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.
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 :
Primary market : new capital raising phase
Secondary market: Trading of already listed securities
Capital markets rely on;
Rules and regulations
Companies disclose all useful information about their businesses
Benefits to investors
Wealth or Capital gain
Securities as Collateral
Benefits to Issuers
Discover the value of its business
Raise a company’s visibility at home and overseas
Have better bargaining position with financiers
Enhance management best practices
Foster employee motivation
Benefits from Capital Market incentives
Listed securities are easily acceptable as collateral against loans from financial institutions .
Market Performance 2008
To date a total number of Rwf 15.2 billion has been raised
BCR 10 years, 9% coupon, Corporate Bonds
FXD1, 8%, 2 year, Treasury Bonds
FXD2, 8% 2 year, Treasury Bonds
FX3, 8.25%, 3 year Treasury Bonds
Rwanda OTC bond market transacted a total turnover of Rfw 634,300,000 in 50 deals
CMAC MILESTONES ACHIEVED IN 2008 & 2009
Capital Markets Rules and Regulations operational (Legal framework) in Blue Print
Capital Market laws drafted waiting to cabinet
Training of market operators / members
National Public Education and awareness programs
Strategic plan and initiatives 2009 – 2013
Fiscal and None Fiscal Incentives
CMAC Privatization Policy & Listing of profitable companies
Integration into the East African Capital Markets: full member of EASRA & EASEA
Cross listing and Cross border trading rules
Capital market, Construction and Real Estate
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
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 transferab le . 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