Question

Discuss the requirements for listing of a company on the Ghana Alternative Exchange (GAX) relative to the first official listing requirements. How does the GAX operate?

Answer 1

Key Listing Requirements

A company applying for listing on the GAX is expected to meet the following requirements:

Stated Capital

A company applying to list on the GAX must have a minimum stated capital of GH¢250,000 at the time of listing.
The stated capital of GH¢250,000 shall be the capital after the company’s initial public offer but prior to listing.

Public Float

The public float of the applicant must constitute a minimum of twenty-five percent (25%) of the total number of issued shares.

The minimum number of public shareholders shall be twenty (20).

Period of Existence

Admission may be granted to a start-up company, provided the applicant submits to the GAX a 3-year business plan, demonstrating clearly the viability of the applicant.

Profitability

The company seeking admission to the GAX need not have recorded profits historically but must have the potential to make profit at least at the end of its third year of listing.

Sponsorship of Applicants for Listing
Licensed Dealing Members, Investment Advisors or Issuing Houses shall sponsor an application for listing on the GAX.

The Ghana Alternative Market (GAX) is a parallel market operated by the Ghana Stock Exchange. It focusses on businesses with potential for growth. The GAX accommodates’ companies at various stages of their development, including start-ups and existing enterprises, both small and medium.

Benefits of GAX

1. Easier Access to Long Term Capital

2. Access to Long Term Capital at a relatively lower cost

3. Improvement in the financial position of the GAX company

4. Enhanced status in the Community

5. Realization of Value of Investments

6. Reduce Risk and Improved Liquidity

Incentives

Companies may enjoy other incentives including:

Underwriting
Mandatory underwriting of the minimum offer directly or indirectly by sponsor. So there will be no failures of Initial Public Offers.

GAX-SME Listing Support Fund
Access to a revolving fund to support the cost of raising capital and deferment of up-front fees. Companies listing on GAX can apply for funds under the GAX-SME listing support fund to pay fully or partly for the cost of advisory services.