1 Legal and regulatory framework

1.1 Which laws and regulations govern the capital markets in your jurisdiction?

  1. Securities Industry Act, 2016 (Act 929)
  2. Central Securities Depository Act, 2007 (Act 733)
  3. Foreign Exchange Act, 2006 (Act 723)
  4. Companies Act, 2019 (Act 992)
  5. Securities And Exchange Commission Regulations, 2003 (L.I. 1728)
  6. Ghana Stock Exchange Listing Rules, 2006
  7. Corporate Governance Code for Listed Companies 2020 SEC/CD/001/10/2020 (Issued by the Securities Exchange Commission)

1.2 Is your jurisdiction part of a supranational, transnational or multinational framework with relevance to capital markets? If yes, how does this work?

The Ghana Stock Exchange (GSE) is a leading member of the African Securities Exchanges Association. Ghana has applied to become an affiliate member of the World Federation of Exchanges.

A fully integrated West African Capital Market is soon to be established. The West African Capital Markets Integration Council (WACMIC) is the body responsible for designing the policy framework and managing the implementation of the process that will facilitate the creation of an integrated capital market in West Africa. Ghana played a key role in setting up the WACMIC and will be a part of the West African Capital Market when it is established.

In 2014, the WACMIC protocols and rules were launched, enabling licensed market participants of participating countries to formally gain access to markets of interest within the West African sub-region. The roadmap for integration is divided into three phases. Phase 1 – which deals with sponsored access – has been implemented, and brokers with member countries can now trade securities and settle in markets other than their own through local brokers in other jurisdictions.

The implementation of Phases 2 and 3 – on the Integration of Qualified West African Brokers and the Fully Integrated West African Capital Market respectively – is still in the pipeline.

1.3 Which bodies are responsible for regulating the capital markets in your jurisdiction? What powers do they have?

The bodies responsible for regulating the capital markets in Ghana are the SEC, the GSE and the Bank of Ghana. The powers of these regulatory bodies are outlined below.

SEC: Section 43 of the Securities Industry Act grants the SEC the power to approve a securities exchange.

Section 123(1) empowers the SEC to:

  • issue a private warning or a public censure to a present or past licensee or officer, partner, shareholder or controller of a licensee;
  • disqualify a licensee from holding a licence of a specified kind for a specific period; or
  • disqualify an officer of a licensee from a specified office or position as a licensee for a specified period.

Section 45 empowers the SEC power to:

  • review a disciplinary action taken by a securities exchange; and
  • affirm or set aside a decision of an exchange after giving the member and the exchange an opportunity to be heard.

The SEC also acts as an appellate body in respect of disciplinary action taken by a securities exchange.

The SEC has the power to issue circulars to capital markets operators providing guidance on compliance with the Securities Industry Act. Examples include the Circular to Auditors of Capital Market Operators and a circular on COVID-19.

Section 37 of the Securities Industry Act empowers the SEC to request bank records of persons.

GSE: The GSE has the power to:

  • suspend the trading of shares in a listed company; and
  • suspend the listing status of a company where it fails to meet or is in breach of its continuing listing obligations under the GSE Listing Rules.

Bank of Ghana: Section 47 of the Bank of Ghana Act empowers the Bank of Ghana to issue securities of its own, and to specify the conditions for such securities and sell or purchase them.

Under Section 48 of the act, the Bank of Ghana plays the role of a settlement bank in the capital markets by undertaking the settlement of funds through the Central Securities Depository (CSD). It therefore plays a regulatory role in the settlement of securities transactions.

A licensed bank may be appointed as a participant for the CSD.

1.4 How does enforcement work and what kinds of sanctions may be applied?

The SEC may make an application to the court where a party which is obliged to comply with, enforce or give effect to the rules and regulations of a securities exchange fails to do so. The court may issue an order directing that party to fulfil its obligations.

Under the Securities Industry Act, where a party fails to comply with a mandatory duty stipulated in the act or violates the act, that party may be fined or sentenced to a term of imprisonment.

The SEC may investigate the activities of persons regulated by it where complaints are received about such persons.

In exercising its power to request bank records, the SEC may write to the Bank of Ghana requesting bank records or information held by a bank or a specialised deposit-taking institution on any transaction concerning any person under investigation where the SEC is of the opinion that the bank or specialised deposit-taking institution is a proper person to assist with the investigation.

2 Capital markets infrastructure

2.1 What is the capital markets infrastructure in your jurisdiction (eg, trading venues, central counterparties, central securities depositaries (CSDs)?

The Securities and Exchange Commission (SEC) defines 'market infrastructure' as "all components that play a major role in the overall IT‐enabled operations of an institution, and the securities markets at large".

The capital market infrastructure in Ghana is as follows:

  • Ghana Stock Exchange (GSE) Automated Trading System (GATS): The GATS was introduced in November 2008. It supports all trading venues and is responsible for pre-opening, opening, continuous auction and closing of the market.
  • Capizer EZ Trade: This is opened for posting orders 30 minutes before opening. At the pre-opening stage, orders can be entered, amended or deleted; but trading does not take place. When trading opens, the Capizer EZ Trade matches opening orders with overlapping bids and offers, and the GATS automatically calculates the opening price for each security. In the continuous auction phase, all listed issues are simultaneously open for trading. This is when trading actually takes place. The system automatically closes all markets after issuing an alert. The system has been programmed to close at 3:00pm. The GATS undertakes pre-trade risk management by pre-validating each order entered into the system.
  • Trading venues: The trading venues available in Ghana are:
    • the Main Market;
    • the Ghana Alternative Market (GAX); and
    • the Ghana Fixed Income Market (GFIM).
  • the Ghana Commodities Market (GCX)Central Securities Depository (CSD): Currently there is only one CSD, following the merger of the Bank of Ghana's securities depository and the GSE's securities depository.
  • Central counterparties: The Clearing House secretariat of the CSD undertakes clearing and settlements. The Bank of Ghana is the settlement bank for the funds settlement function of the clearing and settlement processes.

