Venture Capital Trust Fund Act, 2004 Act 680 (Revised Edition)

VENTURE CAPITAL TRUST FUND ACT, 2004 (ACT 680)
ARRANGEMENT OF SECTIONS
Section
PART I—ESTABLISHMENT OF THE VENTURE CAPITAL TRUST FUND
1. Establishment of the Trust Fund
2. Object of the Trust Fund
3. Sources of Money for the Trust Fund
4. Bank Account for the Trust Fund
5. Categories of Accounts of the Trust Fund
PART II—THE BOARD AND MANAGEMENT OF THE TRUST FUND
6. The Board of the Fund
7. Functions of the Board
8. Tenure of office of members
9. Vacancies on the Board
10. Meetings of the Board
11. Committees of the Board
12. Disclosure of interest
13. Allowances for members of the Board
14. Disbursement from the Trust Fund
15. Application for funding
16. Eligibility for funding
17. Management of Equity and Credit Accounts
18. Tax incentives
19. Reporting by Venture Capital financing companies
20. Administrative Expenses of the Trust Fund
21. Tax Exemption
PART III—ADMINISTRATIVE AND FINANCIAL PROVISIONS
22. Administrator and functions
23. Appointment of other staff
24. Accounts and audit
1

25. Annual Report
26. Financial Year
27. Regulations
28. Interpretation
29. Amendments
2

ions
23. Appointment of other staff
24. Accounts and audit
1

25. Annual Report
26. Financial Year
27. Regulations
28. Interpretation
29. Amendments
2

ACT 680
REPUBLIC OF GHANA
THE SIX HUNDRED AND EIGHTIETH
ACT
OF THE PARLIAMENT OF THE REPUBLIC OF GHANA
ENTITLED
VENTURE CAPITAL TRUST FUND ACT, 2004
AN ACT to provide for the establishment of a Fund to be known as the Venture Capital Trust
Fund to provide financial resources for the development and promotion of venture capital
financing for Small and Medium Enterprises (SMEs) in specified sectors of the Ghanaian
economy; the management of the Fund and to provide for related matters. DATE OF ASSENT: 17th November, 2004. BE IT ENACTED by Parliament as follows:
PART I—ESTABLISHMENT OF THE VENTURE CAPITAL TRUST FUND
Section 1—Establishment of the Trust Fund
There is established by this Act a Venture Capital Trust Fund referred to in this Act as the
"Trust Fund". Section 2—Object of the Trust Fund
(1) The object of the Trust Fund is to provide financial resources for the development and
promotion of venture capital financing for Small and Medium Enterprises (SMEs) in priority
sectors of the economy as shall be specified from time to time.

otion of venture capital financing for Small and Medium Enterprises (SMEs) in priority
sectors of the economy as shall be specified from time to time.

(2) For the purpose of achieving the object of the Trust Fund, monies from the Trust Fund shall
be applied to such relevant activities as the Board of the Fund may determine including in
particular,
(a) the provision of credit and equity financial to eligible venture capital financing companies
to support Small and Medium Enterprises which qualify for equity and quasi-equity financing;
(b) the provision of monies to support other activities and programs for the promotion of
venture capital financing, as the Board may determine, in consultation with the Minister. 3

support other activities and programs for the promotion of
venture capital financing, as the Board may determine, in consultation with the Minister. 3

Section 3—Sources of Money for the Trust Fund
The sources of money for the Trust Fund are
(a) an amount of money equivalent to twenty-five percent of the proceeds of the National
Reconstruction Levy with effect from the 2003 financial year;
(b) such other monies as the Minister with the approval of Parliament may determine;
(c) fees and other monies earned by the Trust Fund in pursuance of its functions under this Act;
(d) money that accrues to the trust Fund from investment made by the Board;
(e) grants, donations, gifts, and other voluntary contributions to the Trust Fund; and
(f) other moneys or property that may in any manner become lawfully payable and vested in
the Board for the Trust Fund. Section 4—Bank Account for the Trust Fund
(1) Monies of the Trust Fund shall vest in the Board and shall be paid into bank accounts that
shall be opened by the Board with the approval of the Accountant-General.

