Uganda, the Pearl of Africa, is a landlocked country nestled in the heart of East Africa. It is known for its stunning landscapes, which include the Nile River, Lake Victoria, and diverse wildlife. Uganda offers a unique blend of natural beauty, a vibrant culture, and a rapidly growing economy.

As a strategic hub for business in East Africa, Uganda presents a compelling opportunity for investors seeking to expand their reach and capitalize on the region’s expanding markets. Its economy is primarily based on agriculture due to its good climate, but increasingly complemented by growth in manufacturing, services, and tourism. The country is endowed with a wide selection of minerals including precious metals like gold, silver, and platinum. Uganda also has renewable energy resources which are still untapped, especially solar, wind, and mini hydropower resources.

Uganda has recently enacted numerous laws and regulatory amendments in various sectors, including financial services, pensions, retirement benefits, competition, fisheries, aquaculture, and mineral resources. These changes aim to promote financial inclusion, boost agriculture and natural resource sectors, and strengthen regulatory oversight.

The premier investment opportunities in Uganda are:

• Natural Resources: Mining and Oil & Gas
• Tourism: International and Domestic
• Agribusiness
• Manufacturing and Value Addition
• Renewable Energy
• Infrastructure and Real Estate Development
• Information and Communications Technology (ICT) and Telecommunications

Why choose Uganda for your business?

• Strategic Location: Situated at the heart of East Africa, Uganda provides excellent connectivity to neighboring countries, including Kenya, Tanzania, Rwanda, and South Sudan. This strategic position offers access to a vast market of over 160 million consumers.
• Favorable Investment Climate: Uganda has implemented a business-friendly environment with a range of incentives for investors. These include tax holidays, customs duty exemptions, and repatriation of profits. The government is also actively working to improve infrastructure and streamline administrative processes.
• Abundant Natural Resources: Uganda is rich in natural resources, including fertile land, minerals, and hydroelectric power. This abundance provides a solid foundation for agriculture, mining, and renewable energy industries.
• Growing Domestic Market: Uganda’s growing population and rising incomes are driving increased consumer demand for goods and services. This presents significant opportunities for businesses in sectors such as retail, consumer goods, and services.
• Skilled Workforce: Uganda boasts a young and relatively well-educated workforce, which is a key asset for businesses seeking to establish operations in the country. The government is also investing in education and skills development to meet the needs of the growing economy.

Advantages of opening a company in Uganda

• Low Cost of Operation: Uganda offers a relatively low cost of doing business compared to other countries in the region. This includes affordable labor, rent, and utilities.
• Supportive Government: The Ugandan government is committed to supporting foreign investment and has established various agencies and programs to assist businesses.
• Access to Regional Markets: Uganda’s strategic location provides easy access to the wider East African market, allowing businesses to expand their operations and customer base.
• Growth Potential: Uganda’s economy is experiencing rapid growth, driven by increased investment and consumer spending. This presents significant opportunities for businesses to capitalize on the country’s development.

Doing business in Uganda as a foreigner

Non-citizens in Uganda
Any person in Uganda who is not a citizen by birth, registration, or naturalization is considered a foreigner. This includes individuals born outside Uganda or those whose parents/grandparents were not Ugandan citizens at the time of their birth.

Foreign Companies in Uganda
A company incorporated in Uganda is considered foreign if over 50% of its shares are owned by non-citizens. Such companies must comply with Ugandan investment laws.

Are you a foreigner thinking of doing business in Uganda?

Welcome to your ideal guide to sailing through Uganda’s dynamic business landscape. A foreigner looking to start a business in Uganda must first register a company. The company registration process is mandated under the Uganda Registration Services Bureau Act Cap 217 to register all business entities in Uganda which are required by law to be registered.

The Uganda Registration Services Bureau (URSB) is the regulatory body in charge of business registrations in Uganda. There are two business forms open to foreigners for their Uganda Business registration. These are for registering a local company or registering a foreign branch. Most individuals and groups prefer to register a local company for obvious reasons – including limitation of liability and tax purposes.

Local Company

The incorporation of a local company by a foreigner with a Ugandan citizen by birth as a director is similar to the registration of a local company by a citizen. There are different types of companies, but most foreign individuals or entities opt for a private entity by shares.

