Rights Issue Circular (Ghana)
Rights Issue Circular
THIS RIGHTS ISSUE CIRCULAR is issued by [Company Name] (Registration No. [Registration Number]) of [Company Address] on [Circular Date].
This Circular is issued in accordance with the Securities Industry Act 2016 (Act 929), the Companies Act 2019 (Act 992), and the Rules and Regulations of the Securities and Exchange Commission (SEC Ghana).
IMPORTANT NOTICE: Shareholders should read this Circular carefully. If in doubt about the action to be taken, shareholders should consult a stockbroker, lawyer, accountant, or other professional adviser registered under the relevant Ghanaian regulatory framework.
1. Terms of the Rights Issue
[Company Name] (the "Company") hereby offers to its existing shareholders the right to subscribe for [New Shares Offered] at a subscription price of [Subscription Price], on the basis of [Issue Ratio] (the "Rights Issue").
Only shareholders whose names appear on the Company's register of members as at the close of business on [Record Date] (the "Record Date") are entitled to participate in this Rights Issue.
The Rights Issue is [Rights Type]. Shareholders who do not wish to exercise their rights should refer to Section 3 of this Circular for guidance.
The offer will open on [Offer Open Date] and will close at 5:00 p.m. on [Offer Close Date] (the "Closing Date"). Acceptance forms and subscription monies received after the Closing Date will not be accepted.
2. Use of Proceeds
The net proceeds of the Rights Issue will be applied as follows: [Use of Proceeds].
The Board of Directors of the Company confirms that the use of proceeds is consistent with the Company's strategic objectives and is in the best interests of shareholders.
3. Acceptance Procedure
To accept this offer, eligible shareholders must complete the Provisional Allotment Letter (PAL) enclosed with this Circular and submit it together with the subscription monies to [Receiving Bank] on or before the Closing Date of [Offer Close Date].
Subscription monies must be paid by banker's draft, electronic funds transfer, or such other method as the Company may specify. Cheques will not be accepted unless expressly authorised by the Company.
Shareholders who do not accept this offer by the Closing Date will be deemed to have forfeited their rights. The Company may, at its discretion, offer unsubscribed shares to other investors or to existing shareholders who have applied for excess shares.
4. Directors' Responsibility Statement
The directors of [Company Name] collectively and individually accept responsibility for the accuracy of the information contained in this Circular. To the best of the knowledge and belief of the directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Circular is in accordance with the facts and does not omit anything likely to affect the import of the information.
This Circular has been prepared in compliance with the Securities Industry Act 2016 (Act 929) and the requirements of the Securities and Exchange Commission (SEC Ghana).
Signatures
Signed on behalf of the Board of Directors of [Company Name] on [Circular Date].
Chairman / Director
________________
Signature
Company Secretary
________________
Signature
What Is a Rights Issue Circular (Ghana)?
A Rights Issue Circular in Ghana is a formal corporate document issued by a company to its existing shareholders, offering them the right to subscribe for newly issued shares in proportion to their existing shareholding, at a specified subscription price, within a defined acceptance period. The Rights Issue Circular (Ghana) is governed by the Securities Industry Act 2016 (Act 929), which regulates the capital markets in Ghana, and the Companies Act 2019 (Act 992), which governs the internal affairs of companies incorporated in Ghana.
Section 1 of the Securities Industry Act 2016 (Act 929) establishes the framework for securities regulation in Ghana. The Securities and Exchange Commission (SEC Ghana), established under Act 929, is the primary regulator of the Ghanaian capital market. The Ghana Stock Exchange (GSE), established under the Stock Exchange Act 1971 (Act 384) and now operating under Act 929, is the principal securities exchange in Ghana. Companies listed on the Ghana Stock Exchange (GSE) must comply with the GSE Listing Rules, the SEC Ghana Rules and Regulations, and the Companies Act 2019 (Act 992) when conducting a rights issue.
