Corporate governance in Uganda
The recently proposed Code for Institutional Investors by the Uganda Securities Exchange (USE) stakeholders aims to promote greater corporate governance and best practices in one of sub saharan Africa’s fastest growing economies.The code is essentially a set of best practices collectively developed by Uganda’s largest and middle sized institutional investors. According to an insider privy to the proposal, the code would put Uganda alongside the Kenya, South Africa and Nigeria in terms of transparency and other best practices. In addition, the technocrat told your blogger, an institutional investor council would also be established as a platform to discuss stewardship matters undertaking the oversight role of monitoring the take-up and application of the code. The implementation of this code will put Uganda alongside several advanced economies in Africa including Egypt and South Africa all of which have recognised the need to inculcate sound stewardship practices in listed companies by leveraging on the ability of institutional investors to effect meaning change in their investees through active engagement, as well as setting a benchmark for other investors.
Aspirational in nature and voluntary in implementation, the code will serve as a frame of reference for institutional investors in areas such as monitoring and engagement of investee companies, voting activities and managing conflicts of interest. By providing this framework for collective action, this code will enable institutional investors to have a cohesive voice in engaging companies on issues such as board governance and accountability as well as transparency and sustainability. Starting from late 2015, signatories to the code if fully adopted and supported by law, are expected to report annually on their application of the principles of the code in their website, annual report or in other publicly accessible documents. Despite the code being voluntary, institutional investors will be able to apply the code in the interest of their beneficiaries. A good take-up and application of the code by institutional investors will encourage good governance and long-term sustainability of their investee companies in your blogger’s opinion.