2.2 What are the main exchanges and other trading venues in your jurisdiction? What are the key differences between those various trading venues?

The GSE is the main exchange and is supported by two other trading venues: the GFIM and the GAX.

The GFIM is the market on which fixed income securities are traded; while the GAX deals with securities trading for small and medium-sized enterprises. The minimum stated capital for listing on the GAX is GHS 250,000; whereas on the GFIM, the security to be issued must have a nominal value of not less than GHS 500,000. In addition, to list on the GAX, the public float must constitute a minimum of 25% of the total number of issued shares and a minimum of 20 public shareholders; whereas on the GFIM, the security to be listed must have a minimum of five holders.

The Ghana Commodities Exchange (GCX) is a market set up for trading in agricultural and non-agricultural produce. Current commodities being traded on the market are maize, soyabean, sorghum, sesame and rice.

Ghana also has an over-the-counter market for trading in securities which are not listed on the GSE.

2.3 What kinds of securities does your jurisdiction provide for (eg, electronic securities)?

Ghana provides for electronic securities only.

2.4 Is it mandatory to deposit securities with a (local) CSD (eg, for listing)?

It is mandatory to deposit book-entry securities with the CSD under Section 28 of the CSD Act. 'Book-entry securities' are investments such as stocks or bonds whose ownership is recorded electronically without a paper certificate as proof of ownership.

2.5 Are there rules in place governing crypto-assets and crypto-infrastructure (eg, crypto-exchanges, local crypto-money)?

As yet, there are no rules governing crypto-assets in Ghana. Such assets are not traded on the GSE. In 2019, the Securities and Exchange Commission (SEC) issued a press release to the general public that the SEC does not regulate various cryptocurrencies and associated types of product offerings and their accompanying online trading platforms or exchanges. The public was warned that those trading or dealing in such assets do so at their own risk.

2.6 Are special rules in place for crowdfunding products?

There are no special rules for crowdfunding products.

2.7 What kinds of databases are available on instruments issued and traded in your jurisdiction, and how can they be accessed?

The main database in Ghana is the GATS, which uses the Capizer EZ Trade software.

The GATS is accessed through:

  • the GSE's trading floor on the local area network;
  • a remote connection through the wide area network; or
  • a remote connection via the Internet.

Only authorised licensed dealing members and primary dealers may have access the GATS using their membership credentials.

3 Trading and post-trading infrastructure

3.1 What kind of market infrastructure does your jurisdiction provide for?

The market infrastructure in Ghana is:

  • the Ghana Stock Exchange Automated Trading System (GATS);
  • the Central Securities Depository (CSD) (clearing and settlement);
  • the Securities and Exchange Commission (Trading and Surveillance Unit); and
  • Ghana Interbank Settlement system.

3.2 What are the rules governing liquidity flows across execution venues (eg, use of systematic internalisers, trading obligations)?

The rules governing liquidity flow across trading venues include the following:

  • Day trading: Brokers may buy or sell shares on the same day.
  • Margin trading: The Securities and Exchange Commission may issue rules governing margin trading as and when relevant.
  • Internet trading through the GATS to be permitted: Qualified licensed dealing members are granted internet trading service provider status to enable them to trade.

3.3 Are there rules on light and dark markets and how do these apply?

There are no rules on light and dark markets in Ghana.

3.4 Are market participants subject to best execution requirements?

Yes, market participants are subject to best execution requirements. A broker-dealer must give priority to the orders of clients and must also disclose all material information, including the disclosure of interests.

3.5 Does your jurisdiction apply a target market concept?

No, Ghana does not apply a target market concept.

3.6 How does securities settlement work in your jurisdiction?

On the trading day, locked-in data of eligible securities must be received by the Clearing House from the GATS as follows:

  • Locked-in trades in respect of government/Bank of Ghana securities will be uploaded and submitted to the CSD at the Bank of Ghana for clearing and settlement.
  • Locked-in over-the-counter market trade data of eligible securities will be received from the GATS on a real-time basis.
  • Spot market trades (T+0) are settled on the same day on a member-to-member basis outside the system.
  • There is a settlement cycle of T+1 for government/Bank of Ghana securities sold at primary auction.
  • There is a settlement cycle of T+2 for secondary market transactions involving debt securities.
  • There is a settlement cycle of T+3 for secondary market transactions involving equity securities.
  • The counterparties to a trade can agree at the time of negotiation to settle earlier on a bilateral basis, on either T+0 or T+1 for debt securities.

4 Listing and delisting of shares and bonds

4.1 What key requirements must be met to obtain a primary listing in your jurisdiction? What restrictions apply in this regard? Do any exemptions apply?

The criteria for an original listing are as follows:

  • The company must be a public limited liability company.
  • The company must have a stated capital of:
    • GHS 1 million for a first official listing application on the Main Market; or
    • GHS 0.25 million for the Ghana Alternative Market (GAX).
  • The company must issue not less than 25% of the number of issued shares of the company.
  • The shares must be paid in full. The Ghana Stock Exchange (GSE) may refuse partly paid shares unless the circumstance can be deemed exceptional.
  • The spread of shareholders existing at the close of an offer should be adequate, in the GSE's opinion, with at least 100 shareholders after the public offer for the Main Market and 20 for the GAX.

The listing requirements for debt securities are as follows:

  • The company must be a public limited liability company.
  • A company listing debt securities on the GSE or the GAX must file a listing application, a prospectus, a trust deed, its regulations and other supporting documents with the GSE and the Securities and Exchange Commission (SEC).
  • For companies or institutions, securities must have a total issue amount of not less than GHS 1 million in face value, with a minimum of 50 shareholders to the security.
  • For government securities, there is no prescribed minimum for the amount of issue or number of holders for listing on the GSE.
  • Debt securities to be listed must be created and issued pursuant to a trust deed duly approved by the SEC.

