The Extraordinary General Meeting (EGM) of HFC Bank slated for January 20, 2015 is set to be full of fireworks as the Social Security and National Insurance Trust (SSNIT) is demanding the removal of two independent directors of the bank, a request some industry watchers say is an affront to the laws of the Securities and Exchange Commission (SEC) and the Ghana Stock Exchange (GSE).

The current chairperson the HFC Bank Board, Mrs Muriel Susan Edusei, and Mr Francis Oduro Koranteng are the two individuals pencilled down to be removed.

SSNIT, which owns 26% shares in the bank, did not officially state the reasons for the removal, but insider information indicates that SSNIT wants to replace the current board chairperson with one of its representatives on the board.

The EGM was published on the website of the Ghana Stock Exchange (GSE) on December 29, 2014.

Information available to The Finder indicates that SSNIT had written to HFC board demanding an EGM in order to replace the two independent directors.

The sources said when the immediate past HFC Bank board chairman, Nana Agyei Duku, resigned, a board meeting was called to elect a new board chairperson.

According to the sources, at the board meeting Mrs Edusei was put forward as the candidate for the position of chairperson of the board.

SSNIT and Republic Bank of Trinidad and Tobago have two representatives each, making it four out of the nine-member board.

The sources explained that representatives of SSNIT, which owns 26% shares in HFC Bank, and Republic Bank, which has 40% shares in HFC Bank, voted against Mrs Edusei being the chairperson.

However, three board members, as well as the two independent directors all voted in favour of Mrs Edusei, who also voted.

At the end of the day, it was five against four in favour of Mrs Edusei and she accordingly became the board chairperson.

Managing Director of HFC Bank, Mr Asare Akuffo told The Finder that the board works in the interest of the company and is, therefore, not subject to the direction of any individual shareholder.

He explained that the Securities and Exchange Commission (SEC) and the Ghana Stock Exchange laws demand two independent directors to represent public interest and minority shareholders in every listed company, and therefore no shareholder has the authority to demand their removal when such directors have not been proven to have committed any crime or engaged in conflict of interest.

He explained that the two directors had one-year term of office, which ends in April this year, and can be reappointed, and wondered why SSNIT could not have waited for their term of office to expire.

Mr Akuffo noted that the action by SSNIT is a test case for Ghana’s capital market and poses a threat to investor confidence, saying SEC and GSE must be interested in the action of SSNIT.

In his view, the case can shake the foundation of the capital market, adding, “SSNIT is fighting a proxy war for Republic Bank.”

He explained that since 1995 when HFC Bank was founded, SSNIT has been represented on the board, and the operational processes of the bank have not changed.

Ever since Republic Bank made a move to make a mandatory offer to shareholders of HFC Bank, board room secrets dominated the media landscape.

Republic Bank has for some time now been pushing to own controlling stake in HFC Bank, but the move has not yet materialised because of certain legal issues.

HFC and Republic Bank early this year accused each other of breaching the agreement reached on Republic Bank’s takeover of HFC.

Republic Bank earlier denied accusations made by HFC Bank that it did not go through the right legal process in its takeover bid of the bank.

Republic Bank also dismissed reports that it failed to go by the deal agreed between it and HFC Bank on the takeover.

HFC Bank subsequently dragged Republic Bank to court.

The Supreme Court asked HFC Bank to exhaust the SEC procedure for addressing such grievances.

The Supreme Court also quashed an earlier ruling by a high court which sought to freeze the process.

Recently, SSNIT categorically denied rumours that it plans to offload its stake in HFC Bank to Republic Bank.