Your Right to Invest First: How Rights Issues Work on the Ghana Stock Exchange

Imagine you own shares in a growing Ghanaian company. The company needs fresh capital to expand—perhaps to build a new factory, acquire a competitor, or strengthen its balance sheet. Instead of looking for new investors, the company turns to you first, offering you the opportunity to buy additional shares before anyone else. This is the essence of a rights issue.

Rights issues are a common feature of life on the Ghana Stock Exchange (GSE). In recent years, major listed companies like CalBank PLC, Enterprise Group Limited (EGL), and Guinness Ghana Breweries Limited have all turned to their existing shareholders to raise capital through rights issues . For investors, understanding how these transactions work is essential—not only to protect your proportional ownership but also to potentially profit from them.

This ASJ guide explains everything you need to know about rights issues on the GSE: what they are, how the process works, key dates to watch, and what rights (pun intended) you have as a shareholder.

What Is a Rights Issue?

A rights issue is an invitation from a listed company to its existing shareholders to purchase additional shares in proportion to their current holdings . Unlike an Initial Public Offering (IPO) which seeks new investors, a rights issue is a “right of first refusal” for current owners.

The legal foundation for rights issues in Ghana is found in the Companies Act, 2019 (Act 992) , specifically section 37, which governs how companies may offer shares to existing shareholders . Additionally, the Ghana Stock Exchange Listing Rules (Rule 40(b)) provide the regulatory framework for these transactions .

Why Do Companies Launch Rights Issues?

Companies typically pursue rights issues for several strategic reasons:

1. Capital Injection: To raise funds for expansion, acquisitions, or new projects

2. Debt Reduction: To pay down existing debt and strengthen the balance sheet

3. Regulatory Requirements: Particularly for banks, to meet minimum capital adequacy requirements set by the Bank of Ghana

4. Working Capital: To fund day-to-day operations and growth initiatives

For example, when CalBank PLC launched its GH¢600 million rights issue in 2024, the stated purpose was to “improve the Bank’s regulatory capital position, continue the effective execution of its growth strategy and enable the Bank to continue to deliver long-term value to its shareholders .

Renounceable vs. Non-Renounceable Rights Issues

On the GSE, rights issues are typically renounceable, meaning that shareholders can choose to sell their rights to other investors if they do not wish to subscribe themselves.

Renounceable Rights Issues

In a renounceable rights issue, shareholders receive rights that have value and can be traded on the stock exchange during a specified period . This feature allows shareholders who cannot or do not wish to invest more money to monetise their rights by selling them to interested buyers.

Key characteristics:

• Rights can be traded on the GSE during the “rights trading period

• Shareholders who sell their rights receive cash compensation

• The buyer of the rights (the “renouncee”) can then subscribe for the shares

Non-Renounceable Rights Issues

Less common on the GSE are non-renounceable rights issues, where the rights are attached to the shares and cannot be sold separately. Shareholders must either exercise the rights or let them expire (and potentially see their ownership diluted).

Most GSE rights issues, including the recent CalBank offer, have been renounceable, providing maximum flexibility for shareholders .

Key Terminology You Must Know

Understanding rights issues requires familiarity with specific terms and dates. Here are the essential ones:

The Step-by-Step Process of a Rights Issue

Understanding the chronological flow of a rights issue helps investors navigate the process confidently.

Step 1: Company Approval and Regulatory Clearance

Before any rights issue can proceed, the company must obtain several approvals:

• Board of Directors approval

• Shareholder approval at an Annual General Meeting (AGM) or Extraordinary General Meeting (EGM)

• Securities and Exchange Commission (SEC) approval of the Rights Issue Circular

• Ghana Stock Exchange (GSE) approval for the listing of additional shares

The Rights Issue Circular is a comprehensive document that provides all material information about the offer, including rationale, terms, risks, and financial projections . As the Guinness Ghana Breweries circular states: “Responsibility for the accuracy of the information in this Circular lies with the Directors .

Step 2: Announcement and Key Dates

The company announces the rights issue, including the critical dates:

• Ex-Rights Date

• Qualifying Date (Record Date)

• Opening and closing dates for subscription

• Rights trading period

For example, CalBank’s 2024 rights issue announced:

• Ex-Rights Date: March 28, 2024

• Qualifying Date: April 3, 2024

• Record Date: April 4, 2024 (register closed)

• Subscription Opens: April 5, 2024

• Subscription Closes: April 26, 2024

Step 3: CSD Procedures and Entitlement Determination

This is where the technical work happens. The Central Securities Depository (CSD) plays a crucial role in administering rights issues.

