GBL’s acquisition questioned

A former Legal Adviser of the erstwhile Ghana Breweries Limited, Mr Joe Aboagye Debrah, has thrown a challenge to the Securities and Exchange Commission (SEC)to investigate the acquisition by Guinness Ghana Limited of Guinness Ghana Breweries and the role played by all major actors in the process.

This is to determine whether the country's securities laws were breached or not.

In what analysts believe would be a test case of corporate governance in the country, the legal practitioner also demanded the authorities to determine whether the interests of shareholders were adequately protected by the regulatory institutions involved in the acquisition.

In statement sent to the commission and copied to the press, Mr Debrah stated that “ the demand for a thorough investigation is premised on certain issues which have remained unanswered since the acquisition and which have been heightened by recent events in the two companies.

Mr Debrah, a Partner of Think Ghana, a non-governmental organisation committed to corporate governance and human rights, requested the commission to investigate whether the valuation report underpinning the take-over was submitted to shareholders in fullfilment of the Ghana Stock Exchange's own listing regulations.

He said the Securities Industries Amendment Act made room for the Administrative Hearing Committee to hear a complaint and to investigate to ascertain the facts and to make a fair determination as to whether any securities laws had been breached.

He said SEC commission under the law had 30-days to determine the case, acknowledging that SEC had the right to investigate the complaint.

“At this stage, we are not saying that anybody has done something wrong”, he said, adding that this is the first time anybody has made a formal complaint in respect of acquisition in Ghana”. In a 17-point question, he questioned the legal basis for the transactions.

Again, he asked whether a takeover could lawfully be undertaken under the Regulation 1(4) of the GSE's takeover and merger rules, having due regard to relevant Ghanaian securities legislation.

Mr Debrah is also questioning whether full disclosures were made to GBL shareholders in view of the information contained in the notice for GBL's Extraordinary Shareholders Meeting in April 2003 and the circular underpinning GBL's Capital Restructuring Programme undertaken in June 2003.

He also asked whether Heineken International B.V., at the time of GBL's capital restructuring project, was aware of a bid by Diageo Plc and did not make full disclosures to either the Board of GBL or the shareholders of GBL on the long-term prospects of GBL following the capital restructuring project?

Mr Debrah said the SEC had a lot of power to investigate this issue, saying “ this is not a perception issue”.

He said the issues raised were critical and involved two major multinationals with a tradition of high corporate governance and there was the need to ensure that such best practices were adhered to in this country.

Mr Debrah said it was also important to ascertain whether in view of the prevailing share price of Guinness at the time of the acquisition compared to the price paid by Diageo plc for new shares it acquired under the placement.

He also wanted to know whether Diageo Plc participated in the resolution to approve the sale of shares to it under the placement and to indemnify it and other directors from any poteniatl lawsuits?

Mr Debrah is also seeking to know whether full disclosures were made to shareholders of Guinness on the implications of the resolutions passed at its EGM on July 20, 2004, particularly regarding a waiver of their rights to shares at 50 per cent discount.

The statement sought to find out from SEC whether the shareholders of Guinness were made fully aware that the acquisition was to be financed by a local bank, and to be undertaken by Guinness itself and not Daigeo Plc.

It further, questioned whether the Board of GBL was competent under law to approve the deal and forward same to shareholders for acceptance, especially having regard to regulation 75 (2) of GBL's regulations and to legal advice sought and obtained?

Mr Debrah said his motivation was to ensure that multi-nationals respected the laws of good corporate governance and to ensure that they played by the rules.