Trust Fund shall vest in the Board and shall be paid into bank accounts that
shall be opened by the Board with the approval of the Accountant-General.

(2) The Minister of Finance shall within thirty days of receipt of notification of payment of the
proceeds of the National Reconstruction Levy revenue, pay directly from the Consolidated
Fund into the bank accounts opened under subsection (1) the proportion of the National
Reconstruction Levy revenue that is required to be paid into the Fund under section 3(a). Section 5—Categories of Accounts of the Trust Fund
(1) The monies in the Trust Fund shall be divided into such categories of accounts as the Board
may determine. (2) There shall be assigned to each category of Account such proportion of the Trust Fund as
the Board shall in consultation with the Minister determine.

There shall be assigned to each category of Account such proportion of the Trust Fund as
the Board shall in consultation with the Minister determine.

PART II—THE BOARD AND MANAGEMENT OF THE TRUST FUND
Section 6—The Board of the Fund
(1) There is established by this Act a Board of Trustees for the Trust Fund comprising
(a) a chairperson;
(b) one representative of the Ministry of Finance and Economic Planning not below the rank
of director;
(c) one representative of the Ministry of Private Sector Development not below the rank of
director;
(d) the Administrator of the Trust Fund under section 22;
(e) one representative of the Ghana Securities Industry Association;
(f) one representative of the Ghana Association of Bankers;
(g) one representative of the Ghana Insurers Association; and
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ties Industry Association;
(f) one representative of the Ghana Association of Bankers;
(g) one representative of the Ghana Insurers Association; and
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(h) two other individuals, one each from the formal and informal sectors of the economy one
of whom is a woman. (2) The chairperson and members of the Board of Trustees shall be appointed by the President
acting in consultation with the Council of State. (3) The President shall in appointing a member of the Board under subsection (1) have regard
to the persons integrity, knowledge, expertise and experience in matters relevant to the
functions of the Board. (4) The Board shall be a body corporate with perpetual succession and shall have a common
seal and may sue and be sued in its corporate name. (5) The Board may
(a) enter into contracts;
(b) acquire, purchase and hold movable and immovable property; and
(c) convey, assign and transfer any movable and immovable property or any interest in property
vested in it.

hold movable and immovable property; and
(c) convey, assign and transfer any movable and immovable property or any interest in property
vested in it.

Section 7—Functions of the Board
(1) The Board is responsible for the management of the Trust Fund and shall for that purpose
(a) pursue policies to achieve the object of the Trust Fund;
(b) collect or arrange to be collected, monies lawfully due to the Trust Fund through procedures
to be determined by the Minister;
(c) monitor and evaluate the operations and performance of venture capital financing
companies in respect of monies received from the Trust Fund;
(d) ensure accountability of the Trust Fund by defining appropriate procedures for its
management;
(e) disburse monies from the Trust Fund;
(f) invest some of the monies of the Trust Fund in such safe securities as it considers financially
beneficial to the Trust Fund;
(g) receive and process applications for funds from venture capital financing companies;
(h) put in place structures and guidelines that will ensure that venture capital finance companies
live up to their responsibilities stated in the agreement between the venture capital financing
companies and the SMEs they fund;
(j) in consultation with the Minister, formulate policies to determine among other things
(i) the terms under which any monies from the Trust Fund will be allocated to eligible venture
capital financing companies under this Act;
(ii ) the maximum amount of money that may be granted by the Trust Fund to an applicant;
and
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ble venture
capital financing companies under this Act;
(ii ) the maximum amount of money that may be granted by the Trust Fund to an applicant;
and
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(ii i) the sectors of the economy in which the monies from the Trust Fund may be invested;
(j) publish such manuals or guidelines as it considers necessary to regulate the conduct and
operations of venture capital financing companies in relation to monies from the Trust Fund;
(k)approve the broad terms and conditions of agreements to be entered into between venture
capital financing companies and SMEs in relation to disbursements made from monies from
the Trust Fund; and
(l) perform such other functions as are incidental to the achievement of the object of the Trust
Fund. (2) The Minister may give general directives in writing to the Board on matters of policy. Section 8—Tenure of Office of Members
(1) The chairperson and any member of the Board other than the Chief Executive of the Trust
Fund shall hold office for a period of four years and is on the expiration of that period eligible
for re-appointment. (2) A member of the Board other than an ex-officio member may at any time by letter addressed
to the President through the Minister resign from office.

