Subscribe Google Whatsapp Linkedin Mail Telegram This feature is a continuation of an earlier publication on various financial theories propounded to explain factors underlying mergers and acquisitions. Discussions in the previous write-up ended on the Herfindahl index H index and the agency problems and managerialism related to mergers and acquisitions.
Ghana has attracted the attention of well-known international businesses investing in all sectors of the economy. There are two main reasons for this in the banking sector. Firstly the recapitalization requirement of the Bank of Ghana BOG and secondly interest from international banks seeking to acquire existing banks.
If these opportunities are taken, expect corporate takeovers and mergers to become increasingly common, and the structure of corporate Ghana to keep changing.
What then should foreign investors bear in mind? Where the industry or sector in which an Investee Company operates is regulated, the approval of the Regulator may be required. Other Regulatory Restrictions A number of sector specific laws restrict the level of foreign ownership in companies engaged in business in those specific sectors.
Banking Sector - The Bank of Ghana BOG has to approve any agreement or arrangement that would result in a change in the control of a bank or its holding company.
Petroleum Sector - The Petroleum Exploration and Production Law provides for notification to the sector minister where a merger or acquisition would result in the creation of a new company.
A petroleum agreement cannot be assigned without the consent of the sector minister. If the merger or acquisition leads to the company ceasing operations, the Ghana National Petroleum Corporation GNPC Mergers and acquisitions in ghana the first option in the purchase of its assets.
The Mining Act is being reviewed to tighten regulations in areas of revenue, licensing and protection of the environment. Fisheries Sector - Fishing crafts operating in Ghana's coastal waters and rivers in connection with any fishing activity have to procure a license for their activities.
These licenses are not transferable to another person without the permission of the Fisheries Commission. Consequently, where a merger or an acquisition leads to the formation of a new company, a license granted to a fishing vessel owned by the old company cannot be transferred to the new company unless this permission has been obtained.
Telecommunication - The Electronic Communications Act states that the National Communications Authority NCA must approve the transfer of shares in a licensee company if the transfer would result in a change of control of that company and cause it to breach licence terms relating to its ownership structure.
Insurance - In the insurance sector, the acquisition or sale of a Significant Interest in an insurance company also requires the prior written approval of the National Insurance Commission. The Companies Act Act as amended expressly provides for arrangements and amalgamations.
An arrangement is any change in the rights or liabilities of members, debenture holders or creditors of a company or any class or in the Regulations of a company, other than a change effected under any of the provisions of the Act or by the unanimous agreement of all the parties affected.
An amalgamation is defined as any merger of the undertakings or part thereof or part of the undertakings of one or more companies and one or more bodies corporate.
This is the most common kind of merger, which basically means that one company is absorbed into the other one. There are a number of ways for businesses to merge in Ghana: Merger of two or more companies into one of the existing companies Merger of two or more companies into a new entity set up for that purpose Special Purpose Vehicle Amalgamation or arrangement with court approval The merger can take the form of acquisition by one party of the business and assets of the other party in return for a cash payment or an issue of shares or an acquisition by one party of the shares of the company being acquired in return for a cash payment or an issue of shares.
Investors are likely to opt for an asset sale enabling the investor to agree on the assets to acquire and exclude certain liabilities as well as reduce the level of tax payment especially in relation to stamp duties and investment taxes.
It is important to note that the shareholders of the corporate entity may have the same rights after the merger. By acquiring the shares, the purchaser indirectly obtains ownership of all assets of the company. With a share acquisition, the business is transferred as a going concern subject to change of control provisions in relevant contracts.
It tends to be a more straightforward transaction.
Only shares are transferred as opposed to all of the underlying assets of the business for which separate transfers with different formalities may be required.
The necessary legal formalities would have to be adhered to e. Investors may opt for this structure considering the costs and risk sharing as well as other factors such as local content requirements for some sectors which may dictate a minimum level of local ownership and capitalization matters.
This happened in the HFC Bank takeover. Restrictions on price cash or shares Ghanaian law does not provide for any restrictions on the form of consideration to be paid for the shares in a private company.The Role of Mergers and Acquisitions in Firm Performance: A Ghanaian Case Study Simon K.
Harvey University of Ghana Business School This study analyzes the impact of mergers and acquisition on performance of the acquiring firm using a t-. The Constitution of Ghana as well as several other legislations such as the Criminal Offences Act (Act 29), Whistleblower Act (Act ) and the Anti-Money Laundering Act (Act ) have provisions governing anti-corruption in Ghana.
First Bank of Nigeria: Acquisition of the entire issued shares in International Commercial Bank in Ghana, Sierra Leone, The Gambia, Senegal and Guinea by First Bank of caninariojana.comk Transnational /Ecobank Ghana: Merger with The Trust Bank.
The corporate world of Ghana is changing and market watchers have predicted an increase in mergers and acquisitions (M&A) in Ghana.
This is as a result of continuous growth in the economy. Ghana does not particularly have a competition authority as seen in some other countries, so the clearance for a merger or a takeover is obtained from industry-specific regulators and must meet statutory legal requirements as set out in the industry-specific legislation.
Mergers and Acquisitions In modern business environments, there are increasing dynamics encouraging firms to utilize mergers and acquisitions to resolve resource.
In dynamic business environments, the value of existing resources is subject to erosion, in some instances fast erosion.