The Bank of Ghana (BOG) has issued a notice emphasising the disqualification of significant shareholders, directors, and key management personnel directly implicated in the financial sector clean-up from holding critical positions within regulated financial institutions (RFIs).

This move aims to address poor corporate governance, which contributed to the failure of several RFIs, necessitating a banking sector clean-up from 2017 to 2019.

To ensure sound corporate governance practices, the BoG issued the Corporate Governance Directive in 2018 and the Fit and Proper Persons Directive in 2019, followed by the Corporate Governance Disclosure Directive in 2022 to enhance governance disclosure practices.

The BoG’s Fit and Proper Persons Directive mandates that individuals in oversight and management roles must possess sufficient knowledge, skills, and experience and be of good repute.

As such, the directive disqualifies individuals involved in institutions that had their licenses revoked, went into receivership, or were wound up by a competent authority.

Among others, “the Fit and Proper Standards considers whether a person has been a director of, or directly involved in the management of, any company or institution: which had its licence revoked; or is being or has been wound up by a court of competent jurisdiction or other authority competent to do so within or outside Ghana; and has gone into receivership, insolvency or involuntary liquidation.”

“In order to further promote the safety and soundness of RFIs, the BoG is by this notice bringing to the attention of RFIs, their obligation under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and the Fit and Proper Persons Directive, 2019 to ensure the continuous fitness and propriety of Significant Shareholders, and Persons, serving as Directors and Key Management Personnel of RFIs.

“The BOG reminds the public that persons who have been directly implicated in the 2017-2019 Financial Sector clean-up, and all previous directors of failed banks and SDIs since the enactment of Banks and Specialised Deposit Taking Institution Act, 2016 (Act 930) do not qualify to hold key positions under the fit and proper persons criteria,” a press statement by the BoG has indicated.

The noticed directed to banks, specialised deposit-taking institutions, and the general public advised to adherence to these regulations to promote the safety and soundness of the sector.

It maintained that poor corporate governance contributed significantly to excessive and imprudent risk-taking in the financial sector, which led to the failure of some Regulated Financial Institutions (RFIs) licensed by the Bank of Ghana (BoG), consequently necessitating the 2017-2019 banking sector clean-up.