The government has taken a “compassionate” decision to partially bail out customers of the remaining defunct fund management companies (FMCs) whose firms are still undergoing liquidation processes.
The decision would allow the Securities and Exchange Commission (SEC) to facilitate the payment of up to GH¢50,000 of a customer’s funds that were locked up in the more than 20 FMCs.
The SEC said in a statement released Wednesday morning [November 18, 2020] that it would cover all companies whose licenses were revoked but legal processes to allow for formal payments of their funds had dragged.
It said the action was expected to benefit 92,460 claims filed against the remaining 27 FMCs.
“The decision to make this partial payment is predicated on Government’s commitment to protect its citizenry and its sensitivity to the plight of affected clients compounded by the disruptive impact of the Covid-19 pandemic.”
“Furthermore, this intervention has become necessary at this stage because liquidation petitions for the remaining affected Fund Management Companies are currently at different stages”
“In addition, some affected Fund Management Companies like Gold Coast Fund Management Limited (now Blackshield Fund Management Company Limited) are contesting the liquidation petition and as a result, have filed a Stay of Proceedings until its application for judicial review of the decision of the Administrative Hearings Committee has been heard,” it said.
It explained that: “There is the possibility for these legal processes to take some time and, therefore, extend the pain and suffering of the affected investors hence this decision by the Government.”
“This compassionate move by Government of a partial bailout would cover all clients of the failed Fund Management Companies whose licenses were revoked but are yet to come under official liquidation including customers of Blackshield Fund Management Company Limited,” it said.
Of the total number to benefit from the exercise, the statement said Blackshield Fund Management Company Limited accounts for a total of 84,656 (92%) claims.
“Claims filed by individuals (including pensioners) is 86,506 with Gold Coast Fund Management Limited (now Blackshield Fund Management Company Limited) accounting for 80,018 (92.5%) of these claims. Based on the validated claims, the partial bailout being offered would result in 89% and 82% of affected individuals and pensioners being fully settled respectively.”
“Validated claims in excess of this partial payout amount shall be covered after the liquidation proceedings in Court, in line with the terms being applied under the bailout package for the clients of the Fund Management Companies currently under official liquidation,” the statement said.