A notice by Bank of Uganda seeking to change the legal status of Crane Bank Limited has sparked confusion, with lawyers saying the central bank has over-stepped its powers.
They also argue that the law being cited by the central bank does not apply in this case.
In the notice, Bank of Uganda citing the Section 7 (1) (a) of the Financial Institutions Act has advised the Uganda Registration Services Bureau to strike the word “bank” from Crane Bank Limited.
But independent lawyers say this is not applicable given that Crane Bank Limited was registered way before the enactment of the Financial Institutions Act in 2004.
“That is not how the law is applied,” said one of the lawyers.
According to the documents Crane Banl Limited was registered as a limited liablility company on July 23, 1990.
Secondly, the central bank’s notice contradicts a Supreme Court ruling in the case Crane Bank (under receivership) Vs Sudhir Ruparelia and Meera Investments. In the case, court ruled that the central bank no longer had “managerial powers” over Crane Bank.
The Supreme Court ruled that “Crane bank existed as a legal entity before it was licensed to operate as a financial institution and that the return of management to the shareholders is a logical result of the fact that the central bank is no longer a receiver and no longer the manager.”
As such, the court has emphasized that the Crane bank receivership ended on January 20, 2018, and consequently, its management has to be reverted to its shareholders. Sudhir’s lawyer Peter Kabatsi has welcomed the decision saying it has been a tough fight.
