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Business News of Tuesday, 15 September 2015

Source: B&FT

‘Create a reliable legal system for mergers’

Mr. Sam Ato-Gaisie Mr. Sam Ato-Gaisie

Captains of industry have called for a robust legal system that will facilitate mergers and acquisitions in the country, as companies currently face an uphill task trying to tie-up mergers.

Founder of the Entrepreneurs Foundation of Ghana, Samuel Ato Gaisie said: “In the past partnershipS became a problem, and that deterred people from entering into partnerships.

This is because when there is a problem in connection with the partnership and the case goes to court, it takes a very long time for the issue to be resolved. Aside from the time, you will have to spend a lot of money paying legal fees and going up and down until the case is over.

“An example we have is the merger between Dannex and Starwin pharmaceutical companies. The companies have tried to merge but a lack of misunderstanding has taken the case to court, and up till now the court has not been able to finalise the ruling. Situations like this can deter others from entering into partnerships with others.”

Owing to the benefit of mergers, Mr. Ato-Gaisie advocated that local companies should strive to build synergy to the mutual benefit of all involved.

“There are so many advantages in merging. It is the best way for countries to develop their local industry. If two companies merge, they combine their synergies together and with the turnover they can become a market leader,” he said.

Chief Executive Officer of KAMA Group Dr. Michael Agyekum-Addo said the country’s legal system should be made business-friendly to encourage mergers and acquisitions, and create the necessary conducive legal environment for business to thrive.

“My personal experience has been very bitter. The manager of my forex bureau after 13 years of service stole everything and went into hiding for two years. He was later arrested and we went to court.

“For one and half years we have not started the case, even though we have gone to court for more than 35 times. The case has been adjourned several times and the man is walking on the streets of Ghana free. How can we depend on a system like this,” he asked.

He added: “Merging has a lot of legal issues involved, and since our legal and judicial system has not lived up to expectations people find it difficult to trust it -- and that is the more reason why people don’t like to join forces”.

Some mergers in Ghana over the years have suffered some setbacks which delayed the process. A typical example is the aforementioned merger between Dannex and Starwin pharmaceuticals.

Ever since the idea of a merger was conceived, the merger deal has been frustrated by a series of complaints filed at the Securities and Exchange Commission by the then-majority shareholders of Starwin, Merfield Properties Ltd., challenging the integrity of the merger’s process.

After the Securities and Exchange Commission ruled in favour of the company, it was followed by a another complaint lodged at the National Labour Commission (NLC) by the Industrial and Commercial Workers’ Union (ICU) on 24th July 2015 over unfair labour practices being perpetuated at Starwin Products Ltd., after a lockout of the company’s premises by the new management because of safety issues.

The Commission ruled that the workers be paid their full salaries up to 31st August 2015; and that all pending cases in court should be resolved on or before 31st August 2015 and a report back to the Commission.