The Ghana Stock Exchange since 1990 has been gradually facilitating the development of capital market in Ghana. The Exchange has put in place facilities for businesses and the Government to raise long-term capital as well as for investors to obtain liquidity, reasonable capital safety and diversity of investments. Since its establishment, many companies as well as the government have raised funds through the floatation of company shares to the general public.
The idea of establishing a Stock Exchange became an issue for discussion for almost two decades under various governments prior to its implementation. However, in February 1989, the issue of establishing a stock exchange was moved into higher gear when a 10 member National Committee, under the Chairmanship of Dr. G.K. Agama, then Governor of the Bank of Ghana, was set up by the then PNDC Secretary for Finance and Economic Planning, Dr. Kwesi Botchwey. Other members of the Committee include;-
The work of the committee was to consolidate all previous work connected to the Stock Exchange project and work out modalities towards the actual establishment of the Exchange. As a result of the work of the committee, the Stock Exchange was established in July 1989 as a private company limited by guarantee under the Companies Code, 1963. It was given recognition as an authorized Stock Exchange under the Stock Exchange Act of 1971 (Act 348) in October 1990. The Exchange was inaugurated on November 12, 1990 and trading commenced on its floor the same day. It was however, officially launched on January 11. 1991. The Exchange however, changed its status to a public company limited by guarantee in April 1994. Ghana Stock Exchange is a member of the Association of Africa Stock Exchanges (ASEA),
The Exchange was set up with the following objects:
The listing support fund was developed in partnership with the African Development Bank and the Venture Capital Trust Fund to assist SMEs in covering the initial costs associated with the listing process. This fund is intended to provide an incentive to SMEs and encourage them to use the GAX to acquire long-term capital and expand their businesses.
The GAX-SME listing support fund is endowed by the Ghana Stock Exchange, African Development Bank, and the Venture Capital Trust Fund, and administered by the GAX Governing Committee. The objectives of the fund are: to pre-finance whole or part of the advisory and listing expenses for companies seeking to list on the GAX; to encourage SMEs to raise capital through the GAX; to support growth and expansion in the SME sector. The level of financial support offered will be determined on a case by case basis. It is possible that companies may receive 100% of the anticipated costs for advisory and listing expenses.
The support provided by the fund will be provided during the initial disbursement of funding and the date of listing. If for any reasons the company withdraws its public offer, the company shall be responsible for refunding the amount of funding disbursed. It is a revolving fund, the sustainability of which depends on repayment therefore any amount disbursed will be repayable in full according to the terms set out by the Governing Committee; these terms will be specified in an Agreement upon receipt of funds. The amount to be repaid will remain interest-free up until the date of listing; thereafter the outstanding balance will be subject to interest.
Application and Approval Process
SMEs must apply in writing to the GAX Officer. A complete application must include:
Once these documents have been provided and the application has been approved as complete and acceptable for consideration, a letter of acknowledgement will be issued
Within ten business days of receipt, the GAX Officer will review the application. The decision process will include an assessment of factors such as the company’s suitability for listing and the company’s capability of listing without support from the fund, as well as meetings with the company’s advisors and sponsors. The GAX Officer will prepare a report for consideration by the GAX Governing Committee. The applicant will be informed of the approval or decline of funding in writing. If a funding offer is approved, the applicant must accept the offer in writing within ten business days of the initial offer letter.
Once funding has been approved and accepted, the GAX Officer shall consult with the company and sponsor to draw up legal documentation. The company will need to satisfy any pre-disbursement conditions before the funding amount can be allocated. The GAX Officer will be responsible for determining whether conditions have been adequately met. The funds will be disbursed directly to the identified service providers to cover advisory and pre-listing expenses; the company will be notified of payment confirmation. The GAX Officer will closely monitor the listing process and will need to receive regular updates on progress from the sponsor.
GHANA STOCK EXCHANGE (GSE)
P.O. BOX 1849, ACCRA
5th & 6th Floor Cedi House, Liberia Road, Accra
Tel: 0302 669908/669914/669935
Fax: 0302 669913