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Corporate Financing partly entails raising funds [capital] for a company [corporation]. This is done in a number of ways such as (1) debt (2) private equity  or (3) a public equity through an Initial Public Offer [ IPO].

Locally, corporations often raise capital through debt by getting a loan or issuing a bond. Such bonds are issued and offered on the Malawi Stock Exchange[MSE].  This guide will therefore focus on raising capital on the MSE by means of public offering of bonds.

What is a Bond 

A corporate bond is a written acknowledgement of indebtedness offered or issued by a corporation in respect of a loan made or to be made to it. The bond is also an undertaking by the corporation to repay the amount borrowed by it [together with interest on the borrowed amount] over a period of time.

Put simply, the bond functions as a loan between an investor and the corporation where the investor agrees to give the corporation a certain amount of money payable on a specific date on condition that the corporation will be making periodic interest payments at an agreed rate in the period before the date of repayment. The date for repayment is usually called the maturity date.

Legal Framework for issuing and Listing of Bonds

The pieces of legislation that are key in listing bonds on the MSE are the Financial Services Act, the Securities Act, and the Companies Act as well as other regulations, rules and policies made pursuant to or under the Acts mentioned above.

What does Issuing a Bond mean?

Issuing a bond simply refers to a circumstance where a corporation offers or invites the public to provide a loan to it , in a bid to raise capital.  The offer specifically provides that the loan will be  repaid on a specific date with interest, at an agreed rate, paid periodically and in the period preceding the agreed date of repayment.

To Whom are Bonds offered to?

Bonds can be offered to the public or privately. Thus, a bond is a form of a security[1] which a company can offer to the public[2]. An offer to the public is defined broadly to include (1)  an offer of a security to a section of the public, (2) an offer to individual members of the public selected at random, or (3) an offer to a person if the person became known to the corporation offering such security as a result of an advertisement made by or on behalf of the said corporation which was intended to result in the public seeking further information about an investment opportunity. [3]

How are Bonds Offered?

A bond is offered for sale with a face value. This is also called the par value. Par Value  is the amount that the corporation must pay the holder of the bond at the end of the life cycle of the bond or upon reaching date of repayment.

What are the advantages of Issuing a Bond?

Raising Capital by issuing a bond presents many advantages to the corporation including (1) not parting with ownership of the corporation since it is a debt and no alteration is done to the ownership structure, (2) flexibility as it allows issuing of bonds of varying terms for various periods to a large pool of investors and not a single investor since there is  access to a large pool of investors with capital (3) liquidity and less risk and (4) from a taxation point, the periodic interest payments made to bondholders may be deductible from the corporation’s taxes.

Issuing bonds on the  MSE

The MSE has a debt market where bonds can be offered for sale by a corporation to the public. Before a corporation can make a public offer of bonds on the MSE debt market, certain requirements must be satisfied as outlined below.

Listing Admission Requirements

For a Corporation’s bonds to be listed on the MSE, the following requirements must be met:

  • The company must be duly incorporated in the Republic of Malawi.
  • The Company must be in compliance with the laws of the Republic of Malawi under which it was incorporated.
  • The company must be authorized to issue debt securities by its Memorandum and Articles of Association.
  • The company must obtain all necessary statutory and other consents for the issuance of such debt security such as consent from the Board of Directors where the Memorandum and Articles of Association require the same.

Listing Fees

At the initial issue of bonds on the MSE, a fee in the sum of MK 1, 650, 000.00 is payable by the company that intends to issue the bonds. For more information about listing fees, visit


Most corporations raise capital or funds to finance its operations and growth by debt in the form of issuing bonds, which is security in the form of an undertaking by a corporation to repay the amount borrowed by it with interest over a period of time. Bonds may be issued publicly or privately. Issuing of bonds presents a number of advantages. In Malawi, the MSE has a debt market where public offers of bonds can be made upon satisfaction of certain requirements.

[1] See Section 2 of the Securities Act

[2] See Section 258 of the Companies Act, 2013

[3] See n2 above

This content appears as a courtesy of Ritz Attorneys at Law, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit