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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