The Ghana Stock Exchange (GSE) has issued rules to facilitate and regulate the issuance, admission and trading of commercial papers on the Ghana Fixed Income Market (GFIM).

Commercial papers are typically short-term money-market securities with fixed maturities of between 15 to 270 days and which represent an issuer’s unconditional promise to pay a certain sum to the order of an investor at a future date. In 2012, the Securities and Exchange Commission (SEC) issued its Guidelines for Investments in Commercial Papers dated 8 October 2012 to formally recognise commercial papers as an eligible asset class for investments by fund managers. However, in the absence of bespoke admission and trading rules for commercial papers, commercial papers have lacked secondary market depth and treasury bills have essentially monopolised Ghana’s money market. It is against this backdrop that the GSE has published the Commercial Paper Issuance and Admission Rules dated February 2024 (CP Rules). The CP Rules provide the:

• procedure for issuing commercial papers (including sustainability themed commercial papers);
• requirements for the admission of commercial papers on the Ghana Fixed Income Market (GFIM) for secondary trading;
• eligibility criteria and continuing admission obligations for issuers of commercial papers;
• minimum subscription, underwriting and rating requirements;
• solvency requirements for issuers;
• rollover and redemption of commercial papers;
• duties of an issuer, issuing house, sponsor, paying agent and member; and
• sanctions for non-compliance.

Given that credit to the private sector from the banking sector has weakened in recent years and the demand for more diversified investment products has grown since the completion of the Government’s domestic debt exchange programme, the CP Rules could not have arrived at a more opportune time. It is expected that the CP Rules will lead to the development of a vibrant commercial paper market which meets the needs of both short-term lenders and borrowers, complements existing investment products, and augments efforts to close the financing gap in the private sector. Our firm is proud to have collaborated closely with the GSE and other stakeholders to develop the CP Rules.

The Securities and Exchange Commission (SEC) has issued guidelines to regulate the issuance of green bonds. The Securities Industry (Green Bonds) Guidelines, 2024 (SEC/GUI/003/03/2024) (the SEC Green Bond Guidelines) which follow the green bond principles published by the International Capital Markets Association, provides:

(a) regulatory guidance on the criteria an issuer must meet to characterise its debt securities as green bonds;

(b) the processes for evaluating and selecting projects to be financed through the issuance of green bonds and applying for SEC approval to issue green bonds;

(c) rules for the management of the proceeds from the issuance of green bonds, as well as monitoring, performance evaluation, disclosure and reporting obligations for issuers of green bonds; and

(d) penalties for non-compliance with the SEC Green Bond Guidelines.

With the global focus on environmental, social and governance matters, it is expected that the SEC Green Bond Guidelines will facilitate the allocation of capital to projects with a positive impact on the Ghanaian environment and the development of a domestic green bond market. The guidelines will also prevent the incidence of greenwashing, through the implementation of its stringent approval standards, monitoring requirements and disclosure obligations.

The Securities and Exchange Commission (SEC) has issued the Securities Industry (Over-The-Counter Market) Guidelines, 2022 (SEC/GUI/001/02/2023) (the OTC Market Guidelines) to regulate over-the-counter (OTC) markets for securities and prescribe the rights and obligations of issuers whose securities are traded on an OTC basis. The OTC Market Guidelines define an OTC Market as an approved trading facility for the admission and trading of unlisted securities. 

The OTC Market Guidelines provide:

(a) that unlisted securities issued to the public by corporate entities (including public companies) are required to be traded on an OTC market;

(b) that a public company which has not issued securities to the public may utilise an OTC Market for the secondary trading of its securities;

(c) that all securities admitted to an OTC Market must be dematerialised and held through an approved securities depository;

(d) the process for applying for a licence to operate an OTC market;

(e) rules for the management and membership of an OTC market;

(f) qualification requirements for the admission of securities to trading on an OTC market;

(g) the rules of conduct for dealers and other securities industry operators on an OTC market; and

(h) financial and other reporting obligations for operators of an OTC market and issuers of securities which are traded on an OTC basis.

The SEC is (under the Securities Industry Act, 2016 (Act 929) as amended (the Securities Industry Act)) authorised to regulate the issuance of securities by corporates, statutory bodies and local government authorities to the public. Such securities offered to the public are usually admitted to formally licensed securities exchanges for secondary trading purposes. However, the issuers of such securities may opt to issue them on an unlisted basis and in such situations, the unlisted securities may be traded directly (on a private basis) without the intervention of a centralised securities exchange. Such decentralised markets on which unlisted securities are traded are referred to as OTC markets. The Securities Industry Act gives the SEC power to regulate OTC markets.

By issuing the OTC Market Guidelines and requiring all unlisted securities which are issued to the public by corporate entities (including public companies) to be traded on an OTC market, the SEC expects to promote an open, impartial and informative marketplace for unlisted securities which are issued to the public.

