1. The Advantages & Disadvantages of Listing
on the Ghana Stock Exchange-Anthony
Adangabe (HND, BSC)
DEFINITION: Stock Exchange is an organized market for buying and selling of financial
instrument known as securities which includes stocks, bonds, options and futures. In summary, it
is an organized market where securities are bought and sold.
HISTORICAL BACKGROUND
The idea of establishing a Stock Exchange in Ghana lay on the drawing board for almost two
decades prior to its implementation. In February 1989, the issue of establishing a stock exchange
moved a higher gear when a 10 - member National Committee, under the Chairmanship of Dr.
G.K. Agama, then Governor of the Bank of Ghana, was set up by the Government. Other
members of the Committee were:
 Dr. Kobina Erbynn - Former Chief Executive, GIPC
 Mr. N. K. Kudjawu - Kudjawu & Co, Accra
 Nana Wereko Ampem II (Late) - Former Chairman, Barclays Bank of Ghana Ltd
 Mr. Afare Donkor - Former Managing Director, CAL Bank
 Mrs. S.Beata-Ansah - Ex Managing Director, HFC Bank Ltd
 Mr. E. J. A. Aryee (Late) - Former Managing Director, NTHC Ltd
 Dr. J. K. Richardson - Former Managing Director, BAT Ghana
 Mr. S. Y. Osafo-Maafo - Former Managing Director, National Investment Bank
 Mr. Yeboa Amoa - Who became the Exchange's first Managing Director
The work of the committee was to consolidate all previous work connected to the Stock
Exchange project and to fashion out modalities towards the actual establishment of the
Exchange. As a result of the work of the committee, the Stock Exchange was established in July
1989 as a private company limited by guarantee under the Companies Code of 1963. It was
given recognition as an authorized Stock Exchange under the Stock Exchange Act of 1971 (Act
384) in October 1990. The Council of the Exchange was inaugurated on November 12, 1990 and
trading commenced on its floor the same day. The Exchange, changed its status to a public
company limited by guarantee in April 1994.
Going public is not an easy task. In deciding whether to seek a listing, a company should
consider the alternative financing needs available and the benefits versus the drawbacks of
listings.
Benefits
There are many advantages that accrue to companies that attain a public listing of their shares.
Some of the key considerations and benefits are:
 Easy access to long term and new capital: on going public, it enables the company to
raise a long term capital by issuing securities to the public. Going public provides access

2. to various individuals who in aggregate have a significant amount of funds to invest. The
ability to raise funds from investing public through issue of securities is perhaps the most
valuable of the benefits that accrue to the public companies. Rising of such capital allows
future expansion in growth.
 Creating a market for the company's shares: public companies offer the investing
public including institutional investors and pension funds, an attractive avenue for
investment by virtue of liquidity of issued securities.
 Enhancing the status and financial standing of the company: an immediate benefit
enjoyed by a newly listed public company is the considerable improvement in over-all
financial position. The injection of substantial equity funds for example greatly improves
the company’s balance sheet. With such capital injection, the company will be able to
improve its financial position.
 Increasing public awareness and public interest in the company and its products:
going public will raise the level of investment community awareness of the company and
its products. This can result for example in a greater ability to attract high caliber of
employees and increase general business opportunities. The public companies also
benefits from access to useful information brought to them by advisers, financial
analysts, stock brokers and shareholders.
 Providing the company with an opportunity to implement share option schemes for
their employees: the ability of companies to offer share options and employees share
ownership schemes is a key advantage of the public companies.
 Accessing to additional fund raising in the future by means of new issues of shares
or other securities: Apart from its initial capital that it raises from the stock exchange
market, it has another opportunity to issue more securities for future investment.
 Freedom to diversify investment: by going public, existing shareholders are placed in
the position to diversify their investment
 Transferability of shares: a private company restricts the right to transfer its shares.
Shares in the private companies can generally only be sold to other existing shareholders.
Shares in the public companies on the other hand are freely transferable.
 Realization of investment: a key benefit that shareholders in private companies derive
from going public is the ability to establish a market value of shares thereby enhancing
the ability to trade in the shares.

3. Drawbacks
While there are benefits to going public, it also means additional obligations and reporting
requirements on the companies and its directors:
 Shareholder interests - people that invest in your business will become shareholders.
These shareholders then have an interest in how your business is run, and you will have
to consider their interests when running your business. Shareholder interests may be
different to your own objectives and in some instances this can lead to conflict.
 High set-up costs - listing costs can be considerable when joining the Main Market and
you will have to pay ongoing costs – e.g. higher professional fees. There are further costs
you need to consider which include financial reporting documents, audit fees, investor
relation departments and accounting oversight committees.
 Reduced control - floating your business on the Main Market can expose you to losing
some control over the management of your business. As there are stakeholder interests to
consider, you may not have full control over certain business directions or decisions.
There is also the potential risk of your business being taken over - if an interested
investor can acquire enough shares in your business.
 Market fluctuations - these can occur through many factors (e.g. social, political or
economic). These fluctuations can make your business vulnerable, as invested capital can
drop.
 Short term only focus - the pressure from shareholders, and other competition in the
Main Market, could cause you to focus on short term goals to improve share prices. This
can generate rapid additional revenue, but could also mean you fail to focus on your long
term business growth. Your business may become vulnerable to market fluctuations
beyond your control and the added pressure of the market could cause you to focus more
on short-term results than long-term growth.
 Additional compliance - you will have to comply with numerous additional regulatory
requirements and meet accepted standards of corporate governance – e.g. added
disclosure for investors.

4. In conclusion, the benefits of listing on the Ghana Stock Exchange outweigh the
drawbacks. It is therefore advisable for more companies to be listed on the Ghana Stock
Exchange.
References
Settor Amediku, (Financial Management Strategy)
Len Mcdowall , (Publicly Listing A Company)