The general listing requirements for all securities are as follows:

  • The issuer must have submitted an application to the GSE.
  • A licensed dealer must sponsor the application.
  • Subject to the laws of Ghana, securities should be freely transferable.

The following restrictions apply:

  • Any offer made to the public must be made through a prospectus approved by the SEC.
  • Foreign companies are subject to the same listing requirements. In addition, the prior approval of the SEC and the Bank of Ghana is required for the issue and listing of foreign debt securities in Ghana.
  • Private companies are restricted from listing on the GSE and must convert to public companies in order to be listed.

4.2 What key requirements must be met to obtain a secondary listing in your jurisdiction? What restrictions apply in this regard? Do any exemptions apply?

Currently, there are no primary or secondary listings in Ghana. There are just general requirements to be met before shares or securities can be listed. There are three markets:

  • the Main Market;
  • the Ghana Fixed Income Market; and
  • the GAX.

4.3 What are the most common listing structures? What are the advantages and disadvantages of these different types of structures? What other factors should companies consider when deciding on a listing structure?

The common listing structures according to Section 18 of the GSE Listing Rules are as follows:

  • Offer for subscription: An offer made by an issuer of securities to the public for subscription;
  • Offer for sale: An offer made to the public on behalf of the issuer of securities already in issue or agreed to be subscribed;
  • Placing: An issue where shares are placed in the hands of identified institutions and individuals or through a restricted public offer;
  • Introduction: An application where the exchange will grant the issuer a listing without the requirement of a public issue;
  • Rights issue: An offer by way of rights to the existing holders of listed securities, which enables them to subscribe for further securities in proportion to their existing holdings;
  • Capitalisation or bonus issue: An allotment of further securities to existing holders of listed securities credited as fully paid out of the issuer's surplus reserves or profits in proportion to their existing holding without any monetary payment; and
  • Any method approved by the Companies Act 2019.

The advantages and disadvantages of the different types of structures are set out in the following table.

Listing structure Advantages Disadvantages
Offer for subscription
  • It allows shareholders to buy additional shares at a fixed price.

It gives the shareholder the option to subscribe to as many shares as it wishes subject to the terms of the offer.
  • A shareholder is not offered shares in proportion to the number already owned.
  • It is cost effective, as no additional charges need be paid other than regular transaction charges and securities transaction tax.
  • It is less time consuming.
  • It is transparent and less likely to face manipulation.

It is possible to get discounted stocks.
  • There is usually a limited bidding window.
  • There is a reduced market for bonds and shares, which may have a long-term effect on the business or company as a whole.
  • There is a limited number of potential investors, which may not want to invest substantial amounts individually.
Introduction
  • It provides the company with a regulated environment within which to operate and a platform to trade shares with the public investors in the capital markets.
  • The company cannot raise capital immediately; only at a later date.
Rights Offer
  • It provides an opportunity for current shareholders to increase their stake in the company at a reduced cost.
  • It is cheaper than a public issue share.
  • It saves shareholders from the eventual dilution of their investment which results when the company issues more stock.
  • The company may be unable to raise more funds and might fail to reach its target.
Capitalization or bonus issue
  • It allows investors to understand the relative size of one company versus another.
  • It does not take into account the debt load of the company.

4.4 How does the listing of bonds differ from the listing of shares?

The differences are set out in the following table.

Listing of bonds Listing of shares
  • These must be issued by a company limited by shares, the government of Ghana or district, or a municipal or metropolitan assembly in Ghana.
  • The issuer must receive consideration or proceeds of the offer as it pertains to the bonds.
  • The bonds must be allotted prior to 'introduction'.
  • Shares must be issued by a public company limited by liability.
  • Its shares must be fully paid and the issued shares must be fully allotted prior to the 'introduction'.
  • The company must guarantee that its shares will not be delisted for a minimum period of three years.

4.5 What advisers are typically involved in the listing process? What claims (if any) can be brought against advisers with regard to their role in the listing process? Is there any way to mitigate such liability?

The following advisers are typically involved:

  • licensed dealing members;
  • legal advisers;
  • reporting accountants; and
  • corporate advisers.

According to the Securities and Exchange Commission (SEC) regulations, contravention of Regulations 25, 26 and 27 subjects a person to liability to either or both of:

  • a penalty of GHS 5 million for each contravention; and/or
  • revocation, suspension or such restrictions on the licence as the SEC may impose.

Advisers can mitigate liability by taking out professional liability insurance and adhering to the rules required of such advisers. Thorough legal, financial and technical due diligence will also help to ensure that professional advisers have provided relevant insight on the listing.

4.6 What other factors should companies consider when deciding on a listing strategy?

Other factors to consider in deciding on a listing strategy include the following.

Costs: The company must take into consideration the initial cost of going public and the cost related to continued listing obligations.

Loss of privacy/confidentiality: The public has every right to ask questions and scrutinise the company should they decide to invest. The disclosure obligations in the prospectus and the continued disclosure required of public issuers sometimes force companies to divulge highly sensitive information.

Less independence in decision making: Once a company is listed, prior approval of the shareholders is required for significant/material transactions or actions.

Potential liability for disclosure: Management will be subject to certain liabilities once a company goes public. Directors, officers and shareholders may be subject to both personal and liability and penal sanctions for any misrepresentations in the prospectus and any subsequent public disclosure of documents.

Company valuation: The valuation can be another compelling reason for a company to list. Not only will the company have an obvious value at the outset, but once the company begins trading on the market, a valuation can be achieved quickly and cheaply on any given day, based on the market capitalisation at close of trading on that day.

Compliance and compliance costs: Listed companies have significantly higher compliance costs and often need personnel or entire departments dedicated to ensuring that disclosure and corporate governance obligations are met on an ongoing basis.

