Graphic Business News

Ghana losing out for lack of insolvency law – Felix Addo

By: Maxwell Akalaare Adombila
Dr Felix Addo, President, GARIA
Dr Felix Addo, President, GARIA

THE President of the Ghana Association of Restructuring and Insolvency Advisors (GARIA), Dr Felix Addo, has repeated calls for a speedy passage of the Corporate Insolvency Bill into law to help provide comfort for investors and endear the country to the business community.

Beyond serving as a clear guide on the restricting and liquidation of companies, he observed that the availability of an insolvency law will help raise Ghana’s rankings on the World Bank Group’s Doing Business Report, which tracks the ease at which businesses can enter and exit selected economies.

The ranking has, since its inception, become a critical guide to investors seeking comfortable markets to invest their capital.

In its 2019 rankings, which surveyed 190 countries, Ghana placed 114 in the world and 12 in Sub Saharan Africa (SSA), ranking behind the likes of Mauritius and Rwanda.

Dr Addo, who chairs Board of Guinness Ghana Company Limited, told the Daily Graphic on December 21 that Ghana could have performed better in the rankings if it had a law that determined how companies could exit the country.

“One of the key items is the ease of resolving insolvency. In other words, if I bring you my foreign capital and I set up a business here in Ghana, assuming things go wrong, do we have a predictable regime whereby I can have a sanitised, consistent process to either restructure my business or close down the business?” he asked in an interview.

“Now, we do not have that in Ghana. So, if we are 12 in SSA, it means that there are 11 more attractive countries for any foreign direct investor to bring his/her funds in.”

“If I am a foreign direct investor, why should I come to Ghana, which is number 12, when there are others with higher scores?” he asked.

Status of bill
Since 2016, GARIA, a grouping of experts in restructuring and insolvency, have been advocating the passage of the Insolvency Bill.

It followed their resolve that the Companies Act, 1963 (Act 179) and the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180) have virtually become archaic and required replacement to help meet modern day challenges.

Consequently, a committee of experts on company law, chaired by Prof. Justice Date-Bah, drafted a Corporate Insolvency Bill, which Dr Addo said “has not travelled that far.”

“It is our understanding that the Corporate Insolvency Bill is currently before Cabinet,” he said while expressing the hope that the bill will be passed into law in 2019.

He emphasised that the bill was an important piece of legislation as it aimed to improve the quality of the legal regime for corporate bodies and their administration when they become insolvent.