CAPITAL MARKET ADVISORY COUNCIL

FINANCING CONSTRUCTION &

REAL ESTATE

THROUGH THE CAPITAL MARKET

19TH – 20TH MAY 20089SERENA HOTEL, Kigali

CMAC Background A capital market is a market where shares and bonds

are bought and sold. A capital market is sometimes referred to as a stock market or securities market or stock exchange.

The CMAC Council was established by the Prime Minister’s Order No. 01/03 of 28/03/2007 with the purpose of guiding the development of the capital market in Rwanda.

The Council is made of 11 Board members representing different interest groups.

CMAC is run by the management headed by an Executive director and technical staff.

Bonds and Shares

What is a bond?A bond is a debt. When you buy a Treasury or corporate bond issued by Government or a company you are a lender and the Government or company is a borrower.

What is a share?A share is a unit of ownership in a company. When you buy a share in a company, you become one of the owners of the company. You acquire voting rights at the General meetings and participate to profits of the company.

CMAC PRODUCTS

How does the Capital Market work?Organized markets where buyers and sellers

(Investors or the public) meet

7 members or professional intermediaries: Stockbrokers and Investment Advisors.

Capital markets has two levels:I.Primary market: new capital raising phase II.Secondary market: Trading of already listed

securities

Capital markets rely on;I. Rules and regulationsII. Physical infrastructure

Companies disclose all useful information about their businesses

Benefits to investors

SavingsIncomeWealth or Capital gainSecurities as CollateralLiquidity

Benefits to IssuersAccess capitalDiscover the value of its businessRaise a company’s visibility at home and

overseasHave better bargaining position with financiersEnhance management best practices Foster employee motivationBenefits from Capital Market incentivesListed securities are easily acceptable as

collateral against loans from financial institutions.

Market Performance 2008

Primary marketTo date a total number of Rwf 15.2 billion has been

raised

Listings

1.BCR 10 years, 9% coupon, Corporate Bonds

2.FXD1, 8%, 2 year, Treasury Bonds3.FXD2, 8% 2 year, Treasury Bonds4.FX3, 8.25%, 3 year Treasury Bonds

Secondary marketRwanda OTC bond market transacted a total turnover

of Rfw 634,300,000 in 50 deals

CMAC MILESTONES ACHIEVED IN 2008 & 2009Capital Markets Rules and Regulations

operational (Legal framework) in Blue PrintCapital Market laws drafted waiting to

cabinetTraining of market operators / membersNational Public Education and awareness

programsStrategic plan and initiatives 2009 – 2013Fiscal and None Fiscal IncentivesCMAC Privatization Policy & Listing of

profitable companiesIntegration into the East African Capital

Markets: full member of EASRA & EASEACross listing and Cross border trading rules

Capital market, Construction and Real EstateOpportunities

Banks can access or raise long term funds through Capital Markets to enable them to sell mortgages by selling shares of bonds.

The BCR has issued bond of Rfw 5 billion through the capital to sell mortgages

Construction companies can also raise long term fund by selling shares to the public through the ROTC to capitalize their businesses or sell bonds

Where profit history is not provided (new ventures) underwriting is require

To implement this, the following listing and disclosure requirements should be observed:

Listing Rules for Equity Securities

Requirements Criteria

Sponsorship Every new applicant for listing must be sponsored by a participant of the capital market

Nominated Adviser Every issuer must appoint a nominated adviser: person approved by CMAC or its sponsor

Incorporation Registered under the Company’s Act to carry on business in Rwanda.

Minimum number of shareholders

50 for equities

Minimum spread of shares to the public

25%

Listing Rules for Equity Securities

Requirements Criteria

Minimum Paid up capital Rwf 500,000,000

Minimum market capitalization

New applicant: Rfw 500 million

Net Assets Rwf 1 billion

Track record 3 financial years but less if issue is underwritten

Application Procedures A letter of application to list Appropriate fees

Disclosure document The disclosure document must be lodged with CMAC

Listing for Debt Securities

 

Requirements

1. Incorporation

2. Persons responsible

3. Information on the issuers

4. Share Capital and Assets

Criteria

Issuer must be Registered under the Company’s Act to carry on business in Rwanda.

Names, Address, Roles of each director and senior manager , etc.

Name of issuer, Address of Head Offices , Country of Incorporation, Date of Incorporation, Legislation of Incorporation, etc.

Authorized issued and fully paid up capital of Rwf 500 million.

5. Statistics on the Offer/Issue

Amount of debt to be issued Features of the bond Purpose of the issue

Listing for Debt Securities

 

Requirements

6. Track record & profitability

8. Transferability

9. Minimum number of bond

10. Minimum size of a bond issue

Criteria

At least 2 financial years of positive profits or as shall be determined by the Council.

Debt securities to be issued must be fully negotiable and freely transferable.

At least 7 bondholders who are not a director or substantial shareholder of the issuer.

Rwf 500 million

11. Disclosures in the Audited Annual reports and accounts and the information memorandum

3 years annual reports and accounts or since inception if less

Internationally acceptable accounting standards - IAAS

Advantages

Viability of projects determined by demand and supply.

Liquidity and projects pricing is made possible through public participation

Availability of information by investing publicly.

THANK YOU

MURAKOZECYANE