Section 22, The Banking Act, 2019

(1) The Central Bank may by statutory instrument makerules regarding matters of corporate governance for banks and financial holding companies that the Central Bank considers necessary or appropriate to ensure sound operation including - (a) the scope and nature of the duties of directors; (b) the requirements for audit committees and other specific committees of a Board of Directors; (c) the responsibilities of key management personnel; (d) risk management; (e) internal audit; and (f) internal controls and compliance. (2) The Central Bank shall review the corporate governance structure and regulations of banks and financial holding companies including issues relating to - (a) alteration of constitution; (b) composition of the Board of directors; (c) duties of the Board of directors; (d) duties of the directors to report; (e) appointment of internal auditor; and (f) corporate secretary. (3) A bank or financial holding company shall, within 28 days of the date of approval by its shareholders or board of directors of any alteration to its memorandum of association or of any other document representing its constitution, submit the particulars of the alteration to the Central Bank for approval. (4) Approval for the alteration shall not be granted by the Central Bank unless it is satisfied that the proposed alteration is not detrimental to the interests of the bank or financial holding company's depositors. (5) Notwithstanding anything contained in any legislation relating to companies or in any other enactment, no application for registration or confirmation of an alteration in the memorandum of association or any other document representing the constitution of a bank or financial holding company shall become effective without the written approval of the Central Bank. 36 37 Corporate governance rules. (6) A bank or financial holding company which fails to comply with the requirements of this Section shall be liable to an Administrative Penalty. (7) A bank or financial holding company shall be governed by a board of directors that meets the following requirements - (a) not less than five and not more than 9 members, majority of whom shall be resident in Sierra Leone; (b) not less than 50% excluding the Chairman should comprise non-executive directors; (c) not more than 40% excluding the Chairman should comprise executive directors; (d) not less than 10% should be independent non- executive directors; and (8) The board shall be chaired by a resident nonexecutive director. (9) Directors shall be fit and proper persons as defined in this Act. (10) The board of directors of a bank or financial holding company shall be responsible for providing strategic direction. (11) The board of directors of a bank or financial holding company shall be responsible for ensuring that - (a) a sound risk management culture is established throughout the bank or financial holding company and its subsidiaries; (b) policies and processes are developed for risktaking that are consistent with the risk management strategy and the established risk appetite; (c) uncertainties attached to risk measurement are recognised; (d) appropriate limits are established that are consistent with the bank or financial holding company's risk appetite, risk profile and capital strength and that are understood by and regularly communicated to relevant staff; (e) key management personnel take steps necessary to monitor and control all material risks consistent with approved strategies and risk appetite. (12) The board of directors of a bank or financial holding company shall set suitable risk appetite levels to define the level of risk the bank or financial holding company is willing to assume. (13) The board of directors of a bank or financial holding company shall be responsible for ensuring that the business of the bank or financial holding company is carried on in compliance with all applicable laws and safe and sound practices. (14) The board of directors of a bank or financial holding company may establish such committees necessary to implement its duties. (15) The board of directors of a bank or financial holding company shall not delegate its responsibility for the safe and sound operation of the bank or financial holding company. 38 39 (16) The board of directors of a bank or financial holding company as a group or each director individually shall immediately report in writing to the Central Bank if they have reason to believe that the bank or financial holding company - (a) may not be able to properly conduct its business as a going concern; (b) appears to be or is likely in the near future to be unable to meet all, or any of its obligations; (c) has suspended or is about to suspend any payment of any kind; (d) does not, or may not be able to meet its capital requirements as prescribed under this Act; (e) is engaged, exposed or involved in an event which is likely to have a material adverse impact on the bank or financial holding (f) violates or is about to violate a law or regulation. (17) Any individual director who acts in accordance with this Section shall make his or her intention known to the board of directors in writing prior to reporting to the Central Bank. (18) Where the board of directors or a director fails, omits or neglects to report to the Central Bank any matter required to be reported under this Section, the Central Bank may remove any or all such directors. (19) Notwithstanding sub section (18) the board of directors or each director who violates the provisions of paragraph (a) of subsection (16) shall be liable to an administrative penalty. (20) A bank or financial holding company shall have an internal auditor, appointed by its board of directors who shall operate independently of the board of directors and report to an audit committee. (21) The internal auditor shall be a certified chartered accountant or certified internal auditor. (22) The internal auditor shall be given access to management to discuss matters relevant to its functions and shall have the right, upon request, to obtain from the bank or financial holding company any information or documentation which he shall require. (23) The internal auditor shall be responsible for - (a) monitoring the bank or financial holding company's systems for internal controls, applicable policies and procedures; (b) reporting non-compliance with policies, procedures or applicable laws or other irregularities to an audit committee at least quarterly, and more frequently when necessary; (c) assisting and cooperating with the external auditor, referred to in subsection (1) of section 111, in the performance of its duties; (d) performing such other duties as may be assigned to the internal auditor by the board of directors or an audit committee. 40 41 (24) A bank or financial holding company shall have a corporate secretary, appointed by its board of directors, who shall be accountable to the board of directors. (25) The corporate secretary shall be an executive officer suitably qualified. (26) The corporate secretary shall be responsible for advising and guiding the board of directors on matters of ethics and good corporate governance. PART IV -REGISTRATION OF A FINANCIAL HOLDING COMPANY