Supreme Court reverses Court of Appeal decision, affirms BoG’s revocation of UniCredit licence
In a landmark decision, the Supreme Court has unanimously reversed the Court of Appeal’s ruling and upheld the High Court’s decision affirming the Bank of Ghana’s revocation of UniCredit Ghana Limited’s license.
This decision confirms the central bank’s authority and procedural correctness in its oversight of financial institutions.
Panel and Decision
The five-member Supreme Court panel, chaired by Chief Justice Araba Esaaba Sackey Torkornoo, delivered the ruling on Wednesday, June 26, 2024.
The panel also included Justices Mariama Owusu, Prof. Henrietta Joy Abena Nyarko Mensa-Bonsu, Ernest Yao Gaewu, and Yaw Darko Asare.
Background
On August 16, 2019, the Bank of Ghana declared UniCredit Ghana insolvent, revoking its license to operate as a savings and loans company under Section 123 of the Banks and Specialised Deposit Taking Institutions Act of 2016 (Act 930).
Hoda Holdings Limited, the majority shareholder of UniCredit, challenged this decision in the Human Rights Division of the High Court, seeking judicial review and an injunction against the Bank of Ghana.
High Court Ruling
On March 18, 2021, the High Court, presided over by Justice Gifty Agyei Addo, ruled in favor of the Bank of Ghana.
The court found that UniCredit was insolvent prior to the license revocation and that the Bank of Ghana had issued numerous notices to UniCredit, directing it to rectify its capital deficiency.
The court concluded that the Bank of Ghana followed the appropriate procedures under Act 930 in revoking the license and placing UniCredit under receivership.
Court of Appeal Decision
Dissatisfied with the High Court’s ruling, Hoda Holdings Ltd appealed to the Court of Appeal.
On July 7, 2022, the Court of Appeal, comprising Justices Janapare A. Bartels-Kodwo, Merley Wood, and G.S. Suurbaareh, overturned the High Court’s decision.
The appellate court held that the Bank of Ghana should have adhered to the steps outlined in Section 16(3&4) of Act 930, which provide for a hearing before a license revocation.
Supreme Court’s Verdict
The Bank of Ghana subsequently appealed to the Supreme Court, seeking to overturn the Court of Appeal’s decision.
In its ruling on Wednesday, the Supreme Court affirmed the High Court’s judgment, stating that the Bank of Ghana acted within its legal mandate and followed due process in revoking UniCredit’s license.
The court emphasized that UniCredit had been duly notified and given opportunities to address its financial deficiencies.
The Supreme Court’s ruling underscores the robustness of Ghana’s financial regulatory framework and reinforces the authority of the Bank of Ghana in maintaining stability within the financial sector.
The decision is expected to have significant implications for the governance and oversight of financial institutions in the country.
NB: Below is a NorvanReports analysis of the key aspects and implications of this Supreme Court decision:
Affirmation of Regulatory Authority: The Supreme Court’s decision strongly affirms the Bank of Ghana’s regulatory authority under the Banks and Specialised Deposit Taking Institutions Act of 2016 (Act 930). This reinforces the central bank’s power to take decisive action against insolvent financial institutions.
Interpretation of Act 930: The ruling suggests that the Supreme Court interprets Section 123 of Act 930 as sufficient grounds for license revocation in cases of insolvency, without necessarily requiring the additional steps outlined in Section 16(3&4) that the Court of Appeal had deemed necessary.
Due Process Considerations: By overturning the Court of Appeal’s decision, the Supreme Court appears to have determined that UniCredit was given adequate opportunity to address its capital deficiency. This implies that the multiple notices sent by the Bank of Ghana constituted sufficient “hearing” before action was taken.
Precedent Setting: This ruling likely sets a significant precedent for future cases involving financial regulation in Ghana. It clarifies the extent of the Bank of Ghana’s powers and the procedures it must follow when revoking licenses.
Impact on Financial Sector Stability: The decision potentially strengthens the Bank of Ghana’s ability to swiftly address issues of insolvency in the financial sector, which could contribute to overall financial stability in Ghana.
Implications for Shareholders: The ruling may have significant implications for shareholders of financial institutions, particularly regarding their ability to challenge regulatory decisions through the court system.
Clarification of Legal Procedure: The case highlights the complexities of interpreting financial regulations and the importance of clear legislative language in Act 930.
Judicial Hierarchy and Interpretation: The case demonstrates the role of the Supreme Court in providing final interpretations of law, especially when lower courts have differing views on the application of statutes.
Potential Economic Impact: This ruling might boost investor confidence in Ghana’s financial sector, depending on how it’s perceived by local and international stakeholders.
Future Regulatory Approach: The Bank of Ghana may feel more confident in taking similar actions against other financially troubled institutions in the future, based on this affirmation of its authority.
This analysis is based on the ruling and general principles of financial regulation and legal interpretation.
