LETTER TO GHANA REGULATORS ON SPPC

ThinkGhana

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

October 22, 2008

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

Dear Sir,

RE: NOTICE OF EXTRAORDINARY GENERAL MEETING OF SUPER PAPER PRODUCTS COMPANY LTD. –REQUEST FOR INTERVENTION OF SECURITIES REGULATORS TO ASSURE ADEQUATE DISCLOSURE TO SHAREHOLDERS

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
Accra.

CANCELLATION OF TRADE IN SHARES OF CAL BANK LTD. - MATTERS ARISING

PRESS STATEMENT:

CANCELLATION OF TRADE IN SHARES OF CAL BANK LIMITED –
MATTERS ARISING

ThinkGhana wishes to express its concern about media reports that the Bank of Ghana (BoG) has ordered the cancellation of a trade in the shares of CAL Bank Ltd., a listed company on the Ghana Stock Exchange. The trade involved the sale of approximately 10.73% of the shareholding of Kingdom R5 and approximately 16.45% of IFC’s stake in CAL Bank to First City Monument Bank of Nigeria. This deal follows in the wake of the sale of 8.16% of the Bank’s shares by Actis plc, formerly CDC Capital Partners (a founding shareholder of CAL Bank) on Wednesday, November 29, 2006.

We wish to point out that in the development of Ghana’s capital markets, all regulators need to exercise caution in the application of perceived powers under law. ThinkGhana wishes to stress that it is 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, it is our 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. ThinkGhana is concerned about the potential negative implications for foreign investors on the Ghana Stock Exchange where it is perceived that the powers of the SEC can be usurped by the Bank of Ghana unilaterally. We therefore wish to call 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. It is clear from the actions on the Ghana Stock Exchange over the past week that a takeover attempt is underway. ThinkGhana is of the considered opinion 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. This is a breach of the GSE’s own Takeovers and Mergers Rules and the GSE must make bold to enforce its rules to assure compliance and transparency on the market. ThinkGhana is particularly concerned that so far, it is only CAL Bank itself that has sought to abide by the rules of the market by issuing a press release after the initial acquisition by the First City Monument Bank of Nigeria.

ThinkGhana therefore takes the opportunity to call 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. ThinkGhana calls on all regulators in the financial sector to work in harmony to allow for the efficient regulation of the capital market.

Finally, ThinkGhana wishes to implore all the regulators to be mindful of the fact that listing on a stock market implies that shares and stocks of the listed entity are freely transferable. 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.

ThinkGhana is hopeful that the securities rules will be applied fairly and equitably to all players in the market such that the rights of investors will be protected at all times.

Thank you.

Yours in the service of Ghana,

THINKGHANA
Accra, Ghana.

COURT SETS DATE FOR RULING ON THINKGHANA-VRS.-SEC

We are pleased to announce that the High Court, Fast Track Division, will finally have an opportunity on Thursday, December 7, 2006 to adjudicate in respect of the application for an order of mandamus brought against the Securities and Exchange Commission (SEC) for refusing to apply Ghana’s securities laws to alleged breaches by Guinness Ghana Breweries Limited (GGBL) before, during and after the acquisition of Ghana Breweries Limited (GBL) through the Ghana Stock Exchange (GSE) in December 2004.

Final submissions were made by the lawyers for both ThinkGhana (Kwaku Osafo-Buabeng Esq.) and the SEC (Abena Bonsu Esq.) at the High Court today. ThinkGhana was represented at the hearing by Messrs. Joe Aboagye Debrah, Vincent Aikins and Kojo Larbi, who are all directors.

ThinkGhana’s court action has been necessitated by the continuing disregard for Ghana’s securities laws by the regulators and the impunity with which breaches of Ghana’s securities laws have been condoned by the authorities till date. Fortunately, Ghana’s Constitution and the securities laws give us an opportunity to seek the intervention of the law in a matter that is sure to set a precedent in issues relating to mergers and acquisitions activities in Ghana. The process also gives an opportunity to further clarify the issues regarding the demand for an investigation into the acquisition of GBL by Guinness Ghana and to make a case for good corporate governance in Ghana, which we believe, is equally as critical to Ghana’s socio-economic development as the present-day clarion call for good governance in our body-politic.

The application was therefore filed in view of our absolute belief in the rule of law in Ghana. Our dear nation Ghana can only be better if all Ghanaians nurture a desire to make our laws work, irrespective of personalities.

Ghana Deserves Better!

P/S: The processes filed on behalf of ThinkGhana in relation to the matter can be found on this web-blog.

RE: SAM WOODE LTD. - BREACH OF S.E.C. REGULATIONS

ThinkGhana
C/o #28/1 Castle Rd., Adabraka Tel/Fax: 00-233-21-271086
P. O. Box AD233 Mob: 00-233-20-8157566
Adabraka, Accra E-mail: thinkghana@yahoo.com

June 20, 2006
The Director-General
Securities & Exchange Commission
1st Floor, SEC Bldg.
PMB, Ministries Post Office
Accra.

Attn: Dr. Nii Kwaku Sowa

Dear Sir,

RE: SAM WOODE LTD – BREACH OF S.E.C. REGULATIONS

We will be grateful to receive information on steps taken by the S.E.C. further to our complaint dated May 26, 2006 in respect of a breach of relevant securities regulations by Sam Woode Ltd., a listed company.

Kindly treat as urgent.

Ghana Deserves Better!

Thank you.

Yours faithfully,

Cc: The Managing Director
Ghana Stock Exchange
Accra

Breach of Disclosure Regulations by Sam Woode Ltd. - Letter to S.E.C.

ThinkGhana

C/o #28/1 Castle Rd., Adabraka Tel/Fax: 00-233-21-271086

P. O. Box AD233 Mob: 00-233-20-8157566

Adabraka, Accra E-mail: thinkghana@yahoo.com

May 26, 2006

The Director-General

Securities & Exchange Commission

1^st Floor, SEC Bldg.

PMB, Ministries Post Office

Accra.

Attn: Dr. Nii Kwaku Sowa

Dear Sir,

RE: SAM WOODE LTD – BREACH OF S.E.C. REGULATIONS

CALL FOR REDRESS

We wish to bring to your attention for immediate redress, a breach of SEC Regulations, 2003 (L.I. 1728) by Sam Woode Ltd., one of the listed companies in respect of their reporting obligations under law.

On Thursday, May 18, 2006 and on Wednesday May 24, 2006, the Daily Graphic Newspaper carried on pages 26 and 45 respectively, publication by Sam Woode Ltd. of its preliminary 1^st quarter unaudited results for the financial period ended March 31, 2006. The said publication is a clear breach of the provisions of L.I. 1728 and consequently a breach of the disclosure requirements of that company under applicable securities regulations.

The GSE Listing Regulations bind Sam Woode Ltd. as a listed company. However, as you are doubtless aware, the reporting regimes in the market have been fundamentally altered by the promulgation of the SEC Regulations, 2003 (LI 1728). Regulation 55(1) of LI 1728 is instructive. Under the old GSE reporting regime, listed companies were obliged to disclose half-year results not later than 3 months after the end of the relevant period. Preliminary financial results were to be published not later than 3 months after the end of the relevant financial year. A fully audited annual report was expected to be published not later than 6 months. Under L.I. 1728, an annual report was to be published not later than 3 months from the end of the relevant financial year (regulation 54 of L.I. 1728). However, regulation 55 introduced a new quarterly reporting regime such that quarterly financial statements in defined form were to be filed with the regulators and published not later than one month from the end of the relevant quarter.

