CENTRAL SECURITIES DEPOSITORY ACCOUNT YOUR QUESTIONS ANSWERED 1) What does CSD Account stand for? It stands for Central Securities Depository Account. 2) What is it used for? It is an electronic bookkeeping account on which all purchases and sales of securities (shares and bonds) by any investor on the Ghana Stock Exchange (GSE) will be recorded. 3) Why do I have to open a CSD Account? All investors on the GSE will be required to open CSD accounts to facilitate automated trading because without the conversion of securities into electronic form, the functions of the automated trading system will be impeded. The CSD started operation from November 14, 2008 and up to December 12, 2008, the account opening and immobilization process is voluntary. The automated trading platform is scheduled to take off from December 15, 2008. This means that from December 15, 2008, you must first open a CSD account if you have not yet done so before you can buy or sell any listed security on t he GSE. 4) What are the benefits of opening and maintaining a CSD account? o Risk of loss, mutilation, destruction and theft associated with holding physical certificates is eliminated. o You can monitor all your holdings in one account instead of holding different securities certificates. o Makes it easier for Databank Brokerage Ltd (DBL) to monitor the performance of your portfolio of holdings in listed companies. 1
o It facilitates the efficient operation of the automated trading system by allowing for prompt execution and real delivery versus payment of the clearing and settlement system. 5) What do I need to open a CSD account? Individuals o Photocopy of a valid ID (Passport, Driver s License, NHIS or Voter s ID) o One recent passport picture (endorsed by the applicant) Corporate o Certificate of incorporation or Certificate of commencement of business o Board Resolution authorizing the; opening of account and stating the signatories to the account o Specimen signatures of authorized signatories and passport pictures of authorized signatories. Trust Accounts Individuals/Joint Trustees o Constitution o Trust Deed o Valid IDs of Trustees (Passport, Driver s License, NHIS or Voter s ID) Foundations/Trust Funds o Certificate of Registration of Trust o Board Resolution authorizing the; opening of account and stating the signatories to the account Societies/Investment Clubs/Churches o Constitution o Resolution of Governing Body authorizing the; opening of account and stating the signatories to the account Corporations Incorporated by an Act of Parliament o Board Resolution authorizing the; opening of account and stating the signatories to the account Succession 2
o Letters of administration o Probate with will annexed and Standard IDs of Administrators/Executors 6) What is the difference between Immobilization and Dematerialization? o In a system of immobilization investors can convert paper certificate of holdings into electronic form on the CSD and also request paper certificates if they so wish. o Under the dematerialized system (long term objective), paper certificates will no longer be evidence of security ownership but rather investors holdings as shown on their CSD accounts will be the acceptable evidence of security ownership. 7) How do I put my Securities on my CSD account / how do I convert my holdings into electronic form? o Complete a CSD account opening form if you do not already have one o Complete a securities deposit form (one company per deposit slip). o Attach evidence of ownership of security (certificate, TR, BR, and Indemnity). 8) How does the CSD operate? Sale of Shares o Open a CSD account if you do not already have one or have your CSD number on hand. o You must first have the security on your CSD Account either from a previous purchase which was directly credited to your CSD Account or from prior immobilization of that security. o This means that if the security is not yet on your CSD account you will have to complete a security Deposit Request form to immobilize the security for this purpose. o Complete a sale order form requesting a sale of those securities once the deposit is approved by the CSD. 3