A rights issue is a pre-emptive offer — it gives existing shareholders the first right to subscribe for new shares before those shares are offered to the public. The pre-emption right protects shareholders from dilution of their proportionate ownership in the company. Section 72 of the Companies Act 2019 (Act 992) governs pre-emption rights in Ghana, providing that where a company proposes to issue new shares, existing shareholders have a right of first refusal to subscribe for those shares in proportion to their existing holdings, unless the company's constitution (formerly Regulations) waives or modifies this right.
For companies listed on the Ghana Stock Exchange (GSE), a rights issue must be approved by the board of directors and, where required by the Companies Act 2019 (Act 992) or the company's constitution, by an ordinary or special resolution of shareholders in general meeting. The SEC Ghana must approve the Rights Issue Circular as a prospectus or information memorandum under the Securities Industry Act 2016 (Act 929) before it is distributed to shareholders. The Rights Issue Circular must comply with the disclosure requirements prescribed by SEC Ghana to enable shareholders to make an informed decision about whether to take up their rights, sell their rights (where the rights are renounceable), or let their rights lapse.
Unlisted private companies incorporated under the Companies Act 2019 (Act 992) and registered with the Office of the Registrar of Companies (ORC) may also conduct rights issues, subject to their constitution and the pre-emption provisions of Act 992. The Ghana Revenue Authority (GRA) administers stamp duty on share transfers under the Stamp Duty Act 2005 (Act 689). The Bank of Ghana (BoG) and the National Insurance Commission (NIC) impose additional requirements on rights issues by regulated financial institutions and insurance companies respectively.
The legal framework governing the Rights Issue Circular (Ghana) in Ghana draws on several key statutes and regulatory bodies. Under the Companies Act 2019 (Act 992), the Registrar General's Department (RGD) maintains the register of Ghanaian companies. Section 7 of the Companies Act 2019 governs company incorporation. The Ghana Revenue Authority (GRA) administers corporate tax under the Income Tax Act 2015 (Act 896). The Commercial Division of the High Court in Accra adjudicates business disputes. The Ghana Investment Promotion Centre (GIPC) regulates foreign investment under the GIPC Act 2013 (Act 865). Parties executing a Rights Issue Circular (Ghana) in Ghana should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Securities Industry Act 2016 (Act 929) sets the foundational requirements.
When Do You Need a Rights Issue Circular (Ghana)?
A Rights Issue Circular in Ghana is needed whenever a company wishes to raise additional capital from its existing shareholders by issuing new shares on a pre-emptive basis under the Companies Act 2019 (Act 992) and the Securities Industry Act 2016 (Act 929).
A Rights Issue Circular is required when a company listed on the Ghana Stock Exchange (GSE) decides to raise equity capital to fund a capital expenditure programme, retire debt, fund an acquisition, or strengthen its balance sheet, and the board and shareholders have approved the issue in accordance with the GSE Listing Rules and the Companies Act 2019 (Act 992).
A Rights Issue Circular is needed when a private company incorporated under the Companies Act 2019 (Act 992) and registered with the Office of the Registrar of Companies (ORC) proposes to issue new shares to its existing shareholders and wishes to comply with the pre-emption provisions of Section 72 of the Companies Act 2019 (Act 992).
A Rights Issue Circular is required when a bank licensed by the Bank of Ghana (BoG) under the Banks and Specialised Deposit-Taking Institutions Act 2016 (Act 930) needs to raise Tier 1 capital to meet minimum capital requirements set by the Bank of Ghana (BoG), and the bank's board has resolved to conduct a rights issue to existing shareholders.
A Rights Issue Circular is needed when a company regulated by the Securities and Exchange Commission (SEC Ghana) — such as a collective investment scheme operator, a fund manager, or a broker-dealer — needs to issue the document as part of its compliance with SEC Ghana's disclosure and investor protection requirements.
A Rights Issue Circular is required when shareholders of a company wish to exercise or renounce their rights to subscribe for new shares, and the circular provides the basis for completing the Provisional Allotment Letter (PAL) or Acceptance and Renunciation Form that accompanies the offer.
