The Social Security and National Insurance Trust (SSNIT) has described as a “deliberate misinformation,” allegations of insider trading leveled against it by two Independent Directors of HFC bank, Mureil Edusei and Francis Koranteng.
The two directors had earlier alleged that the stance taken by SSNIT on insider trading by the Republic Bank of Trinidad and Tobago is the reason for the Trust’s decision to remove them through an extraordinary General Meeting (EGM) which was scheduled for tomorrow January 20 based on requisition by SSNIT.
In a statement, SSNIT said its decision to exercise its right as a shareholder has nothing to do with any allegation of insider trading
In a letter dated October 24 2014, with the caption HFC Board Corporate Governance Issues, SSNIT said it requested the board of HFC on its own to make changes on the board to increase and broaden its representation.
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The HFC Board per its regulations has the following as composition of the board.
- Any shareholder with fully paid shares representing 12.5% of the issued shares of the Company can appoint 1(one) representative on the board
- A holder of 25% or more can appoint two directors
- Two persons appointed by the board as Independent Directors in addition to the Managing director
However as at the time SSNIT raised its Board Corporate Governance concerns, the board which is to have a maximum number of eleven had;
- Three Executive Directors including the Managing Director
- Two each representing SSNIT and Republic Bank which together holds 66% of the total shares of the bank
- Two Independent Directors and
- One member representing two shareholders who have combined their shares to achieve 12.5%. A practice which is not authorized by the HFC Bank Regulations
SSNIT therefore requested HFC Board in its letter dated 24th October 2014 to address the following in order to broaden representation and make the Board truly independent to protect the interest of shareholders.
- a) Resignation of the representation of shareholders without requisite percentage of shareholding and filling of resultant vacancy
- b) Resignation of one of the Executive Directors excluding the Managing Director and the filling of resultant vacancy
- c) The filling of the vacancy which has occurred as a result of an earlier resignation of a Director whose shareholder has sold its shares
HFC on receipt of the said letter requested a meeting with SSNIT per a letter dated October 30 2014. The meeting was however held on Friday November 7 2014 where SSNIT further explained its position on the concerns.
By a letter dated November 20, 2014, HFC bank wrote to SSNIT and declined the request to make changes on the board. In a reply dated November 27 2014, in response to HFC, SSNIT restated that the HFC Bank board as presently constituted is not an independent and broadly represented board.
According to SSNIT, it is a skewed management led majority board. This is because three executive directors along with the two independent directors act as a bloc on the board without regard to shareholder interest. The quorum for a board meeting is 5 and they can constitute a quorum for a meeting to the detriment of the shareholders.
The statement went on to add that, by the refusal of HFC bank to effect any change to have a more broader representation to protect shareholder interest, SSNIT decided to invoke the provisions of section 297 of the companies act 1963 to requisition an EGM to;
- Remove one Executive Director and two independent directors and then have the EGM appoint three new directors to fill the resulting vacancies to protect shareholder interest.
SSNIT says as at the time it started raising concerns and subsequently requisitioned the EGM, the issue of insider trading allegation was a subject matter of a suit pending in court and the issue of appointment of a new board chair had not risen.
Therefore its decision to exercise its right as a shareholder has nothing to do with any allegation of insider trading
By Lorrencia Nkrumah/citifmonline.com/Ghana
