аЯрЁБс>ўџ GIўџџџFџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџьЅСM №П™4bjbjт=т= %H€W€W0џџџџџџlPPPPPPPdђ ђ ђ 8* F ,dd~ ~ "            ухххххх$j Šъ P          ”PP    ”””  RP  P  у”  у”Ф”XƒPPЯ  r рѕЄаFCФdŽ ђ ђ Ъ›Я40dЃ,t Миt Я”ddPPPPйWELCOME ADDRESS BY THE DIRECTOR – GENERAL OF THE SECURITIES & EXCHANGE COMMISSION, DR. CHARLES ASEMBRI AT A WORKSHOP ON CAPITAL MARKET DEVELOPMENT ORGANISED FOR MEDIA PRACTITIONERS AT ERATA HOTEL, ACCRA, 27TH MAY 2004   THEME: “The role of the Securities (or Capital) market in wealth creation and economic development of Ghana”.   Good Morning Ladies and Gentlemen of the Media,   We are pleased to welcome you to this workshop on the capital market, under the theme “The role of the Securities (or Capital) market in wealth creation and economic development of Ghana”.   This workshop, the first of many to come, is the beginning of what is intended to create the necessary partnership between the media and the Securities and Exchange Commission. To enable the Commission achieve many of its functions as the watchdog of the capital market, the Commission needs to reach out to the public and can only do so effectively with assistance from the media. It is hoped that through such workshops you will continue to update yourselves on capital market issues such that in reporting on this specialized area, it will be possible to develop and promote public interest and participation in the capital market. Without active public participation, the market will not thrive.   In order to put the theme in its proper context it is be pertinent to give a brief overview of the role of the Securities and Exchange Commission in the capital market.   The Securities and Exchange Commission (SEC) was established under the provisions of the Securities Industry Law, (SIL) PNDC Law 333 of 1993, as a statutory body corporate to operate as the regulatory body of the capital market. Under the provisions of that Law, the Commission has many functions, however with one main aim in view, that is ensuring the integrity of the market and protecting the investor. As more and more first-time investors begin to look to the securities market as an alternative investment vehicle and as a means of securing their futures, paying for homes, and educating children, the importance of the Commission to the capital market is more compelling than ever.     wewewWe see our mission as the promotion of the orderly growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected through the effective implementation of the securities laws. This involves ongoing supervision and regulation of the market and the securities industry, the education of market professionals, issuers of securities and investors on their respective rights as well as obligations.    The underlying philosophy of the regulatory framework of the Commission is “Disclosure Based Regulation”. This requires that market operators should be transparent in their dealings by providing timely, comprehensive and accurate information to the investing public to enable the latter make sound investment decisions. With this in mind, the Commission has since it commenced operations in 1999 made substantial progress in improving the legal framework under which it operates both in facilitating the development of the market and for regulating it. In this regard the Law was amended in 2000 by Act 590 and several new provisions for improved operation and regulation of the securities market were introduced. These include:    (1) In the area of market development, detailed provisions on the licensing and regulation of collective investment Schemes (Mutual Funds and Unit Trusts) were introduced. (2) A dispute hearing mechanism, the Administrative Hearings Committee, was introduced under which the Commission has quasi- judicial powers for examining and determining disputes and complaints arising under the Law. This is to facilitate the speedy resolution of complaints, disputes and violations of the Law before recourse is had to the courts.   (3) In order to ensure that only qualified persons are allowed to operate in the capital market, the concept of “Exempt Dealers” was eliminated with the Commission now empowered to license all institutions and persons who wish to operate in the securities market as a dealer.   (4) The inclusion of provisions in the Law that empowers the Commission to review and approve prospectuses of persons wishing to make invitations to the public to subscribe for shares, (the prospectus being the information document through which the company provides information about its operations).   The Law has also made provision for the Commission to develop such regulations as may be necessary to give effect to provisions of the law. This has been addressed in two Regulations, namely: 1) The Unit Trust and Mutual Fund Regulations, L.I. 1695 of 2001, developed for the approval /licensing, better operation and improved oversight by the Commission of Unit trusts and Mutual Funds.   The SEC Regulations, LI 1728, passed in 2003, to provide among other things, for the licensing and capital requirements for market operators, qualification of Directors, and reporting requirements for licensed operators including stock exchanges, dealers, investment advisers and listed companies. These Regulations enable the Commission to maintain oversight over the market to ensure that only “fit and proper” persons are allowed to operate in the market. And furthermore, that, licensees continue to operate by the rules and report to the Commission periodically on their operations. Provisions for disclosure of information by issuers of securities are also made under the Securities and Exchange Regulations of 2003, L.I. 1728. Transparency is a cardinal principle of securities regulation. The reporting requirements that licensed operators need to meet is to ensure that they are playing by the rules and providing investors with up-to-date information on their operations. Adherence to these underlying objectives is fundamental to winning investor confidence, which in itself is at the core of capital market regulation, development and sustainability.   