Branch Offices

This is open for companies with a reduced level of activity. These don’t generally require incorporation in Uganda, but to register one, certain financial disclosures are required by the parent company.

Requirements for registering a company in Uganda

The requirements for Registering a Company in Uganda are as follows;

• Proposed Company/ Business name
  The three proposed business name searches are done online under the URSB to ensure are not similar to an existing registered business. The first name reserved, if approved, is reserved for 30 days.
• Objectives of the Business
  This is essentially the business that the company is being set up to carry out. This business must be entirely legal and not against public policy.
• Nature of business
  This is the type of operation it carries out. This is largely determined by the industry the business operates in eg manufacturing, transporting, production, etc.
• Names of the Directors, contact details and email
  In the interest of transparency and accountability, URA stipulates that the director’s information must be provided on the registration application.
• Proof of Identification
  A valid, unexpired government-issued identification document must be submitted for each director during the registration process. Foreign residents must provide a Foreign National Registration Certificate (Alien Card), while non-resident aliens must submit an international passport
• Copy of shareholder and Directors
  Passport Photo, ID copies, individual, phone numbers, email addresses, postal addresses, residential details & occupation.
• For a company shareholder – Copy of Company Incorporation certificate, phone number, email address, postal address, & registered office details.
• Number of shares to be assigned to each shareholder

URA TIN

All directors, whether resident or non-resident, are required to provide a Uganda Revenue Authority (URA) Tax Identification Number (TIN) certificate copy to prove registration with the tax authority.

In addition, the relevant forms must be signed by all directors and submitted during registration. The Certificate of Incorporation is received from the Ugandan Registrar of Companies after submitting all required documents. If a branch was registered; a certificate of registration will be issued.

Investment License for Foreigners in Uganda

A foreigner must obtain an investment license to be allowed to run a company in Uganda. There are also some requirements for trade licenses to further ease doing business.

Requirements for foreign company registration in Uganda

To establish a foreign company in Uganda, the following steps need to completed:

• Certified Documents from Country of Origin:
  • Memorandum and Articles of Association/Charter/Constitution
  • Certificate of Incorporation
• Beneficial Ownership Information:
  • Names, IDs/BRNs, nationalities, and shareholdings of beneficial owners
• Company Details:
  • Official email and phone number
• Details of directors and company secretary (name, nationality, ID/, passport copy, date of birth, physical and postal address, phone number & email address)
• Details of at least one local representative residing in Uganda
• Complete Registration Forms:
  • Form 24: Director and Secretary Details
  • Form 25: Authorized Persons for Service of Process
  • Form 26: Physical and Principal Office Address
  • Form 13: Statement of Charges
• Submission Documents to the Uganda Registration Services Bureau (URSB):
  • Certified copies of Memorandum/Constitution and Certificate of Incorporation
  • Completed Forms 24, 25, 26, and 13
  • Beneficial ownership information
  • Company contacts details
  • ID copies of directors, authorized persons, and company secretary

Tanzania, a captivating East African nation renowned for its natural beauty and cultural richness, offers a favorable business environment for investors. Its strategic location and investment incentives make it a compelling choice for companies seeking to expand their operations.

Moreover, Tanzania is a growing economy in East Africa. It’s a good place to do business because the government is making it easier for foreign companies to invest. Good business ideas for Tanzania include technology, construction, and farming. The government is building roads, airports, and train tracks, which could be useful for businesses.

The Business Opening in Tanzania

• Digital Services: The growing digital economy in Tanzania offers opportunities for businesses providing software development, e-commerce, cybersecurity, and digital marketing services.
• Local Tourism: Tanzania’s diverse tourist attractions, including national parks and beaches, attract many visitors annually, creating opportunities for tourism-related businesses like hotels, and tour companies.
• Advisory Services: The high demand for professional advice and support in various fields, such as management, finance, and human resources, creates opportunities for consulting services.
• Farming business: Tanzania’s fertile land, favorable climate, and growing demand for agricultural products offer opportunities for entrepreneurs.
• Small-Scale Manufacturing: The increasing demand for manufactured goods in Tanzania provides opportunities for small-scale manufacturing businesses.
• Natural Resources: Tanzania has a rich endowment of minerals, oil, and gas presents opportunities in the extraction industry

