SEC to increase fund management capital to GHC2 million

The Securities and Exchange Commission (SEC) is about to increase the minimum capital for fund management companies (FMCs) from the current GHC100,000 to GHC2 million, Reverend Daniel Ogbarmey Tetteh, the SEC director general, has said.

Ogbarmey Tetteh said the increment will be announced in a new guideline for licensing that the SEC has developed for the capital market.

The new guideline will be rolled out this month or early October and will require all other capital market operators to recapitalise.

Deadline

Once the announcement is made, existing companies will be given up to 31 December 2021 to become fully compliant, he said. For new entrants the directive will take immediate effect.

Ogbarmey Tetteh added that the Ministry of Finance had already endorsed the new capital requirement in line with the Securities Industry Act 2016 (Act 929).

The capital increase is one of several reforms being implemented to make the securities industry more robust and better aligned with international best practice.

He said the capital increase under the new licensing regime is aimed at “raising the bar” to ensure that only fit and proper persons are allowed to operate in the capital market.

The increase from GHC100,000 to GHC2 million will be the first upward revision since the Securities and Exchange Commission Regulations 2003 (LI 1728) were passed.

Parliament has already amended sections of LI 1728 to raise the capital requirement from GHC100,000. Ogbarmey Tetteh said the coming capital increment is needed to strengthen the companies’ financial muscle to meet the requirements of operating in the industry.

That, he said, would make them effective in discharging their obligations properly to clients.

Feedback

The Commission had consulted adequately with players in the fund management industry to ensure that the amount and the time frame were not arbitrary, Ogbarmey Tetteh said.

“Actually, when we started engaging the industry on the minimum capital, we pegged it at GHC5 million, but the feedback was for us to bring it down, and so, after [some] back and forth, we settled on the GHC2 million,” he told the Daily Graphic.

He added that the Commission has also engaged other stakeholders in the securities market over the capital requirement.

“So it will not come as a surprise. In fact, the market has been waiting,” he said.

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