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Why the Corporate Restructuring and Insolvency Act makes Ghana the preferred destination for investment

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Why the Corporate Restructuring and Insolvency Act makes Ghana the preferred destination for investment

Why the Corporate Restructuring and Insolvency Act makes Ghana the preferred destination for investment

The absence of an effective legal mechanism at par with the current and dynamic trends of business, particularly in the area of corporate insolvency, stifled the growth of private enterprises in Ghana and the economic wellbeing of the country as a whole.

However, the promulgation of the Corporate Restructuring and Insolvency Act, 2020, (Act 1015) (the “Act”), is a step in the right direction towards improving the quality of the legal regime for corporate bodies and their administration in the event that they become insolvent. The Act replaces the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), which was in dire need of reform considering how old it surpassed most Ghanaians in age. The Act also introduces novel provisions that facilitate access to timely, efficient and impartial administration and insolvency proceedings.

 

Few of these novel provisions are discussed below:

 

  • Restructuring/Administration of Companies

Unlike the previous legislations that mainly centered on only liquidation and receivership, Sections 2 – 78 of the Act presents distressed companies with the prospect of engaging in a corporate restructuring/administration process. This means companies have the opportunity to temporarily continue in existence as a going concern, where they can put their affairs and assets in order to enable them rise back to profitability with the help of an appointed administrator and/or restructuring officer. The restructuring officer shall work with a restructuring agreement. This is an agreement executed by the company and the creditors to provide for payments towards the creditors’ debts. The effect of corporate restructuring is that it imposes a temporary freeze on the rights of creditors and other claimants against the company, and allows for the implementation of a restructuring plan, which results in a better return for the creditors and shareholders of the company than would have resulted from the immediate winding up of the company. However, these restructuring provisions do not apply to businesses that are subject to special regulations such as banks and insurance companies.

 

  • Active Participation of Creditors in the Insolvency Process

The Act seeks to balance the interests of all concerned parties during the insolvency process and thereby allows for the active participation of creditors in the insolvency process. Sections 20 – 29 centers on the role of creditors when the company undergoes an administrative process. The administrator is obligated to convene a first meeting with the company’s creditors within 10 days after the administration process commences, wherein the creditors have a right to establish a committee of creditors or replace the Administrator. The Committee of Creditors acts as an advisory unit to the Administrator and deliberate on reports relating to the administration of the company. Additionally, creditors must approve of the restructuring agreement. Under official liquidation, creditors may nominate and appoint a liquidator (section 95 (1)) and must be consulted on matters that substantially affect their interests during the liquidation process.

 

 

  • Cross-Border Insolvency Processes

The Act has provisions in sections 150 – 152 and a schedule that specifically regulates cross-border insolvency proceedings. The main aim is to promote cooperation between courts and competent authorities in Ghana and foreign countries, thereby enabling effective cross-border insolvency proceedings of companies that have assets and creditors in and outside Ghana. The provisions in the Act are reflective of the United Nations Commission on International Trade Law (“UNCITRAL”) model law on cross-border insolvency. It allows for the recognition of foreign insolvency proceedings and reliefs. The Act permits a foreign representative to apply for the commencement of an insolvency proceeding in Ghana and participate in proceedings regarding a debtor or creditor. A Ghanaian insolvency practitioner is also authorized to act in a foreign state on behalf of a Ghana insolvency proceeding, as permitted by the applicable foreign law.

 

  • Establishment of an Insolvency Services Division 

Sections 153 – 162 of the Act provides for the establishment of an Insolvency Services Division (“ISD”) under the Office of the Registrar of Companies. The ISD shall review the law and practice that relates to insolvency in Ghana, supervise insolvency practitioners, oversee administration of companies and other body corporates in Ghana and shall liaise with international agencies in the areas of international insolvency as may be necessary. A person can only act as an insolvency practitioner in Ghana if that person is a chartered accountant, lawyer or banker, with good standing in a recognized professional association; a certified restructuring and insolvency practitioner; and has security or professional indemnity for the proper performance of his/her obligations as an insolvency practitioner.

With the passage of this Act and its progressive measures towards the improved standard of business ethics and corporate governance in insolvency proceedings, Ghana is expected to improve on its ranking in the World Bank’s Ease of Doing Business Report. The country currently occupies the 118th position out of the 190 economies compared.

