You are the newly-appointed Assistant Company Secretary of Akoma plc (‘Akoma’), a company listed on the Ghana Stock Exchange. The Company Secretary of Akoma is Mrs Owusu. Mrs Owusu is nearing retirement age and you are therefore ensuring that you have a full grasp of all relevant activities so that the company secretarial department continues to operate with its usual efficiency once Mrs Owusu retires. The company secretarial department also consists of Jane Powers, a Company Secretarial Assistant, who reports to you and a share schemes manager who reports to Mrs Owusu. 

Mrs Owusu arranges a meeting with you to provide you with an update on various matters, as described below. She explains that, with your many years of experience as a company secretary in previous companies, you will be expected to contribute significantly to dealing with these matters. Akoma has been a very active company and has made several acquisitions in the last few years. 

A new Chief Executive Officer (‘CEO’), Mr Asare, and Chairman, Mrs Sasu, have been appointed recently and they have made it clear that the company will continue its active acquisition strategy. The company has raised significant sums recently to fund its expansion and is exploring several further options for funding its growth so that it can continue to expand. Akoma has gained a reputation for being a bold and decisive company and has made its expansion plans public as part of its future strategy. 

The management team of Akoma are all supportive of the plans to expand the company but they all recognise the importance of good governance and effective controls to properly manage the growth of the business. In particular, Mr Asare and Mrs Sasu will rely on the company secretarial function to provide all necessary support to ensure appropriate statutory compliance and corporate governance. Mr Asare is famed for his strong Sasuership in business and has built up a substantial personal fortune Sasuing various companies to success. 

Not only has Mr Asare taken a large personal shareholding in the company, but he insists that all of his senior management team also maintain a shareholding in Akoma to show their commitment. This, in his view, ensures that the management team have a personal stake in the success of the business and that the interests of the management team are closely aligned with the interests of Akoma’s shareholders. The most recent acquisition was that of Down Limited. In the process of due diligence before buying Down Limited, a number of problems were discovered in relation to the statutory records. You have been assigned responsibility for reviewing the statutory records of Down Limited to identify and, if necessary, remedy any issues arising from them. 

As this would be a valuable training opportunity for Jane Powers, she will conduct the initial review under your supervision. You will then provide support to her to ensure the investigation is thorough and that it captures all relevant statutory issues in respect of the Companies Act 2019. Although most shareholders and market analysts appear to be happy with Akoma’s performance, several shareholders have expressed concern as to the way the business is run. These shareholders, who represent 4% of the company’s issued ordinary share capital, have formed the Shareholder Action Group (SAG). There is no other class of share in Akoma. 

SAG claims that the directors are taking excessive risks with their aggressive acquisition strategy and claims that company value has been reduced as a result. The directors do not agree with SAG’s claims. The directors’ view is that the board has made some tough and bold decisions in the past, all of which have been done with a view to increasing the long-term value of the company. They believe this has paid off, as shown by the company’s share price, which has risen from 70 pesewas two years ago to ₡1.35 today. 

This rise has been achieved despite a rights issue last year, in which the offer price was deeply discounted to the prevailing market price. In addition, dividends have steadily increased over the last two years and the company’s finances are sound. Akoma is keeping its options for funding further expansion under review, DC: ACD01-F004 including allotting further shares, issuing debentures or requesting payment for the ordinary shares in issue which are partly-paid. The directors are nonetheless worried about SAG, as it is rumoured that it intends to take action or make claims in respect of its concerns or, alternatively, may sell its holding to Super plc (‘Super’), a large rival competitor company. 

The board of Akoma has made it clear for some time that it is not interested in being acquired by any other company, as it feels that Akoma’s own approach to doing business is unique. Super has for some time been rumoured as wishing to acquire Akoma, but each time this has turned out to be mere press speculation. Mrs Sasu has often said that these persistent rumours are not good for Akoma, as they distract attention from Akoma’s performance. 

Mr Stir is a representative of SAG and has been a shareholder of Akoma for many years. He has in the past acted as a proxy for other shareholders at general meetings of the company. Mrs Sasu has arranged a meeting with Mr Stir to address SAG’s concerns. Akoma’s largest investment is in Matthews plc (‘Matthews’) and its group of companies, in particular, 

Acquired Limited, which is a wholly owned subsidiary of Matthews. Matthews is not listed on any stock exchange. Akoma has taken a substantial holding in respect of Matthews and is considering whether to acquire all of the remaining shares in that company. Akoma has a process of ensuring each company or business which it acquires is fully integrated into Akoma. In this way, Akoma feels that synergies can be achieved and also that the best use is made of the talented employees in the acquired business. 

The board of Matthews has welcomed Akoma’s approach and many of the senior managers and directors of Matthews will stay on in senior roles in Akoma. Both of the senior management teams of Matthews and Akoma go away on a team building exercise and integration strategy meeting, travelling together by coach. Unfortunately, the coach is involved in a serious accident on the motorway in which some of the occupants of the coach are killed and others seriously injured.

Questions below, are connected to the pre-released case study. Prior to the coach accident you agreed to provide a memorandum to the board of Akoma in response to the following matters: (a) Akoma owns 88% of the ordinary shares (the only class of shares) of Matthews. Akoma is keen to take full ownership of Matthews but there are three outstanding shareholders, each of whom holds 4% of Matthews.

The board would like to know:

(i) Whether, with reference to all relevant statutory requirements, Matthews is currently a subsidiary of Akoma. (6 marks)

(ii) How Akoma can initiate the compulsory purchase of the remaining shares of Matthews.

Explain any preliminary issues which need to be addressed and any relevant statutory steps, procedures and timescales. Also, assess whether there are steps which Matthews will be obliged to take. (8 marks)

(b) As part of the integration of the management team of Matthews, several changes are being considered. Mrs Doe is the company secretary of Acquired Limited and is being considered for appointment also as the company secretary of Akoma, in place of Mrs Owusu who is due to retire shortly.

What statutory and regulatory issues, steps and approvals need to be considered in respect of the proposed appointment of Mrs Doe? (6 marks)

Required 

Provide the memorandum in respect of (a) and (b) above.

Answer rating: 100% (QA)

1Whether with reference to all relevant statutory requirements Matthews is currently a subsidiary of Akoma Ans In the case of a subsidiary the parent company must own at least 50 or more of the subsid... View the full answer