2) A member of the Board other than an ex-officio member may at any time by letter addressed
to the President through the Minister resign from office.

(3) A member who is absent from four consecutive meetings of the Board without sufficient
cause shall cease to be a member of the Board. (4) The chairperson or any other member of the Board may be removed from office by the
President for
(a) inability to perform the functions of the office;
(b) for stated misbehavior; or
(c) for any other just cause. Section 9—Vacancies on the Board
(1) The chairperson of the Board shall notify the Minister of vacancies that occur in the
membership of the Board within one month of the occurrence of the vacancy. (2) The President on being notified of a vacancy shall request the appropriate body to nominate
another person for appointment. (3) Where the vacant position is that of the chairperson, the Minister shall notify the President
who shall in consultation with the Council of State appoint a new chairperson. (4) Where a person is appointed to fill a vacancy, that person shall hold office for the remainder
of the term of the previous member and shall subject to the provisions of this Act be eligible
for re-appointment.

shall hold office for the remainder
of the term of the previous member and shall subject to the provisions of this Act be eligible
for re-appointment.

Section 10—Meetings of the Board
(1) The Board shall meet for the despatch of business at times and in places that the Board
may determine but shall meet at least once every three months. 6

e Board shall meet for the despatch of business at times and in places that the Board
may determine but shall meet at least once every three months. 6

(2) The chairperson shall upon the request of not less than one third of the membership of the
Board convene an extraordinary meeting of the Board. (3) The quorum at a meeting of the Board shall be five members. (4) The chairperson shall preside at every meeting at which the chairperson is present and
where the chairperson is absent, a member of the Board elected by the members present from
among their number shall preside. (5) Matters before the Board shall be decided by a majority of the members present and voting. (6) The person presiding at a meeting of the Board shall in the event of equality of votes have
a second or casting vote. (7) The Board may co-opt any person to act as an adviser at its meetings but no co-opted person
is entitled to vote at the meeting. (8) The validity of the proceedings of the Board shall not be affected by a vacancy among its
members or by a defect in the appointment or qualification of a member. (9) Except as otherwise provided under this section, the Board shall determine and regulate the
procedure for its meetings.

qualification of a member. (9) Except as otherwise provided under this section, the Board shall determine and regulate the
procedure for its meetings.

Section 11—Committees of the Board
The Board may for purposes of achieving the object of the Trust Fund appoint committees of
the Board comprising members of the Board or non-members or both and may assign to them
such functions as the Board may determine except that a committee composed entirely of non
members shall only advise the Board. Section 12—Disclosure of Interest
(1) A member of the Board who has an interest in any matter being considered or dealt with by
the Board shall disclose the nature of that interest at a meeting of the Board and shall not take
part in any deliberation or decision of the Board with respect to the matter. (2) A member who has an interest in a matter before the Board but who fails to disclose that
interest under subsection (1) shall be removed from the Board. Section 13—Allowances for Members of the Board
The chairperson and other members of the Board shall be paid allowances that the Minister
may determine. Section 14—Disbursement From the Trust Fund
The monies of the Trust Fund shall be disbursed by the Board in proportions and to eligible
venture capital financing companies as the Board may determine.

onies of the Trust Fund shall be disbursed by the Board in proportions and to eligible
venture capital financing companies as the Board may determine.

