Financial Institutions Act

The Act applies to financial institutions defined in section 2; it does not apply to cooperative societies registered under the Cooperative Societies Act (except those established to accept deposits from the public) or to microfinance deposit-taking institutions.

This section provides interpretation rules and a series of definitions for terms used in the Act (for example: credit provision, guarantee provision, acceptance house, affiliate, agent, agent banking, associate, bank, Bank of Uganda securities, board, branch, building society, commercial bank, company, control and many other defined terms).

The Bank of Uganda must, when considering an application for a licence under section 9, be satisfied about a list of specific factors relating to the applicant’s finances, business nature, management fitness, capital, community needs, branch locations, internal controls, public interest, promoters and shareholders, board composition, moratoriums and other relevant matters.

The Bank of Uganda must consider licence applications and reports within specified time limits, may grant, condition, limit or refuse licences, must inform applicants in writing, licences must state certain details, financial institutions must only carry out licensed business, contraventions attract fines, and aggrieved persons may appeal to the High Court within thirty days.

Applicants must pay a fee prescribed by the Bank of Uganda when granted a licence; licence holders must thereafter pay an annual fee by 31st January each year; late payment incurs a civil penalty equal to fifty percent of the licence fee; unpaid fees and penalties are a debt owed to the Bank of Uganda.

A licence under section 11 remains in force until revoked; the financial institution must display the original licence conspicuously at its premises and display copies at each branch office.

The Bank of Uganda may at any time amend or restrict a financial institution’s licence for specified reasons; before doing so (unless requested by the institution) it must notify the institution in writing and give it an opportunity to make representations; if it refuses an amendment in certain circumstances it must notify the institution in writing of the decision and reasons within a reasonable time.

A financial institution's licence will be revoked if it fails to commence operations within twelve months from the date of issue of the licence.

The Bank of Uganda has the power to revoke a financial institution's licence if satisfied of listed grounds (e.g., cessation of business, severe under-capitalisation, insolvency, liquidation, conduct harmful to depositors, contraventions, deception, unauthorised amalgamation or transfer, failure to comply with conditions or remedial directions, or failure to meet licensing conditions).

Persons must not transact deposit-taking or other financial institution business in Uganda without a valid licence; financial institutions are prohibited from acting beyond their licence and from certain misrepresentations; licensed persons may use agents; the Bank of Uganda must make regulations on agents in consultation with the Minister.

The Bank of Uganda may direct persons to withdraw, amend or stop deposit-related advertisements it finds misleading; failure to comply without lawful excuse is an offence punishable by a fine up to fifty currency points or imprisonment up to one year, or both.

A financial institution must obtain the consent of the Bank of Uganda before opening, setting up or transacting through a subsidiary, branch or representative office or acquiring an interest in an undertaking outside Uganda; after establishing such an office it must notify the Bank of Uganda in writing (including changes of address or closure as soon as they occur); the Bank may require satisfaction about capital adequacy, proposed business plans and additional information, and in acquisitions the Bank shall appoint accountants to examine the target’s financial position to protect depositors.

Persons not licensed as banks must not use the word "bank" or similar expressions or representations implying they are authorised banks, except with the consent of the Bank of Uganda; companies must use "bank" in their name to carry on banking business; permitted description for Islamic banking is allowed; contravention is an offence punishable by a fine.

The Bank of Uganda may authorise officers to search premises and seize or copy records, freeze accounts, suspend or close businesses where it believes section 3 is being contravened; persons must not obstruct or give false information to such officers.

If the Bank of Uganda finds someone obtained money contrary to section 3, the Bank must in writing direct them to repay the money and any profits (including interest) to the persons from whom it was obtained, in the manner and within the period set by the Bank; failure to comply permits insolvency consequences and the Bank may apply to the High Court.

Companies proposing to operate as financial institutions must apply in writing to the Bank of Uganda for a licence and include specified information and documents with their application.

Financial institutions must not allot, issue or register transfers of 5% or more of shares to one person or related persons except with Bank of Uganda permission; the Bank may order reduction of harmful shareholdings and require plans within set timeframes.

No person or group of related persons may acquire more than five percent of the shares of a financial institution unless the Bank of Uganda has received written notice of intent and given a written notice of no objection; the Bank of Uganda will only issue a notice of no objection if it is satisfied the persons are fit and proper and that depositors' interests would not be threatened.