In addition to Regulations, the SEC issues directives and guidelines to market operators as part of our obligation to ensure a fair, transparent and orderly market. We have, for example, issued a directive that is aimed at limiting the possibility of insider trading by dealers. It is no longer possible for a director or officer of a Licence Dealing Member (LDM) to be a director of a Listed Company.   It is worth mentioning that within two years of being established, the Commission was able to meet all the criteria required for full membership of IOSCO, the international organization of Securities Commissions. This is evidence of the international good standing of the Commission, and a testimony to the legal framework put in place. We are, however, not unaware of criticism from some operators that the Commission tends to over-regulate. While not intending to defend our position, it should be noted that striking a balance between developing the market and providing adequate investor protection through regulation is a tightrope that all securities market regulators have to walk, more especially in emerging markets. Avoiding corporate scandals (whether it be Pyram, R5 or Enron) and loss of investor confidence is a goal we must all strive for, both the regulator and the market operator. GOOD CORPORATE GOVERNANCE Ladies and Gentlemen, the recent corporate scandals in the US and elsewhere have been blamed largely on improper corporate governance practices. Corporate Governance has assumed a new importance in the administration of companies. To this end many countries and International institutions have developed corporate governance guidelines to improve the governance structure. The Commission in its efforts to maintain international best practice at all levels of the securities market in Ghana has developed for the market a set of “Corporate Governance Guidelines on Best Practices”. Furthermore, in the regulations developed to give effect to the provisions of the Law, Listed Companies are now required to file unaudited quarterly, and Audited Annual Financial Statements with the Commission and the Ghana Stock Exchange (GSE) and also make them available to shareholders. The company has the option to publish the quarterly financial statements in the press instead of dispatching them to each shareholder individually. In addition to the information to be provided in the reports, the CEO and the CFO of each reporting entity has to make a sworn statement in the Annual and Quarterly Report that the financial statements do not contain untrue statements, misleading facts or omit material facts to the best of their knowledge. LICENSED OPERATORS Various companies currently operate in the securities industry under the licenses of the Commission. Currently, the Commission has licensed in total 15 Broker – Dealer firms, (or Licensed Dealing Members) 22 Investment Advisers, 2 Trustees, 3 Custodians. The Commission has also licensed 4 Mutual Fund Schemes and 4 Unit Trust schemes. Of the number of schemes licensed, 2 mutual funds and 3 unit trusts are operating. The others I believe are gearing up to start operations soon. The coming into operation of these schemes is helping to deepen the market further and helping to mobilize savings of small savers. THE GHANA STOCK EXCHANGE The importance of the SEC’s role in the capital market cannot be fully appreciated unless the stock market becomes relevant in capital mobilization and wealth creation for Ghanaians. Our stock market is still young and small by international standards but has made some notable achievements, which we can build on. Since its inception in 1990, the GSE has in its small way provided the platform for companies and government to raise needed capital. On the primary market a total of Ђ587 billion has been raised by companies and government through initial public offerings of shares and rights issues. On the corporate bonds market a total of US$14.1 million and Ѓ1.2 million have been raised to date through the Exchange. On the secondary market a total of 740 million shares, valued at Ђ1.2 trillion have been traded. The Exchange has also posted some impressive returns to investors over the years. An active capital market has been identified as key to economic development. Over successive years, private sector industries and commercial enterprises have been unable to operate at optimum capacity, due partly to the inability of these enterprises to source long-term funds to make their operations efficient and competitive. The capital market can be used as the source of long-term funds. This will provide an answer to the financing needs of industry and commerce. The employment opportunities and subsequent earning power that this will generate should serve as a catalyst for further development and wealth creation.   This brings us to the theme of the workshop and the role of the media in promoting government’s policy of wealth creation. In this context, we see your role in the wealth creation cycle as collaborating with the Commission and the GSE in providing information and educating the public on capital market issues to generate and maintain the interest in the market and its usefulness as an investment medium. With all the appropriate regulations in place, no capital market will thrive without public/investor participation at an appreciable level. Investors need to be educated to understand the workings of the market; to know their rights and understand the risks they take as well as their responsibilities. In order to create “the necessary atmosphere for the orderly growth and development of the capital market” active investor participation is important.   The collaboration between the Commission and the media is therefore aimed at ensuring that we make the capital market meaningful and relevant to Ghanaians in all walks of life.   It is our hope that journalists will continue to play a key role in facilitating the understanding of the workings of the capital market and the role of the SEC. We are very pleased therefore that you were able to honour our invitation to attend this workshop, which we hope you will find very useful. On behalf of the Commission and on my own behalf, I welcome you to this special workshop for the media. THANK YOU FOR COMING. 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