According to the Central Securities Depository Act, 2007, the issuer must confirm to the CSD:

• The rights issue ratio

• The qualifying date

• The rights trading period

• The subscription opening and closing dates

The issuer must ensure that the ex-date is set at three business days before the qualifying date .

At the close of business on the qualifying date, the CSD system takes a “snapshot” of the holdings of all clients in that security . This snapshot determines exactly how many rights each shareholder receives.

An entitlement list report is then provided to the company’s registrars, containing:

• A list of clients eligible for the rights issue

• The number of rights shares to be allocated to each client

• Any fractional entitlements

The registrar then prints Rights Allotment Letters (RAL) and dispatches them to shareholders .

Step 4: Trading of Rights (For Renounceable Issues)

During the rights trading period, shareholders can sell their rights on the GSE through their stockbrokers. The rights themselves have value, typically trading at a discount to the market price of the existing shares.

This market allows:

• Existing shareholders to monetise their entitlement if they lack funds or desire not to invest further

• New investors to acquire the right to subscribe for shares, effectively buying into the company at a price determined by the market

Step 5: Subscription by Shareholders and Renouncees

Qualifying shareholders (and renouncees who purchased rights) can subscribe for shares during the subscription period.

The CalBank rights issue offered multiple subscription channels:

• In person at IC Securities (Lead Manager)

• At any CalBank branch

• Through an online portal

Payment is made at the subscription price specified in the circular. For CalBank, this was GHS 0.29 per share .

Step 6: Allotment and Listing

After the subscription period closes, the company allots shares to those who applied and paid.

The company then applies to the GSE for the listing of the additional shares. Once approved, the new shares begin trading on the exchange alongside the existing shares .

For example, CalBank announced the “successful listing of 3,103,448,276 additional ordinary shares on the Ghana Stock Exchange” in December 2025, marking the completion of their rights issue process .

Rights Issue Pricing: Discount vs. Premium

Most rights issues on the GSE are priced at a discount to the current market price to incentivize shareholder participation. This makes economic sense—why would a shareholder subscribe through the rights issue if they could buy the same shares cheaper on the open market?

However, there have been exceptions. In 2018, Enterprise Group Limited (EGL) announced a rights issue priced at a 33.3% premium to the prevailing market price of GHS 4.50 . The offer valued EGL at GHS 6.00 per share, meaning it was actually cheaper for investors to buy shares on the GSE than through the rights issue.

As the analysis noted: “This is an unusual practice in Ghana and the African market, where rights offers are usually priced at a discount to the prevailing market valuation of the company. However, this shows that the managers of the company believe firmly in the upside potential of the stock” .

Such premium-priced rights issues typically rely on institutional shareholder commitment to ensure success.

What Happens to Fractions?

Rights ratios rarely work out to whole numbers. For example, CalBank’s offer was:

• 1 new ordinary share for every 0.3351 existing ordinary shares

• 1 new preference share for every 3.1935 existing ordinary shares

This means most shareholders ended up with fractional entitlements. The CSD entitlement list specifically captures these fractions , and the registrar handles them according to prevailing rules—typically by aggregating fractions and allocating whole shares, with any residual proceeds distributed or held.

Why You Should Pay Attention to Rights Issues

Protecting Your Ownership Percentage

If you do not participate in a rights issue, your percentage ownership in the company will be diluted. For example, if you own 1% of a company and it issues 20% new shares (which you do not buy), your ownership drops to approximately 0.83%.

Potential Profit Opportunities

Because rights are typically priced at a discount, participating in a rights issue can be immediately profitable. Even if you do not want to increase your investment, selling your rights during the trading period can provide cash compensation.

Signal of Company Health

A successful rights issue suggests shareholder confidence in the company’s direction. Conversely, a rights issue priced at a premium (like EGL’s) signals that management believes the stock is undervalued and has strong institutional backing .

Risks and Considerations

1. Dilution Risk

If you ignore the rights issue documents, you will automatically be diluted. Always read communications from companies you invest in.

2. Market Price Fluctuations

The market price of existing shares may fall during the rights issue period, potentially making the rights less attractive.

3. Oversubscription

Some rights issues allow shareholders to apply for additional shares beyond their entitlement if others do not take up their rights. However, there is no guarantee of receiving these excess shares.

4. Costs

While buying rights shares typically involves lower transaction costs than open market purchases, there may still be fees. Consult your broker.

