The Court of Appeal has, in a unanimous decision, restored the operating licence of GN Savings and Loans Company Limited, bringing a major twist to one of the most closely watched episodes in Ghana’s post-banking sector clean-up disputes.
A three-member panel of the Court set aside the earlier judgment of the High Court in Accra, which had affirmed the Bank of Ghana’s decision to revoke the company’s licence. In effect, the second-highest court quashed both the regulatory action taken by the Bank of Ghana and the High Court’s endorsement of that action, holding that the revocation was unfair and unreasonable.
The appellate court also ordered that the receiver hand over possession, management, and control of the company’s assets and operations to its shareholders, effectively restoring control of the institution to its owners.
Background
At the heart of the dispute is GN Savings and Loans Company Limited, formerly GN Bank Limited, which was reclassified on 4 January 2019 as part of regulatory restructuring by the Bank of Ghana. Following that reclassification, the institution continued operations under its new name until 16 August 2019, when the Bank of Ghana, then led by Dr Ernest Addison, revoked its licence. As part of the broader banking sector clean-up exercise, Eric Nana Nipah was appointed receiver to take control of its affairs.
The company, owned by Groupe Nduom and led by Dr Papa Kwesi Nduom, challenged the decision at the High Court in Accra.
Decision of the High Court Now Overturned
On 24 January 2024, Justice Gifty Addo Adjei upheld the regulator’s action, holding that the Bank of Ghana had acted within its mandate. She reasoned that the institution’s financial position and governance weaknesses made it unable to meet its obligations, and that the Central Bank had not acted unlawfully in the face of insolvency concerns.
“The Central Bank took the most reasonable and fair decision in the face of the liquidity challenge in accordance with its mandate,” the High Court held, effectively validating the revocation and the subsequent receivership.
However, the Court of Appeal has now taken a different view. It concluded that the decision to revoke the licence could not stand under the applicable legal standards of fairness and reasonableness, and therefore set aside both the regulatory action and the High Court ruling that had supported it.
The ruling reopens a significant chapter in the ongoing legal and regulatory debates surrounding Ghana’s financial sector clean-up exercise, particularly the extent of the Bank of Ghana’s powers and the safeguards required when those powers are exercised.
