According to a 2005 Memorandum of Economic and Financial Policies of the Government of Ghana, the Ghanaian authorities plan to pass an Insolvency Bill and Companies Code that will address the lack of clarity regarding the rights of both creditors and borrowers. According to the U.S. Department of Commerce's 2007 edition of its Country Commercial Guide to doing business in Ghana, there is as yet no bankruptcy law on the books. The Bodies Corporate (Official Liquidations Act) constitutes Ghana's insolvency regime. The Companies Code specifies procedures for debt collection. The World Bank's 2007 "Doing Business" evaluation of Ghana discloses that, in the sphere of business closings, Ghana does somewhat better than the regional averages, but significantly underperforms in comparison with the average experienced by members of the Organization for Economic Cooperation and Development (OECD). In Ghana, it takes an average of 1.9 years to close a business, at an average cost of 22%, and with an average recovery rate of $0.24 on the dollar. This compares with a regional average of 3.4 years, 20%, and $0.171 on the dollar. The average performance experienced by members of the OECD is 1.3 years, 7.5%, and a recovery rate of $0.741 on the dollar. However, there is insufficient information publicly available as to Guatemala's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.

General Overview

According to a 2005 Memorandum of Economic and Financial Policies of the Government of Ghana, which was included in the International Monetary Fund's 2005 Article IV Consultation report, as part of the Financial Sector Strategic Plan launched by the government in 2003, the Ghanaian authorities plan to expand credit in the private sector through legislative reforms. This includes a plan to pass an Insolvency Bill and Companies Code that will address the lack of clarity regarding the rights of both creditors and borrowers. It aims to "[accelerate] the judicial and legal processes to secure land tenure, which is the only form of collateral for small- and medium-size enterprises and entrepreneurs" (p. 74). According to the U.S. Department of Commerce's 2007 edition of its Country Commercial Guide to doing business in Ghana, there is as yet no bankruptcy law on the books.

In 2005, the World Bank published a Report on the Observance of Standards and Codes (ROSC) covering Ghana's corporate governance. In this report, the World Bank noted that Ghana's Ministry of Justice, Business Law Division is responsible for conducting reviews of business-related legislation. According to this report, Ghana's legal system is based on common law, inherited from its colonial association with the United Kingdom. Its Companies Code of 1963 is based on similar UK legislation of 1960. The World Bank report adds that the Bodies Corporate (Official Liquidations Act) constitutes Ghana's current insolvency regime. The Companies Code specifies procedures for debt collection. Petitions by creditors to liquidate a debtor company may be filed by creditors with the Registrar General's Department (RGD) or the court. There is no legal provision to enable early discovery that a company is facing financial distress. According to the 2005 World Bank report, "the Bodies Corporate (Official Liquidations) Act protects creditors from the risk of trading with insolvent companies" (p. 19). By the terms of this law, all distribution of dividends cease when a company is insolvent. There is some relief offered to debenture holders by the Companies Code, which allows for a meeting of debenture holders and permits them to challenge claims raised by shareholders that would lead to reduced liabilities. The RGD and the court lack adequate enforcement capacity, according to the World Bank report. Creditor redress options include the appointment of a receiver, the limitation of dividends, and veto power over certain decisions by the debtor corporation. The World Bank adds that Ghana does not maintain a credit registry, but notes that a databank is being compiled by the Ghana Association of Bankers that may be of use in the future. In addition, the World Bank reports that a credit reporting law is in the drafting stage.

At the time of the ROSC, the Companies Code was under review with an eye toward reform. The RGD, which is under the authority of the Attorney General's office in the Ministry of Justice, is charged with enforcing the Companies Code. According to the ROSC, the RGD is constrained by a lack of personnel and technology from being an effective enforcement body. The report adds that, in recent years, the RGD has drafted plans to upgrade its facilities and improve training, and has begun to computerize its files.

The World Bank "Doing Business" project evaluates 178 economies on a variety of measures designed to measure the ease of doing business therein. Among the measures evaluated are three aspects of "Closing a Business," including the cost of closure (measured as a percentage of income per capita), the time (in years) required to effect closure, and the recovery rate (in cents on the dollar). According to the Doing Business website, in Ghana, it takes an average of 1.9 years to close a business, at an average cost of 22%, and with an average recovery rate of $0.24 on the dollar. This compares with a regional average of 3.4 years, 20%, and $0.171 on the dollar. The average performance experienced by members of the Organization for Economic Cooperation and Development is 1.3 years, 7.5%, and a recovery rate of $0.741 on the dollar.