Parties should note that all rights issue circulars for listed companies must be reviewed and approved by SEC Ghana before distribution. Failure to obtain SEC Ghana approval may constitute a breach of the Securities Industry Act 2016 (Act 929) and expose the company and its directors to regulatory sanctions.
What to Include in Your Rights Issue Circular (Ghana)
A compliant Rights Issue Circular in Ghana under the Securities Industry Act 2016 (Act 929) and the Companies Act 2019 (Act 992) must contain the following essential elements.
Company Details: Full legal name of the issuing company, its registration number with the Office of the Registrar of Companies (ORC), registered address, and Ghana Stock Exchange (GSE) stock code if listed. The names, professional qualifications, and directorships of all directors must be disclosed.
Offer Terms: The number of new shares being offered, the subscription price per share expressed in Ghana Cedis (GHS), the ratio of new shares to existing shares (e.g., 1 new share for every 4 existing shares held), and the record date for determining eligible shareholders.
Acceptance Period: The opening and closing dates of the offer, the acceptance procedure, and the address of the Receiving Bank or registrar to which completed Acceptance Forms and subscription monies must be submitted.
Purpose of the Issue: A clear and specific explanation of how the proceeds of the rights issue will be applied — capital expenditure, debt repayment, working capital, acquisitions, or regulatory capital requirements under the Banks and Specialised Deposit-Taking Institutions Act 2016 (Act 930) or Insurance Act 2021 (Act 1061).
Financial Information: Audited financial statements for the most recent financial years, prepared in accordance with International Financial Reporting Standards (IFRS) and signed by the company's auditor registered with the Institute of Chartered Accountants Ghana (ICAG). A statement of net assets and current liabilities.
Risk Factors: A description of material risks facing the company and the proposed use of proceeds, including market risks, regulatory risks, and operational risks specific to the company's industry and Ghana's economic environment.
Directors' Responsibility Statement: A statement signed by all directors confirming that, to the best of their knowledge and belief, the information in the circular is accurate and complete, consistent with their obligations under the Companies Act 2019 (Act 992) and the Securities Industry Act 2016 (Act 929).
Renunciation Rights: A statement of whether the rights are renounceable (i.e., whether shareholders who do not wish to subscribe may sell their rights in the secondary market on the Ghana Stock Exchange (GSE)) or non-renounceable.
Tax Implications: A summary of the Ghana Revenue Authority (GRA) tax treatment of the subscription proceeds, any withholding tax obligations under the Income Tax Act 2015 (Act 896), and stamp duty under the Stamp Duty Act 2005 (Act 689).
Advisers: Names and addresses of the legal advisers enrolled with the Ghana Bar Association, financial advisers, auditors (ICAG registered), and receiving banks (licensed by the Bank of Ghana (BoG)) involved in the rights issue.
SEC Ghana Approval: Reference to the SEC Ghana approval letter authorising distribution of the circular, required under the Securities Industry Act 2016 (Act 929).
Forms-legal.com provides this Rights Issue Circular template as a starting point for Ghanaian companies. Given the complexity of securities regulation in Ghana and the mandatory SEC Ghana approval process, companies should engage a solicitor enrolled with the Ghana Bar Association and experienced in capital markets before issuing a rights issue circular.
Additional compliance elements for a Rights Issue Circular (Ghana) used in Ghana include: Under the Companies Act 2019 (Act 992), the Registrar General's Department (RGD) maintains the register of Ghanaian companies. Section 7 of the Companies Act 2019 governs company incorporation. The Ghana Revenue Authority (GRA) administers corporate tax under the Income Tax Act 2015 (Act 896). The Commercial Division of the High Court in Accra adjudicates business disputes. The Ghana Investment Promotion Centre (GIPC) regulates foreign investment under the GIPC Act 2013 (Act 865). Forms-legal.com provides this template as a starting point for Ghana-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
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}Frequently Asked Questions
Yes. For companies listed on the Ghana Stock Exchange (GSE), a Rights Issue Circular constitutes a prospectus or information memorandum under the Securities Industry Act 2016 (Act 929) and must be approved by the Securities and Exchange Commission (SEC Ghana) before distribution to shareholders. SEC Ghana reviews the circular to verify compliance with disclosure requirements designed to protect investors and maintain market integrity. The issuing company must submit the draft circular, together with supporting financial statements, legal opinions, and board resolutions, to SEC Ghana for review. Only after SEC Ghana issues its approval letter may the circular be distributed to shareholders and published. Private unlisted companies are not subject to SEC Ghana approval but must comply with the pre-emption and disclosure requirements of the Companies Act 2019 (Act 992). Failure to obtain SEC Ghana approval for a listed company rights issue may expose the company's directors to sanctions under Act 929, including fines and criminal liability.