The Registrar of Companies must not register any transfer or allotment of shares of a financial institution referred to in section 17(2) unless the Bank of Uganda gives written consent.

Financial institutions or controlling companies must not allot, issue, register or transfer shares in the name of anyone other than the beneficial shareholder without the written approval of the Bank of Uganda.

No person may vote or receive dividends on shares in a financial institution if those shares were allotted, issued or registered in contravention of this Act; such dividends accrue to the financial institution, and resolutions adopted by the requisite majority are not invalidated by votes cast in contravention.

Financial institutions must keep a register of current beneficial holders of all their shares (in a form the Bank of Uganda may approve), provide up-to-date returns to the Bank every six months, and persons or related groups acquiring or ceasing a substantial interest must notify the institution within 21 days.

No person may exercise control over a financial institution except a reputable financial institution or, in exceptional cases, a reputable public company.

The Bank of Uganda may make preliminary orders restricting share transfers, voting, issuance and payments; persons served must acknowledge receipt and affected shareholders must surrender share certificates within seven days; contravening certain provisions is an offence with fines or imprisonment.

Banks must have at least two hundred thousand currency points paid-up cash capital; non-bank financial institutions must have at least fifty thousand currency points; the Bank of Uganda may approve eligible liquid assets; the Minister may revise requirements on advice of the Bank of Uganda.

Financial institutions must maintain minimum ongoing capital: at least 8% core capital and 12% total capital of risk‑adjusted assets (including off‑balance‑sheet items); the Bank of Uganda may set higher requirements, revise minima by statutory instrument (in consultation with the Minister), and require capital buffers.

Financial institutions must hold a minimum amount of liquid assets as prescribed by the Bank of Uganda; the Bank may set proportions and include certain foreign liabilities, and institutions that fall short pay a daily civil penalty of one-tenth of one percent of the deficiency.

The Bank of Uganda may take a range of corrective actions (including orders, directions, examinations, suspensions, appointments, reconstitution of boards, withholding approvals, licence withdrawal, capital requirements and other sanctions) where it finds a financial institution's affairs detrimental to depositors, prejudicial to the institution, in contravention of law, refusing inspection, or providing false information, and may act further if the institution fails to comply with orders or directions.

The Bank of Uganda may, on representation or on its own motion, modify, cancel or uphold any order made under section 82, and may impose necessary conditions when doing so.

Prompt mandatory corrective actions in sections 85, 86 and 87 take precedence over any discretionary corrective actions available to the Bank of Uganda under this Act or any other law.

Where a capital-compliant financial institution suffers or is likely to suffer large losses (defined as 25% of core capital), the Bank of Uganda must prohibit certain distributions, increase inspection frequency, and may require written explanations from directors or management.

Bank of Uganda must require under-capitalised financial institutions to submit and implement a capital restoration plan and may take various corrective measures (appoint advisers, restrict branches, growth, interest rates, remove officers, or order other remedial actions).

If a financial institution is significantly under-capitalised, the Bank of Uganda shall immediately take specified corrective actions, may take additional measures, require a board agreement to rectify within ninety days and restore within one hundred eighty days, and may close, place under receivership or put into statutory management if conditions persist.

The Bank of Uganda may take over management of a financial institution in specified circumstances; when it does, several legal effects follow including voiding certain transfers and requiring officers or related persons to refund preferential advances.

When the Bank of Uganda takes over management of a financial institution it has exclusive powers of management and control and may take various actions including continuing or discontinuing operations, stopping or limiting payment of obligations, employing staff, executing instruments in the institution's name, initiating or defending legal actions in its name, reorganising or liquidating the institution, appointing a statutory manager, assuming or rejecting executory contracts, cancelling leases, appointing an advisory board, closing or selling the institution, and doing other acts necessary to carry out its obligations; it must appoint an auditor at the financial institution's cost, inform the public immediately, and exercise statutory management for the minimum time necessary, and if the institution does not comply with prudential standards within six months it shall be closed and placed under receivership.

Statutory manager must perform listed duties (trace and preserve assets, recover debts, evaluate capital structure and recommend restructuring, enter contracts and borrow, obtain documents, issue accounts, and perform other duties) and may declare a moratorium on payments; persons who wilfully refuse to provide requested information commit an offence liable to a fine up to 250 currency points or up to two years imprisonment.

A person must not start or continue legal proceedings against a financial institution while it is under Bank of Uganda management, except with court leave for exceptional hardship or the Bank's prior written consent.

