The Companies Act 2012 is the principal legislation regulating the corporate sector in Uganda. The Companies (Amendment) Act 2022 amended the 2012 Act to introduce some flexibility in the regulation of companies in Uganda.
The amendment purposed to remedy the inadequacies of the principal Act in several ways. For instance, the Act lacked provisions on transparency and disclosure of beneficial owner’s information and threshold. It did not require or elaborate a procedure for striking off defunct companies from the companies’ register. There was also no statutorily mandated time frame for when a dissolved company name would be made available for reuse. Additionally, the Act lacked provisions on deregistration of a company. These are merely highlights. The amendment has more comprehensive provisions as is subsequently analysed.
The Amendment repeals Sections 18 and 19 of the 2012 Act. This ushered in change in the process of incorporation of a company. The cumbersome registration form in Schedule 2 of the 2012 Act was replaced by a user-friendly Form 1. The result is a comprehensive yet precise registration form that makes the process quick and easy.
The amendment also introduces the concept of beneficial ownership. A beneficial owner is defined in Section 1 to mean a natural person who has final ownership or control of a company or a natural person on whose behalf a transaction is conducted in a company, and includes a natural person who exercises absolute control over a company. A new Section 119A was introduced to require all companies to keep a register of beneficial owners with sufficient information relating to any offences and sanctions against them. This concept introduces transparency and eases regulation of companies because the person who exercises absolute control over a company is known.
Section 14 was amended by making the corporate governance code in Table F the default code for public companies which do not comply with any corporate governance provisions under any other law. Aside from providing a standard corporate governance code for public companies, this amendment alleviated the possibility of a company being governed by a dual corporate governance regime.
The issuance of a share warrant to the bearer is repealed by the Amendment Act to allow for transparency and disclosure of information on the ownership of companies. This prevents concealing of tax payers information from tax authorities and the Registrar of companies.
The Act commendably repeals section 256(1) (a) which exempted foreign companies incorporated in any part of the Commonwealth from conforming to the filing requirements of the Act. This provision was difficult to justify in the current economic dispensation.
The powers of the registrar were also somewhat enhanced. The Registrar may strike off defunct companies from the register on his or her own accord or at the request of the company. The only legal requirement is that the registrar gives notice of their intention to do so. This process ensures a cleaner company register and more accurate results upon search and reservation of company names.
Company secretaries and advocates retained by registered companies must thus pay keen attention to these amendments. Especially for corporate governance, the requirement now is to ensure that your client complies with some corporate governance regime of any legislation applicable to your client. There is no additional need for blanket compliance with Table F.