The Securities and Exchange Commission (SEC) has issued the Securities Industry (Self-Regulatory Organisations) Guidelines, 2022 (SEC/GUI/005/02/2023) (the SRO Guidelines) to regulate the recognition, governance and business operations of self-regulatory organisations (SROs) in the securities industry. The SRO Guidelines provide:

a. conditions for being recognised as (and the revocation of the recognition of) an SRO;

b. guidance on the governance arrangements (such as the composition of its governing body, tenure of office and membership qualification) applicable to SROs;

c. for the functions which SROs may perform; and

d. financial and other reporting obligations of SROs.

The Securities Industry Act, 2016 (Act 929) as amended (the Securities Industry Act) defines an SRO as a registered securities exchange or an organisation of intermediaries which represents a particular segment of the securities market and has been approved by the SEC as self-regulatory. SROs are important actors in the securities industry because they create rules to foster compliance with and enforce industry and professional standards in the relevant sector of the securities industry within which they operate. To assist SROs in the exercise of their oversight functions, the Securities Industry Act mandates SROs to make rules with the prior approval of the SEC and enables the SEC to delegate any of its statutory powers or functions to an SRO. An SRO can enforce its approved rules without any further intervention from regulators such as the SEC.

By issuing the SRO Guidelines, the SEC has satisfied its obligation under the Securities Industry Act to specify the terms and conditions which regulate the recognition of SROs. It is expected that the SRO Guidelines would strengthen the regulatory framework for the supervision of SROs, resulting in the enhanced compliance with industry and professional standards, protection of investor interest, and ultimately, promoting the orderly growth and development of a robust and efficient securities market.

In November 2022, the Minister for Finance (during his reading of the budget statement and economic policy of the Government for the 2023 financial year) announced the Government’s intention to raise additional domestic revenue through certain changes to Ghana’s income tax regime (in case you missed it, please see our 2023 Legal and Regulatory Outlook for a comprehensive update). Following this announcement, the Income Tax (Amendment) Bill of 2022, the Excise Duty (Amendment) Bill of 2022, the Ghana Revenue Authority (Amendment) of 2022 and the Growth and Sustainability Levy Bill of 2022 were prepared and submitted to the Parliament of Ghana for enactment.

Parliament passed these bills on 31 March 2023, but they did not become legally binding until 3 April 2023, when (following receipt of presidential assent and gazette notification) the Income Tax (Amendment) Act, 2023 (Act 1094) (the Income Tax Act Amendment), the Excise Duty (Amendment) Act, 2023 (Act 1093) (the Excise Duty Amendment), the Ghana Revenue Authority (Amendment) Act, 2023 (Act 1096), and the Growth and Sustainability Levy Act, 2023 (Act 1095) (the Growth and Sustainability Act) became effective.

The Ghana Revenue Authority (GRA), through a notice issued in April 2023, announced 1 May 2023 as the effective date for its administrative implementation of the Income Tax Act Amendment and the Excise Duty Amendment. This means that the GRA began enforcing (and taxpayers were required to start complying with) the relevant provisions of the Income Tax Amendment Act and the Excise Duty Amendment with effect from that date.

In relation to the Growth and Sustainability Act (which applies a levy to profits before tax (or gross production, in respect of mining companies and upstream oil and gas companies only) from 2023 to 2025), taxpayers are required to make quarterly payments and file quarterly returns on a self-assessment basis by 31 March, 30 June, 30 September and 31 December of each of the relevant financial years. However, since the Growth and Sustainability Act took effect within the second quarter of 2023, the first payment and filing for the 2023 financial year is due on 30 June 2023 and may cover obligations for both quarter 1 and quarter 2 of 2023.

It is expected that the GRA will issue administrative guidelines and practice notes to guide taxpayers on the implementation of these amendments in due course.

The Securities and Exchange Commission (SEC) has issued guidelines to regulate the registration of securities issued by public companies, closed-end collective investment schemes, statutory bodies, local government authorities and any other entity which issues securities to the public. The Securities Industry (Registration of Securities) Guidelines, 2023 (SEC/GUI/002/02/2023) (the Registration of Securities Guidelines), provide for:

• registration of securities to be issued to the public or issuers who intend traded on an SEC licensed over-the-counter market);
• the registration requirements (i.e. information and supporting documents to be provided);
• the procedure for registration;
• the registration fee payable to the SEC; and
• the sanctions for non-compliance.

Section 145 of the Securities Industry Act, 2016 (Act 929) as amended (the Securities Industry Act) requires the registration of all securities to be issued to the public (except securities issued with an original tenor of up to 1 year and Government of Ghana securities). The Securities Industry Act also requires the SEC to issue registration certificates in respect of registered securities, and prohibits  unregistered securities from being admitted to trading on any securities exchange, or transferred, sold or offered for sale to the public on any secondary market.  It is expected that the implementation of the Registration of Securities Guidelines will assist the SEC to monitor, detect and prevent market abuse and achieve its objective of promoting the growth and development of an efficient, fair and transparent securities market in Ghana.

