The Commercial Court in Accra yesterday refused to dismiss a suit challenging the takeover of part of HFC Bank’s shares by the Republic Bank of Trinidad and Tobago.
The Republic Bank had prayed the court to strike out HFC’s suit against it and the Securities and Exchanges Commission (SEC), with the reason that the HFC Bank failed to seek internal redress from the SEC before going to court.
Delivering its ruling, the court, presided over by Mr George K. Koomson, held that the HFC Bank had laid enough foundation to prove that there was the likelihood that it would suffer bias in the hands of the SEC.
Admitting that the Securities Industry Law 1993 (PNDCL 333) permitted the HFC Bank to first seek redress of the issues complained of at the SEC before resorting to the courts, the court held that it would amount to “travesty of justice” if it ordered the HFC Bank to seek redress at the SEC.
That, according to it, was because the HFC Bank had made it clear that it would suffer prejudice in the hands of the SEC which had, in the past, conducted investigations without notifying the HFC Bank and the Republic Bank.
It said it appeared a lot had been done by the SEC to raise issues of bias against the HFC and for that reason the HFC Bank had lost confidence in the SEC.
Action not vexatious
Mr Justice Koomson said the action against the Republic Bank and the SEC was not vexatious, as argued by the Republic Bank.
He said serious issues of law had been raised and there was the need for the court to give it the needed attention.
Court silent on injunction
The court urged parties in the case to, on a later date, argue their cases on the motion for interlocutory injunction which is praying the court to restrain the Republic Bank and the SEC from taking any steps to offload shares in favour of the Republic Bank until the final determination of the suit.
Costs of GH¢1,000 were awarded in favour of the HFC Bank.
The Republic Bank filed the action on the grounds that the Securities Industry Law 1993 (PNDCL 333) provides explicitly for the matters complained of by the HFC Bank to be submitted to the SEC before redress could be sought in court.
According to the Republic Bank, it was improper for the HFC to resort to the court when it had, indeed, failed to report the alleged breach of the Securities Industry Law to the SEC, as was required by law.
The applicant further argued that the HFC Bank took the legal action without authorisation from the board of directors of the HFC Bank but the court held a different view and, accordingly, allowed the action to stand.
The HFC Bank, on May 23, 2014, instituted legal action against the Republic Bank and the SEC.
According to the bank, there was a transaction involving the purchase of HFC shares held by the Union Bank of Nigeria from the Republic Bank which, according to the HFC, was in breach of the SEC Law.
According to the HFC Bank, the Union Bank of Nigeria sold its shares to the Republic Bank in breach of the SEC Law.
But the Republic Bank is arguing that that transaction had received approval from the board of directors of the HFC Bank.
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