Ghana
Answer ... The criteria for an original listing are as follows:
- The company must be a public limited liability company.
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The company must have a stated capital of:
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- 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.
Ghana
Answer ... 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.
Ghana
Answer ... 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.
|
Ghana
Answer ... 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.
|
Ghana
Answer ... 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.
Ghana
Answer ... 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.
Ghana
Answer ... 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.
Ghana
Answer ...
- 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.