Firstcode Management Services

JULY 2024

ISSUE # 001

The latest news, views, and announcements

New finds this week

Bank of Ghana issues new notice to Banks, Specialised Deposit-Taking Institutions and the General Public on Disqualification of a Significant Shareholder, Director and Key Management Personnel

New finds this week

Bank of Ghana issues new notice to Banks, Specialised Deposit-Taking Institutions and the General Public on Disqualification of  Significant Shareholders, Directors and Key Management Personnel.

Introduction

The Bank of Ghana (BOG) has issued a critical notice addressing the disqualification of significant shareholders, directors, and key management personnel within banks and Specialized Deposit-Taking Institutions (SDIs). This move is part of the ongoing efforts to maintain the integrity and stability of the financial sector following the significant reforms undertaken between 2017 and 2019.

Background

The BOG has identified poor corporate governance as a major factor contributing to excessive and imprudent risk-taking, leading to the failure of several Regulated Financial Institutions (RFIs). To address these issues, the BOG implemented a series of directives aimed at strengthening corporate governance and ensuring the sound management of financial institutions. Key directives include the Corporate Governance Directive (2018), the Fit and Proper Persons Directive (2019), and the Corporate Governance Disclosure Directive (2022).

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Evaluation Criteria: The Fit and Proper Standards assess whether an individual has been involved with a company or institution that has: had its license revoked, been wound up by a competent authority, entered receivership, insolvency, or involuntary liquidation.

Regulatory Obligations: Financial institutions are reminded of their obligations under the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930), and the Fit and Proper Persons Directive, 2019, to continuously ensure the fitness and propriety of their key personnel.

Disqualification of Implicated Individuals: The BOG explicitly states that individuals directly implicated in the 2017-2019 financial sector clean-up, as well as former directors of failed banks and SDIs since the enactment of Act 930, are disqualified from holding key positions in financial institutions.

Key Points of the Notice

Governance Standards: The BOG emphasizes that significant shareholders, directors, and key management personnel must possess good repute, knowledge, skills, and experience to perform their duties effectively. This is in line with the Fit and Proper Persons Directive, 2019.

Implications for Banks and SDIs

Banks and SDIs must adhere to these guidelines to maintain the safety and soundness of the financial sector. This notice serves as a crucial reminder for all financial institutions to rigorously evaluate their key personnel against the established Fit and Proper Persons criteria.

Conclusion

The BOG’s directive underscores its commitment to fostering a stable and trustworthy financial environment. By ensuring that only qualified and reputable individuals hold significant positions within financial institutions, the BOG aims to safeguard the sector against future risks and failures.

For further information, please refer to Notice No. BG/GOV/SEC/2024/14 issued by the Bank of Ghana.