The Securities and Exchange Commission (SEC) has raised the minimum capital requirement for capital market operators in a swath of reforms to upscale their operations, protect investors as well as the integrity of the market.
According to the capital market regulator, existing players in the market are to meet the new minimum capital requirements latest by December 31, 2021. However, the adjusted capital requirements take immediate effect for new entrants.
“The new directive in accordance with Section 209 of the Securities Industry Act 2016, (Act 929) is in line with the Commission’s mandate of regulating and promoting the growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected,” the regulator said.
In October 2017, the SEC hinted at raising the minimum capital requirement as part of a broader plan to streamline market players to enable them to take big-ticket businesses to support economic growth.
But commenting on the move which was preceded by a regulator punitive action against non-performing fund management companies, equity research Analyst Gideon Amoani-Kyei told Business24 by phone: “we should expect some mergers and acquisitions before the deadline. Certainly, some players may not meet the new capital requirement and would have to seek partnership to survive.”
While some analysts believe the adjustment will heap pressure on companies already scrambling to recover from covid-19 ravages, the Databank analyst sees the 15 months period as enough for market operators to shore up their capital.
“Considering the capital increase, I think the 15 months is enough for any player that can actually raise funds to meet the new requirement,” Gideon added.
The SEC’s Director-General, Rev. Daniel Ogbarmy Tetteh said the new licensing requirements including the adjusted capital threshold had been discussed with market players, hence “should not come as a surprise to the market.”
He was speaking at the Annual General Meeting (AGM) of the Ghana Securities Industry Association (GSIA) in Accra.
In addition, the SEC has also rolled out reforms in the Conduct of Business Guidelines, Regulatory Sandbox Licensing Guidelines and Corporate Governance Code for listed companies. These will help to steer the operations and activities of market operators.
The capital adjustment comes after the SEC had revoked the licences of 53 defunct Fund Management Companies in November 2019, with verified claims payment for their customers underway.