The first batch of clients of Fund Management Companies (FMCs) whose licences were revoked in November 2019 will receive a refund of their investments by September 30, the Director-General (DG) of the Securities and Exchange Commission (SEC), Reverend Daniel Ogbarmey Tetteh, has indicated.
He said the payment would involve a refund of a total of GH¢1.08 billion to 5,312 claims that had since been validated.
Rev. Tetteh told the Daily Graphic and the Graphic Business’s specialised programme on banking and finance, Banking & More, on Monday, September 14 that the money would be credited to the accounts of the clients whose claims had been validated following a successful completion of the necessary processes.
He explained that the payment would be effected by the Registrar General (RG), Mrs Jemima Oware, who was the Official Liquidator (OL).
According to him, the payments would benefit the customers of the 22 companies that the OL had successfully secured court orders to liquidate their businesses.
Update
Rev. Tetteh was giving an update on the liquidation process that commenced last year after the SEC revoked the licences of 53 FMCs for various regulatory breaches.
The licences of three of the firms have since been restored after eight of the companies appealed against the SEC’s decision at the commission’s Administrative Hearing Committee (AHC).
The commission upheld the revocations of the licences of the five others.
Assurance
Rev. Tetteh also assured clients of the affected companies that all those whose claims had been validated would benefit from the government-sponsored bailout package being rolled out.
He said the customers would be paid their due after liquidation orders had been given by the courts.
He said while the processes leading to the bailout might have been frustrating for investors, the processes could not be circumvented.
He indicated that neither the SEC nor the government had intentions to exclude any customer from benefiting from the bailout, describing it as a social intervention programme for all affected investors.
He, therefore, called on all affected customers of the 27 outstanding companies not in the phase one of the bailout programme to exercise patience while the SEC and OL went through the processes to fulfil the conditions for the bailout.
He stated that the cooperation of the companies was critical to speeding up the process.
Fears
The assurance from the SEC followed concerns by customers of the defunct Blackshield Company Limited, formerly Gold Coast Fund Management Limited (GCFM), that they risked being excluded from the bailout package, given the legal challenges by GCFM against the revocation and the incomplete validation of claims filed against the company.
In response, the DG said those fears were misplaced as the exercise was neither biased nor limited to a certain group of customers.
“No one should feel that he or she is being excluded because it is only a question of time, and you cannot rush the legal processes,” he said in the interview.
“All we are saying is that the government is committed to providing you a bailout based on your validated claims.
“Today, it is the turn of Mr ‘A’ or Mr ‘B’; tomorrow it will be your turn and it is not like you are being denied,” Rev. Tetteh noted.
Legal process
Rev. Tetteh explained that beyond the peculiar challenges with Blackshield Company, the apparent delay in paying the affected investors was mainly due to legal processes that had to be followed under the Securities Industry Act, 2016 (Act 929) and the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), which was repealed by the Corporate Insolvency and Restructuring Act, 2020 (Act 1015).
Rev. Tetteh said unlike the banking sector where the Bank of Ghana (BoG) was clothed with the relevant powers to put a bank or a deposit-taking institution into receivership after immediately revoking its licence, SEC did not have similar powers for fund management companies.
He said the commission had to rely on Act 929 and Act 180 to transfer assets and liabilities of the affected FMCs.
He explained the processes to include SEC notifying the RG of the revocation for the RG to petition the court for liquidation orders.
He said although the SEC notified the RG in November 2019, the first liquidation order was granted in May 2020 due to initial challenges with service and opposition by some firms.
