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[ESTABLISHING A BUSINESS ENTITY IN UGANDA]
ESTABLISHING A BUSINESS ENTITY IN UGANDA
1. TYPES OF BUSINESS ENTITIES
legal personality. It can sue and be sued. The structure requires appointment of a Board of Directors who may be no more than three and a Company Secretary, to manage the affairs of the Business. Matters to be considered when choosing a particular business entity type;
• Description of the types of entities available in Uganda through which to conduct business. Uganda has several business structures, and these include private companies limited by shares or guarantee, public limited companies, unlimited companies, statutory corporations, as well as partnerships. i) Sole Proprietorship : This is an entity owned and run by one individual. The individual who registers this entity is in direct control of the general management of the Business. These types of entities are registered under the Business Names Registration Act, Cap 105. ii) Partnerships : this is a relationship that subsists between two or more persons and not exceeding twenty, with a view to making profits and operating a business in common. Partnership can be either general partnerships or limited partnerships. In a general partnership, all partners share equal responsibility for the business, whereas in a limited partnership, at least one general partner oversees the day-to-day operations, and one or more limited partners contribute capital but have limited role in business management. Partners in the firm are jointly liable for all the debts and obligations of the Partnership . iii) Companies ; A Company is a distinct legal entity separate and set apart from its members. It obtains its own
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Sole Proprietors The proprietor is entirely liable for the debts and obligations of the Business. So, the person intending to set up this type of entity should be aware of this fact. If the entity is unable to meet its obligations, then personal assets may be attached to cover the debts and obligations. For Tax purposes, the Tax Identification Number of this entity is the one that belongs to the individual. Partnerships The Partners are always jointly liable for the debts and obligations of the Business. The liability could extend to the legal representatives upon death of a Partner. These types of entities are synonymous with people from similar professions. They are very common among lawyers, auditors, medical practitioners, surveyors, Architects, and other professionals. Companies The law defines a foreign company as one where majority stake in the business is owned by a foreigner under the Companies Act, Cap 106. While, under the Land Act, Cap 236, for purposes of owning land, the law prohibits any foreign ownership for mailo or freehold land. However, they can own a lease of up to 99 years, and this can be renewed.
ILN Corporate Group – Establishing a Business Entity Series
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