In conclusion, the Corporate Insolvency and Restructuring Act provides a balance between the rights of creditors to enforce their security and the public interest in ensuring the survival of viable businesses, creditors, and the growth of the economy as a whole. Thus, the passage of Act 1015 is good news.

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World’s richest man Elon Musk buys Twitter in a $44 billion deal

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Elon Musk buys Twitter

World’s richest man Elon Musk buys Twitter in a $44 billion deal

Elon Musk has sealed a deal to buy one of the world’s influential social media companies Twitter Inc (TWTR.N) for US$44 billion cash on Monday 25th April 2022. This landmark transaction transfers the control of the social media platform populated by millions of users made up of celebrities and global leaders to the world’s richest man.

It is a seminal moment for the 16-year-old company, which emerged as one of the world’s most influential public squares and now faces a string of challenges.

Musk, who calls himself a free speech absolutist, has criticized Twitter’s moderation. He wants Twitter’s algorithm for prioritizing tweets to be public and objects to giving too much power on the service to corporations that advertise.

Political activists expect that a Musk regime will mean less moderation and reinstatement of banned individuals including former President Donald Trump. Conservatives cheered the prospect of fewer controls while some human rights activists voiced fears of a rise in hate speech.

Musk has also advocated user-friendly tweaks to the service, such as an edit button and defeating “spam bots” that send overwhelming amounts of unwanted tweets.

Discussions over the deal, which last week appeared uncertain, accelerated over the weekend after Musk wooed Twitter shareholders with financing details of his offer.

Under pressure, Twitter started negotiating with Musk to buy the company at his proposed $54.20 per share price.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement.

Former Twitter CEO Jack Dorsey weighed in on the deal late on Monday with a series of tweets that thanked both Musk and current Twitter CEO Parag Agrawal for “getting the company out of an impossible situation.”

“Twitter as a company has always been my sole issue and my biggest regret. It has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step,” he said.

The Twitter transaction was approved by the company’s board and is now subject to a shareholder vote. No regulatory hurdles are expected, analysts said.

Daniel Ives, an analyst at Wedbush, said the company’s board of directors had its back “against the wall” once Musk detailed his financing package and no other bidders emerged.

Although it is only about a 10th of the size of far larger social media platforms like Meta Platforms Inc’s (FB.O) Facebook, Twitter has been credited with helping spawn the Arab Spring uprising and accused of playing a role on Jan. 6, 2021, storming of the U.S. Capitol.

After Twitter banned Trump over concerns around incitement of violence following the U.S. Capitol attack by his supporters, Musk tweeted: “A lot of people are going to be super unhappy with West Coast high tech as the de facto arbiter of free speech.”

Trump, whose company is building a rival to Twitter called Truth Social, said in a Fox News interview on Monday that he will not return to Twitter.

The White House declined on Monday to comment on Musk’s deal but said President Joe Biden has long been concerned about the power of social media platforms.

“Our concerns are not new,” said White House spokesperson Jen Psaki, adding that the platforms need to be held accountable. “The president has long talked about his concerns about the power of social media platforms, including Twitter and others, to spread misinformation.”

 


Culled from: REUTERS

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Nigeria commits to pay off US$28.7 million capital arrears in Shelter Afrique

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Nigeria Finance Minister Dr Zainab Shamsuna Ahmed and Shelter Afrique MD Andrew Chimphondah

Abuja – January 11, 2022: The Federal Republic of Nigeria has pledged to pay the full capital arrear of US$28.7m in Shelter Afrique, Nigeria’s Finance Minister Dr. Zainab Shamsuna Ahmed disclosed at a meeting with Shelter Afrique Group Managing Director and CEO Mr. Andrew Chimphondah in Abuja.

The Minister further disclosed that the payment will be made in four installments starting January 2022.

In September 2020, the pan African housing development financier received US$$9.4 million from Nigeria. The contribution moved Nigeria to become the second-largest shareholding in the organization with 13.27% of the shareholding, behind Kenya with 17.78%, and ahead of the AfDB at 12.83%.

