Continuing our focus on the importance of business compliance, the COVID-19 Business Info Hub sat down with Provia Nangobi, Head of Public Relations and Corporate Affairs at Uganda Registration Services Bureau (URSB), to understand the first step in keeping your business compliant – business registration. We asked Provia to walk us through the process for different types of businesses operating in the country and shed some light on where business owners can go for support.

Provia explained that the URSB is the government agency responsible for registering businesses and intellectual property rights such as trademarks, copyrights, and patents. In Uganda, a business can be registered either as a sole proprietorship under a business name, a company limited with shares or a company by guarantee akin to a not-for-profit organization. The difference is based mainly on the structure and the number of members of a business. Provia explained more about each of these options.

Sole proprietorships consist of a single person who wants to do business under a legal entity. These businesses are typically smaller in nature and consist of individuals seeking to trade and operate alone while expanding their businesses through credit, investment, and partnership opportunities that formalization affords them. To register a sole proprietorship with the URSB and receive a business certificate, business owners must submit an online form and pay a one-time registration fee of 24,000 UGX. Once those compliance requirements have been fulfilled, businesses are free to begin trading as officially recognized entities.

Registering a company – a process called ‘incorporation’ – is slightly more complex than registering as a sole proprietorship. Compared to sole proprietorships, companies have many more types, structures, and responsibilities, but they stand as distinct legal entities separate from their owners, which protects owners from the company’s legal liabilities. While companies are typically structured to involve multiple people, they can also be structured as ‘single-member” companies for people working independently. The most common companies registered by URSB, according to Provia, are private companies with shares distributed amongst multiple owners. Business owners can also register either a public company that sells stock and part of their shares to the public, unlimited companies, foreign companies or a not-for-profit company limited by guarantee.

Regardless of what type of company business owners register, there are more obligations to ensure full compliance when compared to registering as a sole proprietor. For instance, companies must indicate the total amount of starting capital, which is then used to determine the company’s incorporation fees. Fixed costs associated with incorporation include a 20,000 UGX name reservation and 40,000 UGX to submit two forms. Variable costs include the registration fee – totaling 1% of share capital – and the stamp duty – which has a cost of 0.5% of share capital, as well as a 135,000 UGX fixed fee. Once the incorporation fees are paid, a certificate of incorporation is issued as part of the initial filing process. At this point, companies must submit forms listing the names of their directors and secretary and their business location and provide a memorandum and article of associations outlining the company’s interests. After the registration is finalized and a certificate of incorporation is issued, the company goes into business.

For a company limited with shares, annual returns must be submitted every year to declare the status of operations along with a 50,000 UGX fee (30,000 UGX for companies limited by guarantee). Any changes to the company’s structure or directors must be declared on the form to keep the business registration up to date.

There are enormous benefits of formalizing businesses ranging from: 

  1. Enabling investors to invest in your business through official channels
  2. Supporting your participation in the bidding process for the provision of goods and services
  3. Better access to financial services (i.e., bank loans that are essential for business expansion)
  4. Enabling the company to enter into business partnerships and joint ventures more easily or to carry out mergers and takeovers
  5. Supporting business reputation, which leads to broader clientele and greater opportunities

URSB’s services don’t end at business registration – they also provide services for businesses in need of support. On the occasion that a business enters an insolvency and receivership function – which happens when a company is unable to meet its financial obligations and potentially enters a court-mandated process allowing creditors to recover funds from a business while allowing them to avoid bankruptcy.  The URSB provides services to help businesses strengthen their operations and attempt to revive the company. Suppose a company is unable to recover from its financial woes. In that case, the URSB also provides statutory procedures to shut down the business and the necessary steps to wind up its operations.

When asked why some businesses shy away from formal compliance, Provia suggested that misinformation stops people from registering. People are often confused about the costs, processes, or obligations required to fulfil standard compliance requirements. Some may think that it takes a long time, but it takes just 2 to 3 days for a certificate to be issued once all documents are submitted. Provia highlighted that consulting with business professionals such as business lawyers can help clarify any misconceptions while helping business owners build and develop their operations. More importantly, business owners can query the URSB directly by either a toll-free phone number (0 800 100 006), the official website (www.ursb.go.ug), or through the official WhatsApp number (0712 448448).