Financial Institutions (Licensing) Regulations

Regulation

Regulations may be cited as the Financial Institutions (Licensing) Regulations,

institutions in Uganda

these Regulations, unless the context otherwise requires- "Act" means the Financial Institutions Act,

an application for a licence to conduct financial institution business in Uganda, the Central Bank shall follow the criteria prescribed in section 11 of the Act and these Regulations

The applicant's capital shall be adequate to support the projected volume and type of services planned in a highly competitive environment (2) An applicant proposing to transact financial institution business as a bank, shall have a minimum paid up cash capital of not less than Uganda shillings four billion. (3) An applicant proposing to transact business as a non-bank financial institution, shall have a minimum paid up cash capital of not less than Uganda shillings one billion. (4) An applicant for a licence under the Act shall demonstrate the ability to maintain its capital funds, unimpaired by losses at the prescribed minimum amount at all times and to comply with the ongoing capital adequacy ratio in accordance with sections 26 and 27 of the Act and the Financial Institutions (Capital Adequacy Requirements) Regulations, 2005.

There shall be sufficient transparency in the ownership structure of the proposed financial institution so as to enable the Central Bank to evaluate the institution's substantial, direct and indirect shareholders and its corporate affiliations in compliance with section 18 of the Act (2) The Central Bank shall review the substantial shareholders' past banking and non- banking business ventures and their integrity and standing in the business community, as well as the financial strength of all the substantial shareholders and their ability to provide further financial support, should it be needed. (3) An application, in which one of the substantial shareholders does not satisfy the fit and proper person criteria as determined by the Central Bank under section 19 and the Third Schedule to the Act, shall be rejected. (4) The source of the initial capital to be invested and that of any future funding shall be disclosed to the Central Bank, as well as the percentage shareholding of each shareholder.

The applicant shall prove, to the satisfaction of the Central Bank, that the applicant's management satisfies the fit and proper criteria set out in the Third Schedule to the Act (2) The directors and officers shall have qualifications at a level, which shall enable them to conduct business competently and competitively with existing financial institutions and in compliance with section 53 of the Act and should not possess any of the disqualifications under section 120 of the Act. (3) The applicant shall prove, to the satisfaction of the Central Bank, that the financial institution's business is or shall be directed by at least two executive directors knowledgeable in the manner in which the institution's longer term strategy is pursued in practice, having the ability to influence the institution's policies and able to effectively direct the business of the institution.

specified in regulations 5 to 8, the Central Bank shall further take into account the following

The applicant shall ensure that there are no factors, such as unavailability or inadequacy of information and lack of transparency, which may hinder the conduct of investigations after the submission of its application or inhibit effective supervision after the issuance of a licence (2) With respect to foreign applicants, a level of cooperation between the Central Bank and the home country supervisor shall need to be established to permit the conduct of consolidated supervision.

An application for a licence shall be made in duplicate, in the form set out in Schedule I and shall be accompanied by the supporting documents specified in regulation (2) An application for a licence must specify the class of licence being applied for and other activities that may fall under other classes of licence, which the applicant intends to carry out. (3) A non-refundable application fee of Uganda shillings one million for banks, and Uganda shillings five hundred thousand for non-bank financial institutions shall accompany each application for a licence.

accompanied by the following supporting documents- (a) an information sheet for the applicant and for each of its substantial shareholders (if corporate), subsidiaries or affiliates in the form set out in Schedule 2; (b) a personal declaration form for each of the proposed directors, officers and substantial shareholders ( if natural persons) in the form set out in Schedule 3; (c) individual credit references for the applicant and each of the substantial shareholders, directors and officers from his or her bankers; (d) proposed capital structure of the financial institution;

an application form together with the requisite application fee and supporting documents in accordance with regulations 11 and 12, the Supervision Function of the Central Bank shall, within ten days, send the applicant a formal letter of acknowledgement or a letter of deficiency in accordance with subregulations (2) or (3), as the case may be (2) A letter of acknowledgement shall constitute official notice that the documents submitted were found to be complete and that the processing or evaluation may commence. (3) A letter of deficiency shall outline deficiencies in the application, provide a deadline for rectification of the deficiencies and no further action shall be taken by the Central Bank unless the deficiencies are rectified within the period prescribed.