Lauding the government of Nigeria for its show of confidence in the institution and a stamp of approval for the organisation’s financial turnaround, Mr. Andrew Chimphondah said, “This is a major milestone which is set to propel Nigeria to become the largest shareholder in Shelter-Afrique when the country meets its capital commitment. This is a strong testament of the strong shareholder commitment and support of the Shelter Afrique Board and Management.”

Housing Bond

Shelter Afrique is planning to raise 250 Billion Naira Bond (US$500million) in 2022 to support its affordable housing projects in Nigeria. The Company is set to commence the road shows with prospective investors in January 2022 and is expected to conclude fundraising by end of February.

Shelter Afrique has embarked on a defined strategy of developing and deepening local capital markets so that access to local currency which is competitively priced can be made available to Nigerian Developers from the Real Estate Developers Association of Nigeria (REDAN), Large Developers and Tier 1 and Tier 2 Banks and Primary Mortgage Lenders. The significance of this is that Shelter-Afrique will have been successful in dealing with the foreign exchange exposure risks that have crippled many African countries caused by the weakening of local African currencies against hard currencies such as the United States Dollar and the British Pound Sterling,” Mr. Chimphondah said.

Thanking the Finance Minister Dr. Zainab Shamsuna Ahmed for supporting the Bond Issue by the approvals received on critical waivers from the Ministry of Finance, Mr. Chimphondah noted that Nigeria was a critical and strategic market for Shelter Afrique, adding that the fund realized from the bond issue will go a long way in address the affordable housing shortage in the country, now estimated at 17 Million Units against the continent’s 56 million units.

“As a response to addressing this housing shortage, Shelter Afrique will implement a transformative strategy that will crowd in additional capital funding into the low cost large scale affordable housing market in a commercially viable manner,” Mr. Chimphondah concluded.

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Yaw Amoateng Afriyie appointed Deputy CEO of GIPC

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Yaw Amoateng Afriyie

The President of the Republic of Ghana, Nana Addo Dankwa Akufo-Addo, acting under Section 17 (3) of the Ghana Investment Promotion Centre (GIPC) Act 2013 (Act 865), has appointed Yaw Amoateng Afriyie as the acting Deputy Chief Executive Officer of GIPC.

Amoateng Afriyie’s appointment is subject to the constitutionally required advice of the governing board of GIPC in consultation with the Public Services Commission.

GIPC –  Ghana Investment Promotion Center

GIPC is Ghana’s principal investment agency. Its functional mandate is to attract, promote and retain inward investment into Ghana to stimulate wealth creation and unlock opportunities for the private sector.

Amoateng Afriyie will assist the newly constituted board and the chief executive officer, Yofi Grant, together with the existing management to ensure that Ghana’s post-COVID-19 recovery is anchored on competitiveness, innovation and the board’s broader objectives.

These investment objectives align with Ghana’s international obligations.

Profile of Yaw Amoateng Afriyie

Before his appointment, Amoateng Afriyie worked in various senior capacities in the UK and Ghana as a management and political risk professional. He has considerable experience in commercial, tactical and strategic risk assessment in relation to business and investment in sub-Saharan Africa.

Until recently, he was the managing director of Elmina Advisory Ltd, a Ghana-focused government affairs consultancy advising blue-chip companies and global consultancies to assess opportunities and manage the impact of politics and policy, macroeconomics, and security in Ghana.

He has also worked as West Africa head at Africa Matters Ltd (AML), a London-based Africa-focused consultancy; a research analyst in the international office of the campaign headquarters of the Conservative Party UK; a researcher at Africa Practice, London; an external consultant at the global business advisory firm FTI Consulting; and a freelance contributor on anglophone West Africa at the Economist Intelligence Unit (EIU).

Amoateng Afriyie holds a postgraduate diploma in global business from the Saïd Business School of the University of Oxford, a Master’s degree (MA) in conflict resolution in divided societies from King’s College, University of London, and a Bachelor of Arts with Honours in politics and international relations from the University of Kent, Canterbury, also in the United Kingdom.

He is an enthusiastic amateur golfer who plays to a handicap of 12. He is equally passionate about the arts, including the music of various genres, current affairs, and sports, including football and Formula 1 racing.

GIPC has recently been adjudged the best investment agency in Africa three consecutive times by Capital Finance International magazine (CFI.co).

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