Pre-emption rights in Ghana give existing shareholders the right to subscribe for new shares in proportion to their current holdings before those shares are offered to outside investors. Section 72 of the Companies Act 2019 (Act 992) codifies pre-emption rights for companies incorporated in Ghana. The purpose of pre-emption rights is to protect shareholders from dilution — if a shareholder does not exercise their rights, their proportionate ownership of the company will decrease. For example, if a shareholder holds 10% of a company's shares and the company issues new shares on a 1-for-4 basis, the shareholder has the right to subscribe for 1 new share for every 4 existing shares held, maintaining their 10% stake. A company's constitution (formerly its Regulations under the Companies Act 1963 (Act 179)) may modify or disapply pre-emption rights by special resolution, subject to the requirements of the Companies Act 2019 (Act 992). Any modification of pre-emption rights must be disclosed in the Rights Issue Circular.
Whether shareholders can sell their rights in a Ghana rights issue depends on whether the rights are renounceable. In a renounceable rights issue conducted by a company listed on the Ghana Stock Exchange (GSE), shareholders who do not wish to subscribe for the new shares may renounce their rights in favour of a third party or sell their rights on the Ghana Stock Exchange (GSE) during the offer period, realising the value of the rights. In a non-renounceable rights issue, shareholders must either subscribe themselves or let their rights lapse, forfeiting the economic value of the unsubscribed rights. The Rights Issue Circular must clearly state whether the rights are renounceable or non-renounceable. For listed companies, renounceable rights typically trade on the GSE through a parallel market for nil-paid rights during the offer period, subject to GSE Listing Rules and SEC Ghana requirements under the Securities Industry Act 2016 (Act 929).
The Ghana Revenue Authority (GRA) applies several tax considerations to a rights issue in Ghana. Subscription proceeds received by the company from shareholders in a rights issue are not income of the company and are not subject to corporate income tax under the Income Tax Act 2015 (Act 896) — they represent equity capital contributions. Stamp duty under the Stamp Duty Act 2005 (Act 689) may apply to the transfer or allotment instruments associated with the rights issue. Where shareholders sell their rights (nil-paid rights) on the Ghana Stock Exchange (GSE), any gain realised may be subject to capital gains tax depending on the investor's tax status and the nature of the asset under the Income Tax Act 2015 (Act 896). Dividends paid on the new shares after allotment are subject to withholding tax at the applicable rate under Act 896. Companies should seek a tax opinion from a tax adviser registered with the Ghana Revenue Authority (GRA) or a certified chartered accountant (ICAG member) before proceeding with the rights issue.
The offer period for a rights issue in Ghana is typically between 21 and 28 calendar days for listed companies, subject to the Ghana Stock Exchange (GSE) Listing Rules and the requirements of the Securities and Exchange Commission (SEC Ghana) under the Securities Industry Act 2016 (Act 929). The offer period must be long enough to allow shareholders to receive, consider, and act on the Rights Issue Circular. The circular must state the opening date (when the offer becomes effective), the closing date (the deadline for submitting acceptance forms and payment), and the record date (the date on which shareholders must be registered to participate in the offer). Shareholders who fail to submit their acceptance forms and subscription monies by the closing date forfeit their pre-emption rights. For private companies, the offer period may be shorter, subject to the company's constitution and the agreement of shareholders.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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