The Securities and Exchange Commission (SEC) has issued a code and three guidelines for the market, according to a communique issued by the Commission on Thursday, October 8, 2020.
The statement indicated that the Securities and Exchange Commission has introduced a new Corporate Governance Code for listed companies 2020 in conjunction with three other additional guidelines which are Licensing Requirements for Market Operators, Regulatory Sandbox Licensing as well as Conduct of Business Guidelines.
This was in line with the Commission’s mandate of protecting the interest of investors and the general investing public.
“The Securities and Exchange Commission (hereinafter referred to as “SEC”) is the statutory body mandated by the Securities Industry Act 2016 (Act 929) to protect investors and the interest of the general investing public. The Act among other things specifically mandates SEC to “promote the orderly growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected” …”.
“In the exercise of the powers conferred on the Commission by Section 209 of the Securities Industry Act 2016, (Act 929), these Guidelines are made this 8th day of October 2020”.
The Corporate Governance Code covered areas relating to the composition, role, and responsibilities of the board as well as the establishment of board committees; the appointment, resignation, and remuneration of directors; the preparation of financial statements, maintaining controls and code of ethics; relations with users of financial information and their rights; penalties for breach of requirements.
“A listed company shall comply with this Code no later than one year after it is published”.
In respect of the Licensing Requirements for Market Operators issues dealt with includes the guidelines for applying for a licence and grounds on which it can be granted; application forms, licensing fees and capital requirements for the market operators; additional licensing requirements and applications such as replacement of licence; Statutory notifications and penalties imposed in case of a breach.
Touching on capital requirement, SEC has issued new minimum capital requirements for market operators, ranging between 200 thousand Ghana cedis for an Individual Investment advisor and reaching up to 400 million Ghana cedis for Primary Dealers. A few other notable ones were, Fund Managers, Broker-Dealers, and Credit Rating Agencies with capital requirements of 2 million, 1.5 million and 1 million Ghana Cedis respectively.
“A licensed market operator shall take steps to comply with the new minimum capital requirements specified in schedule 4 no later than 31st December 2021”.
The statement also gave guidelines on the Regulatory Sandbox Licensing and affirmed its objective as follows “These guidelines shall provide a framework for the issuance of Regulatory Sandbox Licences for the conduct of a capital market activity or related services for which there is the absence, or no adequate provisions under any laws regulating the business or capital market activity”.
Again, the statement emphasized that an entity can be eligible to receive a Regulatory Sandbox Licence from the Commission if it is fully compliant to the applicable laws under incorporation.
“(1) A person shall not be eligible for the grant of a Regulatory Sandbox Licence by the Commission unless the Applicant has fully complied with applicable laws of incorporation. (2) An Applicant shall comply with the Fit and Proper criteria of the Commission”.
The Commission also disclosed that it has the authority to reject applications for the Regulatory Sandbox licence for various reasons.
“The Commission may reject an application for a Regulatory Sandbox licence on such conditions including but not limited to; (1) Where the Commission is of the opinion that the market activity, product or service proposed is against public policy or interest. (2) Where the market activity or the proposed product or service is very risky or may pose significant risk to the entire capital market, or (3) Where the Commission is of the opinion that it has not got the human resource capacity or expertise to control, monitor and evaluate, or regulate the market activity, product or service proposed by the applicant. (4) Any other reason that the Commission considers justifiable. (5) Where the Commission rejects an application for the issuance of a Regulatory Sandbox licence, the Commission may give written reasons for the refusal of the application”.
Finally, touching on the guidelines for the conduct of business in the securities industry, issues concerning employee recruitment and training, procedures for whistle-blowing, client relations, maintaining confidentiality and security in business operations, prevention of market abuse, and penalties were discussed.
