Question Tag: Takeovers

The directors of Akilapa Ltd are involved in takeover talks with Bongo Partners. In the discussions, Mr Mensah, the Managing Director of Akilapa Ltd stated that there was no point in considering issues of ethics because the purpose of the takeover is to increase the market share of the company and ultimately increase the profit of the firm. In seconding his point, Miss Benkro indicated that in adopting a pragmatic approach to the takeover, there was no ethical issue in considering a third-party in relation to Bongo Partners because, in her opinion, the takeover will not benefit the third party but the company and the society.

During the meeting, Dr Worlanyo who was the previous Accountant of Bongo Partners before moving to Akilapa Ltd was involved in drafting the financial statements and provided a positive approval of the takeover bid. Upon receipt of the recommendation, a member of the board of directors found that there are indications that several of Bongo Partners’s Non-current assets might be impaired.

Required: i) Comment on the views of Mr Mensah and Miss Benkro regarding the fact that there is no point in considering ethical issues in the takeover bid. (4 marks)

ii) Assess the ethical issues in this scenario and explain how they should be addressed. (6 marks)