In a landmark regulatory development, Uganda’s Capital Markets Authority (CMA) has been granted new and far-reaching powers that could significantly reshape executive leadership in the country’s capital markets sector. The amendments, recently passed into law, allow the CMA to remove chief executive officers (CEOs) and other top executives of regulated entities deemed “unfit” to serve.
While this move has sparked debate in corporate corridors and investor circles alike, it marks a decisive step towards tightening governance standards and restoring trust in Uganda’s financial ecosystem.
What does it mean to be “unfit” to serve as CEO under the new guidelines?
The CMA will assess fitness using a comprehensive Fit and Proper Test that examines an executive’s: Integrity and character, including past behavior, honesty, and reputation; Competence and capacity, covering qualifications, experience, and leadership effectiveness; Regulatory compliance history, especially repeated violations or obstruction of oversight; Ethical leadership, evaluating decision-making that aligns with fiduciary duties and public interest.
The power to remove CEOs is not limited to criminal offenses or financial fraud. An executive can be dismissed for consistent underperformance, non-compliance, or demonstrating an inability to uphold ethical and governance standards critical to investor protection.
The Capital Markets Authority’s CEO removal process is governed by due process, requiring thorough investigations, the CEO’s right to respond, evidence-based findings, and appeal options. The CMA may use various tools like background checks and audits.
These regulatory changes signal a shift in the corporate landscape. Listed and licensed entities are now required to develop formal succession plans for CEOs and board chairpersons, strengthen internal controls and compliance frameworks and proactively engage in risk-based leadership evaluations.
The immediate impact is a heightened sense of accountability in boardrooms, with leadership no longer considered untouchable. For investors, it reflects a stronger commitment to transparency and proactive oversight.
However, critics caution that if not carefully managed, this new authority could lead to overly cautious leadership or a box-ticking culture that stifles innovation. Balancing enforcement with entrepreneurial freedom remains a key consideration.
Beyond the legal changes, Uganda’s empowerment of the Capital Market Authority to act decisively in regulatory enforcement reflects a crucial values statement: leadership in the financial sector is not a privilege but a responsibility that demands constant commitment and ethical conduct. This measure aims to bolster investor confidence, improve corporate governance, and enhance Uganda’s investment attractiveness within East Africa, aligning the country with global efforts to strengthen financial market regulation.
The power to remove “unfit” CEOs underscores the evolution of Uganda’s capital markets into a more disciplined, integrity-driven space. While its execution will require care, consultation, and consistency, it is a firm step in aligning Uganda’s governance standards with international best practices.
In the age of stakeholder capitalism, CEOs are no longer shielded by titles, they are accountable to the public, to investors, and now, to the regulator with teeth.
Editor’s Note:
This article is part of Publicist East Africa’s Business & Governance series that explores regulatory developments shaping Uganda’s economic future.
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