Benefits of Starting a Business in Tanzania

Some notable advantages of starting a business in Tanzania;

• Political Stability: Tanzania offers a peaceful environment for businesses to operate and grow.
• Affordable Labor: Tanzania has a readily available workforce, making labor costs relatively low.
• Regional Integration: Tanzania’s membership in the East African Community (EAC) offers opportunities for foreign trade and investment.
• Investment Incentives: The Tanzanian government provides various incentives, such as tax breaks and duty exemptions, to attract foreign investors.
• Shared languages: Swahili and English languages easily facilitate business operations for entrepreneurs from other nations.
• It’s easy to start a business – forming an entity does not involve so many processes.
• Readily available labor market – Tanzania is a gateway to the East African Community (EAC) market, with millions of consumers.
  There are many good business opportunities.
• Agricultural opportunities: Vast arable land and favorable climate create prospects in agribusiness and agro-processing.
• Low cost of living: compared to other Sub-Saharan African countries it is an attractive destination for business startups.
• Offers a favorable investment climate: with no restrictions on capital inflows or profit outflows, fostering a conducive environment for businesses.

Requirements for Foreigners to Start a Business in Tanzania

To start a business in Tanzania, the following be obtained:

• A business Visa: This allows you to enter Tanzania for business purposes.
• Work permits: For foreign employees, one needs to obtain work permits.
• Company registration: One can either register a branch company or establish a new one.

Requirements for Starting a Business in Tanzania

To start a business in Tanzania, one needs to obtain the following documents:

• Certificate of Compliance:
  Foreign companies setting up branches in Tanzania must obtain a Certificate of Compliance from the Business Registration and Licensing Agency (BRELA).
• Tax Identification Number (TIN):
  All companies, including foreign-owned ones, need a TIN issued by the Tanzania Revenue Authority (TRA).
  Foreign individuals without a National ID can get a TIN directly from a TRA regional office.
• Company TIN:
  Every company registered in Tanzania must have a unique Company TIN issued by the TRA.
• Tax Clearance Certificate:
  Before obtaining a business license, you must have a tax clearance certificate from the relevant tax region.
• Business License:
  To operate legally, a business license from both BRELA and the local municipal or city council must be obtained.

Accomplishment of the above steps makes it possible for one to establish a business in Tanzania and comply with local regulations.

Types of Business Structures in Tanzania

One can choose from these business structures:

• Sole Proprietorship: – Owned and managed by one person.
  • Easiest and cheapest to set up.
  • The single owner makes all decisions.
  • Taxes are based on personal income.
• Limited Liability Company (LLC): – Owned by shareholders with limited liability.
  • Separate legal entity from its owners.
  • Owners’ liability is limited to their investment.
  • Requires at least two shareholders and two directors.
  • No minimum share capital requirement.
  • Popular choice for foreign businesses.
• Public Company: – Can offer shares to the public and trade on the stock exchange.
  • Requires at least two directors and seven shareholders, including one Tanzanian.
  • Minimum share capital of US$300,000.
  • Suitable for large businesses seeking public funding.
• Partnership: – Two or more individuals or entities running a business.
  • Easy to form and manage.
  • Lower setup costs.
  • Decision-making is straightforward.
• Unlimited Company: Members have unlimited liability for company debts.
• Branch: – A foreign company can establish a branch to conduct local operations (an extension of a foreign company).
• Company Limited by Guarantee: No share capital; members guarantee company liabilities.
• Foreign company: – Documents Needed to Register a Foreign Company in Tanzania: To register a foreign company in Tanzania, the following documents are required:
  • Certified Copy of Certificate of Incorporation: – This proves a company’s legal existence.
  • Certified Copy of Memorandum and Articles of Association: – These documents outline a company’s structure and rules.
  • Board Resolution: – A formal decision by your board authorizing the Tanzania operation.
  • Directors and shareholders’ details (Passport copies, passport photos, email addresses, phone numbers, residential details)

Eligible Person to Register a Company

Any person may register a company in Tanzania where the age Limit provided is a minimum of 21 years and a maximum of 70 years as per section 194 of Companies Act Cap.212.

