The Securities Industry Act, 2016 (Act 929) and its Regulations have been in existence since 2016 and there is a need to review and align them with international standards while simplifying same to facilitate growth.
To this end, the Ghana Stock Exchange (GSE) and Ghana Securities Industry Association (GSIA) have the last two years been pushing for legislative and structural changes and are hopeful of achieving this with the Securities and Exchange Commission’s (SEC) new leadership.
The pair believe urgent action on regulatory stability, capital market development and financial sustainability for SEC are among the most paramount issues.
Indeed, newly-appointed Acting Director-General of SEC James Avedzi Klutse views the review and swift passage of an updated Securities Industry Act as top priority.
GSIA president Winston Nelson Jr. stresses the importance of finalising the Act with an aim of closing regulatory gaps, particularly in response to past financial sector crises.
With the existing framework in place, the sector has experienced the clean-up exercise of 2017 to 2019, the Domestic Debt Exchange Programme (DDE0) and subsequent mark-to-market directives of 2022 and 2023.
Nelson observed that while those developments were adverse, they exposed shortfalls in the legislative set-up and consequent limitations of SEC as a regulator.
“This new Act is designed to fix those gaps and build a more robust industry framework that can sustain us for the next five decades.”
Managing Director-GSE Abena Amoah pointed out the need for a more flexible regulatory framework for capital raising, arguing that laws should not impose the same compliance burdens on small issuers as they do on billion-cedi transactions.
“A company looking to raise GH¢10million must have a simple process compared to one seeking a billion cedis, for example,” she said.
Both Mr. Nelson and Ms. Amoah highlighted the Capital Market Master Plan (CMMP) as a crucial initiative to strengthen Ghana’s capital markets.
The Accra bourse has been at the forefront of the push for reinstating capital gains tax exemption on listed securities, as well as other tax incentives for would-be listing companies.
Introduced in 2016 to stimulate the market, capital gains exemption permitted resident investors to “elect to pay tax on capital gains on the realisation of an investment asset at 15 percent; otherwise, the capital gain is taxable at the investor’s marginal tax rate”.
However, this exemption expired in 2021 and has not been reinstated since.
