In Ghana, converting a Company Limited by Guarantee (LBG) into a Limited Liability Company (Company Limited by Shares) is possible, but it requires a formal restructuring under the Companies Act, 2019 (Act 992) and approval from the Office of the Registrar of Companies.
This is because an LBG is normally non-profit and has no share capital, while a limited liability company is profit-making and owned by shareholders. Below is the simplified process.
1. Pass a Special Resolution to Convert the Company
The members of the company must hold a meeting and pass a special resolution agreeing to convert the company from Limited by Guarantee to Limited by Shares.
The resolution should approve:
- Conversion of the legal structure
- Creation of share capital
- Adoption of a new company constitution
2. Draft a New Company Constitution
Because the company structure is changing, a new constitution must be prepared showing:
- Share capital structure
- Shareholders and share distribution
- Directors and company secretary
- New objectives (profit-making)
The old constitution for a guarantee company cannot be used.
3. Introduce Share Capital and Shareholders
A Limited Liability Company must have shareholders and shares.
Therefore you must:
- Define the stated capital of the company
- Allocate shares to members or investors
- Prepare a statement of shareholding
This step officially converts members into shareholders.
4. Prepare Statutory Documents
The following documents are usually submitted to the Registrar:
- Special resolution approving conversion
- New company constitution
- Statutory declaration by a director and company secretary confirming compliance
- Details of directors, shareholders, and company secretary
- Company registration forms
5. File the Conversion Application
Submit all documents to the Office of the Registrar of Companies (ORC) together with the required fees.
The Registrar will review the application and ensure it complies with the Companies Act.
6. Receive a New Certificate of Incorporation
If the application is approved:
- The Registrar cancels the old status
- Issues a new Certificate of Incorporation
- The company becomes Company Limited by Shares (Ltd)
From that date, the company operates as a profit-making limited liability company.
7. Update Regulatory and Tax Records
After conversion, you must update:
- Ghana Revenue Authority (tax status)
- Bank accounts
- Contracts and legal documents
- Company seal and official documents
Frequently Asked Questions
What is a Company Limited by Guarantee in Ghana?
A Company Limited by Guarantee is a type of organization usually created for non-profit purposes such as charities, NGOs, professional bodies, and associations. Instead of shareholders, it has members who agree to contribute a small amount if the company is ever dissolved.
What is a Limited Liability Company (Company Limited by Shares)?
A Limited Liability Company is a profit-making business structure owned by shareholders. Each shareholder owns a portion of the company through shares, and their liability is limited to the amount they invest.
Why would an organization convert from a guarantee company to a limited liability company?
Organizations often make this transition when they want to move from a non-profit model to a commercial one. It allows them to attract investors, issue shares, distribute profits, and operate like a traditional business.
Is the conversion legally allowed in Ghana?
Yes, the conversion is possible under Ghana’s Companies Act, 2019 (Act 992). However, it requires approval from the Office of the Registrar of Companies and proper restructuring of the organization’s legal framework.
What is the first legal step in the conversion process?
The first step is for members of the guarantee company to pass a special resolution approving the conversion. This resolution formally states the intention to change the company’s structure and adopt a share-based system.
Why must a new company constitution be created?
A guarantee company’s constitution is designed for non-profit operations and does not include share capital. When converting, a new constitution must define shareholders, share capital, directors, and profit distribution rules.
How are members converted into shareholders?
During the restructuring process, the existing members may become shareholders by being allocated shares in the new company. This step introduces ownership through shareholding rather than membership guarantees.
What documents are required for the conversion application?
Typical documents include the special resolution approving the conversion, the new constitution, statutory declarations from directors, details of shareholders and directors, and official application forms submitted to the Registrar of Companies.
What happens after the Registrar approves the conversion?
Once approved, the Registrar issues a new certificate of incorporation showing that the company is now a Company Limited by Shares. From that moment, the company can legally operate as a profit-making entity.
What changes after the company becomes a limited liability company?
After conversion, the company must update its tax records, banking arrangements, contracts, and regulatory registrations. It will also operate under commercial business rules instead of non-profit governance structures.