FOUNDATIONS OF
ENTREPRENEURSHIP
CLASS FIVE: ENTREPRENEURIAL MINDSET & LEGAL AND REGULATORY
CONSIDERATIONS
Elikem Nutifafa Kuenyehia
Agenda For Class Five
• Recap of last class
• Continuation from last class
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Traits of a successful entrepreneur
Are entrepreneurs born or made?
Other issues relating to the entrepreneur
Legal and regulatory considerations
Forms of business organisations
Guest Speaker: Kwabena Adu-Kusi,
Managing Partner, Law Bureau
Recap of Class Four
• What did you learn from ‘The King of
Travel’: Pak-Wo Shum?
• What did you learn from Catherine Krobo
Edusei Benson, Founder of Eden Tree
Ghana Limited?
• What did you learn from the entrepreneur
and the entrepreneurial mindset?
Traits of A Successful Entrepreneur
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Interpersonal skills
Ability to become connected
Dynamic leadership & Vision
Self Confidence & Optimism
Salesmanship
Passion
Willingness to take risks
Flexibility
Unsentimental
Disciplined
Future-oriented
Traits (con't)
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Organised
Opportunity obsessed
Initiative
Desire for responsibility
Realistic
Energetic & Hardworking
Sense of Mission
Tolerance for ambiguity
Committed (to the venture)
Resilient
Resourcefulness/Creativity
Other factors influencing
entrepreneurs
• Entrepreneur’s background
• Age
• Educational level
Are Entrepreneurs born or
made?
• Class Discussion
Behaviours typical of Ghanaian
Entrepreneurs
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Unable to separate ‘self’ from business
Personality driven
Lack of planning
Do not listen
Spread too thinly
Lack of trust
Desire for Control
Cut corners
Limited management expertise
Inability to think big
Competency dependence
Why Entrepreneurs Fail?
• Environmental reasons
• Over-optimism
• Over engagement in task oriented
activities
• Approach to decision making
• Inability to recognise when entrepreneur
must give way to manager
• Lack of discipline/Focus
• Underestimation of competition
• Inadequate investment in product or
service development
Avoiding Failure?
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Find the right people
Give them freedom to succeed
Broaden the conversation
Get the right knowledge
Prepare a business plan
Manage financial resources
Adapt, evaluate, course correct
Don’t spread thinly
Different Types of Entrepreneurs
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Lifestyle vs. high growth entrepreneurs
Religious entrepreneurs
Political entrepreneurs
Social entrepreneurs
Opportunity vs. necessity entrepreneurs
Intrapreneurs
Extrapreneurs
The State?
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Some celebrated Ghanaian
entrepreneurs
Prince Kofi Amoabeng
Alhaji Asoma Banda
Ernest Bediako Sampong
Mark Davies
Herman Chinery- Hesse
Dr. (Mrs.) Esther Ocloo
Ken Ofori-Atta
Sandy Osei-Agyeman
Mrs Elizabeth Villars
Kwasi Twum
Kwaku Bediako
Forms of business organisations
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Sole Proprietorship
Partnership
Limited liability company
Unlimited liability company
External Company
Cooperative
Sole Proprietorship
• Most common form of business organisation
in Ghana
• Business owned (and typically also run) by a
single individual
• The sole proprietor and the business are
essentially one
– No distinction at law
– No distinction between the entrepreneur
and the enterprise
– No limitation on liability
Sole Proprietorship (cont’d)
• If carrying out business in his true personal
name, surname or initials no formality
required
• But if using name different from true
surname, name, initials must register under
Registration of Business Names Act
• Certificate of registration to be renewed
annually to be able to use the name
Sole Proprietorship (cont’d)
• Reg. Of Business Name separate from
intellectual property registration which gives
intellectual property rights to the name
• Sole Proprietor has sole responsibility for
decisions relating to business
• No fetters on authority so long as lawful
• No requirement for board
• No obligation to disclose information or
financials
Partnership
• An association of two or more individuals
carrying on business for the purpose of
making a profit
• Must be incorporated under Incorporated
Private Partnerships Act 1962
• Maximum number of individuals = 50