ThinkGhana particularly wishes to reiterate that in terms of content, disclosure requirements have also been fundamentally altered by L.I. 1728. It is also important to note that where the GSE Listing Regulations conflict with L.I. 1728, L.I. 1728 would prevail. The reporting requirements under L.I. 1728 entail a much more detailed disclosure regime than under the requirements of the GSE Listing Regulations. L.I. 1728 has broadened the depth of information to be provided under the Continuing Obligations of listed companies. Regulation 56 on contents of quarterly financial statements reads:

(1) The quarterly financial statements shall comprise either a complete set of financial statements or a set of condensed financial statements but the statements shall include at least

a. A balance sheet

b. An income statement for the period on a year to date basis;

c. A statement where relevant showing either

i. Changes in equity

ii. A statement of recognized gains and losses, changes in equity, except those arising from capital transactions with owners and distribution to owners;

iii. selected explanatory notes as specified in this

regulation; or

iv. a condensed cash flow statement.

You will recall that in an earlier petition to the SEC on the acquisition of Ghana Breweries Limited by Guinness Ghana Breweries Limited, ThinkGhana had cause to point out exactly the same problem of continuing breaches of the securities laws by non-disclosure of information and to draw attention to continuing inaction on the part of the regulators. ThinkGhana is therefore distressed to note that regulators seem to allow some listed companies to flout laid-down regulations in such a blatant manner without taking any steps to either stem such breaches or sanction for such breaches. Shareholders and indeed the entire investing market have a right to information which can only be fulfilled when the rules are applied without fear or favour. As you are fully aware, confidence is the glue that holds stock markets together and confidence is engendered by prompt and adequate disclosure of information. The publications which have been attached to this communication for ease of reference clearly show that Sam Woode Ltd. used the old format under the GSE Listing Regulations in purported compliance with LI 1728. Such condensed reports are no longer allowed on the Ghanaian market. ThinkGhana is therefore very distressed that even in the wake of our petition against Guinness on self-same issues, such publications are being sanctioned in purported compliance with disclosure requirements when in actual fact they are clear breaches of the law. The SEC’s continuing inability to stem such practices on the Ghanaian market may damage investor confidence on the market with dire consequences for all investors and the listed companies. We dare ask whether these actions are calculated to prevent the true state of the financial position of the companies concerned being disclosed to shareholders. Only yesterday, Messrs Kenneth Lay and Jeffrey Skilling were found guilty of major infractions of corporate law in the Enron scandal. We must as developing economies, take stock and learn lessons from such incidents. No jurisdiction allows such continuing breaches to recur on its market. There are a lot of listed companies that are working very hard to meet their disclosure obligations. We therefore call on the SEC to ensure that such breaches cease forthwith and appropriate sanctions applied to defaulters. Indeed, we do hope that the mistakes in the Guinness case have not been repeated by allowing the publication which is in breach of the rules to be issued as a press release through the Ghana Stock Exchange already. Again, it seems both the GSE and the SEC have allowed these breaches of fundamental disclosure obligations to pass. We are hopeful that steps will be taken to withdraw the said publications with apologies to Ghanaian investors and the appropriate sanctions applied. We also call on the SEC to intensify its public education campaign on the rules and regulations applicable to Ghana’s securities markets. ThinkGhana also calls on the SEC to ensure that the Ghana Stock Exchange improves its surveillance and compliance capabilities to prevent such unfortunate situations from recurring on our markets. Finally, we call on the SEC to ensure that the GSE takes steps to remove the offending sections from its Listing Regulations as they have a potential to confuse market operators and the investing public on the true state of the disclosure requirements of listed companies.

We will be grateful for information on the steps taken to resolve the issues that we have brought to your attention for redress, please.

Ghana Deserves Better!

Thank you.

Yours faithfully,

Cc: The Managing Director

Ghana Stock Exchange

Accra

ThinkGhana-Vrs-SEC,Ghana: Supplementary Affidavit3

IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION}
C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT


NOTICE OF SUPPLEMENTARY AFFIDAVIT

Please TAKE NOTICE that at the hearing of the substantive application, Counsel for the Applicant will seek leave of this Honourable Court to rely on the supplementary affidavit attached hereto.


DATED AT 1ST LAW, ACCRA THIS 2nd DAY OF MAY, 2006





SOLICITOR FOR APPLICANT

THE REGISTRAR
FAST TRACK COURT
ACCRA.
AND FOR SERVICE ON THE RESPONDENT










IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION}
C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT

SUPPLEMENTARY AFFIDAVIT

I, Joe Aboagye Debrah, of F119B, Palm Avenue, Ashongman Estates, Accra, Chief Executive/Founder of ThinkGhana, do make oath and say as follows:

1. That I am the Deponent herein and have the authority and consent of the Applicant organisation to depose to these facts which are also within my personal knowledge.

1. That the Applicant caused its solicitors to file an application for an order of mandamus to issue against the Respondents on March 16, 2006 and attached an affidavit in support.

2. That my solicitors also filed supplementary affidavits in respect of other matters that needed to be brought to the Honourable Court’s attention for justice to be done.

3. That further to the filing of the said affidavits, there has been a publication in the Daily Graphic newspaper of Tuesday, May 2, 2006 to the effect that the Managing Director of Guinness Ghana Breweries Limited and Ghana Breweries Limited (GBL) had admitted at GBL’s Annual General Meeting that Guinness and GBL are separate entities. A copy of the report is attached hereto as exhibit “TG18”.

4. That exhibit TG18 is further incontrovertible proof that there has been no merger between GGL and GBL to form GGBL as stated by the Respondent in exhibit TG2, which formed part of its reasons for refusing to do its legal duty to investigate the complaint filed by the Applicant.

5. That the fact of GBL’s AGM and the publication of the statements in a national newspaper without any disclaimers from the SEC, the GSE or GGBL that all the named parties are fully aware of the breaches of securities laws and have elected to condone them and not apply the applicable sanctions unless compelled by the Honourable Court so to do.

6. Wherefore I swear to this affidavit in support.

Sworn at Accra this 2nd day of May, 2006



………………………..
DEPONENT

BEFORE ME





COMMISSIONER OF OATHS





AND FOR SERVICE ON THE RESPONDENTS

ThinkGhana-Vrs- SEC,Ghana: Supplementary Affidavit 2

IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION}
C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT


NOTICE OF SUPPLEMENTARY AFFIDAVIT

Please TAKE NOTICE that at the hearing of the substantive application, Counsel for the Applicant will seek leave of this Honourable Court to rely on the supplementary affidavit attached hereto.


DATED AT 1ST LAW, ACCRA THIS 24th DAY OF APRIL, 2006





SOLICITOR FOR APPLICANT

THE REGISTRAR
FAST TRACK COURT
ACCRA.
AND FOR SERVICE ON THE RESPONDENT










IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION}
C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT

SUPPLEMENTARY AFFIDAVIT

I, Joe Aboagye Debrah, of F119B, Palm Avenue, Ashongman Estates, Accra, Chief Executive/Founder of ThinkGhana, do make oath and say as follows:

1. That I am the Deponent herein and have the authority and consent of the Applicant organisation to depose to these facts which are also within my personal knowledge.

1. That the Applicant caused its solicitors to file an application for an order of mandamus to issue against the Respondents on March 16, 2006 and attached an affidavit in support.

2. That my solicitors also filed a supplementary affidavit in respect of other matters that needed to be brought to the Honourable Court’s attention for justice to be done.

3. That further to the filing of the said supplementary affidavit, there has been a publication in the Daily Graphic newspaper of Friday, April 21, 2006 of a notice of an annual general meeting by Ghana Breweries Limited, a copy of which is attached hereto as exhibit “TG17”.

4. That exhibit TG17 is further incontrovertible proof that there has been no merger between GGL and GBL to form GGBL as stated by the Respondent in exhibit TG2, which formed part of its reasons for refusing to do its legal duty to investigate the complaint filed by the Applicant.

