Sierra Leone

Exchange

The Sierra Leone Stock Exchange.

Corporate Governance Code

Corporate Governance Code can be found on the Corporate Affairs Commission website [2].

Currency

Sierra Leonean Old and New Leones (SLL).

Public offers/disclosure regulations

The Anti-Corruption Act of 2008 (as amended), the Public Procurement Act 2004 governs public offers and contains certain disclosure obligations.

Regulatory body or bodies

The Security Exchange Commission.

Principal legislation

The Security Exchange and Commission Act 2017.

Takeover / merger regulations

Mergers and acquisitions are governed by the Companies Regulations of 2015 (the “Regulations”) and regulated by the Corporate Affairs Commission (the “CAC”). The Regulations apply to public and private companies as well as every merger, acquisition or combination between or among companies, involving acquisitions of shares or assets or ceding control of another company.

Impact of Regulatory Regime on Business

There are no specific financial thresholds to be made in the event of a notification and the filing fee.

Scope

These laws cover copyright, trademark, design patents etc.

Corruption Perception Index rank worldwide for 2022

110/180 [3]

Corruption Perception Index score for 2022

34/100

UNAC ratified?

Yes, on 30th September 2004 

SIGNATORY TO UNITED NATIONS CONVENTION AGAINST CORRUPTION (UNCAC)?

Yes, on 9th December, 2003

SIGNATORY TO THE OECD CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS?

No

Arbitration

Sierra Leone laws recognise arbitration as a means of dispute resolution between private parties in Commercial and Civil transactions. The new Arbitration Act 2022 [4] which repealed and replaced the Arbitration Act Chapter 25 (CAP 25) of the laws of Sierra Leone 1960 applies to domestic and international arbitrations with a seat in Sierra Leone and also contains provisions governing arbitrations to which the Government of Sierra Leone is a party. It applies to all arbitrations commenced on or after 22 September 2022 (unless the parties have agreed otherwise).  The 2022 Act seeks to clarify, modernise and improve the law relating to arbitrations and arbitral awards. It  provides a comprehensive arbitration framework which is in line with international standards and based on a sound set of guiding principles.  The Act includes Arbitration Rules, which apply to domestic arbitrations in Sierra Leone, subject to any modifications that parties may agree. If the Arbitration Rules conflict with the 2022 Act, the provisions of the 2022 Act will prevail.

Court of Appeal

Section 128(1) of the 1991 Constitution of Sierra Leone provides that the Court of Appeal shall consist of (i) the Chief Justice, (ii) not less than seven Justices of the Court of Appeal and (iii) such other Justices of the superior court of the Sierra Leone judicature as the Chief Justice may determine.

Section 128(2) provides that the Court of Appeal shall be duly constituted by any three Court of Appeal judges. However, a single Justice of the Court of Appeal may exercise any power vested in the Court of Appeal not involving the decision on any cause or matter before the Court of Appeal save:
in criminal matters, if any such Justice refuses or grants an application in exercise of any such power, any such person affected thereby shall be entitled to have the application determined by the Court of Appeal as duly constituted; and

in civil matters, any order, direction or decision made or given in pursuant to the power conferred by the provision may be varied, discharged or reversed by the Court of Appeal as duly constituted.

High Court

The Sierra Leone Constitution provides that the High Court shall consist of (i) the Chief Justice, (ii) not less than nine High Court judges and (iii) such other judges of the superior court of the Sierra Leone judicature as the Chief Justice may determine. The High Court shall be duly constituted by any one judge of the High Court sitting with a jury (Constitution, section 131(2)).

The High Court has supervisory jurisdiction over all inferior traditional Courts in Sierra Leone and any adjudicating authority. In the exercise of its supervisory jurisdiction it has the power to issue directions, writs, and orders.

Effectiveness of the court system

The Judiciary is considered by many as not being independent and that it remains subject to manipulations and corruption. It is seen by many citizens as slow and ineffective to resolve disputes.

Enforcement of arbitral awards

The Arbitration Act 2022 governs the enforcement of arbitral awards.

