Friday, October 24, 2008



#28/1 Castle Rd., Adabraka Tel/Fax: 00-233-21-271086
P. O. Box AD233 Mob: 00-233-24-4293270
Adabraka, Accra E-mail:

October 22, 2008

The Director-General
Securities & Exchange Commission
1st Floor, SEC Bldg.
PMB, Ministries Post Office

Dear Sir,


We wish to bring to your attention for immediate redress, certain matters concerning an Extraordinary General Meeting of Super Paper Products Company Limited (SPPC), a company listed on the Ghana Stock Exchange, scheduled for Wednesday, November 5, 2008 at the TDC Club House, Tema. We do believe that if immediate steps are not taken by both the GSE and the SEC on the matters raised herein, serious damage will be done to the regulatory integrity of the Ghanaian securities market which may affect the nation adversely. We have addressed this communication to you in your capacity as the apex regulator but will serve a copy on the GSE, which has as much responsibility in this particular matter.

ThinkGhana is a not-for-profit organization based in Accra, established inter alia, to promote good corporate governance and securities regulatory practices in Ghana and also work in related human rights activities. SPPC is a company listed on the Ghana Stock Exchange.

You will recall earlier in this year, SPPC scheduled its Annual General Meeting for July 11, 2008 and circulated an Annual Report which specified in the Notice therein, the following as part of the agenda for the said AGM:

“Special Business
To consider and if thought fit, pass the following as Special Resolutions:

6. THAT the name of the company is hereby changed to African Champion Industries Limited.
7. THAT by the nature of business which the company is authorized to carry on is hereby amended by the addition of the following objects:
(f) To purchase or otherwise acquire any mines, mining rights and take concessions in Ghana or elsewhere and to explore, prospect, work and develop those businesses; {emphasis ours}

(g) To purchase, partake in or otherwise invest in stocks, shares, bonds and securities of corporate entities and on the capital markets {emphasis ours}
8. THAT the authorized number of shares of the company is increased to 5,000,000,000 ordinary shares of no par value.

9. THAT Regulation 82 of the company’s Regulations is hereby amended by the substitution of the following new section:
“ Any document may be served by the Company on any member, debentureholder or director of the company in any of the following manners:

a. in the manner provided by section 262 of the Code; or
b. by electronic mail, where the member, debentureholder or director has notified the company of his or her electronic mail address; or
c. by making the document available for accessing and/or downloading on the company’s website and notifying members, debentureholders or directors of such document through publication of notice in widely circulated national newspapers or news media”.

10. THAT subject to Special Resolution 8 passed, the Directors be and are hereby authorized to make a series of private placements in the aggregate of 100, 000,000 shares at a minimum price of 20 pesewas per share by the end of 2010 as an ordinary resolution. {emphasis ours}.

11. THAT subject to Special Resolution 8 passed, the Directors be and are hereby authorized to make a series of secondary issues in the aggregate of 500,000,000 shares at a minimum price of 20 pesewas per share by the end of 2012 as an ordinary resolution.” {emphasis ours}.

It is instructive to note that in the Annual Report, the Chairman’s Statement did not make any reference whatsoever to the rationale behind the fundamental changes being proposed to the company structure and regulations. In fact, the only disclosure on the proposed amendments were found on page 26 of the Annual Report where as additional notes to the said Report, single sentences had respectively been proffered as rationale for the amendments. These were the only information available to shareholders of SPPC in order to make fundamental decisions on the company’s future.

Though at the time, ThinkGhana raised questions for the investing public to ponder about potential breaches of securities rules, we did not deem it necessary to formally draw the attention of the securities regulatory authorities to the matter. However, we feel compelled to draw your attention following the publication of the Notice for the EGM in the Daily Graphic newspaper this week. The notice suggested that our earlier caution to all shareholders to demand further and better particulars from the SPPC directors before voting on such critical matters had been heeded. ThinkGhana has taken the exceptional step of formally communicating to both the GSE and the SEC following perusal of the Notice of the SPPC EGM, a copy of which we have taken the liberty of attaching for your perusal.

We wish to place on record our concern for the integrity of the securities market if the said Notice is allowed to pass and the proposed EGM is sanctioned to take place based on what has been circulated as the official Notice of the said Meeting to all shareholders. For the records, the said Notice seeks to incorporate a circular to shareholders purporting to make disclosures on the rationale for the proposed resolutions. We wish to submit that it fails totally in that regard.

