Going Public on a Stock Exchange, the Listing Process Explained By Mark Darko

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Hi. As discussed in last week’s article, listing and selling shares on a stock exchange helps you raise capital, plus it’s a mark of prestige. This notwithstanding, you can’t simply start selling stock in your company, call up NASDAQ, NYSE or GSE and demand a listing.  First, come the legal processes and procedures  required for an initial public stock offering (IPO). Then you have to navigate the exchange process before you finally start trading. To begin the journey to a stock exchange listing, file a registration statement, (often referred to as Form S-1) with the Securities and Exchange Commission. The statement includes the prospectus, the document you offer to anyone looking to buy your shares. The prospectus has to accurately describe your business operations, financial health, management and risk factors. It also includes audited financial statements. The SEC also requires added financial details, outside of what you put in your prospectus.  It is important to note that the SEC can reject your registration if it thinks your information is inaccurate, misleading or incomplete.  New, smaller companies can use a streamlined SEC process to file their registrations. Exchange Listing Standards Like exclusive clubs, the major stock exchanges don’t accept just anyone. Stock exchanges such us the Ghana Stock Exchange, NASDAQ, the New York Stock Exchange, etc have listing requirements your company has to meet. These include your initial stock price, number of shares, number of shareholders and total market value. After you start trading on an exchange, you have to meet less stringent standards to stay on the board. Otherwise, the exchange can drop your stocks. Getting on the Board Each stock exchange sets its own standards. If you can’t qualify for one board, it’s possible another will welcome you. The NYSE, for example, has a separate market, NYSE American, for companies that aren’t large enough for the big board. Similarly the Ghana Stock Exchange also has the GAX, i.e the Ghana Alternative Market for smaller companies that may not qualify to be listed on the main board or first official list (FOL) Once you settle on the right market, you pick your ticker symbol, the shorthand for your company. NYT, for example, stands for the New York Times. You need to choose a symbol that meets your board’s rules, the SEC requirements and doesn’t duplicate anyone else’s symbol. There’s also a marketing theory that investors respond better to symbols that look like words they can pronounce: SIRP is more attractive than SRP, for instance. Finding an Underwriter You must employ an underwriter to act as the intermediary between your company and investors. Underwriters function as the risk experts of the financial world, and investors depend on them to determine whether it’s worth taking a business risk. Before you can list your company on the stock market, your underwriter must agree to assume the risk of buying the whole inventory of stock in your company before selling it to the public. This commitment takes the form of an underwriting agreement. After you’ve settled your underwriting agreement and the Securities and Exchange Commission has investigated your company, the underwriter drafts a prospectus to show to potential investors in an attempt to drum up excitement. Apply to the Exchange Once you have your prospectus and your ticker symbol, you apply to the exchange or