Counsel says based on principle and nothing else
Although Cal Bank would experience some difficulties, especially with the value of its stocks on the Ghana Stock Exchange as a result of the court action against it by Mr. Afari Donkor, his counsel Nana Asante Bediatuo has said his client was acting on the basis of principle and nothing else.
Mr. Afari Donkor, who is a 14.5% shareholder in Cal Bank has instructed his counsel Nana Asante Bediatuo to seek legal intervention for his bid to be on the board of the bank.
Mr. Donkor has been nominated to the board, but his bid is being frustrated by current members of the board on reasons aligned to some earlier problems Mr Donkor had had with the Bank of Ghana.
Although there are no clear legal provisions on the representation of a shareholder on the board of a company, Nana Bediatuo told the Business Chronicle on Friday that, as the largest single individual shareholder, his client deserved to be on the board.
Explaining further, Nana Bediatuo said a statement of claim has been filed, asking the courts for a declaration to restrain Cal Bank and its Board from holding their annual general meeting until they have made Mr. Afari a member of the Board of Directors and also until the bank has removed potentially defamatory statements about his client from the annual report.
Explaining, Nana Badiatuo said prior to the IPO, all shareholders of Cal had representatives on the board and 'it would certainly be unfair, discriminatory, unjust and inequitable to Mr. Afari if as a major shareholder, he does not have a representative on the Board of the bank as everybody has and when there is no legal and other bar to him from serving on the board.'
Mr. Afari is the second largest share holder (14.5%) with the largest being International Finance Corporation (IFC) with17% stakes in the bank.
Nana said his client had satisfied all requirements for a person to be on the board of a bank, according to the Ghana's companies code and the banking law.
The investment lawyer said even the BoG had not said he does not qualify to serve on the Board as the new banking law has given it the power to declare fit who becomes a board member.
Mr. Afari was co-founder and principal promoter of the bank when it was Continental Acceptance Limited in 1990.
It then changed its name to Cal Merchant Bank and then to Cal Bank after getting a universal banking license.
In 1996, he was forced to resign as a director with some allegation made against him.
He was however discharged for lack of evidence. After that, the BoG took control of his 30% shares, placed a representative on the board of the bank then, for owing ¢1.2 billion with interest to the central bank.
According to Nana, his shares reverted to him after paying the money and interest to the BoG and he therefore had to occupy that vacant position after the BoG representative left. The 30% share reduced to 14.5% after offloading the rest.
Meanwhile an injunction has been slapped on the bank's annual general meeting.
Speaking to a Joy FM reporter earlier, he said there is no law compelling Cal Bank from making Mr. Afari -Donkor a member of the board, but Nana Bediatuo admitted that it is the practice all over the world that beyond a certain percentage, people are normally invited on the board.
He stated for instance that the GSE rules state that if 16 per cent of shares of a company is acquired, one must inform the stock exchange within two days, however if 25 per cent is acquired, one is forced to make a tender offer to buy all of the outstanding shares in that company.
Nana Bediatuo explained that the market on which Cal Bank traded understands that there is something called a substantial shareholding and if that is so, why did the regulations of Cal Bank seek to say that there is no such thing as substantial shareholding?
Meanwhile, The Chronicle has gathered that Cal Bank is also going to court tomorrow to present evidence that Mr. Afari-Donkor cannot be a director of the bank.
A source close to the bank said a BoG letter to Mr. Afari-Donkor striking out his name as a board member would be tendered in court as evidence.