Malawi University of Business and Applied Sciences

(MUBAS)

Bachelor of Accountancy (BAC 4)

FINANCIAL MANAGEMENT
Submitted to: Dr. Chidule
Date:

14 FEBRUARY, 2023.

Submitted by:

Patrick Candroma (Bac/18/SS/055)

Immanuel Kadziwe (Bac/19/SS/020)

THE BIBLIOGRAPHY OF ALLIANCE CAPITAL LIMITED AND FACTORS THAT HAVE

LED IT TO BE LIQUIDATED

The bibliography of Alliance Capital

Alliance capital limited is one of the leading with unlocking the county’s diverse investment

opportunities for economic diversification and sustainable development. It’s main objectives on

clients are centered on pension fund assessment management, portfolio management and

corporate finance advisory services.

Alliance Capital was incorporated as a private limited company on August 31 in 2004 as

Alliance Investment Limited and changed its name to Alliance Capital Limited on September 30

2006.

A strategic alliance is an arrangement between two companies that have decided to share

resources to undertake a specific, mutually beneficial project. A strategic alliance agreement

could help a company develop a more effective process

Alliance Capital Limited is an investment and portfolio manager registered under the Financial

Services Act of 2010 and is supervised by the Reserve Bank of Malawi. It was registered in May

2005. Its executive team has a wealth of experience in pension funds and investment

management.

Factors that led the company to be winded up

There are a number of reasons that led the company to be liquidated.

In the first place, the loans were not redeemed in time, which made the company to be rolling

over maturities of investments for its clients when they were due and led to an exodus of

complaints to the central bank and later led to the judgement for its winding.
In addition, the judgement from the Judiciary especially the High Court of Malawi indicates that

negligence and disregard of legal mandate are some of the factors that sent the company into the

financial difficulties such as debt and even into a failure to honor matured investments.

The High Court judgement also indicates that the company diverted from being a portfolio

manager to being a lender to the point that some people who already had loans with the company

failed to settle their loans.

The judgement further states that instead of investing in government instruments and other

reliable investments, the company resorted to lending the money to individuals, in some

instances its own directors and some people who already owe it money without the approval of

its clients.

“In one of the cases, the company granted a facility to a company owned by one of its directors

without disclosing this conflict of interest to the clients whose funds were used for the facility,”

the judgement reads.

It further indicates that there were instances where borrowers were paid amounts which were

much higher than those provided for in the facility agreement.

An incident of this nature was where one company was paid K28 million while the facility

agreement indicated K20 million.

The judgement further indicates that another company entered into an agreement with Alliance

Capital to be given a loan of K5 billion but there was no indication of the exact amount disbursed

and terms of conditions of the facility and exact details of the bank account.
It is stated in the judgement that one borrower who failed to repay a facility of K600 million as a

foreign currency in 2018 was granted another facility of K250 million in a different trade name

in 2019.

“There were some transactions which did not make any business sense in the light of the

financial difficulties the company was facing. An example of these questionable transactions was

one which took place in October 2020 when a market investor was promised 16 percent return on

funds amounting to K700 million.

“This transaction took place when it was common knowledge that no money market securities

could be found on the market to back such a return,” reads the judgement.

The loans were not redeemed in time, which made the company to be rolling over maturities of

investments for its clients when they were due and led to an exodus of complaints to the central

bank and later led to the judgement for its winding.

It is said in the judgement that because of such decisions, the company had a negative capital of

K393.39 million against K50 million required capital as of December 2021.

“I therefore order the company to wind up; the Governor of Reserve Bank of Malawi wearing his

hut as the registrar of financial institutions is hereby appointed as the liquidator of the financial

institutions in Malawi

company and shall begin to act with immediate effect,” the judgement reads.

In summary, Alliance Capital was one the most leading financial institution established on 31 st

August, 2004.Later it was liquidated by the High Court of Malawi on 11 th

November,2022.Failure to redeem loans on time, negligence and failure to compliance with legal

mandate, failure to invest in government financial instruments and other reliable investment and

instances where borrowers were paid much higher than the required amount were some of the

factors that led the institution to winded up