Enforcement of foreign judgments

The New York Convention (NYC) to which Sierra Leone is a signatory, upholds arbitral agreements and facilitates the enforcement of foreign arbitral awards in 88% of the world's countries. Section 67 of the Arbitration Act 2022 Act specifically implements the NYC, with the effect that an arbitral award made outside Sierra Leone may benefit from the NYC enforcement regime if the following three conditions are met:

1. Reciprocity: the country in which the arbitral award was made is party to the NYC;
2. Commerciality: the underlying dispute arises out of a legal relationship considered "commercial" under Sierra Leone law; and
3. Non-Retroactivity: the relevant arbitration agreement and award were respectively concluded and rendered after the date of Sierra Leone's accession to the NYC (i.e. after 28 October 2020). See more here.

Section 81 confirms that foreign awards which are not enforceable under the NYC will be governed by the Foreign Judgments (Reciprocal Enforcement) Act 1960.This provides a fallback provision, should Section 67 not apply. However, it should be noted that the 1960 Act requires the relevant country to have a bilateral or reciprocal enforcement treaty with Sierra Leone. If this is not the case, parties wishing to enforce a foreign award will only have resort to the enforcement regime under Sections 65-66.  Sections 65-66 additionally set out a self-contained, but expansive, enforcement regime applicable to domestic and foreign awards and are reflective of international standards.

Judiciary

Section 135 of the Constitution entrusts the appointment of the Chief Justice and other judges of the higher courts of the judicature of Sierra Leone on the President with the approval of the Judicial and Legal Services Commission and subject to the approval of Parliament.

Magistrates Court

The Magistrates Court is the primary inferior court of judicature in Sierra Leone. Sierra Leone was divided into Judicial Districts pursuant to The Courts Act, 1965 (as amended) [5]. Section 4 of the Courts Act provides that every Judicial District shall have a Magistrates Court.

Magistrates Courts have limited jurisdiction. Subject to their limitations, Section 8 of the Courts Act 1965 provides that the Magistrates Court shall have the jurisdiction to do all lawful acts necessary to enquire into, and dispose of, or to hear and determine all civil and criminal matters arising within the district, area, or transferred to the relevant Magistrates Court by the High Court.

Supreme Court

The Supreme Court sits at the top of the Sierra Leone court hierarchy. Section 121(1) of the Sierra Leone Constitution provides that the Supreme Court shall consist of (i) the Chief Justice, (ii) not less than four Justices of Supreme Court and (iii) such other Justices of the superior court of the Sierra Leone judicature or of the superior courts of any state operating a body of law similar to Sierra Leone.

The Coram of the Supreme Court is three justices. The Supreme Court is the final Court of Appeal in Sierra Leone and as such, appellate and other jurisdiction may be conferred upon it by the Constitution or any other law.

Foreign investment incentives

Basic law

The National Investment Board (NIB) Act (Act No. 49 of 2022) establishes a National Investment Board headed by the President with sweeping powers over the country’s investment climate, which bring together a number of key implementing agencies under one umbrella. It is intended to act as a facilitating body to assist investors with their business enterprises and generally to improve the investment climate in Sierra Leone, with the stated purpose of harmonising the regulatory processes for investors. The Act is the latest step in a reform process that includes the launch of a governance code in 2019 and a National Public Investment Management Policy in 2021.

The new NIB is composed of four units:

• Business Facilitation: grants permits and licences
• Public Private Partnership: administers the country’s PPP Act 2014 regarding contracts
• Investment and Export Promotion: facilitates relations between investors and the government
• Corporate Affairs: administers the Companies Act 2009 for the registration and regulation of companies

The following three agencies have been terminated and their roles transferred to the NIB:

• Corporate Affairs Commission
• Sierra Leone Investment and Export Promotion Agency
• Public Private Partnership (PPP) Unit

The NIB Act (section 52(1) also repeals the Investment Promotion Act 2004 and the Sierra Leone Investment and Export Promotion Agency Act 2007. Following the enactment of the NIB Act, the Secretariat of the NIB in January 2023 commenced an incorporation-transition with the agencies Sierra Leone Investment and Export Promotion Agency (SLIEPA), Corporate Affairs Commission, Office of the Administrator and Registrar General (OARG) and Public Private Partnership (PPP) Unit) under its supervision [6].

