Companies Act (Chapter 110)

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This legislation was repealed on 01 Jul 2013 by

Companies Act, 2012 (Act 1 of 2012)

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Uganda

Companies Act

Chapter 110

  • Commenced on 1 January 1961

  • [Up to date as at 30 September 2020]
  • [Note: The version of the Act as at 31 December 2000 was revised and consolidated by the Law Reform Commission of Uganda. All subsequent amendments have been researched and applied by Laws.Africa for ULII.]
  1. [Amended by Insolvency Act, 2011 (Act 14 of 2011) on 1 July 2013]

  2. [Repealed by Companies Act, 2012 (Act 1 of 2012) on 1 July 2013]


An Act to amend and consolidate the law relating to the incorporation, regulation and winding up of companies and other associations and to make provision for other related and connected matters.


Part I – Preliminary

1. Interpretation

(1)In this Act, unless the context otherwise requires—(a)accounts” includes a company’s group accounts, whether prepared in the form of accounts or not;(b)annual return” means the return required to be made, in the case of a company having a share capital, under section 125, and in the case of a company not having a share capital, under section 126;(c)approved stock exchange” means a stock exchange approved under section 24 of the Capital Markets Authority Act and includes an interim stock trading facility approved under section 90 of that Act;(d)articles” means the articles of association of a company, as originally framed or as altered by special resolution, including, so far as they apply to the company, the regulations contained in Table A in the First Schedule to any of the repealed Ordinances or in Table A in the First Schedule to this Act;(e)book and paper” and “book or paper” include accounts, deeds, writings and documents;(f)company” means a company formed and registered under this Act or an existing company;(g)company limited by guarantee” and “company limited by shares” have the meanings assigned to them respectively by section 3(2);(h)contributory” has the meaning assigned to it by section 214;(i)court”, used in relation to a company, means the court having jurisdiction to wind up the company;(j)creditors’ voluntary winding up” has the meaning assigned to it by section 281(4);(k)debenture” includes debenture stock, bonds and any other securities of a company whether constituting a charge on the assets of the company or not;(l)director” includes any person occupying the position of director by whatever name called;(m)document” includes summons, notice, order and other legal process, and registers;(n)existing company” means a company formed and registered under any of the repealed Ordinances;(o)financial year” means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in general meeting is made up, whether that period is a year or not;(p)general rules” means rules made by the Minister under section 348;(q)group accounts” has the meaning assigned to it by section 150(1);(r)holding company” means a holding company as defined by section 154;(s)insurance company” means a company which carries on the business of insurance either solely or in conjunction with any other business;(t)issued generally” means, in relation to a prospectus, issued to persons who are not existing members or debenture holders of the company;(u)limited company” means a company limited by shares or a company limited by guarantee;(v)members’ voluntary winding up” has the meaning assigned to it by section 281(4);(w)memorandum” means the memorandum of association of a company, as originally framed or as altered from time to time;(x)minimum subscription” has the meaning assigned to it by section 49(2);(y)officer”, in relation to a body corporate, includes a director, manager or secretary;(z)personal representative” means—(i)in the case of a deceased person to whom the Succession Act applies either wholly or in part, his or her executor or administrator;(ii)in the case of any other deceased person, any person who, under law or custom, is responsible for administering the estate of such deceased person;(aa)printed” means reproduced by original letterpress or by such other means as may be prescribed;(bb)private company” has the meaning assigned to it by section 29(1);(cc)prospectus” means any prospectus, notice, circular, advertisement, or other invitation, offering to the public for subscription or purchase any shares or debentures of a company;(dd)registrar” means the registrar of companies or any assistant registrar or other officer performing under this Act the duty of registration of companies;(ee)repealed Ordinances” means the Indian Companies Act, 1882, (as applied to Uganda), the Companies Ordinance, 1923 (No. 6 of 1923) and the repealed Companies Ordinance;(ff)repealed Companies Ordinance” means the Companies Ordinance, Chapter 212 of the Laws of Uganda (Revised Edition), 1951;(gg)resolution for reducing share capital” has the meaning assigned to it by section 68(2);(hh)resolution for voluntary winding up” has the meaning assigned to it by section 276(2);(ii)share” means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied;(jj)share warrant” has the meaning assigned to it by section 85(2);(kk)statutory meeting” means the meeting required to be held by section 130(1);(ll)statutory report” has the meaning assigned to it by section 130(2);(mm)subsidiary” means a subsidiary as defined by section 154;(nn)Table A” means Table A in the First Schedule to this Act;(oo)time of the opening of the subscription lists” has the meaning assigned to it by section 52(1);(pp)unlimited company” has the meaning assigned to it by section 3(2).
(2)A person shall not be deemed to be within the meaning of any provision of this Act a person in accordance with whose directions or instructions the directors of a company are accustomed to act, by reason only that the directors of the company act on advice given by him or her in a professional capacity.
(3)References in this Act to a body corporate or to a corporation shall be construed as not including a corporation sole but as including a company incorporated outside Uganda.
(4)Any provision of this Act overriding or interpreting a company’s articles shall, except as provided by this Act, apply in relation to articles in force at the commencement of this Act, as well as to articles coming into force thereafter, and shall apply also in relation to a company’s memorandum as it applies in relation to its articles.

2. Register of companies

There shall be kept by the registrar a record called “the Register of Companies” in which shall be entered all the matters prescribed by this Act.

Part II – Incorporation of companies and matters incidental to incorporation

Memorandum of association

3. Mode of forming an incorporated company

(1)Any seven or more persons, or, where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration, form an incorporated company, with or without limited liability.
(2)Such a company may be either—(a)a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed “a company limited by shares”);(b)a company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up (in this Act termed “a company limited by guarantee”); or(c)a company not having any limit on the liability of its members (in this Act termed “an unlimited company”).

