Ugandan banks ordered to end outsourcing of company secretaries
KAMPALA, UGANDA — Banks in Uganda have received a directive from the country’s central bank, Bank of Uganda (BoU), to cease outsourcing the role of company secretary by December 2023.
This mandate aims to bolster corporate governance and protect confidential data, the BoU stated in its 2023 annual report.
The company secretary position has become “integral to corporate governance and management” within banks, necessitating extensive internal knowledge and access, the report explained. All regulated financial institutions must recruit secretaries internally, with exceptions requiring BoU approval.
This follows governance guidelines for banks issued in October 2022 that initially required compliance by December 2022. Some banks requested deadline extensions, citing the lengthy recruitment process.
Within banks, company secretaries serve as senior managers, vetted by the central bank before appointment approval. Their responsibilities include organizing board and shareholder meetings, providing legal and governance advice, filing resolutions, ensuring reviews of board charters, and monitoring shareholding changes.
The rationale from the BoU is to limit access to sensitive data and improve accountability through direct relationships between secretaries and banks. However, potential disadvantages include increased bias risks and costs.
The annual report shows the BoU Financial Stability Committee recommended confirming the December 2023 compliance deadline for this directive. Banks will also fulfill the requirement for additional independent directors by this date after an earlier extension.
