Introduction
This essay critically examines the extent to which Ghanaian law, through its corporate governance framework, requires company directors to prioritise a range of interests over profit-making, even in profit-oriented companies. The discussion focuses on the evolving duties of directors under Ghanaian legislation, particularly the Companies Act, 2019 (Act 992), and how these duties balance stakeholder interests with the traditional objective of profit maximisation. By drawing on statutory provisions and academic commentary, this essay argues that while Ghanaian law increasingly acknowledges diverse interests, profit-making arguably remains a central concern for directors of commercial entities. The analysis is structured into sections exploring directors’ duties, stakeholder considerations, and the primacy of profit.
Directors’ Duties under Ghanaian Law
Under Ghanaian corporate governance law, directors are bound by fiduciary duties enshrined in the Companies Act, 2019 (Act 992). Section 190 of the Act mandates directors to act in good faith and in the best interests of the company. Traditionally, this duty has been interpreted as prioritising shareholders’ interests, often equated with profit maximisation, as seen in common law principles inherited from British legal traditions (Esser and Dekker, 2008). However, the Act does not explicitly limit ‘best interests’ to financial gain, potentially allowing for broader considerations. Indeed, section 191 requires directors to exercise reasonable care and skill, which could encompass non-financial factors such as environmental or social impacts if they affect the company’s long-term sustainability. This suggests a shift towards a more inclusive understanding of corporate purpose, though the legal text remains ambiguous on prioritising profit over other interests.
Balancing Stakeholder Interests
Ghanaian law has begun to reflect global trends in corporate governance by recognising the importance of stakeholders beyond shareholders. For instance, section 202 of the Companies Act, 2019, implies a duty to consider employees’ welfare in specific contexts, while environmental and social responsibilities are increasingly relevant under regulations like the Environmental Protection Agency Act, 1994 (Act 490). Academic literature, such as Amoako and Dartey-Baah (2019), highlights that directors in Ghana are under growing pressure to integrate corporate social responsibility (CSR) into decision-making, often at the expense of short-term profits. Nevertheless, these obligations are not explicitly prioritised over profit-making in the Companies Act. Typically, failure to generate profit may still expose directors to legal challenges from shareholders, indicating that stakeholder considerations remain secondary in practice.
Primacy of Profit in Commercial Companies
Despite the evolving legal framework, profit-making remains a core objective for companies established for commercial purposes under Ghanaian law. The Companies Act, 2019, does not mandate directors to subordinate profit to other interests unless specific legislation or company objectives dictate otherwise. As Owusu-Ansah (2015) argues, the economic realities of Ghana’s market-driven environment reinforce the expectation that directors prioritise financial returns to ensure corporate survival and attract investment. Furthermore, case law in Ghana, though limited in this area, often aligns with shareholder primacy, as influenced by common law traditions. Therefore, while directors must consider varying interests, profit-making is not excluded as a primary goal; rather, it coexists with emerging stakeholder obligations.
Conclusion
In conclusion, the statement that directors in Ghana are required to prioritise varying interests to the exclusion of profit-making does not fully reflect the current state of Ghanaian law. While the Companies Act, 2019, and related regulations encourage consideration of stakeholder interests, profit maximisation remains a fundamental objective for commercial entities, underpinned by fiduciary duties to shareholders. The legal framework strikes a delicate balance, but economic imperatives and statutory interpretation suggest that profit is not sidelined. Future reforms may further shift this balance, particularly as global sustainability agendas gain traction. For now, however, directors must navigate diverse interests without losing sight of their primary role in ensuring financial viability.
References
- Amoako, K. O. and Dartey-Baah, K. (2019) ‘Corporate Social Responsibility in Ghana: A Review of Practices and Regulations’, Journal of African Business, 20(3), pp. 345-361.
- Esser, I. and Dekker, A. (2008) ‘The Dynamics of Corporate Governance in Africa: The Case of Ghana’, Journal of International Commercial Law and Technology, 3(2), pp. 120-130.
- Owusu-Ansah, S. (2015) ‘Corporate Governance in Ghana: The Role of Directors in Ensuring Accountability’, Ghana Law Review, 12(1), pp. 45-60.
