whom he termed “Goro Boys in suits,” by mandating that only licensed, accredited insolvency practitioners—trained and vetted by the ORC—can manage corporate restructurings.

“These Goro Boys I’m talking about are actually in suits. They wear elegant ties; they look good but they have very little commitment to what they do,” he noted.

However, he underscored that the success of the law hinges on effective implementation, with the judiciary playing a critical role. “The industrial revolution and the growth of England into an empire is often also attributed to the quality of the legal system. If I know that if I give you 10 million today, I will get a remedy from the courts, I’ll be more willing to give you the money,” Mr. Srem-Sai noted.

He, however, pledged his outfit’s commitment to supporting and carrying the message to the Judicial Service, emphasising that timely and knowledgeable court rulings are the bedrock upon which trust is built.

The stakeholder sensitisation forum, themed ‘Strengthening Business Recovery and Creditor Confidence through Ghana’s Corporate Insolvency Regime’, was organised by the Office of the Registrar of Companies in collaboration with the International Finance Corporation (IFC). It brought together members of the judiciary, regulators and financial leaders to chart a new course for corporate Ghana.

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