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A company is defined as a legal entity formed by a group of individuals to engage in and operate a business with a view of making profits.
Companies are generally organized to earn a profit from business activities, though some may be structured as nonprofit charities.
Among common questions people ask include, how long does it take to register a company and what are the requirements?
There are different types of companies. I will discuss one type, a private company limited by shares. This is the most preferred company type in Uganda.
Registering a company is a one day process unlike in the past where the process used to take weeks and months.
To register a private company limited by shares, the following are the processes and requirements:-
- Visit a lawyer for consultation
A company is regulated by laws, among which includes the Companies Act No. 1 of 2012, Laws of Uganda and Regulations made thereafter. Company law is very technical so you need a concrete piece of advice prior to incorporating a company. It is advisable to consult a lawyer to advise you on the process and requirements. Your lawyer will task you to avail him/her with some information such as:- - Your proposed company name(s);
ii. How many directors will you have?;
iii. Details of the directors and secretary i.e name, occupation and address;
iv. What will be the share capital;
v. Who will be shareholders and or subscribers;
vi. What percentage will each shareholder and or subscriber hold and or own;
vii. General nature of business your company intends to do;
viii. A few objectives for which you are opening a company;
ix. Your intended physical location for your business;
x. Which bank(s) you intend your company to open an account and who will be signatories to the bank account. This helps your lawyer to draft a bank account opening resolution. - Subscribers / Shareholders’ meeting
Upon consulting with your lawyer, as owners or subscribers of the company, have a discussion and get answers to those tasks or questions given to you by the lawyer, then return to him/her. - Instructing a lawyer
As stated earlier, it is advisable to hire a lawyer to do your company registration. Company law is very sensitive and technical. You need prior and concrete legal guidance. A lawyer plays so many roles such as giving proper and technical legal advice, drafting necessary documents, among others.
So agree on fees chargeable for his/her services. It is affordable. The law does not allow lawyers to over-charge or under charge a client. There is a written law on what a lawyer should charge you. Rule I, Third Schedule of The Advocates (Remuneration and Taxation of Costs) (Amendment) Regulations, 2018 states in details how much you are supposed to pay your lawyer as instruction fees. Do not be over charged and you too, do not under pay your lawyer. Over charging a client amounts to professional misconduct whereas under charging a client amounts to unprofessional conduct.
About choosing company name(s)
Think about the name you would like to call your company and give to your lawyer for instance, Africana Investment (U) Limited. It is advisable you propose to your lawyer more than one name. Availing your lawyer with names will help him/her to do name search and reservation with Uganda Registration Services Bureau (URSB). There is a test applied on names. Names can be rejected on some grounds. The name you choose should be different from other companies already in existence. Your name should also be desirable. A name like Sweet Sex Co. Limited may seem to the Registrar of Companies as immoral and undesirable, hence may be rejected.
Name search and reservation
Upon submitting your proposed names to your lawyer, he/she will apply for name search and reservation by filling Name Reservation Form and submit to URSB for a search. If searched and approved, you make payment of 20,000/= in the bank being name reservation fees. The name is reserved for 30 days within which you should register your company. Reservation does not mean you wait for 30 days to lapse then register your company as most people mistake it. You can reserve and register your company on the same day.
Documents required
On top of availing your lawyer with details he/she requested you when you first consulted him/her, you must avail him/her with a photocopy of the national IDs and one passport for the subscribers. These accompany Company Form S.18.
The drafting, form filling and signing process
Upon reservation and giving your lawyer the information and any other details he/she needs from you, your lawyer then drafts the necessary documents, the memorandum and articles of association and company bank account resolution.
In drafting, your lawyer is guided by the law for instance the Companies Act No. 1 of 2012. Therefore, it is recommended that you let a lawyer handle your company registration.
Your lawyer then obtains certain company forms such as A1, S.18 and 20 from URSB and guide you on how to fill in and sign.
Upon drafting the memorandum and resolution, your lawyer guides you on where to sign. He/She then ensures that they are witnessed by another lawyer.
