The Securities & Exchange Commission, SEC regulator of Ghana’s capital market operators will soon agree with the various firms under their regulatory care as to the new minimum capital levels that should apply, for the firms to retain their operational licenses.
According to GhanaQuest’s sources SEC and the regulated firms have agreed on a new minimum capital of GHc 2 million for a fund management license and GHc 2 million for a stockbroking license. Previously, both types of activity required minimum capital of GHc100,000 for each.
However, since each type of activity requires separate capitalization, firms engaged in both – as is the case with most firms licensed by SEC – would require total capital of GHc4 million.
In a related development SEC in 2019 revoked the licenses of 53 firms under its regulatory purview for reason of regulatory infractions or for reason of insolvency, which has vividly exposed the problem of undercapitalization in the industry.
According to SEC, the revocation of the licences is to protect the integrity of the securities market and investors.
In a statement SEC said, “These actions were taken pursuant to Section 122 (2)(b) of the Securities Industry Act, 2016 (Act 929 or “the Act”) which authorities the Securities and Exchange Commission to revoke the licence of a market operator under any of the following circumstances:
(a) If it is wound up;
(b) It ceases to carry on the business for which it was licensed;
(c) If the Commission has reason to believe that the licensed body or any of its directors or employees has not performed its functions or the functions of directors efficiently, honestly and fairly;
(d) If the licensed body contravenes or fails to comply with a condition or restriction applicable in respect of the license or any other provision of Act 929; and
(e) If the licensed person fails to commence business within 6 months of being granted a licence.”