5. That both the Respondent and Guinness Ghana Breweries Limited have a legal duty under relevant securities legislation to ensure that full disclosure is made to the Ghanaian public that no merger has taken place and the consequential breaches of the law duly acknowledged and punished as such.

6. That if there had been a merger as alleged by the Respondent in exhibit TG2, GBL will not be in existence and would not be calling a general meeting per exhibit TG17 to be held on April 28, 2006.

7. That by condoning such flagrant breaches of the securities laws and not taking any steps to sanction GGBL for the breaches of law, the Respondent is promoting a culture of impunity unknown to securities regulation which can only be ended by the intervention of this Honourable Court.

8. Wherefore I swear to this affidavit in support.

Sworn at Accra this 24th day of April, 2006



………………………..
DEPONENT

BEFORE ME





COMMISSIONER OF OATHS





AND FOR SERVICE ON THE RESPONDENTS

ThinkGhana-Vrs- SEC, Ghana" Supplementary Affidavit

IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION}
C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT


NOTICE OF SUPPLEMENTARY AFFIDAVIT

Please TAKE NOTICE that at the hearing of the substantive application, Counsel for the Applicant will seek leave of this Honourable Court to rely on the supplementary affidavit attached hereto.


DATED AT 1ST LAW, ACCRA THIS 20th DAY OF MARCH, 2006





SOLICITOR FOR APPLICANT

THE REGISTRAR
FAST TRACK COURT
ACCRA.
AND FOR SERVICE ON THE RESPONDENT










IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION}
C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT

SUPPLEMENTARY AFFIDAVIT

I, Joe Aboagye Debrah, of F119B, Palm Avenue, Ashongman Estates, Accra, Chief Executive/Founder of ThinkGhana, do make oath and say as follows:

1. That I am the Deponent herein and have the authority and consent of the Applicant organisation to depose to these facts which are also within my personal knowledge.

1. That the Applicant caused its solicitors to file an application for an order of mandamus to issue against the Respondents on March 16, 2006 and attached an affidavit in support.

2. That the solicitors inadvertently omitted to attach a copy of the Ghana Stock Exchange Press Release numbered 021/2004 referred to in paragraphs 20 and 21 of the affidavit in support.

3. That I hereby attach a copy of the said press release as “exhibit TG15”.

4. That I have since received notice of a petition to the General Legal Council filed by Mr. Devlin Hainsworth who styled himself as the Managing Director of Ghana Breweries Limited (GBL).

5. That the said petition was on the corporate letterhead of GBL and duly signed as such and also exhibited the names of the directors of GBL on the said letterhead. The relevant portions of the said corporate communication from GBL are attached hereto as exhibit “TG16”.



6. That exhibit TG16 is incontrovertible proof that there has been no merger between GGL and GBL to form GGBL as stated by the Respondent in exhibit TG2, which formed part of its reasons for refusing to do its legal duty to investigate the complaint filed by the Applicant.

7. That the Respondent has a legal duty under relevant securities legislation to ensure that GGBL makes disclosure to the Ghanaian public that no merger has taken place and yet has in the face of all the evidence that is available to it has refused to implement the relevant law on the matter.

8. That if there had been a merger as alleged by the Respondent in exhibit TG2, GBL will not be in existence and would not be communicating as a corporate entity as recently as February 28, 2006.

9. That there are currently about 1000 shareholders of GBL and more than 500 employees of record of GBL which remains a viable separate legal entity as per the Chairman of GGBL’s statement in exhibit “TG10”.

10. Wherefore I swear to this affidavit in support.

Sworn at Accra this 20th day of March, 2006



………………………..
DEPONENT

BEFORE ME





COMMISSIONER OF OATHS





AND FOR SERVICE ON THE RESPONDENTS

ThinkGhana-Vrs- SEC, Ghana: Statement of Case

IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION }
C/o SEC Bldg, Ministries, Accra } RESPONDENT
(Applicant will direct service)

Ex parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT

STATEMENT OF CASE

The Applicant prays for an order of mandamus to issue against the Respondent, Securities and Exchange Commission pursuant to Order 55 of the High Court (Civil Procedure) Rules, 2004 (C.I. 47) to compel the Respondent to investigate the acquisition by Guinness Ghana Breweries Limited (GGBL) of Ghana Breweries Limited (GBL) to establish whether Ghana’s securities laws have been breached and also for the SEC to be compelled to apply the law and sanction defaulters for the breaches of securities laws and regulations that have been occasioned thereby.

1. The Applicant’s case is as set out herein and in the accompanying Affidavit in Support annexed hereto.

2. The Plaintiff’s cause of action is founded on the following provisions of the law:


a. The Securities Industry Law, 1993 (PNDCL 333)
i. s9 ii. s10 (1) (a, g, h); (2) (a, b); (3-11);
iii. s11-15 iv. s18-20; 22; 27(1); 30(1) (c), (5) (a), (b); v. s123, 124,127(c), 128, 129, 130, 132,134,136

b. The Securities Industry (Amendment) Act, 2000 (Act 590)
Section 9 which incorporates the new Part 1A.

c. Securities and Exchange Commission Regulations, 2003 (L.I. 1728)
i. reg. 50, 51, 54-58, 60, 62

d. Companies Code, 1963 9Act 179)
i. s203; s205; 207(7)
ii. s230(7)

e. GSE Listing Regulations
i. Reg. 52 (1) and (2) ii. Part VIII


3. The Plaintiff’s grounds for an order of mandamus is as deposed to in the affidavit in support of the motion.

4. The facts:

These facts are germane to the matter:

a. In June 2003, GBL completed a capital restructuring programme.

b. In December 2003, Heineken and Diageo, the parents of the Ghanaian entities, announced a deal to acquire Heineken’s stake in GBL triggering a takeover under the GSE Rules.

c. GGBL was obliged to file its first quarter results for its financial year 2004 by October 2003. It was never filed. Till date, it has not been filed. This is a clear breach of Regulation 55 of LI 1728. The penalty is two million cedis for each day the default remains. Nothing has been done by the Respondent till date.

d. GGBL’s half-year results for its 2004 financial year were finally released later but it was also an ingenious breach of the rules. Under LI 1728, it was to be filed latest by January 2004, at a time when the takeover announcement had already been made through the GSE. However, GGBL used the old format for reporting instead of the stipulated format under LI 1728. That implied that a condensed financial statement was produced instead of a separate balance sheet, profit and loss account and cash flow statement as required by law. Please refer exhibit TG15. Again, the Respondent allowed it to pass! It is as yet unclear whether this was an attempt to prevent disclosure of the true financial state of GGBL in the lead up to the takeover. Respectfully, this can only be known if this Honourable Court will make an order of mandamus to issue against the SEC in order to wake the SEC up to its responsibilities under law.

e. No valuation report was submitted to the GSE or the Respondent. We wish to submit that the GSE has no discretion in this regard. The GSE’s own Listing Regulations require it under regulation 52 to demand a copy of the valuation report. Again, it was never demanded by the regulators and never submitted.

f. Between December 17, 2003 when the deal was announced on the Ghana Stock Exchange and July 20, 2004, when the shareholders of GGBL approved the deal and other resolutions pertaining thereto, GGBL’s share prices increased by approximately 136% (that is within seven months of the announcement of its merger with GBL) whilst GBL increased within the same period by approximately 5%. GBL’s share price on the date of the announcement of the deal (December 17, 2003) was ¢1425 and rose to ¢1500 by July 20, 2004. GGBL was trading at ¢5400 on the date of the announcement. By July 20, 2004, it was priced at ¢12750. On any other market, the regulator would investigate to assure itself that all was well. Is Ghana any different? We think not. This is especially so in view of the fact that Diageo caused to be issued to itself to the exclusion of all other shareholders, shares of GGBL which were priced at the prevailing price on the day of the announcement (i.e. ¢5400/17 December, 2003) at a time when the price had already appreciated hugely, thereby making instant capital gains. It is our humble submission that the regulator must investigate to establish where there was no stock market manipulation or insider dealing over the said period leading to these events on the securities market.

g. False reports have been made to the GSE and the Respondent in clear breach of the law. GGBL sent a press release to the GSE in 2005 stating that the merger was achieved in December 2004. Please refer exhibit TG8. This is false and a breach of the Securities Industry Law, 1993. Nothing has been done till date. Regrettably, the Respondent itself has repeated these false and untrue statements in official communication to the Applicant as reflected in exhibit TG2. As shown in exhibit TG12, the Daily Graphic newspaper carried a report of the launch of a corporate entity and logo of GGBG on October 13, 2005. It was all part of the grand deception. GGBG does not exist in law. It has not even been registered with the Registrar-General’s Dept. in contravention of the Registration of Business Names Act, 1962 (Act 151) as evidenced by our search exhibited as TG11.

