Bank of Uganda has stirred controversy by issuing a notice regarding the legal status of Crane Bank Limited dated April 3, 2024. Citing Section 7(1)(a) of the Financial Institutions Act, 2004 [as amended], BoU recommended that the Uganda Registration Services Bureau (URSB) remove the word ‘Bank’ from Crane Bank Limited’s company name, effectively striking it off the records as a registered entity in Uganda.
Crane Bank Limited, a member of the Ruparelia Group of Companies, was initially registered on July 23, 1990, to conduct banking business. Despite its contentious closure in October 2016 and subsequent sale in January 2017 by BoU, several protracted legal battles all saw Crane Bank trouncing BoU with the final battle in the highest court in the land, the Supreme Court that ordered a return of BoU assets to their shareholders.
Legal experts have questioned BoU’s authority to direct URSB to deregister Crane Bank Limited, labeling it illegal and indicative of BoU’s desperation following legal setbacks against Crane Bank and its major shareholder tycoon Sudhir Ruparelia.
The attempt to deregister Crane Bank Limited faces hurdles as shareholders’ consent is required, and legal challenges are anticipated if URSB heeds BoU’s advice. Lawyers warn that URSB’s compliance could lead to lawsuits from Crane Bank Limited shareholders. Additionally, they suggest that Crane Bank Limited may seek a court order to prevent its deregistration.
With Crane Bank Limited’s registration dating back 34 years, legal experts doubt BoU’s ability to use the Financial Institutions Act, 2004, to deregister the bank. They emphasize that BoU must first comply with the Supreme Court’s order to return all properties and assets to Crane Bank Limited before thinking of pursuing deregistration.