Bank of Ghana revises mergers and acquisitions directive

The Bank of Ghana (BoG) has issued a directive to operationalize relevant sections of Act 930 pertaining to mergers and acquisitions for banks and specialized deposit-taking institutions regulated under the banks and specialized deposit-taking institutions Act, 2016 (Act 930).

The directive is aimed at 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.

In addition, the directive seeks to set minimum conditions that must be fulfilled by the Parties to the proposed merger or acquisition.  More importantly, it aims at prescribing post-merger and post-acquisition requirements for the Regulated Financial Institutions in the country.

Furthermore, Bank of Ghana indicated that the new directive will 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.

Moreover, the directive will ensure that the merger does not adversely affect competition and the stability of the financial system.

Transfer of Shares Affecting Significant Shareholdings

With regards to the transfer of shares affecting significant shareholdings, BoG noted that a person shall not without the prior approval in writing to the Bank of Ghana directly or indirectly, alone acquire shares in a bank, specialized deposit-taking institution or financial holding company which together with any existing direct or indirect holdings of that person, constitute a significant shareholding.

Also, the directive states that no person should directly or indirectly, alone or in concert with one or more other persons, increase the ownership interest of that person in a bank or specialized deposit-taking institution or financial holding company if the aggregate ownership interest of that person after the increase would exceed one of the supervisory thresholds.

Disapproval of Transfer of Shares

The directive further outlines the conditions under which the Bank of Ghana may disapprove any request or intentions from any party or parties for a transfer of shares.

The Bank of Ghana indicated that it may disapprove a proposed transfer of shares in the interest of sound and prudent management of a bank or specialized deposit-taking institution and the functioning and stability of the overall financial system by preventing the acquisition of shares by a person who, in the opinion of the Bank of Ghana, would not be a fit and proper person or who may exercise influence to the detriment of that bank or specialized deposit-taking institution.

Also, the Bank may disapprove a proposed transfer of shares if the sale or disposal of shares by a promoter, Director or a person who has a controlling interest which may be detrimental to that bank or specialized deposit-taking institution.

Sale of Business, Mergers, Amalgamations and Reconstructions

The directive also highlights conditions under which a person should not enter into agreement on the sale of business, mergers, amalgamations and reconstructions under Section 52 (1) of Act 930.  According to the Bank of Ghana, such agreement can only be entered if the Parties to the agreement or arrangement have submitted an application on the proposed agreement or arrangement and all other relevant information and documents for the approval of the Bank of Ghana.