six months after receipt of a complete application and in accordance with section 12 of the Act, investigate and prepare a detailed report in respect of each application. (2) The report shall indicate the decision of the Central Bank to- (a) grant the licence if it is satisfied that the application satisfies the requirements of the Act and these Regulations; (b) grant the licence subject to the fulfillment of certain conditions that it may deem necessary;

the applicant, in writing, of its decision to grant or refuse to grant the licence (2) A notice communicating the decision not to grant a licence shall state the grounds upon which it is based. (3) Where the Central Bank decides to grant a licence, it shall, in the notice communicating the decision to grant a licence, require the applicant to submit, within a period of two weeks after the date of receipt of the notice, a certificate of deposit in the name of the applicant indicating that it has deposited or invested an amount not less than the required minimum paid-up capital in such accounts or assets approved by the Central Bank, before a licence can be issued. (4) Notwithstanding the issuance of a licence, no financial institution shall open for business without prior clearance from the Central Bank which shall conduct a preopening inspection of the proposed premises to confirm the adequacy of the premises for the proposed business, strongroom and vault and the existence of a security system, electronic equipment and communication facilities suited to the type of financial institution concerned. (5) Successful applicants shall further be required to- (a) provide the Central Bank with complete operating manuals covering policies and procedures on loans, investments, deposits, foreign exchange and other major operations of the financial institution;

the composition of directors or board members, directors, officers or shareholders, or in the capital structure while the application is being processed or after the granting of a licence but before commencement, shall be duly notified to the Central Bank as soon as possible, but in any event, not later than twenty one days after the day the changes come to the attention of the financial institution

on or before the 31st day of January each year in accordance with section 13 of the Act until the licence is revoked

these Regulations shall remain valid until revoked by the Central Bank (2) A licence granted under section 12 of the Act and regulation 14 shall, at all times, be displayed in a conspicuous place at the head office of the concerned financial institution, and copies of it shall be similarly displayed in a conspicuous place at each of its branch offices.

A financial institution shall not engage in any other business other than the business specified in its licence (2) The Central Bank may, after giving reasonable notice to a licensed financial institution, restrict or amend the terms and conditions of any licence issued under the Act.

the Central Bank an updated Information Sheet as set out in Schedule 2, not later than the 31st day of January each year

Every financial institution shall ensure that the Central Bank is notified of every proposed appointment of a director in accordance with section 53(1)(e) of the Act (2) Notification in sub-regulation (1) shall be accompanied by the chairperson's declaration as set out in Schedule 4. (3) A person intending to become a director of a financial institution shall notify the Central Bank in writing of his or her proposed appointment by submitting a personal declaration form set out in Schedule 3. (4) Every financial institution shall submit a personal declaration form as set out in Schedule 3 for each subsequent proposed director.

SCHEDULES SCHEDULE 1 REGULATION 11 APPLICATION FOR A LICENCE TO ESTABLISH A FINANCIAL INSTITUTION (To be submitted in duplicate) The Governor, Bank of Uganda P.O Box 7120, KAMPALA

the capacity of duly authorised agent on behalf of ………………………………, a Company incorporated under the Companies Act, CAP. 110 Laws of Uganda ("the principal"), hereby apply for a licence in terms of section 10 of the Financial Institutions Act, 2004 to establish a financial institution to carry on the business(es) specified in class(es)**……………….. pursuant to section 10(3) and the Second Schedule to the Financial Institutions Act, 2004.

section 10 of the Act and regulation 12 of the Financial Institutions (Licensing) Regulations, 2005.

……………………… ……………………… Date Applicant

Applicant's address/ Tel. Principal's address/Tel. …………………………… ……………………......….. …………………………… ……………………......…..

…………………………… ………………………….... …………………………… …………………………....

Certification and Undertaking

I, the undersigned, …………………………….. hereby certify that all information contained in and accompanying this application is complete and accurate to the best of my knowledge and belief. I undertake to forthwith notify the Bank of Uganda, of any material change in the particulars of this application.

Sworn at …………….. this …......day of …………………200……

_______________________ _______________________ Signature of Deponent Principal/ Promoter/Agent

Deponent understands the contents of this declaration.

Before me, ___________________________ COMMISSIONER FOR OATHS

Note: **List all the types of business activities in which you propose to engage.

SCHEDULE 2

REGULATIONS 12 (1) (a) AND 20

INFORMATION SHEET

known:

connection with any business carried on by it, including any name the applicant is or will be obliged to disclose in connection with any business carried on by it by virtue of the Business Names Registration Act (Cap.109 Laws of Uganda)………………………………………………………..

