The Securities and Exchange Commission (SEC) says the government has approved a partial payment of up to GHS50,000 to all persons whose funds have been locked-up in the various defunct fund management companies in process of liquidation.
The SEC made this known in a press statement on Wednesday, November 18, 2020
According to the Commission, it is to make this payment “while the court process on the liquidation petition and other matters continue”.
“The Securities and Exchange Commission (SEC), acting within its mandate of protecting investors and the integrity of the market, wishes to announce the outcome of its deliberations with Government regarding an agreed social and humanitarian intervention for all remaining customers of the failed Fund Management Companies.”
“The Commission hereby announces that Government has authorized a partial bailout which involves a partial payment of up to Fifty Thousand Ghana Cedis (GHS50,000) to all customers of the remaining affected Fund Management Companies while the court process on the liquidation petition and other matters continue.”
The SEC explains that its decision “is predicated on the Government’s commitment to protecting its citizenry and its sensitivity to the plight of affected clients compounded by the disruptive impact of the COVID-19 pandemic.”
“Furthermore, this intervention has become necessary at this stage because liquidation petitions for the remaining affected Fund Management Companies are currently at different stages.”
Meanwhile, it clarified that “they will receive their balances after court processes are concluded.”
No one will be left out in bailout for clients of defunct fund managers
The Commission had assured that no customer will be excluded from the government’s bailout package.
The SEC in a statement on Wednesday, September 2, 2020, clarified that its earlier statement announcing the bailout package had been misinterpreted.
“We wish to assure all affected clients that the Government bailout package is all-inclusive, provided claims have been validated and liquidation orders secured. The SEC reiterates the fact that there is no plan to exclude any group of customers and as indicated in our last press release, the roll-out of the Government bailout will be done in phases,” SEC said in a statement.
SEC also explained that the agreement it had with Government was for the bailout to be effected phases only after validation of claims and liquidation orders are secured.
“The first phase will cover clients of the twenty-two (22) companies currently under official liquidation per Court orders, based on their validated claims. The Official Liquidator will communicate details of the payment process to affected clients starting in September. The second phase would cover clients of the remaining companies after the liquidation orders are secured”.
“The point being made therefore is that receiving Government’s bailout is predicated on completion of validation and securing of liquidation orders. It is therefore a question of timing and nothing else,” SEC noted.
The financial sector clean-up was commenced by the Akufo-Addo administration in August 2017. It led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.
The Securities and Exchange Commission in November 2019 also revoked the licences of 53 Fund Management Companies following the companies’ failure to “return client funds which remain locked up and in a number of cases, have even folded up their operations.”
The action was taken pursuant to Section 122 (2) (b) of the Securities Industry Act, 2019 (Act 929) which authorizes SEC to revoke the license of a market operator under some circumstances.
Included in the list of the defunct companies was Black Shield Fund Management, a subsidiary of Groupe Nduom.
SEC selected branches of Consolidated Bank of Ghana Limited (CBG) to receive claims from clients who have their funds locked up at the affected companies.
The banks were tasked to accept relevant documents for validation of the investment claims.