Liquidity: The shareholders of a company considering listing may be keen to go public to the extent that they plan to divest their own holdings, either fully or partly, in the short to medium term. Once listed, there is generally a constant liquid market for the securities, meaning that any person wishing to divest can easily find buyers at the current market price.

Ease of listing: Not all exchanges are open to all companies and this is one of the reasons why advisers should be consulted. Some smaller exchanges do not lend themselves well to foreign issuers.

4.7 What are the typical reasons for voluntary delisting? What are the grounds for compulsory delisting? What is the process for delisting?

Under Rule 13(1) of the GSE's Listing Rules, the typical grounds for compulsory delisting are as follows.

Disposal of principal assets: A company has:

  • disposed of its principal operating assets;
  • ceased to be an operating company; or
  • discontinued a substantial amount of its operation or business without the shareholders' authorisation.

Public distribution: The public distribution of the securities has been reduced to below 5%, rendering further trading in the securities on the exchange inappropriate.

Timely disclosure: The company has failed, or is unable or unwilling, to comply with the exchange's requirements on continuing listing obligations and disclosure policy.

Quality of management of listed companies: The management of the company does not comply in any material respect with the exchange's policy concerning the quality of management of listed companies as expressed in Rule 11 of the GSE Listing Rules.

Listing agreement: The company has failed to comply with its listing agreement or other agreements with the GSE, or has failed to comply with the GSE's rules.

Fees or charges: The company:

  • has failed, or refused to pay when due, any fee or charge payable by the company to the GSE;
  • finds its financial situation significantly threatened; or
  • is found to be consistently and persistently non-compliant with GSE and SEC rules and directives.

Under Rule 15(1) of the GSE Listing Rules, the process for voluntary delisting is as follows:

  • The issuer must submit a written application explaining its reasons for delisting;
  • The application must be supported by a special shareholders' resolution; and
  • The application for a voluntary delisting must include an application fee.

4.8 What tax considerations should be borne in mind from the issuer's perspective?

  • A capital duty of 0.5% is payable by the issuer on the increase in stated capital resulting from the issue of new shares.
  • Capital gains tax of 15% is payable by any selling shareholder on any profits made on the transfer of shares where the initial public offering involves a share transfer.
  • Shares listed on the GSE are exempt from capital duty tax.
  • Stamp duty of GHS 0.50 is payable by the issuer on any agreement executed in respect of the offer.

5 Prospectus rules and marketing

5.1 What kinds of instruments are subject to prospectus requirements?

A prospectus is required for any kind of invitation to the public. The instruments, which will therefore require a prospectus include shares, debt instruments and any securities approved over time by the Securities and Exchange Commission (SEC).

An offer is deemed an 'invitation to the public' if it is:

  • published or advertised in Ghana;
  • made or circulated to person(s), whether they are existing shareholders or clients of the issuer or in any other manner;
  • made or circulated to person(s) allowing them to reject or assign the benefit of the invitation or of the shares in favour of any other person; or
  • made to any person(s) to acquire shares listed on an exchange or in respect of which the invitation states that an application for listing on an exchange has been or will be made.

5.2 What are the key exemptions from the prospectus requirements and what kinds of selling restrictions might apply?

The key exemption from the prospectus requirements is that a company or an issuer that is seeking to list by introduction has the option of filing a statement for review by the SEC in lieu of a prospectus. With regard to debt securities, exemptions may be granted in case of strict compliance with the disclosure requirement for the prospectus.

With regard to selling restrictions, the only restriction is that if the sale is an offer to the public, it must be executed through the issuance of an approved prospectus by the SEC.

5.3 What key information must be included in a prospectus? What other requirements and restrictions apply with regard to the content of the prospectus?

The key information included in a prospectus is as follows:

  • general information about the issuer, including its capital structure, historical development and organisational structure;
  • the particulars of the directors and management of the issuer;
  • details of any group or associates of the issuer;
  • a business overview of the issuer;
  • details of the shareholding and assets of the issuer;
  • details of the employment structure;
  • details of any related-party transactions;
  • details of the financial conditions and operating results of the issuer;
  • details of any litigation or other legal proceedings involving the issuer;
  • details of the taxation issues of the issuer; and
  • details of the offer, including the structure and the timetable.

Other prospectus-related requirements include:

  • the report of the reporting accountant;
  • the legal opinion of the legal advisers;
  • a declaration of the interests of the advisers in relation to the offer; and
  • a declaration by the directors of the issuer of the accuracy of the facts contained in the prospectus.

With regard to restrictions, an issuer or company disclosing information must communicate clearly and fairly. Unwarranted promotional disclosures – such as inappropriately worded news releases, exaggerated reports or predictions which may mislead investors and cause unwarranted price and volume movements – are prohibited. In addition, any ads, brochures, pamphlets or other publicity materials relating to the security issue must not be extraneous to the information contained in the prospectus.

5.4 What is the process for preparation, approval, filing and publication of the prospectus? How long does each step take?

The issuer and its advisers are responsible for the preparation of the prospectus. However, the licensed dealing member takes primary responsibility for drafting the prospectus and filing it with the Ghana Stock Exchange (GSE), the SEC and the Companies Registry.

The prospectus is then reviewed by the SEC and thereafter published.

The GSE generally processes applications and delivers listing decisions within 20 business days of submission.

A prospectus must be filed and published for as long as the offer is an invitation to the public.

With regard to duration or timelines, no specific timelines for each step have been codified in the laws, apart what has been stated above.

5.5 What are the rules governing prospectus summaries/key information documents (KIDs) in your jurisdiction?

In Ghana, the laws that govern prospectus are:

  • the Security Industry Act 2016 (Act 929); and
  • the SEC Regulations 2003 (LI 1728).