Understanding the Company Registration Process

The Business Registration and Licensing Agency (BRELA) is the governing body responsible for company registration in Tanzania. The process typically involves the following steps:

• Choose and reserve a business name: – Pick a unique name and check availability through the BRELA portal.
• Prepare Documents: – Draft Articles of Association and gather necessary information including;
  • Proof of identity for directors and shareholders (ID copies, passport photos, phone numbers, email address, postal address, residential details)
  • Proof of company address (phone numbers, email address, postal address, registered office details)
  • State the nature of activities & nominal capital details
• Submit Online: – Fill out registration forms, pay fees, and submit the application online through the BRELA portal.
• Processing and Verification: BRELA reviews and verifies the application and documents.
• Certificate Issuance: Upon approval, the Certificate of Incorporation is issued.
• Tax Registration: Obtain a Tax Identification Number (TIN) from the Tanzania Revenue Authority (TRA).
• Additional Registrations: Register with other relevant authorities or obtain necessary licenses.
• Bank Account Opening: Use the Certificate of Incorporation and TIN to open a company bank account.

Required Documents

To register a company in Tanzania, the following details are needed:

• At least three proposed company names
• A description of the business activities
• Passport-sized photographs of shareholders and directors
• Proposed business location
• Physical addresses, postal addresses, phone numbers, and email addresses of shareholders and directors
• National ID or travel passport copies of shareholders and directors

Timeline

The process of incorporating a company in Tanzania typically takes around 7 to 14 days after payment has been made. The Certificate of Incorporation serves as evidence of the company’s existence and legal capacity.

Other requirements after getting a business certificate that conforms with the Employment Act.

• Get a Tax ID Number (TIN): company documents are needed to register for a TIN online or at the Tanzania Revenue Authority (TRA). This helps them to track the company’s taxes.
• Get a Business License: Depending on the business type, one must register with either the Ministry of Industry and Trade or local government.
• Register for VAT (optional): Only businesses with high initial capital need to register for Value Added Tax (VAT). This can be done online or at the TRA office.
• Get Workers’ Compensation Insurance: This protects employees in case of accidents. It is possible to register online or at the Tanzania Insurance Regulatory Authority (TIRA).
• Social Security Number: Visit the National Social Security Fund (NSSF) office to get a social security number for your business.
• Register with OSHA (Occupational Safety and Health Administration): – This helps ensure workplace safety. It is possible to register online or by submitting an application form.

Choosing the right business structure involves several crucial steps to ensure legal compliance, operational efficiency, and alignment with your business goals. Before jumping into the steps, here are the different business structures in Kenya.

The Common Business Structures in Kenya

The common business structures include:

• Sole Proprietorship: Simplest form owned and operated by one individual. The owner is personally liable for all business debts and obligations.
• Partnership: Owned by two or more individuals who agree to share profits and losses. Partners have unlimited liability unless in a limited liability partnership (LLP).
• Private Company Limited by Shares: structured with shareholders who have limited liability. Can be formed by one or more persons.
• Public Company Limited by Shares: Shares are publicly traded on a stock exchange. Subject to more stringent regulatory requirements.

Now that we understand the different business structures available, below is a guide to ensure an informed decision for your business:

1. Consider Key Factors for Your Business

• Liability Protection: Evaluate the level of personal liability protection you need. Sole proprietors and partnerships expose owners to unlimited liability, whereas LLCs and companies limit liability to the extent of investment.
• Ownership and Control: Determine how you want ownership and management control structure. Partnerships offer shared decision-making, while companies have shareholders and directors.
• Tax Implications: Different structures have varying tax obligations. Understand the tax obligations and benefits associated with each structure.

2. Assess Operational and Regulatory Requirements

• Cost and Complexity: Consider the setup costs, ongoing maintenance costs, and administrative complexity associated with each structure. Sole proprietorships and partnerships are simpler and cheaper to establish than companies.
• Regulatory Compliance: Understand the regulatory requirements for each structure. Companies in Kenya must comply with the Companies Act, including filing annual returns, maintaining statutory records, and conducting annual general meetings.

3. Evaluate Funding and Growth Potential

• Capital Requirements: Assess your business’s need for capital and how each structure facilitates raising funds. Companies can issue shares to raise capital, making them more attractive for investors compared to sole proprietorships or partnerships.
• Scalability: Consider your business’s growth potential. Companies generally offer greater scalability and opportunities for expansion compared to other structures.