………………………………………………………… …

address: Date approved and date opened

…………………………… …………………………… …………………………… …………………………… …………………………… ……………………………

Subsidiaries & Affiliates: Name and type of Amount of shares % of shares held business held to total ……………………… …………………… …………………… ……………………… …………………… …………………… ……………………… …………………… ……………………

Name: Designation Present term No. of years as board member …………… …………… …………… ……………… …………… …………… …………… ……………… …………… …………… …………… ……………… …………… …………… …………… ………………

Board Committees Name and purpose of committee(s): Name of members:

………………………………… ……………………… … ………………………………… ……………………… … ………………………………… ……………………… … ………………………………… ……………………… …

………………… ………………… ……………………… ………………… ………………… ……………………… ………………… ………………… ……………………… ………………… ………………… ………………………

Name Country of Residence Paid up capital % citizenship

other shareholders owing less than 5% (Number………………)

TOTAL …………… ………

Name of financial shares owned % of institution amount number capital ……………………… ……………… …………… …………… ……………………… ……………… …………… …………… ……………………… ……………… …………… …………… ……………………… ……………… …………… …………… ……………………… ……………… …………… …………… QUESTIONNAIRE ( FOR APPLICANTS ONLY)

the applicant's bankers within the last ten years.(Please also indicate the applicant's principal bankers)……………………………………………………… …

the applicant's external auditors. Please give particulars of any body you may have given authority to carry on any business activity in Uganda or elsewhere. If any, give particulars. If any such authority has been revoked, give particulars, including the name and professional qualification of the partner's who will be responsible for the assignment…………………………………………………… …

from a supervisory body to carry on any business activity in Uganda or elsewhere ? If so, give particulars. If any such authority has been revoked, give particulars.…………………………………

supervisory body to carry on any business in Uganda or elsewhere other than the authority mentioned in answer to Question 13 ? If so, give particulars. If any such application was for any reason refused or withdrawn after it was made, give particulars……………………………………………………

…

the last ten years failed to satisfy a judgement debt under a court in Uganda or elsewhere within a year of the making of the Order? If so, give particulars………………………………………….

any compromise or arrangement with its creditors within the last ten years or otherwise failed to satisfy its creditors in full? If so, give particulars ………………………………………….………

of the applicant or any company in the same group been appointed in Uganda, or has a substantial equivalent of any such person been appointed in any other jurisdiction, in the last ten years? If so, give particulars, including whether the receiver is still acting under the appointment…………………………………………

order in relation to the applicant or company in the same group, or has the substantial equivalent of such a petition been served in any other jurisdiction, in the last ten years? If so, give particulars……………………………………………………

…

the voluntary liquidation of the applicant or any company in the same group been given in Uganda, or has the substantial equivalent of such a petition been served in any other jurisdiction, in the last ten years? If so, give particulars…………………………………………………… …

liquidation of the applicant institution or any company in the same group, or has the substantial equivalent of such a petition been served in any other jurisdiction, in the last ten years?. If so, give particulars…………………………………………………

criminal investigation, prosecution disciplinary action(s), public criticism or trade sanctions in connection with banking and financial services in Uganda or elsewhere…………….

applicant institution and the Uganda Revenue Authority or any equivalent taxation authority in any other jurisdiction? If so, give particulars…………………………………………………..…

the applicant or any company in the same group engaged, or does it expect to be engaged, in Uganda or elsewhere in any litigation which may have a material effect on the resources of the institution? If so, give particulars……………………………

engaged, in any business relationship with any of its( prospective) directors, officers or managers? If so, give particulars…………………………………………………… …

managers or of companies in the same group guaranteed or otherwise underwritten or secured, or expected to be guaranteed or underwritten or secured, by the applicant company? If so, give particulars…………………………………………………… …

Central Bank in reaching a decision on the application………..

DECLARATION

We certify that we have read sections 10(8) and 126(1)(b) &(c) of the Financial Institutions Act, 2004.We are aware that it is an offence under the terms of sections 10(8) and 126(1)(b) &(c) of the Act knowingly or recklessly to provide to the Central Bank or any other person any information which is false or misleading in a material particular in connection with the application for a licence under this Act or otherwise.

We, certify that all the information contained in and accompanying this form is complete and accurate to the best of our knowledge, information and belief and that there are no other facts relevant to this application of which the Central Bank should be aware. We undertake to inform the Central Bank of any material changes to the application which arise while the Central Bank is considering the application.

