The Securities and Exchange Commission (SEC) has today issued a new directive aimed at strengthening oversight and managing risk exposure linked to investments in foreign securities by Collective Investment Schemes (CIS). The directive is intended to safeguard investor interests and protect the stability of the Ghanaian financial market.
According to the SEC, the directive responds to a “growing interest in and appetite for investing in foreign securities by Managers of Collective Investment Schemes and the potential effects this could have on the stability of the Ghanaian Cedi and the country’s macroeconomic indicators at large.”
The regulator noted that rising offshore exposure could introduce risks from jurisdictions beyond its direct oversight, which may undermine investor protection and market integrity if left unchecked.
Under the new rules, fund managers of CIS that are licensed to invest domestically “shall not invest more than 20% of their funds under management in foreign securities.” This cap is designed to ensure that the majority of scheme assets remain within local markets, limiting vulnerability to external shocks and foreign market volatility.
For funds with mandates to invest abroad, the SEC has also set clear parameters. Those schemes that are licensed to take on significant overseas exposure must now restrict their allocations to foreign securities to a maximum of 70%, with at least 30% of assets retained and invested locally. In addition, foreign investments must meet the legal definition of “securities” under section 216 of the Securities Industry Act, and be made only in approved eligible markets as prescribed under existing regulations.
To reinforce regulatory cooperation and investor protection, the SEC added that investments in foreign markets will only be permitted where the securities regulator in the relevant jurisdiction is a full signatory to the International Organization of Securities Commissions (IOSCO) MoU, or has in place a formal information‑sharing or capacity‑building memorandum of understanding with the SEC.
The directive further mandates that trustees of unit trusts and directors of mutual funds take steps to update scheme particulars in line with the new requirements. These changes must be regularized at investors’ meetings or annual general meetings, in accordance with section 86 of the Securities Industry Act. Schemes that currently fall outside the scope of the directive have 90 days from the date of issuance to align their investment mandates and compliance frameworks with the new standards.
The SEC remains clear that non‑compliance will carry consequences. Any breach of the directive could trigger enforcement actions under section 209(4) of the Act, including sanctions aimed at preserving market fairness and investor confidence.
While the directive is effective immediately, the SEC retains the authority to amend, vary, revise, or revoke these rules as market dynamics evolve. The commission emphasized that any interpretational questions regarding the Directive’s provisions should be referred directly to the SEC, whose interpretation will be considered final.
