BoG lists penalties for non-compliance to M&A directive by banks and SDIs
The Central Bank has come out with a list of sanctions or penalties for banks and Specialised Deposit-Taking Institutions that may be non-compliant or contravene the rules spelt out in the Bank’s new Mergers and Acquisitions Directive.
The listed penalties or sanctions to be applied to banks and SDIs that fail to comply with the new directive, the BoG explains, is to ensure that the objectives for which the directive was issued are met.
According to the BoG, the objectives of the new directive include;
- operationalise relevant sections of Act 930 pertaining to mergers and acquisitions by providing guidance on the processes and procedures for evaluating applications for mergers and acquisitions and the required information, documents or agreements to be submitted to the Bank of Ghana;
- set minimum conditions that must be fulfilled by the Parties to the proposed merger or acquisition;
- prescribe post-merger and post-acquisition requirements for the Regulated Financial Institutions;
- ensure that the interest of a Regulated Financial Institution and its depositors as well as its creditors will not otherwise be threatened by a change in significant shareholding or control in that Regulated Financial Institution; and
- ensure that the merger and/or acquisition does not adversely affect competition and the stability of the financial system.
Hence, a contravention of the rules, requirements, and procedures of the directive by banks and SDIs that threatens the attainment of the set objectives of the directive by the BoG, the Bank will;
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- annul the transfer, merger, amalgamation or reconstruction;
- prohibit the exercise of voting rights in respect of the shares;
- prohibit the payment of dividend in respect of the shares; or
- prohibit the issue of ‘bonus shares’ or ‘rights issue’ in respect of the shares
In addition to the aforementioned penalties, any penalty provided under the Anti-Money Laundering Act, 2008 (Act 749), a person who contravenes a directive issued under this Section is liable to pay to the Bank of Ghana an administrative penalty of not less than two thousand (2,000) penalty units and not more than ten thousand (10,000) penalty units.
The BoG, may also in addition to the penalty under subsection (8) of Act 930, impose any other penalty or take any remedial action that it considers appropriate.
