UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F/A
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| REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2007
Commission file number: 001-32399
BANRO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Canada | 1040 | Not Applicable |
(Province or other jurisdiction of incorporation or organization) | (Primary Standard Industrial | (I.R.S. Employer Identification No.) |
1 First Canadian Place
100 King Street West, Suite 7070
Toronto, Ontario M5X 1E3
(416) 366-2221
(Address and Telephone Number of Registrant’s Principal Executive Offices)
DL Services Inc.
U.S. Bank Center
1420 5th Avenue, Suite 3400
Seattle, WA 98101-4010
(206) 903-8800
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class: |
| Name of Each Exchange On Which Registered: |
Common shares, no par value |
| American Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
For annual reports, indicate by check mark the information filed with this form:
x Annual Information Form x Audited Annual Financial Statements
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 39,860,137
Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the filing number assigned to the Registrant in connection with such Rule. o Yes x No
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
EXPLANATORY NOTE
This Amendment No. 1 to the annual report on Form 40-F for the year ended December 31, 2007 of Banro Corporation (the “Original Form 40-F”) is being filed to correct an accounting error that Banro Corporation (the “Company”) discovered in preparing its interim consolidated financial statements for the six month period ended June 30, 2008. The Company determined that the previously issued annual consolidated financial statements for the three month period ended March 31, 2008 did not properly account for the dilution of the Company’s interest in BRC DiamondCore Ltd. (“BRC”) that resulted from the acquisition by BRC of Diamond Core Resources Limited in February 2008. The Company also re-examined the accounting treatment of dilution gains for the purposes of the reconciliation of its financial statements to United States generally accepted accounting principles and determined that gains related to the dilution of BRC should have been recorded in capital rather than income. The Company has amended its December 31, 2007 and 2006 consolidated financial statements filed as Exhibit 99.3 to the Original Form 40-F.
Other than as expressly set forth above and herein, this Amendment does not, and does not purport to, update or restate the information in any item of the Original Form 40-F or reflect any events that have occurred after the Original Form 40-F was filed. In addition, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (“SOX”), and the certifications pursuant to Section 906 of SOX, filed as exhibits to the Original Form 40-F, have been re-executed as of the date of, and are refiled as part of, this Amendment as Exhibits 99.5, 99.6, 99.7 and 99.8. No other changes have been made to the Original Form 40-F. The filing of this Amendment shall not be deemed an admission that the Original Form 40-F, when made, included any known untrue statement of material fact or knowingly omitted to state a material fact necessary to make a statement not misleading.
DISCLOSURE CONTROLS AND PROCEDURES
As required by applicable Canadian securities laws, the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as such term is defined under applicable Canadian securities laws) as of December 31, 2007 and caused the Company to disclose in the 2007 MD&A their conclusions about the effectiveness of such disclosure controls and procedures as of December 31, 2007 based on such evaluation.
Following the filing of the 2007 MD&A, (a) the Company’s auditors carried out an audit of the Company’s internal control over financial reporting as of December 31, 2007 based on current U.S requirements for internal control over financial reporting (the auditor’s attestation in respect of this audit is filed as Exhibit 99.4 and is incorporated herein in this annual report on Form 40-F), and (b) in conjunction with this audit, the Company’s management conducted an evaluation of the design and operation of the Company’s internal control over financial reporting as of December 31, 2007 based on such U.S. requirements. Based on this evaluation, several material weaknesses in the internal control over financial reporting were identified. See “Management’s Report on Internal Control over Financial Reporting” below for a discussion in respect of this evaluation.
