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Setting Up and Operating an Investment in Uganda

The Investment Code Act 1991 led to the establishment of Uganda Investment Authority (UIA) to promote and facilitate local and foreign investments. With the passage of time, coupled with local, regional and global economic development and a growing competitive environment for investment and for purposes of providing adequate protection and facilitation to the investors, it necessitated amendment of the law that lead to the enactment of the Investment Code Act 2019.

There are also other various laws that support the investment function which include the Public Enterprise Reform and Divestiture Act 1993, the Companies Act, 2012, the Uganda Free Zones Act, 2014, the Public Private Partnerships Act, 2015, the Petroleum (Exploration, Development and Production) Act 2013, all aimed at attracting Local and Foreign Direct Investment for economic and social transformation of the country. Uganda has a legal and regulatory reform ongoing process where various commercial laws are being reviewed for amendment and business licensing reforms to reduce the burden of fees on businesses.

While the amendment of the key investment law is ongoing, Government has transformed Uganda Investment Authority (UIA) into a physical and electronic One-Stop Centre for investors. Uganda Investment Authority is a semi-autonomous primary government-supported one-stop centre for investment. The services it offers are extensive including investment and licensing facilitation, assistance with work permits for immigration, acquisition of secondary licenses, provision of industrial land in its 22 industrial parks across the country, financial advisory, recommendation of entities and after-care services. Most services are provided without cost. Its reputation has been as a primary business developing service provider for international investors, but UIA has made an effort to reach out and include domestic businesses. The UIA is active in commercial law reform and serves as the Secretariat for the Presidential Investors Roundtable (PIRT). The PIRT brings together international and domestic investors to provide input on business constraints.

Uganda’s investment promotion agency is also charged with providing investment licenses and assisting investors with various regulatory activities associated with their investments. No charge is applied in obtaining the investment license. There is a threshold of USD 100,000 for foreign investors and USD 50,000 for Ugandan investors to be eligible for an investment license. The fiscal incentives are enshrined in the domestic laws and EAC tariff book, making them accessible to both foreign and domestic investors. Other incentives are provided for by various Ministry Development Agencies (MDAs) per sector.

The Ministry of Finance, Planning and Economic Development (MFPED) is mandated with the formulation of investment policy, strategy and related investment facilitating laws to guide and attract investment in the country. These legal frameworks are aimed at strengthening economic and social infrastructure for higher productive capacities, upgrading investment promotion, building competitive incentive framework, streamlining the institutional, legal and regulatory framework, building strategic partnerships and strengthening the financial sector for better mobilisation and intermediation for investment financing.  

Companies Act 2012 has widened its definition of a “re-registered company” making the registration of companies easier by including that a private limited company may re-register as a public company, a limited liability company as an unlimited company, an unlimited liability company as a limited liability company and a public company as a private company. The Act has introduced a number of other changes namely introduction of a Single Member Company (Section 4 (1)); and Section 5 gives a new meaning to the term “a private company”.

The Insolvency Act, 2011, provides on how member voluntary winding up as well as amending and consolidating all laws relating to insolvency. 

The Foreign Exchange Act (2004) provides for the exchange of foreign currencies and the making of international payments and transfers of foreign exchange.  The Act has provisions relating to restrictions on carrying on foreign exchange business, and enforcement of compliance.

Uganda has liberalised the capital accounts and the law imposes no restrictions on capital transfers in and out of the country. Investors can obtain foreign exchange and make transfers at commercial banks without approval from the Bank of Uganda (BOU) in order to repatriate profits, dividends, and make payments for imports and services.

Uganda has reformed her commercial justice system to include a mandatory mediation session for all commercial disputes. In 2007, a new law allowed for Chief Magistrates and Grade One Magistrates to adjudicate more commercial disputes, easing the burden on the commercial court judges.

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