The applicable rules are as follows:

  • A prospectus or offer document issued in connection with or in respect of an offer or invitation to the public to acquire corporate securities must:
    • be submitted to the SEC for examination and approval; and
    • include the information specified in Schedule 5 of the SEC Regulations.
  • Every prospectus or offer document issued in connection with or in respect of an offer or invitation to existing shareholders of a company to acquire additional shares must contain adequate information considered by the SEC to be necessary for shareholders to decide whether to invest.
  • A prospectus or offer document issued in connection with or in respect of an offer or invitation to the public to acquire the securities of statutory bodies, including local authorities, must be submitted to the SEC for examination and approval and contain the information specified in Schedule 6 of the SEC Regulations.
  • A prospectus or offer document in respect of any of the above must be accompanied by an examination and approval fee specified in Schedule 2 of the SEC Regulations.
  • The SEC may require the person submitting the documents to provide it with such further information as it considers necessary to facilitate the review and approval of the document.
  • A prospectus or offer document submitted to the SEC in respect of an offer or invitation to the public to acquire the securities of a statutory body must be accompanied by a trust deed.

5.6 Who is liable for the content of a prospectus/KID in your jurisdiction? On what grounds can such claims be brought? Is there any way to mitigate such liability?

The issuer and its directors are liable for the content of a prospectus in Ghana. They may be liable to pay a fine on the grounds of misstatement or omissions. This can attract a fine of a minimum of 500 penalty units or a term of imprisonment for up to two years.

6 Financial services (marketing and distribution)

6.1 What kinds of services in financial instruments are subject to authorisation requirements? Is proprietary trading allowed per se?

  • Cash instruments;
  • Debt-based instruments;
  • Equity ; and
  • Commodities (currently handled by the Ghana Commodities Exchange)

Proprietary trading is allowed under the Ghana Fixed Income Market Manual issued on 17 August 2015, which provides that authorised dealers conducting proprietary trading must have separate 'proprietary' records in the name of the dealer, which must be used for all transactions involving proprietary trades.

6.2 Do special authorisation requirements apply to members of trading venues and/or issuers?

Trading on the Ghana Fixed Income Market (GFIM) requires eligibility. Trading is limited to GFIM dealing members such as:

  • primary dealers;
  • non-primary dealers licensed by the Securities and Exchange Commission (SEC); and
  • licensed dealing members.

The Bank of Ghana, for monetary policy purposes, is permitted to deal in government or Bank of Ghana securities listed on the GFIM. Non-resident foreign entities are ineligible to trade on the GFIM. Primary dealers, non-primary dealer banks and licensed dealing members must apply to become members of the GFIM and pay the relevant fees accordingly. A prospective GFIM dealing member must comply fully with the requirements set forth by its regulator.

6.3 How are financial instruments typically marketed in your jurisdiction? Are there special rules for initial public offerings?

Only persons that are licensed, authorised and approved to provide a service or product with respect to financial instruments may advertise or cause an ad to be made in this regard.

Financial instruments are typically marketed through:

  • roadshows – formal presentations by the management of the issuer to key potential investors;
  • one-on-one meetings – targeted meetings with key potential investors; and
  • publicity – the use of general advertising in respect of retail investors (including print, network and other media).

6.4 Is book building commonly used in your jurisdiction? If so, what does this process typically involve and do the regulatory requirements apply to book building? What are the advantages and disadvantages of book building?

Book building is employed in both public and private equity offerings in Ghana. It generally involves the lead manager (or bond market specialists, in the case of government securities) of the issuing party, upon appointment, consulting with potential investors in order to generate an estimate for the price and demand of the stocks.

Book building assists the lead manager to know the market demand for the equity offerings, particularly, how much investors want and what they are willing to pay. Important aspects of the due diligence conducted will be shared with potential investors. The potential investors who are willing to participate will then communicate their willingness in an agreeable or satisfactory manner. In instances where the Ghana Stock Exchange (GSE) on application waives certain listing requirements, it may direct that proper book building methods be adopted by the relevant licensed dealing member.

6.5 What requirements and restrictions apply with regard to price stabilisation in your jurisdiction?

Stock market manipulation, including price stabilisation, is expressly prohibited in the Securities Industry Act (Section 148), and several provisions in the act and the Ghana Stock Exchange Listing Rules serve to counter such activities. They include:

  • provisions on the dissemination of false and misleading information; and
  • a requirement for the immediate disclosure of material information that is likely to influence the price of securities by the issuer.

Issuers must also provide clarification of rumours and report unusual trading activity to the GSE to the extent that these may influence the stock price.

7 Derivatives

7.1 What trading and clearing obligations apply to derivatives?

No derivatives traded on the Ghana Stock Exchange (GSE); hence, a legal and regulatory framework for trading and clearing does not exist.

7.2 Do mandatory risk mitigation techniques (eg, provision of collateral) apply?

No mandatory risk mitigation techniques for derivatives currently apply in Ghana.

7.3 Is a mandatory reporting system for derivatives transactions in place?

Ghana has no mandatory reporting system for derivative transactions.

7.4 What are the commonly used framework agreements in your jurisdictions for non-cleared and cleared derivatives?

There are no framework agreements that apply to non-cleared and cleared derivatives.

8 Corporate governance/continuing obligations

8.1 What corporate governance requirements apply to listed companies?

The corporate requirements can be found in:

  • the Securities Industry Act 2016;
  • the Securities Industry (Conduct of Business) Guidelines 2020 (SEC/GUI/004/10/2020, SEC/GUI/004/10/2020); and
  • the Corporate Governance Code for Listed Companies 2020 (SEC/CD/001/10/2020).

