2,220 clients of defunct fund management companies paid GH¢257 million

Over 2,220 claimants of defunct fund management companies (FMCs) have been paid GH¢257 million.

This is out of the 4,154 investors who have signed up for the bailout package.

The value of the claims of the signed up 4,154 investors as of November 12, 2020, was GH¢767 million.

GCB Capital is making payment to investors who have been signed on by accepting the government’s bailout package.

Mrs Jemima Oware, the official liquidator of fund management companies (FMCs), disclosed this at a forum with investors.

The forum, organised by the Securities and Exchange Commission (SEC), was dubbed ‘Time with the Commission’, on the theme ‘Ensuring Investors’ Protection’.

The engagement, the second in a series with stakeholders, was to address issues affecting industry players and to enable SEC to offer timely information to the public and to get feedback to improve performance to achieve its mandate.

Government has provided a GH¢1.4 billion relief package to embattled customers of 27 collapsed fund management companies, including Gold Coast Limited, which had previously not received anything due to a prolonged validation process.

The government last week authorised a partial bailout, which involves payment of up to GH¢50,000, to all customers of the remaining affected fund management companies while court processes on the liquidation petition and other matters continue.

This means that all 92,460 affected customers under this special arrangement will receive claims of no more than GH¢50,000, even if their deposits exceed that amount.

Mrs Oware, who is also the Registrar-General, said from the inception of the class meeting on September 15 to November 12, 2020, 4,154 investors signed up for the bailout package.

She said 10 more companies were gazetted for liquidation, adding that the winding up of companies was characterised by challenges such as the complex and bureaucratic court processes, inability to locate some companies, and inaccurate contact details.

Other challenges were non-confirmation of claim validations and dispute over validated claims.

“In the light of all these challenges of the bureaucratic court processes, it is welcoming news that the government has authorised the partial bailout for all remaining customers of the revoked FMCs, pending the outcome of the liquidation petition orders,” she said.

She also assured investors that the office of the official liquidator would expedite the process to bring the much-needed relief to investors and creditors.

The Director-General of SEC, Reverend Daniel Ogbarmey Tetteh told the investors that the commission was taking pragmatic steps to strengthen the capital market and to protect investors’ funds.

Among the measures are the issuance of new guidelines for market operators and migration from a compliance-based framework to a risk-based approach, to take care of potential areas which could disturb the capital market.

Rev Tetteh said SEC had intensified market education of the investing public and market operators, as well as strengthened internal human resource capacity.

He said the creation of the Financial Stability Council had helped to bridge gaps in the sector as various regulators were able to share information.

The director-general said SEC had started preliminary processes to establish an Investor Protection Fund and embarked on a digitisation agenda to quicken turnaround in analysing and tapping into data to better position the commission to protect investors’ funds.

Other actions include revision of the licensing requirements for fund management companies, including an increase in minimum capital requirements to better protect investors, ensure strict adherence to the fit and proper principle and to boost market development and enhance regulatory oversight of the commission.

He said the new and enforceable guidelines would ensure better protection for investors.

The statement by SEC last week explained that the partial payment formed part of measures to reduce the burden on the customers while the court process on the liquidation petition and other matters continues.

The bailout followed deliberations with the government regarding an agreed social and humanitarian intervention for all remaining customers of the failed fund management companies.

The statement said the decision to make the partial payment was predicated on government’s commitment to protecting its citizenry, sensitivity to the plight of affected clients, and the disruptive impact of the COVID-19 pandemic.

It said the intervention was necessary at this stage because liquidation petitions for the remaining affected fund management companies were currently at different stages.

It said, besides, some affected fund management companies, including Gold Coast Fund Management Limited (now Blackshield Fund Management Company Limited), were contesting the liquidation petition.

As a result, they have filed a Stay of Proceedings until its application for judicial review of the decision of the Administrative Hearings Committee has been heard.

The statement said these legal processes could take some time and could extend the pain and suffering of the affected investors, hence the decision by the government.

“This compassionate move by the government of a partial bailout will cover all clients of the failed fund management companies whose licences are revoked but are yet to come under official liquidation, including customers of Blackshield Fund Management Company Limited,” it added.

It said the partial bailout would cover a total of 92,460 claims filed against the remaining 27 fund management companies, out of which Blackshield Fund Management Company Limited accounts for a total of 84,656 (92 per cent) claims.

Claims filed by individuals (including pensioners) is 86,506, with Gold Coast Fund Management Limited (now Blackshield Fund Management Company Limited) accounting for 80,018 (92.5 per cent) of these claims.

It said based on the validated claims, the partial bailout being offered would result in 89 per cent and 82 per cent of affected individuals and pensioners being fully settled respectively.

The statement said validated claims above the partial payout amount would be covered after the liquidation proceedings in court, in line with the terms being applied under the bailout package for the clients of the fund management companies currently under official liquidation.

The partial bailout shall be channelled through the Amalgamated Fund Ghana Limited, the same Special Purpose Vehicle (SPV) being used to pay the clients of the fund management companies currently under official liquidation.

Amalgamated Fund Ghana Limited is managed by GCB Capital Limited, a subsidiary of GCB Bank Limited. The SEC’s agent for receiving and validating claims is PwC.