The Ghana Stock Exchange (GSE) says it has suspended trading in the shares of Agricultural Development Bank (ADB) until Friday, July 20, 2018.
This follows the Central Bank’s cancellation of shares held by four institutions – Belstar Capital Limited (Belstar), Starmount Development Company Limited (Starmount), SIC-Financial Services Limited (SIC-FSL) and EDC Investments Limited (EDC) in ADB yesterday.
GSE, in a press release issued on Tuesday, said the suspension was necessary to prevent disorderly trading in the shares of ADB, market and/or investor abuse.
It was also to stop investors from taking decisions that might make them worse off than would have been the case if they had more information or clarity on the matter.
“The Exchange, pursuant to Rule 7 and Rule 14 of its Trading and Listing Rules respectively, has suspended trading in the shares of ADB for three (3) consecutive business days effective Tuesday, July 17, 2018,” the statement said.
The Bank of Ghana (BoG) on Monday made an order pursuant to Section 55 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) to annul the acquisition of all shares by the four institutions in the ADB, and all transactions undertaken in respect of the relevant shares with immediate effect.
Sanctions explained
The order was also to prohibit the exercise by Belstar, Starmount, SIC-FSL and EDC of any of the voting rights or any other rights in respect of the relevant shares and also restrain the directors appointed by the parties specified above to the Board of the ADB from acting as directors of ADB.
Following the Initial Public Offering (IPO) undertaken in respect of ADB in 2016, Belstar and Starmount directly acquired 24% and 11% respectively of issued shares in ADB.
Covert partnership
“It has come to the notice of the Bank of Ghana that Belstar and Starmount are affiliates, and unknown to the Bank of Ghana, they entered into agreements with SIC-FSL and EDC to acquire additional shares in ADB in its IPO.
“These agreements, in addition to the direct acquisitions by Belstar and Starmount, resulted in a direct and indirect holding by these companies of over 50% of the shares of ADB without the knowledge and approval of the Bank of Ghana and in breach of Section 49 of the Banks and Specialised Deposit-Taking Institutions Law (Act 930, 2016).”
Questionable share acquisition
The Central Bank further explained that it realised that Belstar and Starmount acquired shares with funds obtained from uniBank Ghana Limited, which is currently in official administration, using emergency liquidity support obtained by uniBank Ghana Limited from the Bank of Ghana in questionable circumstances.
Illegal lending
“However, the liquidity funds obtained by uniBank were improperly and unlawfully on-lent to Belstar and Starmount to acquire shares, including shares held by the Financial Investment Trust on behalf of the Bank of Ghana) in ADB’s IPO. Belstar and Starmount have participated in a series of other questionable, unsafe, and unsound related party transactions involving uniBank Ghana Limited to the detriment of Ghana’s financial system and for their financial gain and benefit.
Unfit and improper
The Bank of Ghana said it considered that Belstar and Starmount were not fit and proper persons and could not permit them to continue to hold shares acquired directly or indirectly in ADB.
“The request for emergency liquidity support from the Bank of Ghana by uniBank, loans from uniBank to Belstar and Starmount, the loan from Belstar to SIC-FSL, provision of funds to, and the engagement of EDC by Starmount as purchaser and trustee of shares, are inextricably linked and manifest a calculated intention by these entities to act in concert to acquire a majority shareholding in ADB using EDC and SIC-FSL without the knowledge and approval of the Bank of Ghana.”
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