AFTER THE Bank of Ghana (BoG) cancelled the transaction in which a Nigerian Bank, First City Monument Bank on Thursday purchased shares of the International Finance Corporation (16.45%) and Prince Al Waleed (10.73%) in Cal Bank, in a hostile takeover bid of CAL Bank on the floor of the exchange, experts in the areas of financial law have questioned the authority under which the Bank of Ghana did the cancellation.

First City Monument Bank has been making inroads into acquiring a majority stake in Cal Bank after succeeding in buying an 8.16% stake in Cal Bank last two weeks.

BoG's reasons were that that no regulatory approval was given before the transaction was conducted and therefore it will not be possible for the shares to change hands.

But the Chief Executive Officer (CEO) of ThinkGhana, Mr. Aboagye Debrah has stressed that it is only the Securities and Exchange Commission (SEC) which has regulatory powers under the Securities Industry Law, 1993 (PNDCL 333) as amended, to regulate the securities industry in Ghana.

Having due regard to the powers of the Bank of Ghana under relevant banking laws to regulate the banking industry, he said it was a sincere opinion that the Bank of Ghana should have acted through the SEC where it had legitimate concerns about the legality of the said trades on the floor of the Ghana Stock Exchange.

In a statement issued by him on behalf of ThinkGhana, he mentioned that he was concerned about the potential negative implications for foreign investors on the Ghana Stock Exchange where it is perceived that the powers of the SEC could be usurped by the Bank of Ghana unilaterally.

He therefore called on both the SEC and the Bank of Ghana to clarify the situation to assure investors about compliance with due process.

"ThinkGhana also wishes to call on the SEC as a matter of urgency to intervene in the CAL Bank affair to ensure compliance with all relevant securities laws and regulations," the statement added.

It was a considered opinion of ThinkGhana that the brokers involved in the share transactions should be compelled to abide by the rules of the market or the appropriate sanctions should be applied. "ThinkGhana is concerned that no press releases have been forthcoming from either the Ghana Stock Exchange or the acquirers or their brokers,". The statement said it was a breach of the GSE's Takeovers and Mergers Rules and GSE must take bold steps to enforce its rules to assure compliance and transparency on the market.

ThinkGhana then called on the SEC as the apex regulator to ensure compliance with the rules and to prevent any other institution from invading its legal authority to regulate the industry. It called on all regulators in the financial sector to work in harmony to allow for the efficient regulation of the capital market.

"We therefore call on the SEC to take another look at the restrictions on foreign investment on the market as being outmoded, and impracticable in the context of the government's own declared free market policies and trade liberalization," he stated.

ThinkGhana is a group of legal practitioners who work to improve corporate governance in Ghana.

Many mergers and acquisitions are agreed upon by both parties, but in other cases the acquirer will go over the heads of the targeted firm's management and appeal directly to its shareholders. One may ask whether the transaction fell afoul of the SEC regulations on mergers and acquisition?

According to Mr. Emmanuel Ashong Katai, the Head of Market Development and research of SEC, it did, as there was no approval from SEC for the takeover bid.