General Trends Likely to Impact 2023 and Beyond

We believe the following trends will shape the legal and commercial outlook for the energy, extractives and infrastructure sectors in 2023:

Micro and Macro-economic Factors

The general downward trajectory of the Ghanaian economy and global economic pressures could disrupt significant investments in the energy, extractives and infrastructure sectors in 2023.

Energy Transition

The global energy sector's gradual shift from fossil-based systems of energy production to renewable energy sources is also likely to have an impact on the focus sectors. Although the shift aims to mitigate the adverse impact of climate change, it poses a challenge for African countries like Ghana with untapped fossil fuel resources that will aid in developing their economies.

Outlook and Projections (Commercial)

Our outlook and projections for the energy, extractives and infrastructure sectors from a commercial perspective are as follows:

More Opportunities for the Renewable Energy Sector  

Ghana will continue to increase the share of renewable energy in its energy mix and explore hydrogen energy and other clean energy sources.

New Horizon for Upstream Oil and Gas Industry

GNPC is likely to commence drilling activities in the Voltaian basin, Ghana’s onshore sedimentary basin, between the fourth quarter of 2023 and the first quarter of 2024. 

As Ghana’s upstream oil and gas industry has so far been entirely located offshore, onshore exploration activities will create a new horizon for the industry.

Promotion of Five Offshore Blocks for Direct Negotiation

The Ministry of Energy is likely to continue to actively seek investors to invest in Ghana’s unexplored blocks which are the Offshore Cape Three Points South, Shallow Water Cape Three Points, South West Saltpond, Deep Water Cape Three Points Block, and the Expanded Shallow Water Tano Block. 

It is hoped that, amidst the global energy transition and its associated phenomenon of sustainable investing, investors will not be dissuaded from investing in the five offshore blocks and direct negotiations will commence.

Commencement of Iron Ore Mining

Following the determination of the total iron deposits in Ghana, the Ghana Integrated Iron and Steel Development Corporation (GIISDEC) has confirmed that Ghana is likely to start iron ore mining by end of the year 2023. GIISDEC is expected to develop a masterplan for the iron and steel industry.

Operationalisation of Petroleum Hub Development Corporation (PHDC) 

The PHDC was established by the Petroleum Hub Development Corporation Act, 2020 (Act 1053) with the primary object of promoting and developing a petroleum and petrochemicals hub in Ghana. The PHDC is currently recruiting staff and is likely to commence operations in 2023. The PHDC is expected to spearhead the development of the integrated petroleum complex in the Western Region of Ghana with the aim of adding value to the upstream and downstream petroleum value chain in Ghana and beyond.

Outlook and Projections (Legal/Regulatory and Policy)

Our outlook and projections for the energy, extractives and infrastructure sectors from a legal/regulatory and policy perspective are as follows:

Reform in the Income Tax Regime

There are expected to be some reforms in Ghana’s income tax regime including an introduction of a 35% additional income tax bracket for PAYE.

Programmes and Measures in the Infrastructure Sector

Government is likely to commence works on the 2023 National Flood Control Programme across all 16 regions in Ghana. The Water for All programme is also expected to be implemented and the construction of a number of water supply projects will likely continue.

A re-introduction of road tolls on selected public roads and highways is also expected.

Legislative Reforms in the Construction Industry

After repeated pressure from stakeholders, the Construction Industry Development Authority Bill (CIDA Bill) is likely to be passed into law. The CIDA Bill when passed is expected to bring sanity and professionalism into the construction industry.

It is also hoped that the Condominium Bill and the Ghana Housing Authority Bill will be approved by Cabinet. The Condominium Bill, when passed into law, will regulate shared ownership of common areas which has arisen due to increasing demand for development of high rise and compact properties and the need to maximise limited land space. On the other hand, the Ghana Housing Authority Bill when enacted will establish the Ghana Housing Authority to serve as a regulator in the housing sector and lead the supply side of the housing market.

The Securities and Exchange Commission (SEC) has issued guidelines to regulate the licensing and business operations of trustees in the securities industry. The Securities Industry (Note Trustees) Guidelines, 2022 (SEC/GUI/004/02/2023) (the Note Trustee Guidelines) provides for:

• licensing requirements for trustees;
• the application process for obtaining a trustee licence;
• duties of trustees; and
• financial and other reporting obligations of trustees.

Trustees are key players in the securities industry who are typically appointed under unit trust schemes and corporate fixed income structures to protect the interests of investors, ensure that the terms of relevant transaction documents  are complied with, and enforce the rights of the investors. Trustees play a key role in facilitating the commercial integrity of the securities market and provide confidence to investors that the terms of key transaction documents underpinning their investments will be respected by issuers.

It is expected that the Note Trustee Guidelines would strengthen the regulatory framework for the supervision of trustees, resulting in the enhanced protection of investor interest, and ultimately, promoting the orderly growth and development of a robust and efficient securities market.