The corporate governance requirements include the following:

  • A listed company must have at least three directors with the integrity, skills, experience and qualifications necessary for its business.
  • The chairman of the board of directors of a listed company must not be the chief executive officer, except with the Securities and Exchange Commission's (SEC) permission.
  • New appointments to the board must not be made without the prior written consent of the SEC. If a director is dismissed or resigns, the listed company must report the dismissal or resignation to the SEC within 14 days and give the reasons for it.
  • At least two-thirds of the directors must ordinarily be resident in Ghana.
  • The board may form such committees as it considers appropriate. The board must appoint an audit and risk committee, unless:
    • the listed company does not hold client money or assets; or
    • the listed company obtains the consent of the SEC that an audit committee is unnecessary, given the nature and other controls of the market operator.
  • The board has overall responsibility for managing the risks facing the company and overseeing the actions taken to assess and mitigate those risks. The board will also review the assessment of the risks facing the company. The board must review and adopt an internal organisational structure and policies and procedures designed to mitigate the risks it has identified and to maintain risk management, financial and operational control.
  • The board must employ staff who are fit and proper for their roles and ensure that they have the skills, qualifications and experience for their tasks.
  • A director must not, without the consent of the company, place himself or herself in a position in which his or her duties to the company conflict or may conflict with his or her personal interests or duties to other persons. In addition, where a board member has an interest in any matter that is the subject of board discussion, he or she must declare the nature and extent of that conflict of interest to the board; and the board secretary must keep a register of such interests.
  • A listed company must have a board secretary, who will be responsible for:
    • conducting the administration of board meetings;
    • maintaining the records of board meetings;
    • maintaining the conflicts of interest register; and
    • such other matters as may be determined by the board.
  • The SEC may prescribe further specific duties of a board secretary. The board secretary's duties will be specified by the board. The secretary may have other duties in addition to that of secretary to the board.
  • With respect to related-party transactions, the board must adopt a related-party transactions policy to identify:
    • relevant related parties to the company;
    • any transactions with related parties that may take place; and
    • the procedures to be adopted in order to mitigate the risk of such transactions being conducted in a way that constitutes a conflict of interest or which is against the interests of shareholders as a whole.

8.2 Is there a mandatory or voluntary corporate governance index? If so, what does it contain?

There is no voluntary index, but listed companies are expected to comply with the Securities Industry Act and the directives issued by the SEC. Listed companies that have industry regulators, such as banks, must meet the relevant corporate governance directives applicable to that industry in addition to those issued for listed companies.

8.3 What reporting obligations apply to listed companies? Do these vary if the issuer is a foreign company or between trading venues/segments?

The Ghana Stock Exchange (GSE) Listing Rules require that listed companies:

  • prepare annual report and audited accounts in accordance with the SEC Regulations and the Companies Act; and
  • submit to the GSE quarterly reports according to the SEC Regulations, as amended from time to time, no less than 48 hours before they are published in a widely circulated newspaper.

With respect to the Ghana Alternative Market (GAX), Rule 35 of the GAX Rules of 2013 requires that a company listed on the GAX submit its audited accounts to the GAX within three months of the end of the financial year.

8.4 What other continuing obligations apply to listed companies?

Rules 39 to 52 of the GSE Listing Rules set out the continuing obligations of listed companies. They include the following:

  • Listed companies must prepare an annual report and audited accounts in accordance with the SEC Regulations and the Companies Act.
  • Listed companies must submit to the SEC quarterly reports according to the SEC Regulations, as amended from time to time, no less than 48 hours before they are published in a widely circulated newspaper.
  • Listed companies must submit to the GSE copies of:
    • all periodical and special reports, circulars and similar issued by the company for the information of holders of any of the company's securities, as soon as they are released/issued;
    • the published accounts of the company and all documents required by law to be annexed thereto, as soon as they are issued and at least 21 days before the date of the annual general meeting;
    • all special resolutions passed at general meetings of the company, as soon as they are passed; and
    • all proceedings of the annual general meeting where they contain information additional to that contained in the annual report, as soon as practicable after the meeting.
  • A listed company must allot securities within 21 days of the final application's closing date for an issue of securities and dispatch certificates to all successful applicants or furnish the depository with a list of all successful applicants and their particulars within 14 days of the date of allotment.
  • Where a valuation has been conducted on the fixed assets of a company or its subsidiaries, or both, and the results are reflected in the company's accounts, a summary report must be submitted to the GSE together with a copy of the valuation report.
  • The following matters, among others, must be immediately announced by a listed company, which must prepare the announcements for release by the GSE:
    • any information concerning the company or its subsidiaries that is necessary to avoid the establishment of a false market in the company's securities or is likely to affect the price of its securities;
    • any recommendation or declaration of dividend (including bonus shares, if any), the amount per share, the qualifying date and the date of payment and, where there is a figure for the previous year, the final dividend for the corresponding period in the previous year;
    • any recommendation or decision that dividends will not be declared and the reasons for such recommendation or decision;
    • all special resolutions to be put to a general meeting of the company and immediately after such meeting, whether or not they were carried;
    • any call to be made on any of the partly paid share capital of the company;
    • any change of address of the registered office of the company or of any office at which the register of securities of the company is kept;
    • any change in the directors, company secretaries or auditors of the company;
    • any proposed alteration in the company's constitution;
    • any notice of substantial shareholdings or changes received by the company and details thereof;
    • any application filed with a court to wind up the company or any of its subsidiaries;
    • the appointment of a receiver or liquidator of the company or any of its subsidiaries;
    • any acquisition of shares of another company or any transaction resulting in such company becoming a subsidiary of the company;
    • any acquisition of shares resulting in the holding of 10% or more of the stated capital of another listed company; and
    • any sale of shares in another company resulting in the company ceasing to be a subsidiary; or resulting in a holding falling below 10% of the issued capital of that company.

8.5 What are the consequences of breach of any of these obligations?

Where a company listed on the GSE fails to comply with the continuing listing obligations, the listing status of the company may be suspended.