5. Breaches of the Law:

We wish to set out in detail the following breaches of the law that have occurred and which is the subject matter of the Applicant’s complaint but which the Respondent has refused to investigate and/or apply the legally stipulated sanctions:

a. Financial Reports

When the original offer was made to the GBL Board after GSE’s approval, GGBL was in breach of its disclosure requirements on the GSE. Part VII of the GSE’s own Listing Regulations was breached. Available records indicate that when the original Offer was made to the GBL Board, GGBL was in breach of its disclosure requirements on the GSE. The provisions in Part VII of the GSE’s Listing Regulations bind GGBL as a listed company. However the reporting regimes in the market have been fundamentally altered by the promulgation of the SEC Regulations, 2003 (LI 1728). Regulation 55(1) of LI 1728 is instructive. Under the old GSE reporting regime, listed companies were obliged to disclose half-year results not later than 3 months after the end of the relevant period. Preliminary financial results were to be published not later than 3 months after the end of the relevant financial year. A fully audited annual report was expected to be published not later than 6 months. Under LI 1728, an annual report was to be published not later than 3 months from the end of the relevant financial year (regulation 54 of LI 1728). However, regulation 55 introduced a new quarterly reporting regime such that quarterly financial statements in defined form were to be filed with the regulators and published not later than one month from the end of the relevant quarter.

It is significant to note that LI 1728 does not mention half-year results as was the case in the GSE Listing Regulations. This is because the reporting format was such that the second quarter results would automatically reflect the position at half-year. It should however be noted that in terms of content, it also differs. It is also important to note that where the GSE Listing Regulations conflict with LI 1728, LI 1728 would prevail. The reporting requirements under LI 1728 entail a much more detailed disclosure regime than under the requirements of the GSE Listing Regulations. Regulation 52(1) of the GSE’s Listing Regulations enjoins all listed companies to comply with the Rules on Takeovers and Mergers of the GSE.

GGBL’s financial year ends on June 30. Thus ordinarily, its first quarter results during the relevant period should have been published latest by October 1, 2003. LI 1728 clearly states that after a month’s grace period has expired, a company would be in default and is liable to pay ¢2million for each day the default continues. However even after the transaction had been announced, GGBL’s first quarter results were never disclosed yet the Respondent and the GSE approved a major transaction involving a corporate entity that was essentially in breach of the disclosure rules on the market. Till date, neither the Respondent nor the GSE has published any information to the effect that GGBL was mulcted with the relevant penalties for the said breaches in its continuing obligations by either the GSE or the Respondent. It was only much later that GGBL published its half-year results which went some way to cure the lacunae in information that the market needed in order for informed investment decisions.

However, a cursory look at the mode of disclosure in respect of the half-year results also gives cause for concern. As outlined earlier, LI 1728 has broadened the depth of information to be provided under the Continuing Obligations of listed companies. Regulation 56 of LI 1728 on contents of quarterly financial statements reads as follows:

(1) The quarterly financial statements shall comprise either a complete set of financial statements or a set of condensed financial statements but the statements shall include at least
a. A balance sheet
b. An income statement for the period on a year to date basis;
c. A statement where relevant showing either
i. Changes in equity
ii. A statement of recognized gains and losses, changes in equity, except those arising from capital transactions with owners and distribution to owners;
iii. selected explanatory notes as specified in this
regulation; or
iv. a condensed cash flow statement.

However as evidenced by exhibit TG15, GGBL used the old format under the GSE Listing Regulations in purported compliance with LI 1728. For a major multinational engaged in a major acquisition of another listed company and having access to seasoned financial and legal expertise, the question that necessarily arises, is whether this done deliberately to prevent the true state of the financial position being disclosed to shareholders? It is difficult for GGBL to argue that it was not aware of the promulgation of LI 1728. Again, it seems both the GSE and the Respondent allowed these breaches of fundamental disclosure obligations to pass. The Respondent despite all its powers under law, and despite its attention being drawn to these clear infractions by the complaint of the Applicant and further communication as expressed in exhibits TG1, TG4 and TG5, has done nothing although it is aware of such blatant disregard for securities laws.

b. Valuation Report

No valuation report was submitted to the GSE and the Respondent and yet both institutions strangely abdicated their legal duty to request for the document and ensure its disclosure to shareholders. This is a clear unambiguous breach of regulation 52 of GSE’s Listing Regulations. Respondent’s statement in exhibit TG2 that the valuation report was submitted by GGBL to the GSE and also to shareholders of GBL is therefore materially false. No valuation report was submitted to the GSE. Although the GSE’s own Listing Regulations obligated it to request a copy of the Valuation Report, for reasons as yet undisclosed due to the Respondent’s refusal to investigate this matter, the GSE broke its own regulations and did not request for the valuation report from GGBL neither was it submitted. Instructively, the Offer Circular, (copies of which are necessarily with the Respondent) did not also disclose that the Respondent or the GSE had granted GGBL an exemption, even though, there would have been no legal basis to exempt such a fundamental document from disclosure. We wish to stress that this information could easily be ascertained from the Offer Circular. We wish to submit that the Valuation Report is not listed among the documents exhibited in the Offer Circular underpinning the takeover. The Applicant shudders to think of the implications if later investigations do indeed show that the GSE was given a copy of the Valuation Report and chose not to make the disclosure. If the regulations require this document to be disclosed, why did the regulators allow non-disclosure and did not state to shareholders it has granted an exemption?


c. False Reports

Takeover?/Merger?
False reports, unfortunately swallowed, hook, line and sinker by the Respondent, have been submitted by GGBL as part of a grand design of deception, to the GSE. This is a clear breach of section 134 of PNDCL 333. By law, any person who with intent to deceive makes or furnishes … any false or misleading statement or report to the SEC, the GSE or officers of the SEC on matters relating to dealings in securities, matters required by the SEC for the proper administration of the law or the enforcement of the rules of the GSE commits and offence. This is punishable by 500 penalty units and/or two years.

GGBL in the notes to its GSE press release no. 077/2005 stated that there had been a merger since December 2004. Please refer exhibit TG8. We are alarmed that the Respondent would commit such a fundamental mistake. The complaint was premised on the fact that there had been a calculated and deliberate campaign of misinformation to the unsuspecting Ghanaian public through the very institutions tasked to prevent and penalize such actions. The deliberate maze created can only be unravelled if a clear distinction is made Guinness Ghana Breweries Group (GGBG), Guinness Ghana Breweries Limited, (GGBL), Guinness Ghana Breweries (GGB), and Ghana Breweries Limited (GBL). We wish to submit that the true state of affairs is that GGBL acquired shares in GBL but has not merged with GBL. This is at variance with corporate communication from GGBL itself, which has oscillated between the fact of non-merger and the basic untruth of merger. This matter could have been ascertained if the Respondent had had due regard to press releases through the GSE and to publications in the media and to the Annual Report submitted to GGBL shareholders for the Annual General Meeting held late last year. All these documents, instructively, are either with the Respondent itself or should be with it by law. We wish to submit that the Respondent has a legal duty under regulation 58(1) of LI 1728 to review such documents to ensure compliance with accounting standards and securities laws. Clearly, this has not been done. The latest is exhibit TG16 which is dated as recently as February 28, 2006.

