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.