Section 15—Application for Funding
(1) Any venture capital financing company that satisfies the conditions specified in section 16
may apply to the Trust Fund for funding. 7

for Funding
(1) Any venture capital financing company that satisfies the conditions specified in section 16
may apply to the Trust Fund for funding. 7

(2) An application for funding from the Trust Fund shall be in such form as the Minister may
on the advice of the Board prescribe. (3) The application shall be accompanied with such non-refundable processing fee as the Board
shall determine. (4) Upon the receipt of an application, the Board may conduct such investigations on the
applicant and may request the applicant to submit such documents as it considers necessary for
the determination of the application. (5) The Board shall within twenty-eight days after the receipt of an application
(a) grant the application if
(i) the funds of the Trust Fund are not exhausted;
(ii) it is satisfied that the applicant has fulfilled all the conditions listed under section 16; and
(iii) the applicant has fulfilled any other conditions required for the grant of an application
prescribed under this Act;
(b) refuse to grant the application where it determines the applicant to be ineligible. (6) Where the Board grants an application, it shall inform the applicant in writing of the monies
allocated to the applicant and subject to subsection (5) specify any terms and conditions upon
which the grant has been made.

in writing of the monies
allocated to the applicant and subject to subsection (5) specify any terms and conditions upon
which the grant has been made.

(7) Where an applicant is granted credit facilities by the Board, the applicant shall bear the full
credit risk of the facility. (8) An applicant dissatisfied with a decision of the Board in respect of an application may
petition the Commission on Human Rights and Administrative Justice for a review of the
decision. Section 16—Eligibility for Funding
A venture capital financing company qualifies to apply for funding from the Trust Fund if that
venture capital financing company
(a) is incorporated in Ghana as a limited liability company under the Companies Code, 1963
(Act 179);
(b) has a name that includes "Venture Capital", or any similar abbreviation;
(c) has as its sole authorized business, the business of assisting the development of small
businesses by making equity and quasi-equity investments and providing business and
managerial expertise to small businesses in which it has made or proposes to make an eligible
investment;
(d) is managed by an investment adviser licensed by the Securities and Exchange Commission
who is in good standing;
(e) has met the minimum equity capital requirements prescribed by regulations made under this
Act;
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and Exchange Commission
who is in good standing;
(e) has met the minimum equity capital requirements prescribed by regulations made under this
Act;
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(f) has in place adequate governance, internal control, and monitoring procedures for selection
of investment projects and for monitoring and management of these projects;
(g) undertakes to enter into an agreement on broad terms and conditions approved by the Board
with any SME it provides funding for; and
(h) meets other conditions prescribed by the Board. Section 17—Management of Equity and Credit Accounts
(1) A venture capital financing company which has received monies from the Trust Fund shall
apply the monies to provide equity or credit financing or equity and credit financing to
qualifying Small and Medium Enterprises in accordance with policy guidelines provided by
the Board. (2) A venture capital financing company shall enter into a written agreement with any SME to
which it provides funding. Section 18—Tax Incentives
A venture capital financing company shall enjoy such tax incentives as shall be provided in the
Internal Revenue Act, 2000 (Act 529) as amended.

tives
A venture capital financing company shall enjoy such tax incentives as shall be provided in the
Internal Revenue Act, 2000 (Act 529) as amended.

Section 19—Reporting by Venture Capital Financing Companies
The Minister shall on the advice of the Board prescribe the form of reports to be submitted by
venture capital financing companies allocated funding from the Trust Fund and the intervals at
which the reports are to be submitted. Section 20—Administrative Expenses of the Trust Fund
The administrative and other expenses of the Trust Fund shall be paid out of monies approved
by Parliament for the purpose. Section 21—Tax Exemption
The Trust Fund is exempt from payment of any form of tax. PART III—ADMINISTRATIVE AND FINANCIAL PROVISIONS
Section 22—Administrator and Functions
(1) There shall be appointed by the President in accordance with the advice of the Board given
in consultation with the Public Services Commission an Administrator of the Trust Fund. (2) The Administrator shall hold office on the terms and conditions specified in the letter of
appointment. (3) The Administrator shall be a member of the Board. (4) The Administrator shall be responsible for the day-to-day administration of the affairs of
the Board and shall ensure the implementation of the decisions of the Board. Section 23—Appointment of Other Staff
9

administration of the affairs of
the Board and shall ensure the implementation of the decisions of the Board. Section 23—Appointment of Other Staff
9