We recognise the institution's obligation under sections 10(8) and 126 (1)(b)&(c) to provide the Central Bank with any information in its possession relevant to the exercise by the Central Bank of its functions under the Financial Institutions Act, 2004 in relation to the institution. Consistent with this obligation, we undertake, in accordance with regulations 16 and 20 of these Regulations that, in the event that the institution is granted a licence under the Act, we will notify the Central Bank of any material changes to, or affecting the completeness or accuracy of, the answers to the questions above as soon as possible, but in any event no later than twenty one days from the day that the changes come to our attention.

Sworn at Kampala this …………………day of ………………………

Name Position held

………………………… ……………………………… Signed Date

Name Position held

………………………… ……………………………… Signed Date _______________________________________________________ The Deponent understands the contents of this affidavit.

Before me, ………………………………… COMMISSIONER FOR OATHS

N:B:

the required informatin or data needed may be supplied as an attachment

the relevant section requiring the attachment SCHEDULE 3

REGULATION 12 (1) (b)

PERSONAL DECLARATION FORM [For individuals who are, or are proposing to become directors, managers, or substantial shareholders of a financial institution]

Name and capacity of person making this declaration:

being filled ("the institution")…………………………………………

been known:

you are completing this form, i.e. as a current or prospective director, or manager or any combination of these. Please state your full title and describe the particular duties and responsibilities attaching to the position(s) which you hold or will hold. If you are completing this form in the capacity of director, indicate whether, in your position as director, you have or will have executive responsibility for the management of the institution's business. In addition, please provide a copy of your curriculum vitae unless it is already provided by the institution in response to Schedule 2.

…………………………………………………………… ……

:…………… (Country) (Country) since: ………………………… since: ……………………… (Year) (Year)

(Uganda since……………) (Outside Uganda since...……) ……………………………… …………………………… ……………………………… …………………………… ……………………………… …………………………… ……………………………… ……………………………

Particulars Year obtained ……………………………… …………………………… ……………………………… …………………………… ……………………………… …………………………… ……………………………… ……………………………

past ten years) Inclusive date (month & year) Name & business of employer Positions held From Year ……………………………… ……………… ……... ……… ……………………………… ……………… ……... ……… ……………………………… ……………… ……... ………

years……………………………………………………………

now a director, officer, shareholder, or manager? Give relevant dates……………………………………..…………………… …

above where you have been a director, shareholder, controller or manager at any time during the last ten years. Give relevant dates……………………………………………………………

office or employment, or subjected to disciplinary proceedings by your employer or barred from entry to any profession or occupation? If so, give particulars:………………………………

Nature of affiliation i.e. director, officer, share Inclusive date holder with…% holdings (month and year) Nature of business specified etc. from to …………………… …………… ……… ……… …………………… …………… ……… ……… …………………… …………… ……… ………

affiliations maintain a business relationship with the institution? If so, give particulars.

ever held or applied for a licence or equivalent authorisation to carry on any business activity in Uganda or any other country? If any such application was refused or withdrawn after it was made or any authorisation was revoked, give particulars:………………………………………

you are, or have been associated as a director, officer, shareholder or manager holds, or has ever held or applied for a licence or equivalent authorisation to carry on any business activity? If so, give particulars. If any such application was refused, or was withdrawn after it was made or any licence revoked, give particulars…………………………………

institution in which you were affiliated as shareholder, director, officer, etc has ever been under criminal investigation, placed under receivership or insolvent liquidation by any regulatory body or court of law.……………………………………………

Business affiliation (State name of business and nature of affiliation i.e. director, officer, shareholder with…% holdings specified) Name:

………………………… ………………………… …

by you as a judgment debtor under an order of a court in Uganda or elsewhere, or made any compromise arrangement with your creditors within the last ten years? If so, give particulars………….………………………………………… …

elsewhere, or has a bankruptcy petition ever been served on you? If so, give particulars……………………………………………

any body corporate, partnership or unincorporated institution, been adjudged by a court in Uganda or elsewhere, civilly liable for any fraud, misfeasance or other misconduct by you towards such body or company or towards members thereof? If so, give particulars…………………….……………………………… …

institution with which you are associated as a director, shareholder, controller or manager, in Uganda or elsewhere, been wound up, made subject to an administrative order, otherwise made any compromise or arrangement with its creditors or ceased trading either while you were associated

