GSE to encourage shareholders to deposit certificates

Accra, Nov. 25, GNA - The Ghana Stock Exchange says it will adopt a three-prong approach in encouraging shareholders to deposit their share certificates into the GSE Securities Depository (GSD). The transfer of listed securities into the national depository would gradually do away with paper certificates and enable shareholder ownership to be maintained in book-entry form. Mr Kofi Yamoah, Managing Director of Ghana Stock Exchange, said the first step of the three main elements was to encourage individual shareholders to voluntarily go to deposit their share certificates with their stockbrokers and this followed the required steps outlined by the Depository.

Besides encouraging individuals, the listed companies would also be asked to pass resolutions during their Annual General Meetings to amend company regulations to allow for "dematerialisation of certificates". The final element, which is long-term, would be for the Exchange and GSD to do away with paper certificates. Mr Yamoah said the migration of listed securities into the Depository was expected to eliminate paper certificate, remove the bottlenecks and risks associated with excessive paper work in post-trade processing and registration.

He said the Exchange would embark on intensive public education on the migration of equities into the GSD. The establishment of GSD is a vision embodied in the National Financial Sector Plan as part of government's effort to develop a vibrant bond and secondary market in the country and to ensure a prompt and efficient clearing and settlement system. Currently, government securities are issued and traded in book entry or electronic form while corporate securities are required by the Companies Code to be issued and traded in certificated form. Analysts say the current system poses a number of challenges to both investors and issuers.

First, it is costly for issuers to print certificates after initial public offers while these must be cancelled and new ones issued every time securities are traded leading to delays in clearing and settlement. Clearing and settlements of trades is manual and therefore exposed a settlement risk and while ownership of certificates could change when payment had not been received or cleared. 25 Nov. 08