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31.03.2006 Business & Finance

Potentials exist for unlisted securities market - Survey


Accra, March 31, GNA - A survey conducted on the development of Ghana's unlisted securities market has identified Small and Medium Scale Enterprises (SMEs) as having enormous potentials for the mobilization of capital for large-scale investment.

The survey indicated that there were hundreds of SMEs, which were potential sources of funding for start-up businesses in the country, if the unlisted securities market was formalized.

The research carried out by the Securities Exchange Commission (SEC) also mentioned other sources of capital as the issue of corporate bonds by unlisted big firms, SMEs and from the mortgage market. Presenting the findings of the survey at a seminar in Accra on Thursday, Ms Abena Amoah, a consultant to SEC, said fund managers and investors were seeking alternative opportunities, which clearly called for the development of the unlisted market.

She said falling interest rates on capital and funds could also open up major possibilities for companies for the unlisted market to develop.

Ms Amoah said most companies had registrars who directed the sale and purchasing of investors and passed on investors to their brokerage firms.

She said the SEC must generate measures to check the procedures under which these registrars operated. She mentioned inactive market, low transaction value and volume and potential for raising capital for bonds and equities as the major findings of the survey.

Mr Richard Dvorin, a co-consultant, said lack of transparency in the provision of information about the activities of the unlimited companies was a major set back in their development. He said centralized information on the companies' activities had created unwanted practices within the companies and restricted SEC from monitoring their activities to protect investors. Mr Dvorin noted that for effective provision of information, companies should follow the ACT-Up principle, which means to provide Accurate, Complete, Timely and Up-to-date information on trading activities as an essential tool for attracting potential investors to support large investment.

Mr Dvorin suggested that public companies should submit their annual and audited reports to SEC to enable it to monitor their activities and ensure transparency in their dealings with the public.