Ghana’s SEC Unveils Draft Guidelines for Crowdfunding: Fostering Clarity and Investor Protection

In a move to bring clarity and regulatory oversight to the burgeoning crowdfunding landscape, Ghana’s Securities and Exchange Commission (SEC) has released draft guidelines outlining the legal and regulatory framework for crowdfunding activities in the country. The guidelines, aimed at safeguarding the interests of investors and fundraisers, set out eligibility criteria, operational requirements, and investor protection measures.

Scope of Guidelines

The guidelines apply to entities seeking or required to be licensed as a Crowdfunding Intermediary, including:

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  1. Individuals raising capital using crowdfunding services.
  2. Companies offering services as Crowdfunding Platforms in Ghana.
  3. Foreign companies operating Crowdfunding Platforms seeking to offer services in Ghana.
  4. Foreign entities facilitating, operating, maintaining, or providing investment-crowdfunding services in Ghana.

Notably, the guidelines exclude rewards-based or donations-based crowdfunding activities from their scope.

Eligibility Criteria

The guidelines establish criteria for participants in crowdfunding, specifying that fundraisers must be registered entities in Ghana and maintain a minimum capital requirement of GHS 250,000.

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Operational Requirements

The guidelines outline operational rules and standards for crowdfunding platforms and intermediaries, covering aspects such as registration, licensing, governance, due diligence, record-keeping, reporting, and dispute resolution. Importantly, they set a maximum fundraising limit of GHS 6,000,000 within a twelve-month period for most cases, with exceptions for agricultural commodities, physical assets, or agricultural projects, where the limit is GHS 10,000,000.

Investor Protection Measures

To protect the interests of funders, the guidelines introduce various measures, including:

  1. Limits on the amount funders can invest in a single project or within a year.
  2. Rights to cancel or withdraw from a funding agreement.
  3. Rights to receive regular updates and reports from fundraisers.
  4. Rights to lodge complaints or seek redress.

Public Consultation

The draft guidelines are open for public consultation until October 31, 2023. The SEC invites feedback from a broad spectrum of stakeholders, including crowdfunding platforms, fundraisers, funders, industry associations, civil society organizations, and the general public.

For those interested in crowdfunding or seeking more insights, the full draft guidelines can be accessed here.