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28 August 2017

Ghana Stock Exchange Suspends 5 Companies

The Ghana Stock Exchange (GSE) has suspended five companies from trading on the GSE from today for failing to meet “continuing listing obligations, in spite of several promptings to do so.”

A statement from the GSE named the five defaulting companies as African Champion Industry Limited (ACI), Clydestone (Ghana) Limited (CLYD), Golden Web Limited (GWEB), Pioneer Kitchenware Limited (PKL) and Transaction Solutions Limited (TRANSOL).

Offences

It said the breached obligations included failure to submit financial reports, non-payment of annual listing fees and failure to conduct annual general meetings (AGMs).

It added that the suspension would last until September 8, this year within which the exchange expected the companies to rectify the anomalies.

“Failure to do so will attract further sanctions as per the GSE Listing Rules,” the statement warned.

The suspension should reduce the number of equities listed on the main GSE to 32.

Although the decision by the GSE is historic, the Head of Research at Databank, Mr Alex Boahen, told the Daily Graphic last Friday that the suspension would have little impact on trading activities.

“In our point of view, this action will have no impact on the GSE because these companies are literally inactive,” he said.

Impact on shareholders

The suspension means that shareholders of the affected companies will neither be able to sell nor buy shares during the time of suspension.

It is the first time four of the companies are being suspended and the second for PKF, which was listed on the GSE in August 1995.

The company, which produces cookware sets, pans and buckets, among others, was first suspended from trading on the GSE in March 2012 for failure to hold AGMs between 2008 and 2012.

After successfully holding the AGMs, the stock exchange reinstated its listing status in December of that year.

Better late than never

The Head of Research at FirstBanC Financial Services, Mr Benjamin Amoah-Adjei, in a separate interview, lauded the suspension of the companies, as it could serve as a deterrent to non-compliant companies.

Although it had been long in coming, he said, “it is better late than never and we hope that going forward, the GSE will maintain that kind of momentum for the companies to be disciplined”.

Look to GAX

Trading activities on the five companies have been low in recent times, resulting in their share prices being bearish.

Such a suspension can help prompt the companies to restructure their activities and take a definite decision on whether or not they want to stay on the market.

Mr Boahen said it also presented the companies with the opportunity to consider migrating to the Ghana Alternative Market (GAX), where listing regulations were comparatively relaxed.

“Because the main market (GSE) has stringent reporting criteria for the companies, this suspension may present the companies with a good opportunity to repackage themselves and go to the GAX,” the Head of Databank Research said.

They could do that by engaging the exchange on the matter, he explained.

Given that the market was yet to reach its maturity stage, Mr Boahen said, it was advisable for the GSE to encourage rather than frustrate more listings.

“Our market is very small and the exchange wants to encourage rather than frustrate companies. They are quite slow to enforce the listing regulations,” he said.

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