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BOU Outlines Responsibilities of Financial Institutions’ Boards

Strengthening Corporate Governance in Ugandan Financial Institutions

The Bank of Uganda (BOU) has recently outlined the responsibilities of boards of directors in financial institutions, aimed at promoting good corporate governance practices and ensuring the stability of these institutions.

Key Responsibilities of Boards of Directors

  • Oversight of Overall Direction and Strategy: Boards are responsible for setting the overall direction and strategy of their financial institution.
  • Prudent and Sustainable Operations: Boards must ensure that their institutions operate in a prudent and sustainable manner, prioritizing the protection of depositors’ funds and maintaining financial stability.
  • Independence and Accountability: Board members must act honestly and in good faith, avoiding conflicts of interest and situations that may compromise their impartiality.

Risk Management and Compliance

  • Effective Risk Management Systems: Boards are responsible for ensuring that their institutions have effective risk management systems in place.
  • Compliance with Laws and Regulations: Boards must ensure that their institutions comply with all relevant laws and regulations.

Code of Conduct

  • Development of a Code of Conduct: Boards must develop a code of conduct for their members, covering key areas such as:
    • Compliance with laws and regulations
    • Fair and honest dealing
    • Conflicts of interest
  • Signing of the Code: All directors are required to sign the code of conduct as proof of having read and familiarized themselves with its contents.

Transparency and Accountability

  • Accurate and Transparent Financial Records: Boards must ensure that their institutions maintain accurate and transparent financial records.
  • Compliance with Regulatory Requirements: Boards must ensure that their institutions comply with all relevant regulatory requirements.

Conclusion

The BOU’s guidelines aim to promote good corporate governance practices among financial institutions in Uganda, ensuring the stability and security of these institutions. By outlining the responsibilities of boards of directors, the BOU hopes to foster a culture of transparency, accountability, and sustainability within the Ugandan financial sector.