Foreign investment incentives

Government of the Sierra Leone has enacted several pieces of legislation to attract investors into Sierra Leone.
Sierra Leone’s Income Tax Act 2000 and the multiple Finance Acts enacted since 2010 contain various incentives to encourage private sector investment and promote the inflow of foreign capital and technology into Sierra Leone.

These include income tax exemptions, deductions for income tax purposes, import duty exemptions and goods and services tax exemptions. Such incentives are contingent on the satisfaction of relevant criteria including the need to improve local content.

General incentives include income tax relief on plant, machinery and equipment; a three year grace period on import duties for new and existing businesses importing plants, machinery or equipment; lower import duty rates for raw materials; and 100 per cent. tax deductions for expenditure on research and development, training, and the development of social services (such as the building of schools and hospitals).

Sector-specific incentives have also been implemented for investments in agriculture, energy, infrastructure, tourism and pharmaceuticals.  Additional incentives are provided to SEZs, including import and export duty exemptions, three-year corporate tax holidays and expedited government services including customs, immigration and registration.

Foreign investor rules

Listed Companies: Companies Act No. 5 of 2009

All public or private organizations are now required to reserve 30% of their jobs for women [7].

Legislation

General legislation

Sierra Leone does not have specific legislation governing advertisement. However, the legislations listed below contains provisons that deal with advertisement.

• The Sierra Leone Broadcasting Corporation Act 2009
• The Right to Access Information Act 2013
• The Postal Services Regulatory Agency Act 2012
• The Goods and Services Tax Act 2009

No consolidated legislation in relation to Competition. However, the following related legislation have been introduced:

• Patent and Industrial Design Act 2014;
• Trade Mark Act, Chapter 244 of the Laws of Sierra Leone;
• Copyright Act No 20 of 1965.

Industry specific legislation

The telecommunication Act 2009

The Pharmacy and Drug Act (Amended) 2007

Public Procurement Act 2004

Capital Gains Tax

Income Tax Act 2000 (as amended) provides for CGT losses to be included in the corporation tax.

Corporate tax

The Income Tax Act 2000 (as amended):

• specifies tax rates applicable to resident companies pursuant to Part III of the First Schedule to the Income Tax Act;
• non-resident companies are subject to tax at the rate prescribed in the Second Schedule of the Income Tax Act;
• all companies are subject to 30% tax rate except mining companies which are, instead, required to pay a 35% tax rate.

Exchange control

The Exchange Control Act governs this area.

Companies are required to obtained exchange control for repayment of capital and interest outside Sierra Leone and exchange control is also permission is require when shares are transferred in a company.

Export Processing Zone

The non-profit international development agency World Hope International has established an SEZ near Sierra Leone’s principal seaport in Freetown. The GoSL is considering the establishment of further SEZs in other parts of the country under its Post-Ebola Recovery Strategy.

Interest

Interest is payable by both resident and non-resident companies, however, the law does not specify the amount to be paid in interest. The law does, however, prescribe the amount to be withheld on taxes on the payment of interest.

Dividends

The Companies Act 2009 Section 322 part XIV of the Companies Act
Dividends profits are only distributed out of profits arising from the use of the Company's property, revenue reserves and realised profits on a fixed asset sold.
Dividends are paid according to the amount paid on the shares but where nothing is paid up on any of the shares in the Company dividends may be declared and paid according to the amount on the share.

This is also addressed in the Income Tax Act 2006 (as amended).

Losses

As provided for under the Income Tax Act 2000 (as Amended) tax losses can be carried forward without any penalties.

Payroll tax and social security

Social security

The Employer contributes 10% of the employees’ gross salary per month per employees. 

Payroll tax

Payroll taxes are deducted as provided for under the Income Tax Act 2000 (as amended). Amount to be deducted range between 15 to 30%.