- Payment of requisite fees
Your lawyer then visits URSB office to do assessment on registration fees payable and after assessment, visits the bank and makes payment as follows:- - Name reservation fee, twenty thousand (20.000shs) as stated earlier.
ii. Company Form 20, Twenty thousand (20,000shs)
iii. Bank Account opening resolution filing fee, twenty thousand (20,000shs)
iv. Stamp duty (depends on amount of share capital)
v. Company registration fees (depends on amount of share capital). The higher the share capital, the higher the amount chargeable, and vice versa. - Submitting documents for registration
Upon making the above payments in the bank, your lawyer is issued with slips showing proof of payment. For future records, get photocopies from your lawyer and keep. He/She then submits the following documents to URSB for registration.
i. One copy of Company Form A1 duly signed by one of the directors and commissioned.
ii. One copy of Company Form S.18 duly signed by the subscribers.
iii. Three copies of Form 20 duly signed by one of the directors and secretary.
iv. Three bound copies of memorandum and articles of association duly signed by the subscribers and witnessed by a lawyer.
v. A copy of national IDs for the Director(s), Secretary and subscribers/ shareholders.
vi. A pass port photo for the Director(s) and subscribers/shareholders.
vii. Original copy of bank slips showing proof of payment of registration fees.
Registration
The Registrar of Companies then peruses documents submitted. If they conform to the legal requirements, your documents are stamped and the company registered. If not in conformity, the documents are rejected and no registration takes place unless you make changes as directed by URSB office.
Documents issued upon registration.
Upon successful registration, you are issued with the following original documents:-
i. A certificate of incorporation.
ii. Two copies of memorandum and articles of association.
iii. Two copies of company form 20.
iv. Company Forms A1 and S.18 are retained by URSB.
Certification
Your lawyer will then make three photocopies of each of the above documents listed in paragraph 11 (i), (ii) and (iii) above. He/She then proceeds to the bank and pays Uganda shillings 20,000/= for three sets of each document. He/She then files the bank slip and the photocopies with URSB office to be certified by the Registrar of Companies as true copies of the original documents. Certification is very important. If you go to the bank to open a bank account, the bank won’t accept if you do not have certified copies. Secondly, in future, you will forever need your originals, so it is better to have as certified copies for other usages.
Acquiring a box number
Within 14 days from the date your company is registered, the law requires that you get a box number and physical address then notify the Registrar of Companies in writing.
After registration, your lawyer hands over the original and certified copies of the above documents to you. The company director(s) and secretary then proceed to any nearby Post Office branch to get a company box number at a fee. A box number is issued instantly. Upon getting a box number, you return to your lawyer with a card issued by Post Office and receipt showing proof of payment made. Your lawyer then obtains Company Form 18 and the Company Director fills in and sign.
Your lawyer then proceeds to the bank and pays 20,000/= for Company Form 18 and 20,000shs for its certification, plus bank charges. He/She then visits URSB office and submits the said Form 18 for filing and stamping. After stamping and signing by the Registrar of Companies, your lawyer then makes three photocopies to be certified by the Registrar of Companies.
After certification, your lawyer then hands over to you two original and three certified copies of Company Form 18. This form is very important. It shows your physical and postal address. Without a certified copy of Form 18, no bank will open for you a company account.
What next?
At this point, your lawyer has successfully registered your company. The transaction between you and him/her is complete. In most cases, some clients begin operating immediately.
However, it is advisable that you proceed with the following steps.
Account opening
You need a company bank account. Visit the bank and open a bank account in the name of your company. There are clients who cannot deal with your company unless you have a bank account, especially in terms of payment. So you need an account. Bank account opening is not free of charge. There are some fees you will pay, which vary from one bank to another. However, when going to the bank, carry your original company documents and certified copies of a certificate of incorporation; company form 20; form 18; bank account opening resolution; National ID for the proposed signatories to the account; and Passport photos of the proposed signatories to the account.
Acquire a trading license
You need a trading license. Some companies upon registration embark on operations without first getting a license. However, for your business, you will need a license, otherwise you will get in trouble with local authorities. A trading license can be obtained from the sub-county, division, municipal council or city council offices where your business is located. You pay the requisite fees and you are issued with an annual trading license in the name of your company. Fees vary depending on the nature of business. Getting a trading license is a quick process.
Acquire a company TIN
Some companies also choose to operate without getting a company TIN. However, it is very important to get one. Visit Uganda Revenue Authority (URA) and acquire a Tax Identification Number. It will help you a lot in future especially for purposes of filing returns. When bidding for contracts, tenders, projects and other opportunities, you may miss out for lack of a TIN. Getting a TIN is a very quick process. So, please get one.
Acquire a tax clearance certificate
This is very important before you start operations. Visit URA offices and be guided. It is a quick process.
Conclusion
A company serves so many purposes. Registering a company is a simple process if you land in right hands. When you instruct a person to incorporate for you a company, ensure that the process is completed and you are issued with all the above documents upon successful registration. Ensure that you facilitate the process. Some clients do not want to fully facilitate the process. Registering a company is now a one day process. Gone are the days when it took weeks and months. Therefore, open a company and do business in an organized and formal way.
The writer is a legal counsel
Email: oboniface555@gmail.com
Cell phone: +256772748146