Following this evaluation of the design and operation of the Company’s internal control over financial reporting, an evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act) as of December 31, 2007 was carried out under the supervision of and with the participation of the Company’s management, including the CEO and CFO. This evaluation evaluated whether the Company’s “disclosure controls and procedures” (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act) were effective in ensuring that (a) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (b) material information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure. Based on this evaluation and as a result of the conclusions regarding the design and operation of the Company’s internal control over financial reporting (see “Management’s Report on Internal Control over Financial Reporting” below), the CEO and the CFO have concluded that as of December 31, 2007, the Company’s “disclosure controls and procedures” (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act) were not effective in ensuring items (a) and (b) above.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an evaluation of the design and operation of the Company’s internal control over financial reporting as of December 31, 2007, based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that the following material weaknesses existed:
Financial Reporting and Review Process
The Company had insufficient controls and procedures in place to ensure appropriate segregation of duties within the Financial Reporting and Review Process. Specifically, the responsibilities assigned to the CFO include substantially all financial statement and note creation functions. No additional personnel in the Company performs functions at a level of precision that would adequately prevent or detect misstatements in a timely basis, specifically with respect to the reconciliation between Canadian and U.S. GAAP. In addition, the Company did not maintain adequate policies and procedures regarding end-user computing. Specifically, controls over the access to, and completeness, accuracy, validity, and review of, certain spreadsheet information that supports the financial reporting process were either not designed appropriately or did not operate as designed.
Entity-Level Controls
During the assessment of the Entity-Level Controls, we noted that design over the entity level controls was not sufficient to prevent a material weakness. The deficiencies in the design of the controls result in a reasonable possibility that a material misstatement may not be prevented or detected in the annual or interim financial statements in a timely manner. Specifically, the Audit Committee and senior management’s oversight of the assessment and reporting of internal control based on the Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and the process of identifying and assessing risks related to internal control over financial reporting within the Company based on this framework were not considered effective.
As this report is required for U.S. reporting purposes, the Company is a “foreign private issuer” as defined in Rule 3b-4 of the Exchange Act, and the Company is an “accelerated filer”, the Company is required to provide an auditor’s attestation report on internal control over financial reporting. The Company’s auditor has issued an attestation report on the Company’s internal control over financial reporting as at December 31, 2007. The auditor’s attestation is filed as Exhibit 99.4 and is incorporated by reference herein.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
During the period covered by this annual report on Form 40-F, no changes occurred in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
As of April 18, 2008, the Company began to take and implement the following remediation steps to remedy the material weaknesses and enhance the internal control over financial reporting and entity-level controls:
(i) We will implement a system whereby we retain the outside services of a professional accounting firm; experts in the field of internal controls to assess and re-engineer the control environment so as to compensate for the inherent segregation of duties (as it relates to the preparation of the financial statements and notes) issue due to limited resources. In addition, the Company will retain the outside services of a professional accounting firm with US GAAP expertise to compensate for limited resources inside the Company with respect to reconciliation between Canadian and U.S. GAAP.
(ii) We will emphasize enhancement of the segregation of duties based on the limited resources we have and, where practical, we will continue to assess the cost versus benefits of additional resources that would mitigate the situation.
(iii) The Company is in the process of developing appropriate procedures to remediate each of the material weaknesses identified in management’s assessment of internal controls as of December 31, 2007.
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The Company’s management, including the CEO and CFO, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
UNDERTAKING
The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
CONSENT TO SERVICE OF PROCESS
The Company filed an Appointment of Agent for Service of Process and Undertaking on Form F-X with respect to the class of securities in relation to which the obligation to file this Form 40-F arises.
EXHIBITS |
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99.1* |
| Annual Information Form of the Company for the year ended December 31, 2007 |
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99.2* |
| Management’s Discussion and Analysis |
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99.3 (1) |
| Annual Financial Statements as amended and restated |
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99.4 (1) |
| Auditor’s Attestation |
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99.5 |
| Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a) or 15(d)-14 of the Securities Exchange Act of 1934 |
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99.6 |
| Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a) or 15(d)-14 of the Securities Exchange Act of 1934 |
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99.7 |
| Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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99.8 |
| Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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99.9 (1) |
| Consent of BDO Dunwoody LLP, Chartered Accountants |
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99.10* |
| Consent of Michael B. Skead |
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99.11* |
| Consent of Martin F. Pittuck |
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99.12* |
| Consent of Gordon Cunningham |
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99.13* |
| Consent of Daniel K. Bansah |
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99.14* |
| Consent of Anthony Smith |
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99.15 * |
| Consent of A. Gareth O’Donovan |
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* previously filed
(1) Replaces exhibit of same description filed with the annual report on Form 40-F filed on May 5, 2008.
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.
| BANRO CORPORATION | ||
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| By: | /s/ Michael J. Prinsloo | |
| Name: | Michael J. Prinsloo | |
| Title: | Chief Executive Officer | |
Date: September 2, 2008 |
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