A party to a contract with a financial institution shall not be relieved of its contractual obligations because the institution is under management by the Bank of Uganda.

The financial institution must pay all costs of management charged by the Bank of Uganda.

If a financial institution does not maintain the minimum liquid assets, it must not grant any new or additional loan or credit accommodation to any person without prior written approval of the Bank of Uganda.

A financial institution must not grant advances, credit facilities or accommodations secured by its own shares, shares of an affiliated company, or instruments that may qualify as its capital.

Limits financial institutions' credit exposures: generally no advance or credit to a single person or related group may exceed 25% of total capital; under specified secured, self-liquidating conditions an institution may lend up to 50% (maturity ≤ 3 years); special rules apply for advances to other financial institutions (reporting, maturity, security); aggregate large exposures capped at 800% of total capital.

Financial institutions must not pay or distribute dividends, transfers from profits or other distributions that would cause them to fall below capital requirements; the Bank of Uganda must direct institutions that contravene to recall distributions and to pay a civil penalty equal to twice the value of those distributions.

Financial institutions with core capital below 40% of the prescribed amount must not take placements or receive loans from other Ugandan financial institutions; the Bank of Uganda may order repayment and impose civil penalties (250 currency points/day for institutions; 50 currency points/day for officers/directors) and recover unpaid fines.

This section restricts insider lending: financial institutions must not give preferential loans to insiders, must keep insider lending within specified percentage or salary limits, must secure insider loans with 120% collateral, and violations carry criminal and administrative consequences.

A financial institution must not purchase non-performing or low quality assets from its affiliates, associates, directors, executive officers, substantial shareholders, related persons, or related interests.

Financial institutions must not transfer assets out of Uganda exceeding 25% of total capital without prior notice to the Bank of Uganda, except in the normal course of business.

Section Engaging in trade, commerce, industry Section Subject to this Act, a financial institution shall not— engage directly or indirectly for its own account, alone or with others in trade, commerce, industry or agriculture, except in

Financial institutions holding immovable property costing more than 100% of core capital must within five years dispose or add capital as directed; they may only hold or acquire property reasonably necessary for business or staff (subject to a 100% core capital cap); certain secured-realisation and consented purchase activities are permitted; contraventions attract a penalty of five currency points per day.

Licensed deposit-taking financial institutions are prohibited from underwriting shares or conducting securities brokerage or dealing; contravening institutions must pay a civil penalty of five currency points per day. The prohibition excludes Government and Bank of Uganda securities.

The Bank of Uganda may, by notice, prescribe rules for financial institutions' foreign exchange business and may, by notice, impose restrictions on a financial institution's foreign exchange business.

A financial institution must not start any new foreign exchange business if it is significantly under-capitalised; contravention is an offence and the institution is liable to a fine of up to two hundred fifty currency points for each day the offence continues.

The Bank of Uganda may set how to determine and limit financial institutions' net open positions in foreign currencies (limit not to exceed 25% of core capital); institutions exceeding the limit pay 1% of the excess per day; all institutions must submit prescribed returns (daily/weekly/monthly); penalties apply for late, inaccurate, or false returns.

The Bank of Uganda may suspend a financial institution from conducting foreign exchange business when the institution is under criminal investigation concerning its foreign exchange dealings.

Issuing stored value cards in Uganda is prohibited except for certain authorised issuers; the Bank of Uganda may set conditions and reserve/liquidity requirements apply to approved financial institutions.

A mortgage bank must not advance or make more than twenty-five percent of all its loans or other credit accommodations for purposes other than acquisition, construction, enlargement, repair, improvement and maintenance of urban or real estate or substitution of mortgages for that same purpose.

Financial institutions must keep financial ledgers and other financial records, store them in Uganda, record entries in English using government numerals, preserve them for not less than ten years, maintain necessary non-financial records in Uganda, and take precautions to show a true and fair state and to enable the Bank of Uganda to determine compliance.

Persons must not, with intent to deceive or mislead, make false, omit, alter or destroy entries in financial ledgers or related documents of a financial institution; such contravention is an offence punishable by a fine not exceeding one hundred currency points or imprisonment up to five years, or both. A financial institution must indicate in its profit and loss account any civil penalty levied against it under this Act.

A financial institution must submit audited annual financial statements to the Bank of Uganda within three months after its financial year-end, and if it fails to do so it must pay a civil penalty of twenty currency points per day.