Regulatory Oversight

Rights issues in Ghana are subject to robust regulatory oversight:

• Securities and Exchange Commission (SEC) : Reviews and approves the Rights Issue Circular, ensuring “adequate disclosures have been made” . The SEC also conducts post-issue inspections to verify proceeds are used as stated .

• Ghana Stock Exchange (GSE) : Grants approval for the listing of additional shares .

• Central Securities Depository (CSD) : Administers the entitlement process and maintains accurate records .

• Registrar of Companies : Companies must file necessary documentation under Act 992 .

The SEC’s guidelines specifically require that “the proceeds of any public offer/rights issue are to be used in strict accordance with the purpose(s) indicated in the offer document .

Conclusion: Knowledge Is Your Right

Rights issues represent one of the most shareholder-friendly ways for companies to raise capital. By offering existing investors the first opportunity to participate, companies honour the principle that those who already believe in the business should benefit from its growth.

For the Accra Street Journal reader, understanding rights issues transforms you from a passive shareholder into an active participant in corporate finance. Whether you choose to exercise your rights, sell them, or let them lapse, the key is making an informed decision based on your financial goals and the company’s prospects.

As the disclaimer on every rights issue circular reminds us: “If you need advice, you should consult a suitable professional advisor . But with the knowledge in this guide, you now understand the process well enough to ask the right questions.

Frequently Asked Questions (FAQs)

1. What exactly is a rights issue on the Ghana Stock Exchange?
A rights issue is an invitation from a listed company to its existing shareholders to purchase additional shares in proportion to their current holdings. It is governed by the Companies Act, 2019 (Act 992) and GSE Listing Rules .

2. What is the difference between renounceable and non-renounceable rights issues?
In a renounceable rights issue, shareholders can sell their rights to other investors on the GSE during a specified trading period. In a non-renounceable issue, the rights are attached to the shares and cannot be sold separately. Most GSE rights issues are renounceable .

3. How is my entitlement calculated in a rights issue?
Your entitlement is based on your shareholding at the close of business on the qualifying date. The CSD takes a “snapshot” of holdings, and you receive rights in proportion to your existing shares based on the announced ratio .

4. What is the ex-rights date and why does it matter?
The ex-rights date is the date from which shares trade without the attached rights. It is set at three business days before the qualifying date. If you buy shares on or after the ex-rights date, you are not entitled to participate in the rights issue .

5. Can I sell my rights if I don’t want to invest more money?
Yes, in a renounceable rights issue. Rights can be traded on the GSE during the rights trading period. You can sell them through your stockbroker and receive cash instead of subscribing for shares .

6. What happens to fractional entitlements?
The CSD entitlement list captures fractions, and the company’s registrar handles them according to prevailing rules—typically by aggregating fractions and allocating whole shares, with any residual proceeds distributed appropriately .

7. How are rights issue prices determined?
Most rights issues are priced at a discount to the current market price to encourage participation. However, some companies may price at a premium if they believe the stock is undervalued and have institutional shareholder support .

8. What approvals are required before a company can launch a rights issue?
A company must obtain: Board approval, shareholder approval at a general meeting, SEC approval of the Rights Issue Circular, and GSE approval for listing of additional shares .

9. Where can I find information about upcoming rights issues?
Information is published through company announcements, the GSE website, financial newspapers like Graphic Business, and directly in Rights Issue Circulars sent to shareholders .

10. What happens if I ignore a rights issue notification?
If you do not exercise or sell your rights during the specified periods, they will lapse. Your percentage ownership in the company will then be diluted by the new shares issued to participating shareholders.

11. Are rights issue proceeds monitored by regulators?
Yes. The SEC conducts post-rights issue inspections to “ascertain whether proceeds of the IPO/rights issue have been/are being utilised as indicated in the offer document” .

12. Can non-shareholders participate in a rights issue?
Yes, but only indirectly. Non-shareholders can purchase rights during the rights trading period on the GSE. Once they hold rights (as “renouncees”), they can subscribe for shares .

13. What is a Rights Allotment Letter?
A Rights Allotment Letter (RAL) is a document printed by the registrar and dispatched to eligible shareholders, confirming their entitlement in the rights issue .

14. How do I actually pay for rights shares?
Payment methods are specified in the offer circular. They typically include payment at designated receiving banks, through the lead manager’s office, or via online portals

Source: Accra Street Journal 

Last Updated on March 17, 2026 by Samuel Kwame Boadu

Samuel Kwame Boadu

Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.

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