Personal income tax

Resident - Part one of the 2nd schedule

Not over Le 500.000 [8] - Nil

Over Le 500.000 -15%

Next Le 500,000 per month – 30%

Above Le 2 Million per month – 35%

Non-resident - Part two of the 2nd Schedule 25%

Minimum alternate Tax

3%

Royalties

See comments above.

Stamp duty

The Finance Act 2023 passed by Parliament on 4th April, 2023 has increased stamp duty from 0.5 to 2% of property value. This payment is required for the registration of all legal instruments, sales of shares and purchase properties etc.

Technical service fees

N/A

Thin Cap regulations

N/A

Transfer pricing

The Income Tax Act, Part XI section 95 deals with transfer pricing under a section titled "Anti-Avoidance".

The Income Tax Act provides for the Commissioner to distribute, apportion, allocate or assessable income deductions or credits between the taxpayers as necessary to reflect the chargeable income the taxpayers would have realised had the transaction been conducted at arm's length transaction.

The Commissioner may adjust the income payable as he sees fit in respect of any transfer or licence of intangible property between associate companies so that it is commensurate with the income attributed to the intangible property. In addition, the Commissioner may re-characterise the source and nature of any payment or loss as revenue, capital or otherwise.

Value Added Tax

The tax chargeable on the provision of goods and services pursuant to the Goods and Services Tax Act 2009 is capped at 15%.

The Gender Equality and Women’s Empowerment Act, 2022 enshrines improvements to women’s access to finance, employment opportunities, equal pay, maternity leave, and political representation. The Act (knowns as GEWE) establishes a 30 percent quota for women’s participation in government for both appointed positions, including cabinet, ministry, and ambassador roles, and elected positions, such as parliamentary and local council seats [9].  The GEWE quota will go into effect ahead of Sierra Leone’s upcoming Presidential, Parliamentary, Mayoral, and Local Council elections on June 23, 2023.

Global context

Sierra Leone is a member of the WTO and Sierra Leone’s MFN tariff rates are applied to other WTO Members. This has not been affected by the implementation of the ECOWAS CET, as the CET rates are within Sierra Leone’s WTO binding commitments. Imports from other MRU states are duty free. Customs clearance for imported goods was simplified in the early 2000s. The Customs Act 2011 further reformed import and export requirements, providing clarification to what was previously a complicated and time-consuming process. The Customs Act is administered by the Department of Customs on behalf of the National Revenue Authority, headed by a Commissioner-General, and outlines requirements for imports and exports in terms of reporting, transfer, origin, and calculation of transfer value. Customs valuation in Sierra Leone is broadly based on the Agreement on Implementation of Article VII of the GATT 1994.

Regional context

Mano River Union [10] nationals benefit from full equivalency or “national treatment”, meaning that they are treated in the same way as Sierra Leone nationals. The application of “national treatment” is also generally granted to Economic Community of West African States (ECOWAS) nationals, but is largely based on reciprocity. The NRA began implementing the ECOWAS Common External Tariff regime in June 2018, which is intended to harmonise the import and export tariff rates across the ECOWAS member states.

African continental free trade area

In July 2018, Sierra Leone signed the Agreement establishing the African Continental Free Trade Area (AfCFTA) and in November 2018 was ratified by its Parliament. The aim of the AfCFTA is to boost intra-African trade through progressive  trade liberalisation and create a single continental market for goods, services and capital. The AfCFTA Agreement entered into force in May 2019.

[1]  According to the final results of the 2021 mid-term population census which can be accessed here

[2] https://cac.gov.sl/

[3] https://www.transparency.org/en/cpi/2022

[4]

[5]

[6]  Public notice issued by the Secretariat on 12 January, 2023

[7] The Women's Equality and Empowerment Act, 2022

[8] Old Sierra Leonean Leone

[9] Currently, women represent just 12 percent of parliamentary seats and four of 32 cabinet positions.

[10] Members are Sierra Leone, Guinea, Liberia and Cote d’Ivoire.