Audited annual financial statements must disclose specified insider and large-exposure information, including major shareholders (5%+), large advances over 25% of core capital, loans to insiders (directors/shareholders) and related details.

Financial institutions must publish audited annual financial statements within four months after year-end, display unaudited half-year statements in branch banking halls, display audited statements year-round in banking halls, and pay a civil penalty for late publication.

The Bank of Uganda may require a financial institution to amend, correct, republish its audited annual financial statements, or submit further documents or explanations when the statements do not comply with this Act, are misleading, or are not published in the prescribed form and content.

Financial institutions must have a board of at least five directors, led by a non-executive chair; no more than 50% of directors may be employees unless the Bank of Uganda accepts their fitness; unfit persons may not become or remain directors; the Bank of Uganda will vet proposed directors within six months.

Persons must not become directors of a financial institution unless nominated by the institution and approved in writing by the Bank of Uganda after satisfying the fit-and-proper conditions; the Bank may seek information and may approve or withhold approval; false or misleading information to the Bank is an offence punishable by fine or imprisonment; at least 50% of directors must be resident in Uganda during their tenure.

Directors, officers or members of a Shari’ah advisory board of a financial institution must not participate in discussions or decisions on matters where they or their related interests have an interest; they must disclose such interests in meetings and, where the matter concerns that interest, exclude themselves from further attendance.

The board of directors of a financial institution must ensure robust internal controls and systems, report on them to shareholders at the annual general meeting, ensure compliance with laws (and Shari'ah where applicable), keep the board in control of operations, and have written policies implemented and monitored. The directors must appoint two executive directors from among themselves who must be ordinarily resident in Uganda, know the institution's longer-term strategy and be able to direct the institution's business.

Directors must act as fiduciaries and owe duties including honesty, acting in the institution's best interests, independence, accessing necessary information, and must report in writing to the Bank of Uganda when they have reason to believe specified adverse conditions exist.

The Bank of Uganda may remove or suspend directors or whole boards of financial institutions for sufficient cause and may bar individuals from board service for at least ten years; directors on a financial institution's board must not simultaneously serve on or be executive officers of another financial institution or its subsidiaries or affiliates in Uganda.

Bank of Uganda may, by notice, order financial institutions to provide certified board minutes, order boards to meet within three days at a specified place, require certain agenda items, or appoint an observer; quorum and decision rules for such convened meetings are specified and decisions are binding.

The board must form a committee on audit from its members (minimum two), chaired by an appointed chair; the committee must meet quarterly and perform a set of duties including reviewing internal audit reports, controls and financial statements, coordinating audits, ensuring adequate staffing, reviewing material investments/transactions and insider transactions; executive directors are disqualified from serving on the committee.

The board of directors must form an asset and liability management committee of at least two persons; the Bank of Uganda may issue notices to financial institutions about matters for that committee.

Every financial institution must appoint an internal auditor suitably qualified and experienced in banking who reports to the committee on audit of the board of directors.

Financial institutions must annually nominate a firm of qualified auditors from a Bank of Uganda prequalified list; the nominated auditor must be approved by the Bank and auditors must audit statements and give an opinion under specified standards.

No person may hold office as an external auditor of a financial institution unless their appointment is approved by the Bank of Uganda under section 61.

A person must not qualify to be appointed or act as an external auditor of a financial institution if any of several disqualifying conditions apply (for example, lack of CPAs registration, material interest, lack of independence in the Bank of Uganda's opinion, employment by the institution, close partnership with officers/shareholders, or performing secretary/bookkeeper duties).

External auditors must give written notice to the financial institution and the Bank of Uganda about resigning or not seeking re-appointment; financial institutions must not remove or change their auditor before the auditor's term expires except with the Bank of Uganda's prior written approval.

Each approved firm of external auditors must have a valid professional indemnity insurance cover for negligence before the start of the audit.

Audit firms and individual auditors must not serve the same financial institution as external auditor for a continuous period exceeding four years.

External auditors appointed under the Act must perform a primary audit of a financial institution and have specific duties including warning the board of directors of matters discovered, obtaining sufficient evidence, planning and supervising work, testing internal controls, exercising professional care and commenting in writing on the board's report before it is tabled at the annual general meeting.

An external auditor appointed under the Act must inform the Bank of Uganda on reasonable grounds to believe certain breaches or insolvency risks, must verify required quarterly returns and reports, must submit a management letter disclosing shortcomings or contraventions, and must perform other functions assigned by notice.