As you are doubtless aware, the proposed resolutions seek to take away the pre-emptive rights of SPPC shareholders in respect of new and additional shares to be issued by the company. Pre-emption rights are protected under section 202(1) of the Companies Code, 1963 (Act 179) and the GSE’s Listing Rules. Recently, the issue of non-disclosure of a consequnetila loss of pre-emptive rights for shareholders of CAL Bank engaged the entire securities market. It will also be noticed that by the SPPC Notice, the new and additional shares are to be offered through private placements at a fixed price. ThinkGhana is alarmed that single sentences have been offered in the said notice as the rationale for the proposals. In our humble opinion, we find this as WHOLLY INADEQUATE for purposes of disclosure. We are also concerned about its precedent effect in a market as unsophisticated as Ghana’s. We wish to submit that the said SPPC Notice offends against all known disclosure rules and principles of the Ghanaian securities market. It also offends against all known international norms of securities regulation particularly with reference to adequacy of disclosures by companies to shareholders. We also find wholly objectionable that in pursuance of fundamental corporate actions to be undertaken at an EGM in respect of a listed company, both the SEC and the GSE will allow a listed company to circulate such wholly inadequate documentation to their shareholders to solicit approvals of such fundamental right-altering resolutions without making adequate disclosure to shareholders.

Having due reference to section 202 (1) of Act 179, rules 26(3), 45(1), 54(4)(d) and the GSE’s Disclosure Policy under Part VII of the Listing Rules and the SEC’s functions under section 9 of the Securities Industry Law, 1993 (PNDCL 333), particularly subsections (b), (f), and (i), we wish to call on the SEC to direct a postponement of the proposed EGM and request adequate disclosures to be made so that all shareholders of SPPC will be in a position to make an informed decision at the EGM.

We further call on the SEC and the GSE to as a matter of policy reject half-page Notices/Circulars submitted by listed companies in future in support of such proposed resolutions.

We further wish to submit that in view of the contents of the original SPPC Annual Report 2007 especially with reference to the Notice of AGM therein and the additional notes on page 26 thereof, the SEC should direct the GSE to institute an investigation into possible insider dealing in the securities of SPPC in order to assure the integrity of the market.

Finally, ThinkGhana strongly recommends to both the SEC and GSE that it must adopt a proactive regulatory posture especially in view of the lack of sophistication on the part of majority of investors in listed securities in Ghana. We take the opportunity to encourage the SEC and the GSE to demand adequate and timely disclosure from all listed companies so that shareholders will be in a better position to make informed decisions on their investments.

In the light of the following, we wish to make the following recommendations to the securities regulators:

a. That the SEC directs that the EGM of SPPC scheduled for November 5, 2008 be postponed on grounds of inadequate disclosure to shareholders.

b. That the SEC declares as wholly inadequate for disclosure purposes, a half-page Notice/ Circular submitted to shareholders in support of proposed resolutions.

c. That the SEC directs that Notices to shareholders in respect of resolutions that effectively take away the pre-emptive rights of shareholders should make adequate and express disclosure of the fact that approving the resolution will essentially mean a waiver of the pre-emptive rights of shareholders.

d. That an investigation should be conducted to determine whether the processes were not willful with intent to prevent full disclosure to SPPC shareholders.

e. That the SEC should investigate whether any insider dealing has taken place in the shares of SPPC especially between March 2008 and October 2008.
f. That the SEC should direct the GSE to strengthen the enforcement of its rules on disclosure in dealings by directors of listed companies, directors of dealing member and all associated persons.

g. That the GSE should approve all circulars from listed companies prior to distribution to shareholders in order to settle the adequate disclosure question before such documents reach the public.

h. That appropriate sanctions be meted out to any corporate entity or other responsible official found to have breached any securities regulations or rules as a result of the distribution of the SPPC documents.

We hope that the SEC and the GSE will act on our recommendations to assure the integrity of the market, particularly in the wake of the recent CAL Bank matter.

Ghana Deserves Better!!!

Yours in the Service of Ghana,
For ThinkGhana

Cc: The Managing Director
Ghana Stock Exchange
5th Floor, Cedi House
Liberia Road