o Your order will then be entered into the market order book on the automated trading system. o Once the order is executed (counter party/buyer is found), your CSD account will be debited with the number of shares sold and your cash position will be credited with the value of sale. o A cheque will then be issued to you covering the value of sale less any commissions and statutory charges. Purchase of Shares o Open a CSD account if you have not done that already. o Complete a purchase order form. o Deposit Funds for Purchase into account. o Once funds clear, your order will be entered into the market order book on the automated trading system. o Once order is executed (counter party/seller is found), your CSD account will be credited with the volume of shares bought and your cash position reduced by the value of purchase including all commissions and statutory charges. 9) What evidences of share ownership can I present for Immobilization? o Security Certificate o TR Transfer Receipt o BR Balance Receipt o Indemnity Used in case of loss, mutilation or destruction of original certificate 10) Can I immobilize my holdings even if I do not intend to sell? Yes, because the CSD acts as a bookkeeping account and you only need to complete either a sale or purchase order form when you intend to sell or buy. 4
11) Can I have more than one account? You can open more than one account with the same ID or with a different ID and with the different brokers or the same broker Once the same ID type and number is used, the CSD will recognize the different accounts as that of the same person and any statement sent by CSD will show the consolidated position of all transactions on all these accounts. If a different ID type is used, the CSD will recognize the different accounts as that of two different persons and will send different statements. 12) Can I withdraw from the CSD? Yes you can withdraw all or part of your holdings in any security from the CSD. To do this, you must; Complete a Withdrawal Request form stating the security and volume of shares you wish to withdraw The request will be sent to the Registrar of the Company within two business days and once the request is approved, a certificate will be issued within 30(thirty) business days from date of approval. 13) Is there any cost for withdrawing any security from the CSD? Yes the CSD will charge an administrative fee for the processing of withdrawal request for securities deposited onto your CSD account. This fee is yet to be fixed by the CSD. 14) Can I transfer securities between my different accounts? Yes investors can transfer securities from one account to another with the same broker or with different brokers by completing and submitting an Intra Account or Inter Account Transfer Request form. 5
15) What is the difference between an Intra Account and an Inter Account Transfer? o Intra Account Transfers: This involves the transfer of securities between two accounts of the same client with Databank Brokerage Ltd or from another broker to Databank Brokerage Ltd. For an intra account transfer to be effected, the two accounts must; Be for the same underlying client Have been opened with the same ID type and number of the same client. Account can be with the same broker or different brokers In this case CSD recognizes the two accounts as that of the same person and only checks IDs in both accounts to make sure they are the same to complete approval. o Inter Account Transfers are transfers between two different accounts of two different clients. The account may be with different brokers or the same broker It may be accounts for the same underlying client in the case were the two accounts were opened with different IDs (e.g. Driver s License for one and Passport for the other). The GSD will approve the transfer within 2(two) business days once the request is in conformity with its rules and procedures for Private Transfers. 16) How do I keep track of activities on my account? o Active clients will receive quarterly statements from Databank Brokerage Ltd showing all transactions on account over the period. o Dormant Clients will receive half yearly reports from Databank Brokerage Ltd. o CSD will also send yearly statements to account holders by physical (to postal address i.e. P.O. Box number indicated) or electronic (email) means. 6
o CSD Account holders will receive electronic (email or text) messages whenever an activity occurs on the account. o CSD Account holders can also request statements directly from the GSE Securities Depository Company (GSDC) by paying an administrative fee to the GSD. 17) What other functions can I perform with my CSD Account and Holdings? o Pledging of securities towards the receipt of a bank facility. o Portfolio summary and value for visa processing. 18) Where can I open a CSD account? Contact Databank Brokerage Ltd o Call us on Accra-021-610610, Kumasi 051023487, Takoradi 031-23628, Tema 022-210050 o Walk into any of our offices in Accra (No. 61, Barnes Road, Adabraka), Kumasi (Block B, 2 nd Floor, SSNIT Office Complex, Harper Road, Adum) or Takoradi (EIC Office Complex, 2 nd Floor, Room 316), Tema (Room 206& 207, 2 nd Floor, Community 1) o Visit our website at www.databankgroup.com o Send an email to gseautomation@databankgroup.com; equities@databankgroup.com; settlements@databankgroup.com; dcsl@databankgroup.com DATABANK BROKERAGE LTD; YOUR BROKER OF CHOICE!!!!!! 7