Corporate Governance Regulations for Financial Institutions

Overall Responsibilities

The board of directors in a regulated financial institution is responsible for overseeing various aspects of the organization. These include:

• Strategy: Approving and monitoring the overall business strategy, considering long-term financial interests, risk exposure, and effective risk management.
• Risk Management: Formulating and implementing policies for risk management, internal controls, compliance (including AML/CFT), corporate governance framework, and compensation system.

Annual Certification

The board must annually certify to the Bank of Ghana that the regulated financial institution complies with these regulations or not. This certification should include:

• Independent Assessment: An independent assessment of the corporate governance process.
• Report on Deficiencies: A report on material deficiencies and weaknesses.

Business Strategy

The board must approve and monitor the overall business strategy, considering long-term financial interests, risk exposure, and effective risk management. They should:

• Formulate Policies: Formulate policies for overall risk strategy and tolerance, risk management and compliance (including AML/CFT), internal controls system, corporate governance framework, and compensation system.
• Implement Strategies: Implement these strategies to ensure the long-term success and stability of the regulated financial institution.

Duty of Care and Loyalty

Board members must exercise their duty of care and loyalty to the regulated financial institution. They should:

• Act in Best Interests: Act in the best interests of the institution.
• Avoid Conflicts: Avoid conflicts of interest and ensure that transactions with related parties are reviewed and subject to appropriate restrictions.

Corporate Culture and Values

The board should establish a corporate culture that promotes responsible and ethical behavior. They should:

• Set Corporate Values: Set and adhere to corporate values for themselves, key management, and employees.
• Promote Responsible Behavior: Promote responsible and ethical behavior throughout the organization.

Succession Planning

The board should select and replace key management personnel as needed and develop a plan for succession to ensure continuity of the banking business.

Key Management Oversight

The board should provide oversight of senior management, including monitoring their actions, ensuring consistency with approved strategy and policies, and reviewing explanations and information provided.

Separation of Powers

There should be a clear division of responsibilities at the top hierarchy of the regulated financial institution. No one individual should have unfettered powers of decision, and no two related persons should occupy key positions simultaneously.

These regulations aim to ensure that board members are qualified, independent, and focused on the long-term success and stability of the regulated financial institution.