assets and cannot invest abroad.<sup>118</sup> With the new regime, insurance companies can make foreign investments, but these investments are not considered in the solvency formula.

**Table 5:  Legislation, Regulation and Taxation for Domestic Funds and Funds Managers**

|**Fund Vehicle**<br>Legal structure/<br>registration|**VCTF Funds (investing in SMEs in Ghana)**<br>VCTF Act of 2004 dictates these must be<br>Limited Liability Companies under the<br>Companies Act, 1963. Not licensed by SEC.|**Non VCTF Funds**<br> <br>Not discussed in existing legislation. Most<br>likely would also be incorporated as Limited<br>Liability Companies under the Companies<br>Act, 1963, because the Partnership Act, 1962<br>does not provide limited liability to investors.<br>Not licensed by SEC.|
|---|---|---|
|Minimum<br>capital<br>requirement|Minimum capital requirement as stipulated in<br>the VCTF Guidelines of 2006, is US$1.5<br>million (or as determined by the Board of<br>VCTF)|NA|
|Marketing|No requirements|No requirements|
|Depositary/<br>custodian|No requirements|No requirements|
|Investment<br>Restrictions|VCTF Act and Guidelines require that the<br>funds invest in small businesses of not over<br>100 employees or in excess of US$1mn assets<br>(excluding land and building). In addition, the<br>investee must be in seed, start up or expansion<br>phase, and must not be in the business of<br>providing capital (e.g. lending, factoring etc.).<br>VCTF funds cannot invest through leveraged<br>buyouts.<br>Ghana Local Content and Local Participation<br>should fairly benefit Ghanaians, and requi<br>companies should be given preference for lice<br>Ghanaians should be prioritised for jobs in the<br>In addition, it is almost impossible to execute le<br>assistance restrictions under the Companies A<br>directly or indirectly financially assist in acq<br>company.<sup>119</sup>|NA<br>Bill, 2013, stipulates that the oil and gas sector<br>res, for instance, that indigenous Ghanaian<br>nses for oil and gas related activities; and that<br>se sectors.<br>veraged buy outs in Ghana because of financial<br>ct which do not allow a portfolio company to<br>uiring its shares or the shares of its holding|
|Taxation|Exemptions on income tax and capital gains<br>tax under Internal Revenue (Amendment),<br>Act 2006, (Act 700):<br><br>Dividend from a venture capital fund<br>that satisfies the eligibility requirements for<br>funding under the VCTF Act 2004 is tax<br>exempt for the first five years of operations<sup>120</sup><br><br>Capital gains accrued to or derived<br>from a Venture Capital Financing company<br>that satisfies the eligibility requirements of|The VCTF law does not indicate that venture<br>capital funds must actually access funding<br>from the VCTF to qualify for the tax<br>exemptions shows on the left. However,<br>funds that do not otherwise qualify under the<br>VCTF Act cannot qualify for the tax<br>exemptions.|

> 118 AXCO 2015.

> 119 - - - <u>http://www.iclg.co.uk/practice areas/private equity/private equity/ghana, accessed September 26, 2015.</u>

> 120 Under Division II Exempt Income, Section 10 Exempt Income, which lists the incomes which are exempt from tax, this includes “the dividend of a venture capital financing company that satisfies the eligibility requirements for funding under the Venture Capital Trust Fund Act, 2004 (Act 680) for a period of five years of assessment commencing from and including the year in which the basis period of the company ends, being the period in which operations commenced.”

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