Impact of Proposed Trust Bill on Non-governmental Organizations - International Law Office

International Law Office

Company & Commercial - Ghana

Impact of Proposed Trust Bill on Non-governmental Organizations

February 05 2007

Background
Registration
Operations
Governance
Accountability
Comment


Background

In Ghana, non-governmental organizations (NGOs) have traditionally operated in an environment with minimal standards for measuring their transparency and accountability. Although the governance of NGOs has become increasingly topical in recent years, little has been done in regard to compliance. Interventions made to ensure good corporate governance have generally been in the form of conditions prescribed for projects funded by donor agencies and international NGOs, as well as infrequent directives issued by the Ministry of Manpower, Labour and Employment.

The increasing number of NGOs over the last 10 years and the demand by donors, beneficiaries and civil society for accountability has made the need to improve NGO governance even more urgent. The proposed Trust Bill would govern, among other things, the operation of NGOs and charitable trusts and is intended to ensure greater accountability through institutionalized governance mechanisms, oversight and penalties for non-compliance.

Registration

An 'NGO' is defined under the proposed law as a civil society group formed to pursue purposes that are not for profit but are directed towards a public benefit. Such groups may be national or international and secular or faith-based.

At present, NGOs are registered with the Companies Registry, which also has responsibility for the registration of companies limited by shares and other for-profit business entities. Under the proposed Trust Bill, the registration of NGOs will be transferred to the Trust Commission, which will be established under the bill. An application to register an NGO will be submitted to the decentralized social welfare department of the district within which the NGO would operate. The department will forward the application to the Monitoring Committee of the Trust Commission, which will review and advise on whether the NGO should be registered.

Operations

The bill will make significant statutory amendments to the existing regime for NGO operations. It expressly provides that NGOs may engage in trading or business in the course of carrying out their primary purpose. However, income derived from trading or business shall be subject to payment of the relevant taxes. In addition, under the proposed law NGOs will have access to government funds.

Governance

The founders of the NGO will constitute its governing body (ie, the board) and owe a fiduciary duty to the NGO. Under the law, NGOs will have the same duties as trustees, including to:

  • act impartially;

  • be diligent;

  • keep accurate and proper accounts;

  • ensure they do not benefit from trust property; and

  • preserve trust property.

Accountability

Under the law the Trust Commission will have the power to:

  • supervise and investigate the operations of a trust;

  • publish the names of organizations whose applications for registration have been refused or whose registrations have been cancelled;

  • receive complaints made against NGOs; and

  • call for audited accounts.

An NGO will also be required to submit annual reports to the commission.

In addition, the auditor general will have the power to undertake special audits of the books, records, returns and other documentation related to the public funds received by an NGO.

Comment

The proposed law will increase the legitimacy and credibility of the genuine NGOs, and expose those who benefit unfairly from purporting to do good.


For further information on this topic please contact Isabel Boaten at General Law Consult by telephone (+233 21 253 073) or by fax (+233 21 253 075) or by email (isabel@generallawconsult.com).



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