Again, the Daily Graphic publication of October 13, 2005 (please see exhibit TG12) shows a clear attempt to mislead the public on the true nature of the entity GGBL. When those statements are juxtaposed against the Annual Report of Guinness Ghana Breweries Group (GGBG), a phantom entity established and publicly launched by GGBL officials ostensibly as the holding company of the two companies, the securities regulator should have been concerned. Exhibit TG10 clearly shows that the entity GGBG is being referred to as “Ghana’s most celebrated company”. In actual fact, GGBG does not exist. GGBL has not even bothered to register that entity, a clear breach of the Registration of Business Names Act, 1962 (Act 151). All these matters have been pointed out to the Respondent and yet it refuses to act. We respectfully submit that a securities regulator should necessarily act when such acts are committed on the capital markets in Ghana. It is puzzling to say the least that the Respondent would bend over backwards to protect a corporate entity that is clearly in breach of the law by consistently refusing to act in accordance with its mandate under law. The big question that is to be asked is whether the Respondent is to protect investors or its duty is to protect big business? Is GGBL above the law? The law courts have a unique opportunity to lay down the law pertaining to securities activities in Ghana.

d. GSE Liability

Under section 132 of PNDCL 333, executives of the GSE who fail to take all reasonable steps to ensure compliance with the Law or the accuracy or correctness of any statement submitted by those officials commit an offence and will be liable on conviction to 250 penalty units or to one year imprisonment or both. Applicant has pointed out in its complaint to the Respondent that breaches have occurred. The Respondent has a public duty to act yet it has so far failed to act.

e. Court-approved Price?

We wish to submit that no court of law determined the offer price under the takeover deal. We therefore find it rather unsettling that the Respondent would liberally make in exhibit TG2, factually inaccurate statements to the effect that the High Court determined the offer price. These matters could be cleared if any investigations as prescribed by law had been done to ascertain whether a court of law ever made that determination. The Respondent’s continued assertion of an inaccuracy is a sad testament to its unwillingness to fulfil its legal duty unless ordered so to do by this Honourable Court. The Applicant submits that the Respondent made a rather grave error in stating that “the issue of a fair value does not arise since it was determined by High Court and there was no subsequent appeal”. We respectfully submit that when an apex regulator of the securities industry, with a legal duty, liberally documents untrue statements, which would be an offence under PNDCL 333, as amended, if it were committed by a market operator, the law courts and indeed all investors must be very concerned. The Applicant therefore states categorically that the offer price pursuant to the takeover was not determined by the High Court. The offer price was determined by the offeror, GGBL. The matter brought before the Court by a shareholder of GBL was whether the valuation report had to be disclosed in order to determine the fairness or otherwise of the offer price. As soon as the High Court made a ruling that the valuation report should be submitted, not to the public, but to the Court in order for it to make a determination as to whether it should be disclosed or not, the matter was settled out of court. The substantive issues were therefore never resolved. The Respondent was a party to that suit and is fully aware of all the facts. It is only an investigation that can help determine why the regulator itself will make public statements of an untrue nature.

We wish to submit that Diageo, the parent company of GGBL could only lawfully pay for its new shares after the completion of the EGM of GGBL in July 2004 yet the price it paid for the shares was the prevailing price as at December 17, 2003, when the deal was announced, i.e. ¢5400. This was at a time when the prevailing share price of GGBL was ¢12,270. The Respondent is always invited to the general meetings of listed companies and must have been a witness to this event. Respectfully, no securities regulator in any jurisdiction, perhaps except Ghana, would even wait to receive a formal complaint when it notices a rapid rise in the share price of Guinness between December 17, 2003 and the closure of the deal. Whilst we have consistently stated that we have no evidence of wrongdoing, the facts necessarily warrant an investigation to determine whether any stock market manipulation and/or insider dealing transpired during the period.

Section 123(1) of PNDCL 333 defines stock market manipulation as follows: ‘A person who effects, takes part in, is concerned in or carries out, either directly or indirectly, two or more transactions in securities of a body corporate which are transactions in securities of a body corporate which are transactions that have or are likely to have, the effect of raising, lowering, maintaining or stabilising the price of securities of the body corporate on a stock exchange in Ghana with intent to induce other persons to sell, purchase or subscribe for securities of the body corporate or of a related body corporate commits an offence”.

Section 128 prohibits dealings in securities by insiders. It provides as follows:
(1) A person who is, or has at any time in the 6 months immediately prior to a dealing in the securities of a body corporate been connected with that body corporate shall not deal in securities of that body corporate if by reason of his association he is in possession of information that is not generally available, but if it were, might materially affect the price of those securities.

(2) A person who is or has at anytime in the 6 months immediately prior to a dealing in the securities of a body corporate been connected with that body corporate shall not deal in any securities of any other body corporate if by reason of his being, or having been connected with the first mentioned body corporate he is in possession of information that

(a) is not generally available but, if it were, would be likely to affect materially the price of those securities; and
(b) relates to any transaction (actual or expected) involving both those bodies corporate or involving one of them and the securities of the other.

We wish to submit that a case of stock market manipulation or insider dealing can never be established by the regulator requesting for evidence from a complainant. This is because some trades on the market would necessarily have to be unravelled to establish who was buying or selling the shares leading to the unusual rise or fall in the shares. No individual has legal authority to demand contract notes and transfer receipts and other records of securities dealers. It is only the Respondent who has been clothed with legal authority under section 10 of PNDCL 333 to legally request the relevant documents in its quest to investigate such matters. Indeed, an attempt by the Respondent to fully establish the futility of the “show-me-evidence” posture of the Respondent was proved by the response of the solicitors for GGBL as evidenced by exhibit TG7. The Applicants were duly rebuffed.

We therefore submit that where share prices have risen by 136% within a period of seven months after an announcement of a takeover and the majority shareholder of the acquiring company, engineers a sale to itself, alone, by getting all other shareholders to waive their right to equivalent shares as priced, of shares not at the prevailing price but at 136% discount, the Respondent ought to investigate to establish whether the shares were not manipulated and also whether no one connected with the acquiring company as defined by law, benefited by trading in shares during the said period. These are basic fundamental securities law principles that must be upheld by law in the event that the regulator fails to do its legal duty as in this instance. Further, Applicant draws the attention of this Honourable Court that Guinness Plc, which is a United Kingdom based company with links to GGBL, has been held to have engaged in stock market manipulation and breaches of securities laws in the past. This has already been pointed out in communication to the Respondent. In the late 1980s, the Department of Trade and Industry (DTI) in the United Kingdom also had an opportunity to request “documentary evidence” in the late eighties when reports of possible wrongdoing in the takeover of Distillers Plc by Guinness Plc initially surfaced. After investigations were made, the then Chairman of Guinness Plc, Ernest Saunders, was tried, convicted and jailed with three other directors of the company. We respectfully submit that if the DTI had responded in a like manner of the Respondent, the facts would never have seen the light of day. We therefore respectfully submit that it is absolutely essential that an order of mandamus issues to compel the Respondent to do its legal duty by saving the dignity of the nation and do its duty under law to investigate such clear infractions of the law and to impose the stipulated sanctions for the breaches that have occurred so far.