(1) The President acting in accordance with the advice of the Board given in consultation with
the Public Services Commission shall appoint other officers or employees necessary for the
effective performance of the functions of the Board. (2) The President may delegate the power of appointment under subsection (1) in accordance
with article 195(2) of the Constitution. (3) The Board may on the recommendations of the Administrator engage the services of such
experts and consultants as the Board may determine. Section 24—Accounts and Audit
(1) The board shall keep proper books of account and records in such form as the Auditor
General may approve. (2) The books of account kept for the Fund by the Board shall be audited by the Auditor
General or by an auditor appointed by the Auditor-General within six months after the end of
each financial year. (3) In addition to the annual audit, technical audits may be conducted on selective basis by the
Auditor-General or by an auditor appointed by the Auditor-General.

on to the annual audit, technical audits may be conducted on selective basis by the
Auditor-General or by an auditor appointed by the Auditor-General.

Section 25—Annual Report
(1) The Board shall submit to the Minister as soon as is practicable and in any event not more
than eight months after the end of each financial year, a report on the activities and operation
of the Trust Fund during the year to which the report relates and shall include
(a) the audited accounts of the Trust Fund and the Auditor-General's report on the accounts of
the Trust Fund; and
(b) any other information as the Board may consider necessary;
(2) The Minister shall within two months after the receipt of the Annual Report submit the
report to Parliament with such statement as the Minister considers necessary. Section 26—Financial Year
The financial year of the Trust Fund shall be the same as the financial year of the Government.

inister considers necessary. Section 26—Financial Year
The financial year of the Trust Fund shall be the same as the financial year of the Government.

Section 27—Regulations
The Minister on the advice of the Board may by legislative instrument make regulations for
the effective implementation of this Act and in particular prescribe
(a) the form for application for funds from the Trust Fund;
(b) other conditions for qualification of an applicant;
(c) further conditions for the grant of an application for funds from the Trust Fund;
(d) matters to be contained in policy guidelines and manuals issued by the Board;
(e) equity capital requirement for venture capital financing companies; and
(f) the form of reports to be submitted by venture capital financing companies. 10

ty capital requirement for venture capital financing companies; and
(f) the form of reports to be submitted by venture capital financing companies. 10

Section 28—Interpretation
In this Act unless the context otherwise requires
"Board" means the Board established for the Trust Fund under section 6 of this Act;
"Minister" means the Minister responsible for Finance;
"Small and Medium enterprises" means an industry, project, undertaking or economic activity
which employs not more than 100 persons and whose total asset base, excluding land and
building, does not exceed the cedi equivalent of $1 million in value;
"Trust Fund" means the Venture Capital Trust Fund established under section 1;
"Venture capital financing company" means a company incorporated under the Companies
Code 1963 (Act 179) that has as its sole authorized business, the business of assisting in the
development of Small and Medium enterprises by making investments equity and quasi-equity
investments and providing business and managerial expertise to small businesses in which it
has made or proposes to make an eligible investment. Section 29—Amendments
The Financial Institutions (Non-Banking) Law, 1993 (P.N.D.C.L. 328) is hereby amended by
the deletion of paragraph 6 on Venture Capital Funding Companies from the Schedule.

ions (Non-Banking) Law, 1993 (P.N.D.C.L. 328) is hereby amended by
the deletion of paragraph 6 on Venture Capital Funding Companies from the Schedule.

Date of Gazette Notification: 19th November, 2004. 11