GHANA Law and Practice Contributed by: Victoria Bright and Justice Oteng, Addison Bright Sloane
1.4 Stock Exchange Requirements Developments
Only public companies are allowed to invite the public to purchase shares, and this can only be done after the company has filed a prospectus with the registrar. This regulation is strict and any unauthorised offer to the public to acquire shares constitutes an offence, with potential criminal liability for the individuals involved. Additionally, the Securities and Exchange Commission (SEC) has established guidelines to gov - ern the public offering of securities, which include the following. • The proceeds from any public offering or rights issue must be used exclusively for the purpose outlined in the offer document. • The SEC will conduct ongoing post-IPO and post- rights issue monitoring to ensure that the funds are utilised as stated in the offer document. • Issuers must disclose all fees paid to individuals or organisations involved in the IPO or rights issue process. The Anti-Money Laundering Act mandates public companies issuing securities to comply with the Know Your Customer (KYC) procedures. Additionally, the Whistleblower Act, 2006 (Act 720) encourages public companies to set up confidential systems for reporting misconduct or fraud. Whistle- blowers are protected against retaliation. However, companies are not legally required to implement this system. Furthermore, the directors of public companies are elected during the company’s general meetings. At the first annual general meeting (AGM), all direc - tors, except executive directors, are required by law to retire. At each subsequent AGM, one third of the directors must retire following a “first-come, first served” basis. Public companies are prohibited from granting loans, offering guarantees or providing security for loans to their directors or the directors of any associated com - panies.
There have been recent changes to the listing require - ments of the Ghana Stock Exchange. The changes introduce more strict financial thresholds, strong gov - ernance and disclosure obligations. For the Main Market, companies must have at least GHS5 million in post-flotation capital, with at least 20% of shares held by the public. They must also have a minimum of 100 public shareholders and at least 100 million issued securities. For the Ghana Alternative Market (GAX), which serves small and medium-sized enterprises (SME), must have a minimum stated capital of GHS1 million at the time of listing. The capital raised must be maintained and a public float of at least 20% of total issued securities must be ensured. The current listing requirement calls for better checks on directors and management, and GAX companies must appoint a corporate adviser at least once every three years. Companies are mandated to report price-sensitive information and issue updates every 30 business days if results differ by 20% or more. The revised requirements clarify rules on share buy - backs, voluntary and compulsory delistings and sus - pensions. Suspended companies are to report to the Ghana Stock Exchange (GSE) monthly. The GSE can place such entities on a watchlist for a period of up to a year where necessary.
2. Corporate Management 2.1 Principal Bodies or Functions
Under the law, a company acts through its members (shareholders) in general meeting, board of directors or through officers or agents appointed by either the board of directors or shareholders as depicted in Act 992.
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