8.6 Do mandatory auditing rules apply and is there a special review/enforcement process?

Guideline 9 of the Securities Industry (Conduct of Business) Guidelines 2020 SEC/GUI/004/10/2020, provides for the appointment by the board of an audit committee, except where:

  • the market operator is not incorporated and does not hold client money or assets; or
  • the market operator obtains the consent of the SEC that an audit committee is unnecessary, given the nature and other controls of the market operator.

Audits will be both internal and external.

Within one month of receiving a licence or the termination of a previous auditor's appointment, a market operator must appoint an auditor to audit its accounts subject to the written approval of the SEC. The market operator must ensure that:

  • the auditor is independent;
  • on reasonable enquiry, the market operator knows of no reason why the auditor should not serve as auditor;
  • the auditor:
    • is appropriately qualified;
    • has appropriate professional indemnity insurance; and
    • is authorised and competent to conduct an audit of the accounts;
  • the auditor is provided with all material information that is relevant to the audit by the market operator and the market operator signs a declaration to this effect;
  • the auditor has:
    • the right to access all accounting and other records of the market operator; and
    • the right to require such information and explanations as it considers necessary to perform its functions; and
  • all information and explanations given to the auditor is accurate and neither false nor misleading.

The board must arrange for the financial statements to be audited by the external auditor with the accounting standards adopted by the Institute of Chartered Accountants (Ghana) and with any other requirements prescribed by the SEC.

9 Inside information and market manipulation

9.1 What qualifies as inside information?

The Securities Industry Act defines 'inside trading' as the buying or selling of securities by a person who has access to material non-public information about the securities.

9.2 What prohibitions apply to inside information? Is there a legitimate behaviour exemption?

Section 153 of the Securities Industry Act provides for prohibitions in respect of inside information and circumstances in which exemptions may be made. They include the following:

  • The law prohibits anyone who was associated with a body corporate in the previous six months from dealing in the securities of that body corporate if, by reason of his or her association with the company, he or she obtained information that is not available to the public and, if it were, might affect the price of those securities.
  • Anyone prohibited under the act must not cause or procure another person to deal in those securities or communicate such information to any other person if:
    • trading in those securities is permitted on a stock exchange, whether within or outside the country; and
    • that person knows or ought to have known that the other person would use such information for the purpose of dealing or causing or procuring another person to deal in those securities.
  • A body corporate is prohibited from dealing in securities where an officer of that body corporate is prohibited by the act from dealing in those securities.

9.3 What are the rules on mandatory disclosure of inside information?

The Ghana Stock Exchange Listing Rules and the Securities Industry Act include mandatory disclosure rules on inside information as follows.

Listing Rules (Section 54) Securities Industry Act (Section 33)
  • Immediate disclosure of material information.
  • Issuers must immediately disclose information which is likely to have significant effects on the price of the securities
  • The Securities and Exchange Commission (SEC) may, where it considers this necessary for the protection of investors, require a broker-dealer to disclose to the SEC, in relation to an acquisition or a disposal of securities:
    • the name of the person from or through whom or on whose behalf the securities were acquired or disposed of; and
    • the nature of the instructions given to the broker-dealer in respect of the acquisition or disposal.
  • The SEC may require a person who has acquired, held or disposed of securities to disclose to it:
    • whether the person acquired, held or disposed of securities as a trustee for or on behalf of another person or as a nominee;
    • the name of that person; and
    • the nature of the instruction given as trustee or nominee in respect of the acquisition, holding or disposal.
  • The SEC may require a stock exchange to disclose to the SEC, in relation to an acquisition or disposal of securities on that stock exchange, the names of the members of that stock exchange who acted on the acquisition or disposal.

9.4 Are there special provisions on the operation of insider lists and Chinese walls?

There are no special provisions in Ghana on the operation of insider lists and Chinese walls. However, businesses or firms may have internal provisions that regulate the operation of insiders. For instance, AngloGold Ashanti's policy on dealing in company securities and insider trading is binding even for close family members of all persons deemed to be insiders, including contractors and their immediate family.

9.5 Do special rules apply to personal transactions?

Under the Central Securities Depository (CSD) rules, the phrase 'private transactions' includes the inheritance of securities, donations of securities, gifts and other dispositions of eligible securities with the prior written approval of the application industry regulators and the SEC where required.

The special rules governing private transactions as stated in the CSD rules provides that entries in respect of private transactions must not be entered in the securities account, except with the prior approval of the CSD and in accordance with the requirements stated in the CSD's operational procedures.

9.6 What kinds of activities may amount to market manipulation?

Market manipulation activities under the Securities Industry Act include:

  • false trading and market-rigging transactions;
  • false or misleading statements;
  • fraudulent inducement of persons to deal in securities; and
  • dissemination of information about illegal transactions.

9.7 What are the consequences of breach of these requirements and restrictions, both for issuers and for their directors and officers?

Anyone who contravenes the provisions on market manipulation commits an offence and is liable on summary conviction to a fine or a term of imprisonment of between four and five years, or both.

Anyone who is convicted of a market manipulation offence will be liable to pay compensation to anyone that entered into a transaction for the purchase or sale of securities with the convicted person or with a person acting on his or her behalf, and that suffers loss because of the difference between the price at which the securities were dealt in and the price at which they might have been dealt in at the time when the transaction took place had the contravention not occurred.

10 Short selling

10.1 What kinds of restrictions apply to short selling?

There are no rules on short selling in Ghana.

10.2 Is a mandatory disclosure requirement in place regarding short selling?

There are no disclosure requirements on short selling in Ghana.

10.3 Is it permitted to write research reports while holding short positions?

The rules are silent on research reports while holding short positions.

11 Sustainability

11.1 Is the term 'sustainability' defined in your jurisdiction and, if so, how? Does it cover environmental as well as social objectives? How is compliance with sustainability assessed (eg, quantitatively or qualitatively)? Are there certain minimum requirements?

