All You Need To Know About Technology Transfer Agreements In Ghana

As part of the ways of encouraging investment and promoting development in Ghana, local companies are permitted to enter into agreements (“Technology Transfer Agreements”) with foreign entities in order to absorb the knowledge, skills, technology and services of the foreign company for use in the Ghanaian jurisdiction. As is widely known, contracts between private organizations are solely for their benefit and not for the nation as a whole. Why then is the government interested in the agreements entered into between two private companies?

To start it off, the Ghana Investment Promotion Centre is the body responsible for the encouragement, promotion and facilitation of investments in the country by registering and keeping records of all Technology Transfer Agreements (TTAs), among others.

This is essentially what the purpose of a TTA is.

TYPES OF TTAS: A TTA should cover one or more of the following:

1. Industrial Property: This involves the assignment, sale and licensing of all forms of industrial property, eg. Trademarks, tradenames, patents, service marks. They must however accompany the transfer of technology.
2. Technical expertise: This includes feasibility studies, plans, diagrams, models, instructions, guides, formulae, basic or detailed engineering designs, specifications and equipment for training, services involving technical advisory and managerial personnel and personnel training.
3. Technical Know-How: This has to do with transferring knowledge for the use in installing machinery and equipment, immediate goods and raw materials.

KEY PROVISIONS: In order for a TTA to be considered as valid and enforceable, there are certain provisions the agreement should contain. They are:

1. The services to be provided must be fully described and should not be freely and easily available in Ghana.
2. There should be attached a training schedule to the application for the training of the local staff by the Transferor.
3. The governing law must be Ghanaian law.
4. The initial duration of the agreement must be any period between 18 months and 10 years.

AGREEMENTS THAT DO NOT QUALIFY: Some Agreements may bear similarities to TTAs, however, they may not be classified as TTAs should they include any of the following:

1. Agreements solely for the provision of goods.
2. Agreements for a duration of less than eighteen months
3. Agreements for services that fall outside the scope of GIPC legislation, e.g. copyright.

UNENFORCEABBLE CLAUSES: L.I. 1547 provides a list of clauses that would be considered unenforceable in a TTA. Thus, if the Agreement meets the standard of TTAs and it has any of those clauses, the Agreement will still be valid but that clause cannot be enforced in any court of law. Examples of such clauses are:

1. Clauses which forbid the use by the transferee of complementary technologies; prevent the manufacture of products different from those covered by the agreement or prevent the manufacture of products similar to those covered by the technology transfer agreement
2. Clauses which require the consent of the transferor before any modifications to products, processes or plants can be effected by the transferee or which impose on the transferee obligations to introduce unnecessary designs; except where the licensed technology is used to manufacture specific products under a license or trademark
3. Clauses which limit the scope, volume of production or the sale or resale prices of the products manufactured by the transferee.

REGISTRATION AND RENEWAL: For an initial application for the registration of a TTA, the following documents must be submitted to the GIPC:

1. Completed Registration of Technology Transfer Agreement Form
2. Certified true copy of Certificate of Incorporation & Company Regulations as applicable.
3. Three copies of the Agreement
4. A detailed training schedule.
5. A yearly forecast of fees payable to the transferor per annum for the duration of the Agreement.
6. Copies of Audited Financial Statements for the five (5) most recent years of Transferee company.

For a renewal application, the documents listed above must be submitted as well as the following documents:

1. Technology adopted or assimilated by the Transferee under the previous Agreement.
2. Challenges to full assimilation of the technology and the estimated period it will take the Transferee to completely assimilate the technology.
3. Justification for the renewal of the Agreement.
4. Training programmes organized for personnel of the Transferee under the previous Agreement

FEES: This category is divided into two areas which consist of Fees payable to the GIPC and fees payable to the Transferor. When submitting an initial application for registration to the GIPC, a processing fee must be paid in the sum of GH¢15,206.00. Once the application has been approved, the fees to be paid are based on the amount of fees transferable to the Transferor.

The GIPC has stipulated the range of the amount of fees the transferor may charge the Transferee under the Agreement which is based on the type of technology or service to be transferred. The table below gives a summary of the fees.

BENEFITS OF REGISTERING A TTA WITH THE GIPC:

Firstly, it is mandatory for business that have entered into TTAs to register with the GIPC. The annual transfer payment is treated as an expense by the transferee firm in Ghana and hence, it is deducted from profit before tax. As corporate tax is 25% per annum on profits, it will give the company a huge tax relief if the fee payable is treated as an expense and deducted from profit before tax.

Secondly, if the Agreement is not registered, an aggrieved party cannot rely on any court withing the Ghanaian jurisdiction to enforce its rights under the Agreement. Furthermore, as the governing law is required to be that of Ghana, no other court will have jurisdiction to enforce the Agreement.

Lastly, a business that fails to register a Technology Transfer Agreement with the GIPC may be prevented by the Bank of Ghana from transferring funds. This suggest that the business may not be allowed to pay those fees to the entity that provided the services.

CONCLUSION:

Technology Transfer Agreements play a vital role in the development of the county through the transfer of knowledge and skills, the presence of investors and the boosting of the economy. It is an essential part of the investment sector of Ghana and it is advised that more companies partake in TTAs in order to grow their businesses and the nation as a whole.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.