• Partners must be of sound mind & not have
been convicted of dishonesty offence in last
five years
Partnership (cont’d)
• Is a legal person separate from its partners
– May be sued and sue in its own name,
own assets etc
• Partners share decision making, profits and
losses
• Partners jointly and severally liable with the
firm and the other partners for all the debts
and obligations of the firm
Partnership (cont’d)
• Passive/Sleeping vs. Active partners
– Key decisions involving all partners
• Individual partners taxed on their share of
partnership profits
– Each treated as a sole proprietor for tax
purposes
• Required to keep proper accounts
• Required to produce financial statements
– No requirement for audit but highly
advisable
Partnership agreement provisions
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Commencement
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Financial Contribution
Profit (or Loss) Share
Ownership of partnership assets
Drawings and/or salaries
Decision making
Dissolution
Payment in event of death or retirement
Restraint of trade following departure
Dispute resolution (litigation & arbitration)
Governing Law
Companies
• Regulations – constitution of the company
• Types:
– Limited liability
• Liability limited to amount paid for the shares
• Generally, shareholders cannot be held liable
for liability of company
• Assets of Directors not available for company’s
creditors
– Unlimited liability
• Not generally used or suitable for
entrepreneurial ventures ; though some
professional firms use this
Companies
• Incorporating a company
• Incorporation documents to the
Registrar of Companies
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Regulations
Form 3
Form 4
Registration and presentation fee
A sum equivalent to 0.5% of the stated
capital for public companies and
GH¢500 for private companies
Types of Companies
• Limited by shares
– Owners given shares for money they
contribute
– Liability tied to shares purchased
– Shareholders paid dividend from profits if
and when declared
• Limited by guarantee
– No shares issued
– Members liability tied amount members
agree to contribute if company winds up
External Companies
• Company incorporated outside Ghana
establishes a ‘branch’ in Ghana
• No separate legal personality from parent
• Obtain external company status by filing
certain documents and Registrar informing
you that registered in register of external
companies
• Must have a Local Manager & a local
process agent
Co-operatives
• Association set up to provide service (s) or
benefit(s) for its members
• Typically made up of members with similar
characteristics (same employer, trade,
profession)
• May be incorporated or just be a body of
individuals
– Where incorporated must have word ‘cooperative’ after its name
• Not permitted to grant loans to anyone
other than their members
Co-operatives (cont’d)
• Registered under the Cooperative Societies
Decree 1968
• Must have a minimum of ten members
• Members of co-operative are liable for
debts of the co-operative
• Separate legal personality – can sue and be
sued in its own name
Other forms of business
organisations
• Joint Venture
– 2 or more businesses pool resources to
achieve a common objective
– Can be established by agreement or by
setting up a JV limited liability company
Other forms of business
organisations
• Franchising
– An agreement where an owner of a
business format, trademark, trade name
or copyright (the franchisor) gives the right
to another (the franchisee) to sell
products or services under the franchisor’s
trade name and/or to use his systems and
business formula
Other forms of business
organisations
• Principal/Agency
– Agent acts on behalf of principal in
relation to 3rd parties
– Ultimate liability for far as 3rd parties are
concerned is the principal’s
• Mergers & Acquisition
– Not a separate business form
– Typically involve 2 or more companies
coming together to form a single entity
Other Legal Considerations
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Internal Revenue Act, 2000 (Act 592)
National Pensions Act, 2008 (Act 766)
Value Added Tax, 1998 (Act 546)
Ghana Investment Promotion Centre
(‘GIPC’) Act, 1994(Act 478)
Immigration
Labour Issues
Factory, Office and Shop Regulations
Free Zone Act,1995 (Act 504)
Workmen’s Compensation Regulations
Guest Speaker
• Kwabena Adu-Kusi, Managing Partner,
Law Bureau