Insolvency practitioners should be made to assist ailing State-Owned Enterprises – Attorney General

The Attorney-General, Godfred Dame has recommended that qualified Insolvency Practitioners (IPs) be made to restructure distressed State-Owned Enterprises (SOEs). 

Mr. Dame made the remarks in a speech read on his behalf by his Deputy, Alfred Tuah-Yeboah, at the recent induction ceremony of licensed Insolvency Practitioners organized by the Ghana Association of Restructuring and Insolvency Advisors (GARIA) and the Office of the Registrar of Companies (ORC). 

“I will recommend to the government that IPs should be invited by ailing state-owned enterprises to help turn them around. As you may know, a substantial number of state-owned enterprises currently exist on subventions contrary to enabling legislations, which require of them to at least break-even in the execution of their mandates.

Very few State-Owned Enterprises generate profits to pay its dividends to the government for the significant investment made on them. And I’ll recommend that qualified and competent IPs should be allowed to assist in the restructuring of these corporations,” he said.  

The recommendation by the Attorney-General comes a month after President Akufo-Addo chided CEOs of under-performing SOEs, asking them to sit up, especially after the release of the 2020 Public Enterprises League Table. 

At the GARIA ceremony, a total of 166 new members were inducted as Insolvency Practitioners (IPs).

“This ceremony is essential in laying a solid foundation for the inductees to develop the skills and knowledge to assist distressed organisations in managing their businesses, property, and affairs,” said Mr Fosu George Fosu, Chief Executive Officer of GARIA.

Additionally, the Registrar of Companies, Madam Jemima Oware, confirmed that the ORC is almost finalising and approving the strategy document, which would among others, lead to the establishment of an Insolvency Service Division to regulate IPs for the first time.

“It is going to offer greater ability to respond to the local needs of distressed companies, address crossover problems, and will clarify and improve the role definition of each of these agencies, especially when creditors and other claimants initiate a charge against a distressed company,” she noted. 

CIRA 

The Companies Act, 2019 (Act 992) was a major business reform Act closely followed in time of passage by the Corporate Insolvency and Restructuring Act, 2020 (Act 1015) (CIRA). These Acts when implemented have the potential to turn the fortunes of businesses in Ghana in a positive direction.

The CIRA replaces the Bodies Corporate (Official Liquidation) Act, 1963 (Act 180). The latter solely set out a framework for the liquidation of insolvent companies however made little or no provision for the Rescue of such insolvent companies.

Therefore, the CIRA is the main legislation for corporate restructuring and insolvency in Ghana.

The Office of the Registrar of Companies is mandated per CIRA, to establish Insolvency Services Division.