Further, we draw attention to events on the Tokyo Stock Exchange in the past few months. Livedoor, an internet brokerage firm, is being investigated based on allegations of fraud. The firm has been placed on the Stockwatch List, a step prior to delisting. The directors of the company have been arrested and are being tried for breaches of securities laws. The Respondent is a member of the International Organisation of Securities Commissioners (IOSCO) to which the Japanese regulator also belongs. All members subscribe to the principles of securities regulation as laid down in the IOSCO Principles.

The Respondent has breached and/or condoned the breach of the following securities regulations and laws including but not limited to the following:

i. s9 of Act 590 particularly s8c (3) of the new Part 1A by refusing to investigate the complaint and summarily dismissing it.

ii. Failing to sanction GGBL for non-compliance with regulation 55 and 56 of LI 1728.

iii. Failing to sanction the GSE and GGBL for non-compliance with regulation 52 of GSE’s Listing Regulations.

iv. Failing to investigate complaint of possible stock manipulation and insider dealing.

v. Failing to investigate and sanction GGBL for false reports submitted to the GSE and also disseminated to the general public through the media pursuant to sections 124 and 134 of PNDCL 333.

6. The Law:

a. SEC’s Legal Duty:

The functions of the Respondent have been set out in section 9 of the Securities Industry Law, 1993 (PNDCL 333), among which are the following:

Section 9:
(b): to maintain surveillance over activities in securities to ensure orderly, fair and equitable dealings in securities;

(c): to register license, authorise or regulate, in accordance with this Law or any regulations made under it, stock exchanges, investment advisers, unit trust schemes, mutual funds, securities dealers and their agents and to control and supervise their activities with a view to maintaining proper standards of conduct and acceptable practices in the securities business;

(d): to formulate principles for the guidance of the industry

(f): to protect the integrity of the securities market against any abuses arising from the practice of insider trading;

(h): to review, approve and regulate takeovers, mergers, acquisitions and all forms of business combinations in accordance with any law or code of practice requiring it to do so;

(i): to create the necessary atmosphere for the orderly growth and development of the capital market;

(k): to undertake such other activities as are necessary or expedient for giving full effect to the provisions of this Law; and

(l): to perform other functions specified under this Law.

Section 9 of the Securities Industry (Amendment) Act, 2000 (Act 590) is instructive on what the Respondent ought to do when a complaint has been filed with it. Section 8c of the new Part 1A governs the submission of complaints and the examination of issues. Section 8c states in part as follows:

(1) A complaint, dispute or any violation arising under this Law shall, before any redress is sought in the courts, be submitted to the Commission for hearing and determination in accordance with this Part.

(2) A matter to which sub-section (1) applies shall be submitted in writing to the Director-General of the Commission and where it is not in writing, the Director-General shall cause the matter to be reduced into writing.

(3) The Director-General shall cause the matter to be investigated and shall unless he

(a) considers the matter to be frivolous or vexatious;
(b) can settle the disputed matter or complaint to the satisfaction of parties concerned,
refer the matter together with the findings of the investigations to the Hearings Committee within thirty days from the date of receipt of the written complaint, dispute or violation and shall at the same time inform the complainant or persons concerned of the submission to the Hearings Committee.

Further, subsection (5) of section 8E of the new Part 1A of Act 590 gives the Hearings Committee a period of thirty days from receipt of the complaint it to examine and determine the complaint or matter unless there is a delay occasioned by the complainant, his representative or witness.

We wish to submit that the Director-General of the SEC has a legal duty under section 9 of Act 590, to investigate the complaint in order to make a determination that it is unmeritorious. It is obvious from the statements made by the Respondent in exhibit TG2 that no such investigation was conducted leading to the repetition of the same false information and untrue statements being published through the regulatory institutions, a situation that necessitated the complaint. If an investigation was conducted as warranted by law, the Respondent would have been in a position to know that there had been no merger between GBL and GGL to form GGBL. It would also have established that no valuation report was ever submitted to the GSE or to the Respondent itself. Further, it would have established by its investigations that no court of law in Ghana ever fixed the offer price under the takeover deal that led to the acquisition by GGBL of GBL. By wilfully making these false statements in support of its decision to abdicate its legal responsibilities, it is obvious that no investigation was ever conducted as required by law. The unfortunate false statements made by the Respondent in exhibit TG2 could easily be ascertained as the facts are already in the public domain and relevant documentary proof on the issues are with the Respondent itself.

b. Mandamus
The principle regulating the grant of an order of mandamus is stated in the Annual Practice (1960 ed), Vol 1 at page 1725 and quoted with approval by the High Court in The Republic vrs. The Inspector-General of Police; Ex parte Hansen and Others [1992] 2GLR at page 179: “An order of mandamus is an order requiring an act to be done… and it may be made where an inferior tribunal or body of persons is charged with a public duty to do an act, and has failed upon demand to do it: see R. v. Inland Revenue Commissioners, Re Nathan (1884) 12Q.B.D. 461 C.A. The making of the order is discretionary: see R. v. All Saints, Wigan (Churchwardens) (1876) 1 App. Cas. 611 at p.620, but it is made where there is a legal right to the act and no other specific and equally convenient remedy… but it may be made against officers of the Crown who are obliged by statute to do some ministerial act in favour of the applicant.”

In Republic v Chief Accountant, District Treasury, Kumasi; Ex parte Badu [1971] 2GLR 285 the court held as stated in the head note: “… an order of mandamus lies against public officials in the performance of their public or quasi-public legal duty, to require them to carry out their duty. The order is not meant to review or control what such officials have done or what they do, but to compel them to act…The order will only issue if the duty required to be performed can be legally done. Ex parte Nash 15 Q.B. 92 and R. V. Eastbourne Corporation (1900) 83 LT 338 applied.”

In Halsbury’s Laws of England (3rd ed), Vol 11, pages 106-107, paragraph 199, the law is set out as follows: “A mandamus will not go when it appears that it would be futile in its result. Accordingly, the Court will not, by mandamus, order something which is impossible of performance by reason of the circumstances that the doing of the act would involve a contravention of law …”.

In the Republic v. Chief Lands Officer; Ex parte Allotey and Others [1982-83] GLR 971 an application for an order of mandamus was made by a joint head of family to compel the Chief Lands Officer to register a number of conveyances relating to land belonging to the Onamrokor Adain family, which the Chief Lands Officer had refused or failed to register. The High Court per Cecilia Koranteng-Addow J, had the opportunity to pronounce on the issue of the locus standi of the Applicant. In her Lordship’s view, “so far as applications for granting prerogative writs are concerned, I think it is in the discretion of the court whom it will hear and whether to grant such a remedy or not. The writ of mandamus is a wide remedy and it should avail anyone who shows that he has sufficient interest to be protected and that there is no other remedy”.

The Supreme Court in the Republic v Lands Commission; Ex parte Vanderpuye Orgle Estates, reported in the 1998-99 Supreme Court of Ghana Law Reports, 677, examined the scope of mandamus and considered circumstances where the court would grant mandamus even where alternative remedy of appeal was available to the applicant. The case was an appeal against the unanimous decision of the Court of Appeal affirming the judgment of the High Court, granting an order of mandamus against the Lands Commission.

Bamford-Addo JSC at 691 quoted from page 63, HWR Wade Administrative Law (5th Ed) on the history, use and effect of mandamus: “Lord Mansfield said in sweeping terms in R v Baker (1762) 3 Burr 1265 at 1267…’ it was introduced to prevent disorder from a failure of justice and defect of police. Therefore it ought to be used upon all occasions where the law has established no specific remedy and where injustice and good government there ought to be one … the value of the matter, or the degree of its importance to the public police is not scrupulous weighed. If there be a right and no other specific remedy, this should not be denied.” Her Lordship further quoted Darling J in R V The Revising Barrister for the Borough of Henley [1912] 3 KB 518 that “instead of being astute to discover reasons for not applying this great constitutional remedy for error and misgovernment, we think it is our duty to be vigilant to apply it in every case to which, by any reasonable construction, it can be made applicable.” His Lordship Charles Hayfron-Benjamin JSC further buttressed the importance of mandamus as a tool for ensuring that public officials did their duty. He stated at page 697 that “the respondents were right in approaching the court for a mandamus, for, wherever there is a danger or threat that an interest, whether proprietary or otherwise, will be prejudiced or unlawfully interfered with, mandamus will lie”.

