The Private Enterprises Federation (PEF) has exposed loopholes in the Companies Act 1963, Act 179 with a resolve to table a better proposal before Parliament to inform the formulation of a more robust Companies Act.
A bill to amend the current Act is currently before Parliament hoping to be passed by close of 2015 or early 2016.
The review of the lapses in the Act, 179 was done at a private sector consultation workshop on the review of the Companies Bill in Accra yesterday.
In a presentation, Managing Partner of Ntrakwah & Co., Mr. Felix Ntrakwah, opined that it was about time Ghana re-looked at the Companies Act since countries which lauded Ghana and adopted provisions of the Act several years ago have moved on to improve on certain sessions of the Act.
He noted that colonial terminologies like Articles, Equity Shares among others are still captured in the Act even though it is not used in today’s business world.
Mr. Ntrakwah revealed that instead of shareholders appointing and removing auditors; directors of companies are doing that, adding that that has been made possible by the outmoded sessions of the Act.
“Gazette publication which is how the Act allows businesses to announce themselves are outmoded and the Registrar-General Department (RGD) should rather publish a companies’ bullet,” he advised.
He said the new Act when approved should use terms like financial statements instead of accounts, income statements instead of profit and loss account, stressing that all reports today are expected to meet International Financial Reporting Standards (IFRS) as adopted by the Chartered Institute of Accountant (CIA) but same is different from Act 179.
“Major transactions require special resolutions – acquisition or selling out representing more than 75% of company assets, but in Ghana the director just goes ahead without any shareholder consent.”
The legal and business expert pleaded that lawyers and judges be trained on the Act to prevent the recurring problems associated with certain sessions of the Act.
Another legal mind, Mr. Fred Adadzi, also disclosed that templates of business registration forms, documents and declarations were being modified for use.
But Mr. Charles Egan, who is an expert, disagreed, saying, it constitutes grounds for conflict of interest.
“An account can’t be prepared by one person and audited by the same person,” he averred.
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