Merger and Acquisition Directives Revised by Bank of Ghana (BoG)

October 04, 2021

The Bank of Ghana (BoG) recently revised its 2018 merger and acquisition directive for Banks and Special Deposit taking institutions (SDI’s). The new directive provides that the BoG reserves the right to approve any merger, acquisition or transfer of shares and stakes in regulated financial institutions. The BoG’s approval process is in three stages: pre-merger/acquisition consent from the BoG, provisional approval, and final approval. The directive also provides that the Central Bank may annul any takeover or acquisition of a regulated financial institution in the country if any of its rules are breached.

According to the new directive, any transaction that potentially lessens competition will not be approved unless the anti-competitive effect of the transaction is clearly outweighed by public interest. A transaction may however be approved if the Bank is satisfied that a proposed merger or acquisition arrangement shall be for the benefit of the stability of the country’s financial system as a whole and follows all regulatory requirements under the Securities Industries Act 2016, Act 929, and the Ghana Stock Exchange and its listing rules.

Where regulated financial institutions fail to follow any of the foregoing directives, the BoG may annul the transfer, merger, amalgamation or reconstruction; prohibit the exercise of voting rights in respect of the shares; prohibit the payment of dividend in respect of the shares; and/or prohibit the issue of ‘bonus shares’ or ‘rights issue’ in respect of the shares. Further, in addition to any penalty provided under a related act, such as the Anti-Money Laundering Act, 2008 (Act 749), a person who contravenes a directive will be liable to pay to the Bank of Ghana an administrative penalty of not less than GHS 24,000 and not more than GHS 120,000.

It is expected that the new directive will safeguard the interest of stakeholders in the financial sector and reflect current market developments.


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