There has been a public brouhaha on the National Cathedral project recently. Incorporation details released suggest the company is a private company. The word "private" being the company type has ignited a public uproar. However, a private company does not mean the company is owned by a private person nor a public company does not imply the company is owned by the public.
For example, MTN PLC (i.e MTN Public Limited Company) is a public company but it is not owned by the government of Ghana. We need to get the distinction between public and private companies. A public company can trade or freely transfer its instruments (shares/debentures) publicly through the National Stock Exchange while a private company cannot. A public company has PLC at the end of its name while a private company has LTD at the end of its name. We need to get the distinction between a public company and a state-owned enterprise (company). A state-owned company (enterprise) is a legal entity established/acquired, managed and controlled by the government and the government has 100% control or owns the majority of carrying interests.
For example, Ghana Airports Company LTD (Limited) is incorporated as a private company because it does not has its instruments traded on the National Exchange. However, the Government of Ghana is the sole shareholder. This does not mean Ghana Airports Company Ltd does not qualify to be a State-Owned Company (SOE) or it is not an SOE. To determine whether a Company is an SOE or not is determined by the ownership structure. This implies that if the Government of Ghana owns 100% carrying interests of the National Cathedral then the Cathedral is a State Company (SOE) regardless of being incorporated as a private company.
Secondly, the objects of the National Cathedral complement the evidence that it is a State-Owned Enterprise (SOE). The objects of the National Cathedral are as follows:
- To own the assets of the National Cathedral of Ghana
- To administer the National Cathedral project
- To serve as a convening platform for a national conversation on faith
- To operate an interdenominational church for national purposes.
The above objects were crafted with a communal spirit which adds to the evidence that the National Cathedral is a state company regardless of the company type being private.
A state-owned company would be referred to as a public company only when it is listed on the national exchange as such. We should not be confused with the names private and public when it comes to company types.
The new Companies Act of Ghana which is the Companies Act 2019 (Act 992) clarifies that below:
SECTION 7 OF ACT 99 (COMPANIES ACT 2019)
(3) A company limited by shares and an unlimited company shall for the purposes of incorporation be registered with shares.
(4) A company of a type specified in subsection (1), may be a private company or a public company.
(5) A private company, other than a company limited by guarantee, is a company which by virtue of its constitution
(a) restricts the right to transfer the shares of the company, if any,
(b) limits the total number of the members and debenture holders to fifty, not including
(i) persons who are genuinely in the employment of the company, and
(ii) persons who, having been formerly in the employment of the company, were while in that employment, and have continued after the determination of that employment to be members or debenture holders of the company;
(c) prohibits the company from making an invitation to the public to acquire shares or debentures of the company; and
(d) prohibits the company from making an invitation to the public to deposit money for fixed periods or payable at call, whether bearing or not bearing interest.
(6) Where two or more persons hold one or more shares or debentures jointly, they shall, for the purposes of subsection (3) be treated as a single member or debenture holder.
(7) A company which is not a private company is a public company except a company limited by guarantee which has a membership of fifty or less.
(8) A company limited by guarantee shall not for the purposes of incorporation be registered with shares and shall not create or issue shares.
BY: FIDELIS KWADWO ANKOMAH
FINANCIAL ADVISOR AND RESEARCHER
CONTACT INFO: [email protected]