The external auditor appointed under this Act has a right of access at all times to the financial institution's books, accounts, systems, vouchers, records and securities and is entitled to receive from officers and staff all information and explanations; any person who obstructs the auditor or fails/refuses/neglects to provide the requested materials is targeted by the provision.

The Bank of Uganda may, by written notice, require current or former external auditors of a financial institution (or its subsidiary/affiliate) to provide information if the Bank considers it will assist in performing its functions; failure or providing false/misleading information is an offence punishable by a fine up to two hundred fifty currency points or imprisonment up to two years, or both.

External auditors must submit audit reports to the financial institution after the audit; financial institutions must ensure those reports (and a management letter of assurance) are submitted to the Bank of Uganda within three months after the financial year end; non-compliance is an offence punishable by a daily fine of twenty currency points until submission.

The auditor must identify and, where possible, quantify the matters that lead to a qualification in every audited annual financial statements report of a financial institution that includes a qualification.

The Bank of Uganda may reject an audit report if dissatisfied, call for a fresh audit at specified expense(s), may appoint an auditor, and shall fix the auditor's remuneration to be paid by the financial institution.

The Bank of Uganda must require a financial institution to satisfy specified provisions relating to bad debts, non-accrual of interest on non-performing loans, and amortisation of preliminary expenses before annual accounts are finalised, dividends are paid and capital requirements in sections 25 and 26 are met.

Bank of Uganda may require external auditors to provide additional information, carry out special or further investigations, or reports; auditors who, acting in good faith, provide information relevant to supervision are not to be treated as breaching duties or professional codes; the Bank must arrange annual meetings with institutions and their auditors and may arrange other meetings if necessary.

The Bank of Uganda may remove and replace senior officers of a financial institution for public‑interest or depositor‑protection reasons; removed persons are entitled to compensation up to three months’ salary; aggrieved persons may make representations within fourteen days; convicted persons for financial impropriety, fraud or loss are barred from management.

Financial institutions must promptly report specified credit-default and misconduct information to a Credit Reference Bureau; other information requires customer consent; customers have a right to know their data; the Bank of Uganda may regulate and license related providers.

Every financial institution must perform a credit check on a customer who applies for credit, subject to directions by the Bank of Uganda.

The Bank of Uganda may inspect any financial institution; inspected financial institutions must furnish records and officers failing to do so commit an offence with fines or imprisonment; inspecting officers must prepare and submit a report highlighting breaches and weaknesses.

Financial institutions must provide the Bank of Uganda with operational information and periodic returns, report insider lending quarterly, and face penalties and possible operational restrictions for non‑compliance; the Bank may disclose information to other monetary or financial authorities on request.

The Bank of Uganda may require affiliates, associates, holding or subsidiary companies or controllers of a financial institution to provide necessary information or documents in writing, and may appoint a competent person to examine their operations; failure to provide requested information is an offence with fines and/or imprisonment.

The Bank of Uganda may place a financial institution under receivership in specified circumstances; when placed under receivership the Bank or its appointee shall become the receiver.

The Bank of Uganda, or a person it appoints as receiver, must within twelve months consider and implement one or more options (merger, sale, purchase/assumption by other institutions, or liquidation) and must choose the option that best meets specified public-interest criteria; the receiver must evaluate or document evaluations of asset recovery on a present value basis.

When a financial institution is placed under receivership, no person may enforce security over its property or commence or continue any proceedings or legal process against the institution or its property.

Section grants the liquidator broad powers (subject to Bank of Uganda approval/control) to manage liquidation: require information and attendance, bring or defend proceedings, continue business for winding-up, retain advisers, compromise claims, sell assets, execute documents, raise money on assets, appoint agents, enforce liabilities, and conduct or be subject to forensic investigations; certain failures to comply or false statements are offences and persons found responsible after investigation may cease to be fit and proper.

A court shall not entertain any application for a stay of proceedings relating to the liquidation or winding up of a financial institution under this Act, but that restriction does not apply to an application filed by the Bank of Uganda.

The Bank of Uganda or its appointed liquidator must publish a notice once a week for four consecutive weeks calling on all creditors to submit statements of their claims, and creditors must submit those statements within one month of publication.