There is no definition of 'sustainability' in Ghana. The term is used as applicable internationally. Ghana is working towards achievement of the United Nations Sustainable Development Goals, which include both qualitative and quantitative environmental and social objectives.

Environmental objectives largely fall under the National Environmental Policy, which is set by the Ministry of Environment and Technology. This policy introduces mechanisms to ensure both qualitative and qualitative assessments of such objectives. When issuing financing, Ghanaian banks must assess the environmental risks of their clients. The United Nations Development Assistance Framework (2012–2016) also provides support to strengthen Ghana's ability to address energy and environmental challenges at the national, regional and local levels, by focusing on key priority areas, such as climate change and disaster risk.

11.2 Are there special rules in place in your jurisdiction on the identification, management and disclosure of sustainability issues?

There are no rules on the identification, management and disclosure of sustainability issues in the capital markets in Ghana.

11.3 Do applicable sustainability rules distinguish between sustainability risks (ie, financial risks resulting from sustainability issues) and the actual impact of corporate actions on, for example, the environment?

There are no rules that distinguish between sustainability risks and the actual impact of corporate actions in relation to the capital markets in Ghana.

11.4 Does your jurisdiction provide for a special green bond regime?

As yet, there is no regime for a special green bond in Ghana. However, on 24 March 2021 the Securities and Exchange Commission (SEC) and the International Finance Corporation (IFC), a member of the World Bank Group, signed a partnership to facilitate investment in projects that address environmental and climate issues through green bonds. Under this agreement, the IFC will help the SEC to develop guidelines for issuers and investors of green bonds in Ghana. In the meantime, issuers of green bonds should adhere to international requirements such as:

  • the International Capital Market Association Green Bond Principles 2018;
  • the Sustainability Bond Guidelines 2018; and
  • the Loan Market Association and Asia Pacific Loan Market Association Green Loan Principles 2021.

11.5 Are there restrictions on the sale or distribution of instruments not considered sustainable?

There are no rules or restrictions on the distribution of instruments that are not considered sustainable.

11.6 Is it necessary to comply with certain minimum standards (eg, on human rights) to qualify as a 'green' issuer?

Currently, there are no minimum standards for qualification as a green issuer. There are also no specific rules on green bonds.

11.7 How will sustainability rules affect the capital markets in your jurisdiction?

There are currently no sustainability rules that affect the capital markets in Ghana. However, the implementation of specific sustainability rules would stimulate the market by attracting investors, both local and international, which are focused on sustainability matters.

12 Product bans

12.1 What products are currently banned from sale or marketing to (certain kinds of) investors in your jurisdiction?

Although some companies have been suspended and have had their securities delisted from the stock exchange for breach of the Securities and Exchange Commission (SEC) guidelines, no products have as yet been banned by the SEC.

In 2020 the SEC issued the Securities Industry (Regulatory Sandbox) Licensing Guidelines 2020, which set out a framework for the issuance of regulatory sandbox licences for capital market activities or related services where such activities are not regulated (or not adequately regulated) by law. The sandbox licences will enable new products to be phased into the market in a controlled manner.

12.2 What is the process for imposing product bans and which regulators are in charge of this?

No product bans have as yet been imposed by the SEC or the Ghana Stock Exchange. However, the SEC has the authority to issue such codes, directives, guidelines and circulars as it considers necessary for the capital markets; and thus, any product ban would be issued through this process.

13 Trends and predictions

13.1 How would you describe the current capital markets landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Ghana's capital markets have taken significant strides forward over the past two decades. In 2017, the Ghana Stock Exchange (GSE) was ranked as the best-performing exchange globally; although it experienced a significant setback in 2018, posting net declines. However, due to the strong performance of its main index in 2017, interest in the market as a means of raising capital remained strong, making Ghanaian equities more attractive to prospective investors. In 2019, new minimum capital requirements for banks were introduced; and the sustained growth of one of sub-Saharan Africa's fast-growing economies further boosted the raising of capital and stock prices during the course of that year.

As a result, the GSE made an annual return of 14.62% for investors in the first quarter of 2021, making it the best-performing stock exchange on the continent. This impressive performance translates into improved market capitalisation of GHS 57.16 billion as at 31 March 2021.

The GSE is seeking to further expand the capital markets through the Ghana Alternative Market (GAX) by providing incentives to small and medium-sized enterprises (SMEs). The GAX is a parallel market operated by the GSE which focuses on businesses with strong growth potential, in particular SMEs. The GAX is open to SMEs at various stages of development, including start-ups and existing enterprises. It is anticipated that activity on the GAX will increase as the first cycle of the government's flagship "One District, One Factory" policy – which has led to the establishment of over 100 factories in five years – comes to an end.

As the capital markets are an essential driver of economic growth, the Securities and Exchange Commission, in collaboration with the Ministry of Finance, has developed a Capital Market Masterplan 2020–2029. The plan is underscored by four strategic pillars:

  • improving the diversity of investment products and the liquidity of the securities market;
  • increasing the investor base;
  • strengthening infrastructure and improving market services; and
  • improving regulation, enforcement and market confidence.

The plan is designed to provide strategic direction and a clear roadmap for achieving the government's vision of transforming Ghana into a regional financial services hub.

14 Tips and traps

14.1 What are your top tips for the smooth conclusion of offerings in your jurisdiction and what potential sticking points would you highlight?

Top tips include the following:

  • Select professional, experienced and competent advisers for the listing process.
  • Establish a long-term corporate strategy before and after listing.
  • Liaise with relevant regulators and comply with legal requirements on a consistent and ongoing basis.
  • Request waivers or exceptions from certain listing rules where applicable.
  • Establish a strong communication team to handle the entire marketing process.

Potential sticking points include ensuring proper communication and staying alert to potential news or information that could give potential investors the wrong impression. In regulated industries, ensure that any regulatory consents and approvals required from the relevant regulator have been sought prior to listing.

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.