September 08 2008
In June 2008 the now famous extraordinary general meeting of CAL Bank, a public company listed on the Ghana Stock Exchange, presented a test case for corporate governance in Ghana, in the full glare of the media.
The case began to unfold at CAL Bank's annual general meeting (AGM), when the shareholders rejected resolutions by the board of directors which proposed, among other things, to:
Subsequent to the AGM, one of the major individual shareholders requisitioned an extraordinary general meeting for the removal of the managing director, on the grounds that:
In their response circulated to the shareholders, the board of directors and the managing director denied the allegations made against them. They stated that: (i) they could find no basis to remove the managing director, who had received several banking awards; and (ii) the proposed rights issue was intended to support the company's expansion programme, which was legitimate.
At the extraordinary general meeting, the resolution to increase the stated capital was accepted and the resolution for the removal of the managing director was rejected on both a show of hands and a poll.
The case has set a precedent on the exercise of shareholders' rights in public companies. The value of the case, in the words of the individual shareholder who instigated the drama, was to inform the public “that shareholders’ right must not be taken for granted”.
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