Bank of Uganda has issued a directive to supervised financial institutions, including commercial banks, requiring them to cease outsourcing company secretary roles, The Ugandan Wire has learned. The directive, as outlined in the Bank of Uganda Annual Report for 2023, is motivated by the need to restrict access to sensitive and confidential information and to bolster corporate governance within these institutions.
The report specifies that all supervised financial institutions must have in-house company secretaries by December 31, 2023. Bank of Uganda’s rationale for this change is that the role of a company secretary has become increasingly integral to the management and corporate governance of these institutions. It necessitates an in-depth understanding of their internal operations, dynamics, and access to highly sensitive and confidential information.
However, the Consolidated Corporate Governance Guidelines do allow for exceptional circumstances where the role of a company secretary may be outsourced, but this requires prior approval from Bank of Uganda.
This directive is part of the guidelines issued by Bank of Uganda to supervised financial institutions in October 2022, which were approved by the Central Bank board. Initially, these guidelines required compliance by December 2022, but some financial institutions requested an extension, citing the rigorous and lengthy nature of the process.
The role of a company secretary within a supervised financial institution is held by a senior manager who, before their appointment can be approved, must undergo a vetting process by the Central Bank. Among their responsibilities, as outlined in the Consolidated Corporate Governance Guidelines, are calling and documenting board and shareholder meetings, providing legal and governance advice on proposed resolutions, filing and registering resolutions, ensuring periodic reviews of board charters and committee terms, and monitoring changes in shareholding structures.
The annual report by Bank of Uganda further indicates that the Financial Stability Committee has recommended the ratification of the earlier directive with a new deadline of December 31, 2023. This report also reveals that supervised financial institutions will meet the requirement of recruiting additional independent non-executive directors by the same date, as the December 31, 2022 deadline had been extended due to the demanding and time-consuming nature of the recruitment process.