The liquidator must submit a report to the Bank of Uganda within five months of appointment detailing assets, values and (so far as can be established) liabilities; the liquidator may deduct certain amounts referred to in subsection (4); depositors are deemed to have filed claims for amounts shown in the institution's books; persons who fail to file within prescribed periods are not entitled to priority payment; and the liquidator must comply with directions of the Bank of Uganda in administering and distributing assets.

The Bank of Uganda or the liquidator may summon a meeting of creditors or contributories, but may dispense with the meeting if they consider it would achieve no object sufficient to justify the delay and expense.

The liquidator must, within two months after submitting a report of assets and liabilities, commence payment to depositors and creditors and make payments in the specified priority order.

Liquidator must keep prescribed financial ledgers and records, submit audited financial statements to the Bank of Uganda after realisation and distribution, may apply to the High Court to examine persons suspected of concealing institution property, and is not liable when relying in good faith on certain specified documents and professional reports; the court may order restoration or compensation if misappropriation is found.

The Bank of Uganda may release a liquidator and discharge them from liability if satisfied with the audited statements and the liquidator's performance; the release can be revoked if it was obtained by fraud, suppression or concealment of a material fact.

Financial institutions must obtain the approval of the Bank of Uganda before commencing any proceedings under this section.

A financial institution may apply to the High Court for voluntary liquidation only with prior approval of the Bank of Uganda; an institution in voluntary liquidation must immediately cease all activities except those incidental to realising and preserving assets and settling obligations; shareholders remain liable for uncalled subscriptions until the liquidation ends; the board must, with Bank approval and before paying direct creditors, arrange a pro rata distribution among certain claim holders; the Bank of Uganda may place the institution in compulsory liquidation if satisfied assets are insufficient or liquidation is unduly delayed.

The Bank of Uganda must order the winding up of a financial institution when it determines the institution should be liquidated; where liquidation proceedings are commenced the Bank of Uganda or a person it appoints shall be the liquidator.

Establishes the Deposit Protection Fund as a continuing separate corporate entity with perpetual succession and permits it to sue or be sued in its corporate name.

The Fund must be a deposit insurance scheme for customers of contributing institutions; it may act as receiver or liquidator if appointed by the Bank of Uganda; and it may perform other functions conferred by law.

The Board is composed of specified members including a Chair appointed by the Minister; the Minister may remove appointed Board members for specific disqualifying reasons; some members serve five-year terms and may be re-appointed once; a Board member may resign in writing to the Minister; specified categories of persons are barred from appointment.

Financial institutions must contribute to the Deposit Protection Fund; the Fund must issue a notice with the amount and period, late payments incur 0.5% per day, and a minimum annual contribution is 0.2% of average weighted deposit liabilities (Board may vary).

Defines the money comprising the Fund and sets governance powers: the Minister may fix the Fund's size by Gazette notice; the Board may borrow temporarily and must maintain an account with the Bank of Uganda.

Customers of a closed financial institution may lodge claims with the Board for payment of protected deposits; the Board must pay protected deposits within ninety days of closure but may require proof and may refuse payment to those responsible for the closure; the Bank of Uganda or its liquidator may direct withholding to satisfy a depositor's liability; the Board is entitled to recovery from the institution or liquidator.

The Board must, within four months after the close of each financial year, submit audited financial statements and an annual report of the Fund to the Minister and contributing financial institutions and microfinance deposit-taking institutions.

The Fund's financial year is twelve months starting on 1 July and ending on 30 June of the following year.

The Fund must provide institutions with display material bearing the Fund logo; every institution must permanently exhibit that material at public entrances/exits and beside teller stations; every institution must display “Deposit Protected by the Deposit Protection Fund” on websites, official stationery and print advertising; radio and television adverts must state deposits are protected by the Deposit Protection Fund.

The Board of the Fund may make regulations, after consulting the Minister, for the proper management of the Fund.

Bank of Uganda must not grant consent for amalgamations or transfers involving financial institutions unless specified conditions are met; involved financial institutions must notify the Bank and the Bank must register notices and take licensing actions.

Reconstruction of companies within a group that includes a financial institution or its subsidiary cannot be affected without the prior written approval of the Bank of Uganda.

Section Alteration of memorandum and articles Section No— An application for approval by the Bank of Uganda under subsection (1) shall be lodged with the Bank of Uganda before the proposed special resolution authorising the alteration or

The Bank of Uganda may direct a financial institution to alter its memorandum or articles of association; if the institution refuses, the Bank may send the direction to the Registrar of Companies, who must treat and process it under the Companies Act as if it were a special resolution.