exchanges you want to be listed on. Along with the application form itself, you’ll need a boatload of added documentation: A letter from your underwriters confirming you’re able to meet the listing standards.A confirmation your firm meets the board’s shareholder requirements.A listing agreement completed by one of your executive officers.A copy of the corporate charter and bylaws.A certificate from the state where you’re chartered, saying your business remains in good standingWhen you deliver those and other papers with your application, you should be on your way to selling shares on the exchange. Step by step approach and summary 1. First shareholders must meet and agree (pass a resolution) to change from a private company to a public one limited by shares. 2. The company with the help of external solicitors or in-house lawyers prepares a new company regulations which conform to that of the Companies Code and also meet the listing requirements of the Stock Exchange. 3. The new Regulations are discussed with the Stock Exchange and if found satisfactory, filed with the Registrar of Companies. 4. The company’s board will also have to appoint a team of advisors to assist the company to prepare its offer document. The team will include brokers, lawyers, reporting accountants, financial valuation advisors, etc. 5. The draft reports of the advisors are then discussed. Key decisions such as the price of the share to be sold, the proportion of shares of the company to be sold, etc. will have to be taken by the shareholders. 6. An application to list on the Stock Exchange will have to be submitted and at the same time the draft public offer prospectus will have to be submitted to the Securities & Exchange Commission (SEC) for approval. 7. Once the regulatory approvals in (6) are obtained, a date is set for the launch of the public offer. 8. At the end of the offer, if it is successful, allotment is done and applicants are advised. 9. The company then agrees on a date for the commencements of trading its shares on the stock market. Market Highlights  ✴INTERBANK FOREX RATES 💴💰 US$GH¢ Buy 5.8659 Sell 5.8717GB£GH¢ Buy 8.0046 Sell 8.0132CHFGH¢ Buy 6.3282 Sell 6.3345AUD$GH¢ Buy 4.2920 Sell 4.2975CAD$GH¢ Buy 4.7075 Sell 4.7120JP¥GH¢ Buy 0.0524 Sell 0.0524NZDGH¢ Buy 4.0727 Sell 4.0771ZARGH¢ Buy 0.3936 Sell 0.3938EU€GH¢ Buy 6.7904 Sell 6.7971CHN¥GH¢ Buy 0.9105 Sell 0.9112 GH¢CFA Buy 96.5054 Sell 96.6006GH¢NG₦ Buy 70.3176 Sell 70.4590    CRYPTOCURRENCY MARKET      Bitcoin $56,354.01 🔼1.28%Ethereum $3,513.05 🔻1.45%Binance Coin $415.87 🔻0.95%Cardano $2.22 🔻1.85%Ripple $1.16 🔻1.75%Dogecoin $0.2354 🔻4.49%Polkadot $34.83 🔻5.09%Uniswap $24.48 🔻3.57%Solana $151.42  🔻3.00%LUNA $40.01 🔻5.81%Avalanche $58.23  🔻3.66%Chainlink $26.18 🔻4.01%Bitcoin Cash $608.03 🔻1.01%Shiba Inu $0.00002719 🔻0.41%Algorand $1.80 🔻4.03%Litecoin $181.01 🔻0.91%MATIC $1.28 🔻4.04%Cosmos $33.20 🔻4.03%Internet Computer $45.73 🔻5.18%Ethereum Classic $54.26 🔻2.21%Stellar $0.345 🔻2.35%Axie Infinity $120.56 🔻3.09%THETA $6.43 🔻5.65%Vechain $0.1127 🔻4.00%Filecoin $71.83 🔻4.52%Tezos $7.21 🔻6.23%TRON $0.09977 🔻1.73%PancakeSwap $19.35 🔻0.38% 💵Bloomberg USDGHS Cross Rate – *6.0450* (YTD – 🔺️+3.04%) 💰SOCIETE GENERALE FX RATES💵US$GH¢ Buy 5.9800 Sell 6.1200GB£GH¢ Buy 8.1340 Sell 8.3270EU€GH¢ Buy 6.9080 Sell 7.0710CH¥GH¢ Buy 0.9270 Sell 0.9490 🔼GSE DAILY GAINERS➖%CHANGE➖PRICE BOPP ➡Gh¢3.45 🔼+9.87% 🔻GSE DAILY LOSERS➖%CHANGE➖PRICEFML ➡Gh¢5.08 🔻-1.17%MTNGH ➡Gh¢1.23 🔻-0.81% 〽Inflation rate in Ghana  ➡  9.70% (🔺️+7.78%) 🏦Ghana Reference Rate ➡ 13.46% (🔽-0.37%) ✳Policy