As succinctly stated by Hayfron-Benjamin JSC in the case, “… an order for mandamus may issue against a public officer, a statutory authority or person who has a public duty to perform under the common law to do any act so warranted but who refuses or neglects to do that act or perform that duty. It includes the correction of such acts or duty wrongly performed. The order neither grants victory to the person applying nor is it the result of litigation”.


7. Conclusion

In the Annual Report of GGBG 2004, the Chairman of GGBG states as follows on page 8: “Following completion of the transaction, Guinness Ghana Limited changed its name to Guinness Ghana Breweries Limited”. He states further that “since then, both companies have been working hard to merge the operating businesses of former Guinness Ghana Ltd. and Ghana Breweries Ltd”. According to the said statement, “the businesses have been operating under the name of Guinness Ghana Breweries Group to help the sense of unity that is being built between the two companies. However, I would like to ensure that you are all clear that: Both Guinness Ghana Breweries Limited and Ghana Breweries Ltd. continue to exist as stand alone entities”, end of quote! Please refer exhibit TG10. The MD of GBL is also the MD of GGBL. If there has been a merger, would he hold both positions? Indeed, the fact of non-merger is borne out by the Managing Director of GBL itself in exhibit TG16. We submit that GGBL is just the old entity, GGL, which changed its name into that of the intended merged entity, GGBL and has consistently worked to promote the wrong impression in the minds of all Ghanaians that GGBL is the merged entity. Indeed, under Ghanaian law, the Respondent has a legal duty to as a matter of urgency, immediately correct the false information which evinces a brazen lack of respect for Ghana’s laws and to halt the impunity with which Ghana’s securities laws are being breached, regrettably with the active connivance of the Respondent in total disregard for its duty under law.

When such statements are made in Annual Reports, copies of which are with the Respondent and the Respondent justifies a refusal to investigate a complaint by making statements that are debunked by documents within its own possession, it is imperative that the law courts intervene to ensure that public officials do their duty under law. As stated by Hayfron-Benjamin JSC in the Republic vrs. Lands Commission, ex parte Vanderpuye Orgle Estates, “… an order for mandamus may issue against a public officer, a statutory authority or person who has a public duty to perform under the common law to do any act so warranted but who refuses or neglects to do that act or perform that duty”. The Applicant has shown beyond all reasonable doubt that the Respondent has refused and/or neglected to do its duty.

The relevant law has made a provision of 60 days for resolution of complaints. In securities issues, time is of the essence. The continuing delay in dealing with the matter makes it imperative that an order of mandamus is the only order that would compel the securities regulator to do its duty under law to investigate the matters complained of and also to apply laid down sanctions for the infractions of the securities laws and regulations that have already taken place.

The manner in which the Respondent has abdicated its legal responsibility to regulate the market by refusing to investigate the complaint and ensure that defaulters are appropriately sanctioned leaves much to be desired and is a dangerous precedent that needs to be reversed. The grounds adduced by the Respondent to support its regrettable decision to abdicate its legal responsibility have been shown to be wholly inaccurate. The stated grounds of the Respondent are false in material particular and therefore cannot lawfully found a proper determination not to investigate the complaint. The Respondent is akin to a policeman. Indeed, it is the Police of the securities industry. When a policeman can tell a complainant that he will not investigate a complaint in the face of overwhelming evidence, it is a recipe for chaos. Indeed, the policeman has no such discretion. It has a duty to investigate the matter and cite the complainant for deceit of public officer in the event that it finds that the complaint is wholly unmeritorious. Indeed, that is why mandamus is available “to prevent disorder from a failure of justice and defect of police.”

The applicant has established that the Respondent has a legal duty. It was called upon to perform that duty. It refused. The applicant wrote to the Minister of Finance (please refer Exhibits TG13 and 14). No response has been forthcoming. This is a monumental, indeed, unprecedented breakdown in regulation that may be unique to Ghana. This nation will encounter a lot of mergers and acquisitions in the near future as businesses consolidate on the local market. It is therefore essential to understand the regulatory failures in this particular instance in order to correct any mistakes and better the regulatory framework for such critical economic activities. The matters complained of and warranting the present application can therefore by no stretch of the imagination be termed as frivolous or vexatious. Indeed, after 49 years of independence, the Applicant sincerely believes that it is not only small or medium sized local companies that can fall foul of the law. The law is blind as to personalities. The best signal that the Ghanaian judiciary can send to the investing world is that in Ghana, as in other jurisdictions, the law is applied regardless of the personalities involved. Just as the DTI in the United Kingdom did to Guinness Plc by investigating allegations of impropriety in securities dealings, leading to the trial, indictment and conviction of Mr. Ernest Saunders, then Chairman of Guinness Plc and three other directors for breaches of a similar nature, we wish to humbly submit that in the light of the evidence adduced, “the chips should fall where they may”.

We therefore call on this Honourable Court to order mandamus to issue against the Respondent to compel compliance with its duties under law and to prevent total mayhem on Ghana’s securities markets.

DATED AT ACCRA THIS 23rd DAY OF MARCH, 2006




SOLICITOR FOR APPLICANT
THE REGISTRAR
FAST TRACK HIGH COURT
ACCRA

AND FOR SERVICE ON THE ABOVE-NAMED RESPONDENT

ThinkGhana-Vrs-SEC,Ghana :Affidavit in Support of Mandamus Application

IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT OF JUSTICE
FAST TRACK DIVISION
ACCRA A. D. 2006

SUIT NO. AP22/2006
THE REPUBLIC

VRS

SECURITIES AND EXCHANGE COMMISSION }
C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT

AFFIDAVIT IN SUPPORT

I, Joe Aboagye Debrah, of F119B, Palm Avenue, Ashongman Estates, Accra, Chief Executive/Founder of ThinkGhana, do make oath and say as follows:

1. That I am the Deponent herein and have the authority and consent of the Applicant organisation to depose to these facts which are also within my personal knowledge.

2. That ThinkGhana is a private company limited by guarantee established and dedicated to inter alia, upholding the best practices and principles of corporate governance and securities regulation in Ghana.

3. That on December 18, 2005, the Applicant filed a complaint with the Respondent in respect of the takeover by Guinness Ghana Limited (GGL) which later changed its name to Guinness Ghana Breweries Limited (GGBL). The said complaint is attached hereto as exhibit “TG1”.




4. That the said complaint demanded an investigation into the acquisition of GBL by GGBL and the role played by all major actors in the process to determine whether Ghana’s securities laws had not been breached and whether the interests of shareholders were and have been adequately protected by the regulatory institutions involved in the acquisition.

5. That on January 16, 2006, the Respondent wrote to the Applicant stating that the complaint was a catalogue of unproven allegations and was without merit and declined to investigate the complaint but requested for cogent and credible evidence. The Respondent’s letter is attached as exhibit “TG2”.

6. That the Applicant forwarded an initial response dated January 17, 2006 (attached hereto as exhibit “TG3”) to the Respondent and stated inter alia, that the Respondent’s action was an abdication of responsibility under the Securities Industry (Amendment) Act, 2000 (Act 590) and to other relevant legislation. It further stated that the Respondent had neither investigated the complaint as required by law nor was willing to do same.

7. That the Respondent has a legal duty under section 9 of Act 590 to investigate the complaint in order to make a determination whether it is unmeritorious.

8. That the Respondent also has a legal duty under the Securities Industry Law, 1993 (PNDCL 333) to regulate the securities industry of Ghana and to assure compliance with the law, rules and regulations of the securities industry.