Licensed financial institutions may apply to the Bank of Uganda to conduct Islamic financial business; those permitted must do so through an Islamic window; the Bank of Uganda must make special provisions by statutory instrument.

Banks and other financial institutions offering Islamic financial business must appoint and maintain a Shari’ah advisory board; the Bank of Uganda must make regulations (in consultation with the Minister) about such boards; the board of directors is responsible for appointment, maintenance, operation and conduct in line with the institution's rules.

Sections 36 and 37 do not apply to a financial institution engaging in Islamic financial business under this Part.

Financial institutions must not carry out bancassurance or Islamic insurance business in Uganda as principal or agent without prior written authorisation from the Bank of Uganda; if they wish to engage, they must follow formats prescribed by the Insurance Regulatory Authority of Uganda after consultation with the Bank of Uganda and must comply with the Insurance Act.

A financial institution must obtain approval from the Bank of Uganda before opening a new branch, changing an existing branch's location, or changing business hours; it must give six months' notice (or a shorter Bank-approved period) before closing a branch; agent banking is exempt; contravention is an offence with a fine up to two hundred fifty currency points.

Foreign banks may apply to the Bank of Uganda to establish representative offices for limited activities; without prior permission they must not change name, management, address, close the office, or engage in unauthorised activities; applications require a prescribed fee; non‑compliance is an offence carrying a fine up to 250 currency points or up to two years imprisonment, or both; Bank of Uganda may prescribe details by statutory instrument.

The Bank of Uganda must, when it believes funds in an account are proceeds of crime, direct the financial institution in writing to freeze that account.

Rules for dormant accounts: financial institutions must transfer inactive accounts to a dormant register and notify depositors; institutions may continue service charges until transfer but not beyond two years; institutions must advertise accounts on the dormant register after three years; unclaimed balances are to be transferred to the Bank of Uganda after five years from the advertisement, and the Bank of Uganda must employ and refund balances on request.

Persons convicted of dishonesty or fraud must not act or continue to act in the management of a financial institution.

Certain officers of financial institutions and members of a Shari'ah advisory board are treated as public service employees for the purposes of sections 10, 17 and 25 of the Anti-Corruption Act.

The Bank of Uganda must retain all monetary fines and penalties it recovers under this Act and use them to offset the costs of supervising financial institutions.

This Act does not relieve a financial institution of its obligations under the Companies Act or the Building Societies Act.

The Bank of Uganda and its officers, employees and agents cannot be sued for acts done or intended to be done in good faith under this Act.

The Minister may, by statutory instrument, declare any day a bank holiday; financial institutions must not be open to the public on a bank holiday; a bank holiday is not necessarily a public holiday and this section does not affect existing public-holiday laws.

Directors, officers, managers and Shari’ah advisory board members who breach specified duties or commit certain acts face offences and penalties; financial institutions can face civil penalties and fines with additional daily penalties for continuing offences.

The Bank of Uganda may summon officers, directors, shareholders or members of a Shari'ah advisory board for examination when it believes they hold information necessary for its supervisory functions; failure to comply, withholding, false information or refusal to answer are offences punishable by up to two years' imprisonment.

Before imposing a civil penalty the Bank of Uganda must, except in an emergency, give at least three days' written notice requiring the institution or person to show cause; the penalty amount is a debt owed to the Bank and the Bank may sue, debit accounts, or direct recovery after a notified period.

Financial institutions in Uganda must identify and record client identity in certain transactions and must promptly report suspected money laundering to the Financial Intelligence Authority; contravention is an offence punishable by a fine not exceeding two hundred fifty currency points.

Financial institutions must promptly report suspected money laundering related to any account to the Financial Intelligence Authority.

The Bank of Uganda, with the Minister, may make regulations; those regulations may provide for prudential norms, licensing, capital requirements, reporting, advertising, agent banking, Shari’ah sanctions, profit-sharing accounts, transfer of significant shareholdings, and may prescribe penalties including fines up to two hundred fifty currency points or imprisonment up to two years, additional daily penalties for continuing contraventions, higher penalties for repeat contraventions, and forfeiture by a court.

The Minister may, by statutory instrument, amend Schedule 1 (but that amendment requires the approval of Cabinet) and may, by statutory instrument, amend Schedules 2 and 3.

For matters concerning financial institutions, this Act prevails over any other enactment when there is a conflict.