Listing of Rural Community Banks' Securities on the Ghana Alternative Market, June 2018

The primary objective of the GAX is to focus on small and medium-sized enterprises (SMEs) with potential for growth. The GAX registers and lists SMEs at lower share capital requirements and costs relative to listing on the main GSE. This market accommodates companies at various stages of their development, including start-ups and existing enterprises, both small and medium. Rural and community banks (RCBs) in Ghana face a significant challenge in raising additional capital to meet the minimum paid-up capital requirement set by the Bank of Ghana. As of June 2017, only 51 RCBs had met and exceeded the GH¢1million threshold paid-up-capital, while 51 RCBs had paid-up capital ranging from GH¢500,000 to GH¢950,000, and the remaining 39 RCBs' paid-up capital ranged from GH¢137,000 to GH¢464,000. The GAX would serve as one of the most favorable sources for attracting the required additional capital by the RCBs. To list on the GAX, RCBs must meet specific requirements, including having a minimum stated capital of GH¢250,000 at the time of listing, a public float of at least 25% of the total number of issued shares, and a minimum of 20 public shareholders. The company must have operated for at least one year and have published or filed accounts in accordance with the Companies Act, 1963 (Act 179) for at least the latest financial year. Admission may be granted to a start-up company, provided the applicant submits a 3-year business plan demonstrating the sustained viability of the applicant. The GAX listing requirements also specify that at least 50% of the board shall be composed of non-executive directors, and at least one or approximately 25% of the total shall be independent. The character and integrity of the directors of the company shall be taken into account by the GAX Committee in assessing the application for listing. Management should have requisite expertise in the core business of the GAX company. A total of 141 RCBs were profiled for this assignment, with the majority expressing interest in raising additional capital through the GAX. However, a few RCBs have been able to secure both Board and Shareholders' approvals in advance and are therefore prepared to go through the process. These RCBs are profiled in this document, along with their capital requirements, purpose of fund, type of fund, timeframe, and location. The GAX has targeted listing some 50 companies by 2020, and the managers of the Exchange have been working to promote the market and attract more companies to list. The GAX has the potential to provide a favorable source of capital for RCBs and other SMEs in Ghana, and it is expected to play a significant role in the development of the financial services sector of the Ghanaian economy.