9. That the contents of the Respondent’s letter of January 16, 2006, (that is exhibit TG2) shows that no investigation was conducted as the Respondent had regrettably repeated the same false information and untrue statements being published through the regulators by GGBL, a situation which necessitated the complaint in the first place.

10. That per letter dated January 24, 2006, Applicant forwarded a detailed response to the Respondent (attached as exhibit “TG4”) which also annexed a 15-page appendix (attached hereto as exhibit “TG5”).

11. That the Respondent is the only public body tasked with regulating the securities industry in Ghana and cannot abdicate its responsibilities to any other entity.

12. That the Respondent therefore has regulatory oversight over the Ghana Stock Exchange (GSE) and GGBL in accordance with the law.

13. That the abdication of responsibility by the Respondent compelled the Applicant to write to both GSE and GGBL to request for copies of specified documents and information that the Respondent would have needed to make a fair determination of the matter if it had been minded to do its legal duty. Relevant copies of the said letters are attached as exhibits “TG6A” and “TG6B”.

14. That whereas GGBL refused the Applicant’s request for disclosure on stated grounds, (which is attached hereto as exhibit “TG7”), the GSE has provided access to the requested public documents but not the purported valuation report neither did it acknowledge receipt of the said report.

15. That by the GSE’s rules and according to the Securities and Exchange Commission Regulations, 2003 (LI 1728), all listed companies have a duty to file quarterly financial reports with the GSE and copies lodged with the SEC as appropriate.

16. That there are defined sanctions under law to be applied by both the GSE and the Respondent in the event of non-compliance with the rules and regulations.

17. That in the lead up to the takeover of GBL, GGBL failed to file its 1st quarter financial results 2004 by the legally stipulated deadline of October 2003, which is a breach of LI 1728.

18. That the penalty for the said breach is ¢2,000,000.00 for each day that the default persists.

19. That till date, GGBL has never provided the said results and neither the GSE nor the SEC has imposed the requisite penalties under law.

20. That in the lead up to the takeover of GBL, GGL further was obliged to file its half-year results by January 2004, by which time the announcement of the takeover had been made on the market.

21. That GGBL filed its half-year results but not in compliance with LI 1728 as being a condensed financial statement which was not in compliance with regulation 56 of LI 1728 but again, the Respondent and the GSE allowed it to be published on the market in purported compliance with the securities laws.


22. That GGBL has issued a press release on the GSE to the effect that it has merged with GBL and also published through the media communication to cement that wrong impression in the minds of unsuspecting shareholders and investors. The said press release is attached hereto as exhibit “TG8”.

23. That publication of false and untrue information on the stock market is a breach of the Securities Industry Law, 1993 (PNDCL 333) which carries a penalty of 500 penalty units or two years imprisonment.

24. That all of these actions were calculated to prevent full disclosure of the true financial state of GGL prior to the takeover and were a fundamental breach of Ghana’s securities laws.

25. That yet again, the Respondent and the GSE have refused to do their legal duty by acting to prevent or punish the breaches of securities law which continue on the market.

26. That the Respondent in official communication to the Applicant has made the following statements:

a. That GBL and GGL have merged to form GGBL.
b. That GGL submitted a valuation report underpinning the Takeover Offer to both the GSE and the Respondent.
c. That the High Court of Ghana determined the Offer price during the Takeover.

27. That all the above statements in paragraph 26 made by the Respondent itself in official communication are false and untrue in material particular and carry sanctions under applicable securities legislation even if they had been made by any other capital markets operator.

28. That GGBL is communicating on a letterhead of an entity known as Guinness Ghana Breweries Group (GGBG) which entity was used to call the Annual General Meeting of GGBL and copies of the Annual Report were lodged with the SEC in which the Chairman of GGBG states clearly that GBL and GGBL have not merged.

29. That a copy of the GGBG letter head and the relevant portions of the Annual Report of GGBG 2004 are attached hereto as exhibits “TG9” and “TG10” respectively.

30. That a search at the Registrar-General’s Dept. revealed that the said entity, GGBG does not exist and was not even registered in compliance with the Registration of Business Names Act, 1962 (Act 151). The search is attached hereto as exhibit “TG11”.

31. That GGBL has made untrue statements through press releases on the GSE and in the press including a report on the launch of Guinness Ghana Breweries Group in the Daily Graphic newspaper of October 13, 2005 to the effect that it is the merged company but the Respondent has not applied any sanctions but has rather adopted the infractions and put them out in the public domain itself on the SEC’s own letterhead. A copy of the said publication in Daily Graphic is attached as exhibit “TG12”.

32. That at the time the SEC was communicating to the Applicant that GBL and GGL had merged, it was privy to all the information exhibited in exhibits TG9, TG10, TG11 and TG12 but woefully failed to perform its regulatory functions assigned to it by law to either prevent breaches of the law or to sanction offenders for breaches of the law.

33. That on February 3, 2006, the Applicant wrote to the Minister of Finance to use his powers under section 140 of PNDCL 333 to order an investigation into the matter. The letter is attached as exhibit “TG13”.

34. That on February 13, 2006, a reminder was sent to the Minister of Finance but till date, no response has been forthcoming. The reminder is attached as exhibit “TG14”.

35. That the actions of the Respondent are unwarranted under law and a continuing assault on its obligations under law to regulate the securities industry in Ghana and would only act if compelled by an order of mandamus.

36. That under law, the Respondent has a legal duty to investigate a complaint that alleges inter alia, breaches of securities laws such as stock manipulation and insider dealing and to work to secure an enforcement of Ghana’s securities laws regardless of the financial clout of the entities in breach.

37. That during the Takeover, the parent company of GGBL engineered a sale of shares to itself at ¢5400, the prevailing share price on December 17, 2003 to the exclusion of all other shareholders.

38. That this purported sale of GGBL shares to Diageo was approved by GGL shareholders on July 20 2004, about seven months after the deal had been announced and after the price of Guinness had mysteriously risen by approximately 136% to ¢12,750 in the intervening period before the said sale.

39. That in any other jurisdiction and on any other securities market except Ghana, this would warrant an investigation by the securities regulator itself without any prompting from any individual or organisation.

40. That in the late 1980’s, Guinness Plc undertook a similar takeover of Distillers Plc in the United Kingdom which deal was investigated by the Department of Trade and Industry in the United Kingdom and the investigations established malfeasance and breaches of United Kingdom securities laws and the then Chairman of Guinness Plc, Ernest Saunders together with three other directors were sentenced to various terms of imprisonment for their roles in the said transaction.

41. That I have been informed by Counsel and verily believe same to be true that the actions of the Respondent are erroneous in law and constitute an assault on the principles of securities regulation and an affront to all Ghanaians and a complete abdication of responsibility under law.

42. That I have been advised by Counsel and verily believe same to be true that the High Court has authority to order the SEC to do its legal duty by way of mandamus.

43. That it is the Applicant’s prayer that the Respondent be ordered to investigate the acquisition by GGBL of GBL and the role played by all major actors in the process including the SEC itself, to determine whether Ghana’s securities laws have not been breached and whether investor’s interests have been protected by the regulatory bodies.

44. That further, all the sanctions applicable under law be applied by the GSE and the Respondent without fear or favour to all defaulters.

45. That unless this Honourable Court so orders the Respondent to do its legal duty, Ghana will become the laughing stock of the international financial community and much needed portfolio investment will be diverted from Ghana to other countries where regulators are ready, able and willing to do their legal duty to regulate their securities industry according to law.


WHEREFORE I swear to this affidavit


SWORN AT ACCRA THIS ]
DAY OF MARCH, 2006 ] ……………………………
DEPONENT

BEFORE ME





COMMISIONER OF OATHS