4. Seek Professional Advice

• Consult Experts: Given the complexity and legal implications, consult with a business lawyer, accountant, or consultant specializing in business law. They can provide personalized advice based on your specific business needs and goals.

Here at Kenbiz Registrars, we have a team of well-seasoned legal experts who can give sound advice given your struggle in choosing the most suitable business structure.

Contact us and get ahead of the game today!

I. Nominee Directors & Shareholder

The Companies Act, 2015 of Kenya does not explicitly use the terms “nominee director” and “nominee shareholder”. However, the Act includes provisions that indirectly address the roles and responsibilities of individuals who might be acting as nominees. Here’s how the Act deals with these roles:

Who is a Nominee Director?

A nominee director is a natural person or a corporate person appointed by a company to serve in a non-executive capacity, primarily to fulfil legal requirements regarding directorship. Nominee directors do not actively engage in the day-to-day management of the company. Instead, they operate under the instructions of the beneficial or actual director, following a nominee director agreement or Power of Attorney (POA) that delineates their scope of authority. This arrangement offers flexibility to companies, ensuring compliance with regulatory mandates while preserving the anonymity of the beneficial owner.

What are the benefits of appointing nominee Directors?

The appointment of nominee directors offers several advantages for companies operating in a dynamic business environment:

• Compliance Expertise: Nominee directors are knowledgeable about company rules and make sure all regulations are followed.
• Integrity and Confidentiality: Nominee directors are chosen from reliable partners and always maintain high levels of honesty and privacy in their work.
• Anonymity: Keeping the real business owners, incognito.

What are some of the key documents for appointing a nominee director?

• An agreement containing full details about both parties
  The agreement should include the full details of both parties, the beneficiary owner and the nominee director. Included are ID copies, passport photos, email addresses, phone numbers, postal addresses, residential details, address, occupation details, etc.
• Nominee’s agreement:
  This agreement indicates that complete control over the company belongs to the beneficiary owner, not the nominee.
• Beneficiary owner’s agreement
  This serves as a protection for beneficiary owners, demonstrating that ownership of the company belongs to them. The authorities can use the document to prove who is the actual owner of a company when proof of ownership is required.
• Power of attorney
  The purpose of a general power of attorney is to carry out director duties, such as opening bank accounts, signing contracts, and collecting debts.This document is proof that the beneficiary owner can act on behalf of the company even though the beneficiary owner is not listed on the company register. A power transfer may also enable the nominee to accomplish the above tasks.
• Letter of resignation & affidavit of resignation
  The resignation letter and affidavit should be signed in advance but not dated so that the date of resignation can be filled in later, the signed letter should remain in control of the owners of the company. If a nominee director resigns or their services are terminated, all rights return to the owners of the company.
• Memorandum and Articles of Association (if amended)
  Where the appointment of the nominee director necessitates any changes to the company’s constitution, the Memorandum and Articles of Association should be amended and updated accordingly.
• Ordinary resolution
  Certain decisions, including the appointment of nominee directors, must be made through ordinary resolutions to ensure that the company’s operations are in line with statutory requirements and help avoid legal disputes or challenges regarding the legitimacy of the appointment.

What is expected of the nominee director?

1. Fiduciary Duties: Nominee directors are expected to carry out their duties by Section 150 of the Companies Act and in the company’s best interest, even though they are acting on behalf of someone else. They must adhere to the same standards of care and diligence as other directors.
2. Disclosure Requirements: The Companies Act, 2015, Section 149 requires that the identity of the persons who appoint nominee directors must be disclosed. This is part of ensuring transparency and accountability within company management.
3. Legal Responsibility: Despite acting on behalf of another party, nominee directors are legally responsible for their actions and decisions as directors. They cannot simply act according to the wishes of the person who appointed them; they must ensure compliance with all applicable laws and regulations.

II. Nominee Shareholder

Who is a nominee shareholder?

The Companies Act recognizes the concept of holding shares on behalf of another person or an entity. The Act requires that the identity of the beneficial owner of shares be disclosed to the company. This is part of the effort to ensure transparency in the ownership of shares (Section 119 and Section 121).