Rate in Ghana ➡ 13.50% (🔽-7.41%) ¶ TREASURY RATES💸 14 – Day Discount Rate 14.4196% Interest Rate 14.5000%56 – Day Discount Rate 14.1836% Interest Rate 14.5000%91 – Day Discount Rate 12.0970% Interest Rate 12.4743%182 – Day Discount Rate 12.3403% Interest Rate 13.1518%364 – Day Discount Rate 13.9512% Interest Rate 16.2131%1 Year Fixed Note Interest Rate 16.5672%2 Year Fixed Note Interest Rate 17.5000%3 Year Bond Interest Rate 17.7000%5 Year Bond Interest Rate 18.8000%6 Year Bond Interest Rate 18.8000%7 Year Bond Interest Rate 18.1000%10 Year Bond Interest Rate 19.7500%20 Year Fixed Rate Bond 20.2000% 🐂GHANA GOV’T EUROBOND RATES 🏦7 Year Bond Coupon Rate 7.7500%12 Year Bond Coupon Rate 8.6250%20 Year Bond Coupon Rate 8.8750% 🛢Average Petrol & Diesel Price Per Litre – Gh¢6.52 (🔺️+3.03%) 🏧 MARKET INDEXES *Dow Jones Index🚂⛽ 34,746.25 -8.69 -0.03%*S&P 500 🏦 4,391.34 -8.42 -0.19%*Nasdaq Index📲💻  14,579.54 -74.48 -0.51%* NYSE Composite Index 16,517.23 +5.42 +0.03%*London FTSE 7,095.55 +17.51 +0.25%*Germany DAX 15,206.13 -44.73 -0.29%*Japan NIKKEI 225 28,048.94 +370.73 +1.34%*Tokyo TOPIX Index 1,961.85 +22.23 +1.15%*Hong Kong HANG SENG 24,837.85 +136.12 +0.55%*Shanghai Shenzhen 300 4,929.94 +63.56 +1.31%*S&P/ASX 200 Index 7,320.09 +63.43 +0.87%*Bloomsberg EU 500 299.78 -0.73 -0.24%*France CAC All-Tradable 5,039.87 -25.44 -0.50%*Dubai DFM General Index 2,773.53 +1.09 +0.04%*MOEX Russia Index 4,238.00 +9.98 +0.24%*FTSE/JSE South Africa 58,839.09 +117.29 +0.20%*Nairobi SE 20 Share 1,992.92 -9.31 -0.47%*Nigeria SE Main 40,868.36 +39.21 +0.10%*BBG EMEA World Index 159.27 -0.22 -0.14%*GSE Composite Index 2,869.96 -10.13 -0.35%*GSE Financial Index 2,052.31 0.00 0.00% 🔼GSE 2021 GAINERS ➖ PRICE ➖ YTD%FML ➡Gh¢5.08 🔼+370.37%GGBL ➡Gh¢1.81 🔼+101.11%MTNGH ➡Gh¢1.23 🔼+92.19%SOGEGH ➡Gh¢1.20 🔼+87.50%BOPP ➡Gh¢3.45 🔼+72.50% 🔻GSE 2021 LOSERS ➖ PRICE ➖ YTD%CPC ➡Gh¢0.02 🔻-33.33%UNIL ➡Gh¢5.90 🔻-28.83%ACCESS ➡Gh¢3.49 🔻-20.50%SIC ➡Gh¢0.07 🔻-12.50%MAC ➡Gh¢5.39 🔻-9.87% GSE INDEXES ⏸ 2021 YTD RETURNS% *GSE Composite Index 2,880.09 🔼+48.34%*GSE Financial Index 2,052.31 🔼+15.12% 💧MUTUAL FUNDS IN GHANA♣️📈EQUITY FUNDS ➰YTD%Databank EPAcK 🔼+26.65%Republic Equity Trust 🔼+18.02%SAS Fortune Fund 🔼+18.68% ⚖BALANCED FUNDS ⏸ YTD%EDC Balanced 🔼+26.89%Databank Bfund 🔼+21.42%Elite Mutual Fund 🔼+10.09%Fidelity Balanced Trust 🔼+18.18%CCMF 🔼+15.07%CDH Balanced Fund 🔼+12.25%CM Fund 🔼+13.67%Dalex Vision 🔼+9.07%Plus Balanced Fund 🔼+14.40%Republic Future Plan Trust 🔼+14.34%UMB Balanced Fund 🔼+8.62%Databank EdiFund Tier 2 🔼+18.70% ⚙FIXED INCOME FUNDS 🛡YTD%EDC Fixed Income 🔼+12.28%Databank Mfund 🔼+14.61%Fidelity Fixed Income Trust 🔼+13.98%Financial Independence Fund 🔼+11.23%Fixed Income Alpha Plus 🔼+14.00%Plus Income Fund 🔼+13.03%STANLIB Income Fund Trust 🔼+13.38%Databank EdiFund T1 🔼+15.39% MONEY MARKET FUNDS ⏱YTD%SAS Midas Fund 🔼+11.01%Stanlib Cash Trust 🔼+10.38%EDC Money Market Fund 🔼+11.18%Republic Unit Trust 🔼+11.72%  COMMODITIES MARKET *Brent Crude $/barrel⛽ $82.39 +0.44 +0.54%*Natural Gas 🏭 $/million BTUS $5.57 -0.11 -1.97%*Gold 👑 $/troy ounce $1,757.40 -1.80 -0.10%*Silver 💍 $/troy ounce $22.71 +0.05 +0.21%*Corn 🌽 $/bushel $530.50 -3.50 -0.66%*Cocoa 🍫 $/metric ton $2,750.00 +24.00 +0.88%*Coffee ☕ $/pound  $201.35 +3.45 +1.74%*Sugar🎂 $/pound $20.29 +0.45 +2.27%*Lumber $/1000 board feet $720.80 +44.10 +6.52%Rubber  USd/kg $170.50 +1.00 +0.59% Sources: Bloomberg, GSE, Reuters, Myjoyonline, Ghanaweb, Doobia, BBC, Graphic Business. Mark Darko Managing Director (Africa) Everensel Capital Partners

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