The medium of a corporate entity allows for an ingenious way to pool resources to undertake business ventures both large and small. This helps to limit and diversify the risk inherent in business failure. The health of any modern liberal economy is often dependent on the business activity of its corporate bodies. Permitted avenues of funding are the lifeblood of business. Without those, new businesses cannot be started and old ones will fail. The ease with which corporate bodies raise, apply, lose and distribute capital and other funds, both within itself and outside itself, is as much a question of the nature of the legal rules on corporate finance as it is of the strength of the national economy. The legal environment is important in defining the mix of financing avenues that corporate bodies are willing and able to use in the context of the risk related to their corporate transactions. Using the limited liability company as a basis for commentary, this paper/chapter explores whether legal rules on corporate finance in Ghana have been conducive to business.
It attempts to do this by exploring developments that have a bearing on a company’s ability to raise capital. Particularly, it explores the law,s relevance to the changing needs of business in the context of rules on financing limited liability companies, recognition of dematerialised corporate securities, proprietary interests in intermediated securities and the effect of electronic transactions legislation on business finance facilitation. The chapter concludes that the framework for preventing injurious returns of corporate capital are still fit for purpose five decades after their introduction. Ghana’s regime for dematerialisation of securities accords with similar interventions in Africa but the country needs clear substantive rules on proprietary interests in intermediated securities. Lastly, the effect of electronic transactions legislation on facilitating business finance is in a less than desirable state.
Corporate Finance in Ghana: Has the Law enabled business? – Kenneth Ghartey, 2018 [Accepted ‘Mobilizing the Law for Ghana’s future’ (an edited volume) to be published by the University of Ghana School of Law (forthcoming)]
Kenneth is a Lecturer in the Law Department of Lancaster University Ghana. Kenneth also doubles as the Law Programme Coordinator