with it or within one year after you ceased to be associated with it or has anything analogous to any of these events occurred under the laws of any other jurisdiction? If so, give particulars…………………………………………………… …

affairs of any institution which, by reason of any matter relating to a time when you were so concerned, has been censured, warned as to future conduct, disciplined or publicly criticized by, or made the subject of a court order at the instigation of any regulatory authority in Uganda or elsewhere? If so, give particulars……………………………….…………………… …

on the directions or instructions of any individual or institution? If so, give particulars…………………………………………….……… …

undertake business with the institution? If so, give particulars…………………………………………………… …

names or the names of a related party? If applicable, give name(s) in which registered and class of shares……………………………

institution (not being registered in your names or that of a related party) are you or any party beneficially interested ?………………………………………..

institution as trustee or nominee? If so, give particulars…………………………………………………… ……….……………………………………………………… ……

questions 27,28, and 29 above equitably or legally charged or pledged to any party? If so, give particulars……………………

of the institution (or another body corporate of which it is a subsidiary) are you or any related party entitled to exercise or control the exercise of ? ………………………………….…… ..

governmental, professional or any regulatory body (including pending and prospective cases or on-going investigations):

Name of court or Full particulars Status investigative body …………………………… …………… …………… …………………………… …………… …………… …………………………… …………… …………… …………………………… …………… …………… …………………………… …………… …………… …………………………… …………… …………… …………………………… …………… ……………

application for licensing, please provide any other information which may assist the Central Bank in reaching a decision on the application. In any other case, please provide any other information, which may assist the Central Bank in deciding whether the director, shareholder, controller or manager fulfils the criteria in the Third Schedule of the Act.

DECLARATION

I certify that I have read sections 10(8) and 126(1)(b) and (c) of the Act. I am aware that it is an offence under the terms of sections 10(8) and 126(1)(b) and (c) of the Act knowingly or recklessly to provide to the Central Bank or any other person any information which is false or misleading in a material particular in connection with the application for a licence under this Act or otherwise.

I certify that all the information contained in and accompanying this form is complete and accurate to the best of my knowledge, information and belief and that there are no other facts relevant to this application of which the Central Bank should be aware.

I undertake to inform the Central Bank of any material changes to the application which arise while the Central Bank is considering the application.

I recognize the institution's obligation under sections 10(8) and 126(1)(b) and (c) of the Act, to provide the Central Bank with any information in its possession relevant to the exercise by the Central Bank of its functions under the Act in relation to the institution. Consistent with this obligation, I undertake in accordance with regulations 16 and 20 of these Regulations that, in the event that the institution is granted a licence under the Act, I will notify the Central Bank of any material changes to, or affecting the completeness or accuracy of, the answers to the questions above as soon as possible, but in any event no later than twenty one days from the day that the changes come to our attention.

Sworn at Kampala this …………………………day of ………………

…………………………… ………………………… … Name Position held

…………………………… ………………………… … Signed Date

I know and understand the contents of this declaration and that I am making it under oath. Sworn at Kampala, Uganda this ……………day of …………………

………………………………… ………………………… … Signature of deponent (Position)

The Deponent understands the contents of this affidavit.

Before me, …………………………………… COMMISSIONER FOR OATHS

N.B:

on the form is inadequate, the required information may be provided on an attachment labeled accordingly

relevant section of the form by placing the words "REFFER TO ANNEXX"

in this form is confidential and cannot be made available for inspection without the written consent of the Governor of the Central Bank SCHEDULE 4

REGULATION 21 (2) AND SECTION 53 (1) OF THE ACT

DECLARATION BY THE CHAIRPERSON OF A FINANCIAL INSTITUTION ON APPOINTMENT OF A NEW DIRECTOR

I, the undersigned, (name) ……………………, being the Chairperson of the board of directors of ………………………, confirm that I have carefully studied all the information supplied in the personal declaration form and, after discussion with the deponent (name) ………………… and all other members of the board, and after having taken into account any other information at my disposal or that has come to my attention, I am of the opinion that the deponent (name) ……………………………… is a fit and proper person to take up office in this institution.

In the case of the appointment of a director I confirm that the appropriate conditions of the Articles of Association of the company have been complied with. Similarly, in the case of the appointment of an executive officer, I confirm that the company policy has been complied with.

NAME: ………………………………………………………

SIGNED: ………………………………………………………

DATE: ………………………………………………………

E. TUMUSIIME-MUTEBILE, Governor, Bank of Uganda.