A nominee shareholder is an individual or entity who holds shares in a company on behalf of another person or entity, known as the beneficial owner.

Nominee shareholding is an arrangement where a nominee (an individual or entity) holds shares in a company on behalf of another person or entity, known as the beneficial owner. The nominee is the registered shareholder, but the actual ownership and control of the shares belong to the beneficial owner.

What are the benefits of nominee shareholding?

• Confidentiality: Nominee shareholding allows the true owner (beneficial owner) of the shares to remain confidential in public records. According to Kenyan law, the nominee’s name appears in the official company records, protecting the identity of the actual owner from public disclosure.
• Ease of management: By delegating the responsibility of shareholding to a nominee, the beneficial owner can simplify the management of their shares. The nominee can handle tasks such as attending board meetings, voting on resolutions, and receiving dividends, which is particularly useful for individuals who do not wish to be directly involved in these activities.
• Asset protection: From a legal perspective, nominee shareholding can provide a layer of asset protection. Although it does not absolve the beneficial owner from legal liabilities, it helps in managing and organizing assets in a way that might reduce exposure to certain risks.
• Succession planning: Nominee shareholding can facilitate smoother estate and succession planning. The legal framework allows for clear documentation of the nominee arrangement, which can aid in the transfer of shares according to the beneficial owner’s wishes upon their death or incapacity.
• Regulatory compliance: Nominee arrangements can help in meeting regulatory requirements for foreign investors. The Companies Act and related regulations require accurate record-keeping and disclosure, and using a nominee can ensure compliance while maintaining discretion in ownership.
• Corporate governance: Nominee shareholding can streamline corporate governance, especially in complex corporate structures.
• Facilitation of transactions: In transactions involving the sale or transfer of shares, nominee shareholding can provide confidentiality for the beneficial owner, which can be advantageous in sensitive deals.

What are the key documents to validate the appointment of a nominee shareholder?

• Board Resolution: A resolution passed by the company’s board of directors that formally authorizes the appointment of the nominee shareholder. This resolution should detail the terms of the appointment and any associated conditions.
• Share Transfer Form: The nominee shareholder, is required to have a completed and signed share transfer form. This form is necessary for updating the company’s register of members.
• Nominee Shareholder Agreement: A formal agreement between the nominee shareholder and the company. This agreement should outline the nominee’s role, rights, and obligations, as well as any limitations on their authority. This document should be assessed, franked and paid for stamp duty.
• Shareholder Agreement (if applicable): An agreement between the beneficial owner (the actual shareholder) and the nominee shareholder, detailing their arrangement. This agreement should define the relationship between the parties, including how the nominee will act on behalf of the beneficial owner. This document should be assessed, franked and paid for stamp duty.
• Letter of Appointment: A formal letter from the company confirming the appointment of the nominee shareholder, including details about the role and any specific terms of the appointment.
• Articles of Association: While not a legal requirement, it is essential to include provisions in the Articles of Association that address how nominee shareholders are managed. This helps in defining the roles, rights, and responsibilities of nominee shareholders and ensures that the company’s internal governance aligns with the actual shareholding structure.
• Identification Documents: Proof of identity and address for the nominee shareholder. This helps meet your customer requirements and ensures that the nominee’s identity is verified.

Under Kenya’s Companies Act, 2015, Section 97 outlines how joint shareholding is handled when one joint shareholder dies:

1. Joint Holders: According to Section 97(1), if shares are held jointly by two or more people, the surviving joint holders automatically inherit the deceased’s share(s). The remaining joint holders are the only ones entitled to these shares, following the principle of joint tenancy.
2. Death of a Joint Holder: When one joint shareholder dies, the surviving joint holders inherit the deceased’s shares. The deceased’s estate cannot claim the shares without surviving joint holders. This means the shares do not become part of the deceased’s estate and are transferred directly to the surviving holders without probate or other legal processes (see Section 56).

Additional considerations include:

1. Articles of Association: The company’s articles of association might have specific rules about transferring shares when a shareholder dies. These rules could include extra procedures or requirements.
2. Administrative Details: The registrar of companies may ask the surviving joint holders to provide proof of the deceased’s death and other legal documents to update the company’s share register.

This provision simplifies the transfer of shares held jointly by passing them directly to the surviving holders without complex legal steps.