4. Requirements with respect to the memorandum

(1)The memorandum of every company shall be printed in the English language and shall state—(a)the name of the company, with “limited” as the last word of the name in the case of a company limited by shares or by guarantee;(b)that the registered office of the company is to be situate in Uganda;(c)the objects of the company.
(2)The memorandum of a company limited by shares or by guarantee must also state that the liability of its members is limited.
(3)The memorandum of a company limited by guarantee must also state that each member undertakes to contribute to the assets of the company in the event of its being wound up while he or she is a member, or within one year after he or she ceases to be a member, for payment of the debts and liabilities of the company contracted before he or she ceases to be a member, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.
(4)In the case of a company having a share capital—(a)the memorandum must also, unless the company is an unlimited company, state the amount of share capital with which the company proposes to be registered and the division of the share capital into shares of a fixed amount;(b)no subscriber of the memorandum may take less than one share;(c)each subscriber must write opposite to his or her name the number of shares he or she takes.

5. Signature of the memorandum

(1)The memorandum shall be dated and shall be signed by each subscriber in the presence of at least one attesting witness who shall state his or her occupation and postal address.
(2)Opposite the signature of every subscriber there shall be written in legible Roman characters his or her full name, his or her occupation and postal address.

6. Restriction on alteration of the memorandum

A company may not alter the conditions contained in its memorandum except in the cases, in the mode and to the extent for which express provision is made in this Act.

7. Mode in which and extent to which objects of a company may be altered

(1)A company may, by special resolution, alter the provisions of its memorandum with respect to the objects of the company, so far as may be required to enable it—(a)to carry on its business more economically or more efficiently;(b)to attain its main purpose by new or improved means;(c)to enlarge or change the local area of its operations;(d)to carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company;(e)to restrict or abandon any of the objects specified in the memorandum;(f)to sell or dispose of the whole or any part of the undertaking of the company; or(g)to amalgamate with any other company or body of persons,except that if an application is made to the court in accordance with this section for the alteration to be cancelled, it shall not have effect except insofar as it is confirmed by the court.
(2)An application under this section may be made—(a)by the holders of not less in the aggregate than 15 percent in nominal value of the company’s issued share capital or any class thereof or, if the company is not limited by shares, not less than 15 percent of the company’s members; or(b)by the holders of not less than 15 percent of the company’s debentures entitling the holders to object to alterations of its objects,except that an application shall not be made by any person who has consented to or voted in favour of the alteration.
(3)An application under this section must be made within twenty-one days after the date on which the resolution altering the company’s objects was passed and may be made on behalf of the persons entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.
(4)On an application under this section, the court may make an order cancelling the alteration or confirming the alteration either wholly or in part and on such terms and conditions as it thinks fit, and may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court for the purchase of the interests of dissentient members, and may give such directions and make such order as it may think expedient for facilitating or carrying into effect any such arrangement; but no part of the capital of the company shall be expended in any such purchase.
(5)The debentures entitling the holders to object to alterations of a company’s objects shall be any debentures secured by a floating charge which were issued or first issued before the 1st January, 1961, or form part of the same series as any debentures so issued, and a special resolution altering a company’s objects shall require the same notice to the holders of any such debentures as to members of the company.
(6)In default of any provisions regulating the giving of notice to any such debenture holders, the provisions of the company’s articles regulating the giving of notice to members shall apply.
(7)In the case of a company which is, by virtue of a licence from the Minister, exempt from the obligation to use the word “limited” as part of its name, a resolution altering the company’s objects shall also require the same notice to the Minister as to members of the company.
(8)Where a company passes a resolution altering its objects—(a)if no application is made with respect thereto under this section, it shall within fourteen days from the end of the period for making such an application deliver to the registrar of companies a printed copy of its memorandum as altered; and(b)if such an application is made it shall—(i)forthwith give notice of that fact to the registrar; and(ii)within fourteen days from the date of any order cancelling or confirming the alteration wholly or in part, deliver to the registrar a certified copy of the order and, in the case of an order confirming the alteration wholly or in part, a printed copy of the memorandum as altered.
(9)The court may by order at any time extend the time for the delivery of documents to the registrar under subsection (8)(b) for such period as the court may think proper.
(10)If a company makes default in giving notice or delivering any document to the registrar of companies as required by subsection (8), the company and every officer of the company who is in default are liable to a default fine of two hundred shillings.
(11)The validity of an alteration of the provisions of a company’s memorandum with respect to the objects of the company shall not be questioned on the ground that it was not authorised by subsection (1) except in proceedings taken for the purpose (whether under this section or otherwise) before the expiration of thirty days after the date of the resolution in that behalf; and where any such proceedings are taken otherwise than under this section, subsections (8), (9) and (10) shall apply in relation to the proceedings as if they had been taken under this section and as if an order declaring the alteration invalid were an order cancelling it and as if an order dismissing the proceedings were an order confirming the alteration.
(12)In relation to a resolution for altering the provisions of a company’s memorandum with respect to the objects of the company passed before the 1st January, 1961, this section shall have effect as if, in lieu of the exception to subsection (1) and subsections (2) to (11), there had been enacted in this section the provisions of section 7(2) to (7) of the repealed Companies Ordinance.

Articles of association

8. Registration of articles and regulations of companies

There may in the case of a company limited by shares, and there shall in the case of a company limited by guarantee or unlimited, be registered with the memorandum articles of association, which shall be signed by the subscribers to the memorandum and shall contain the regulations of the company.

9. Content required in the case of an unlimited company or a company limited by guarantee

(1)In the case of an unlimited company, the articles must state the number of members with which the company proposes to be registered and, if the company has a share capital, the amount of share capital with which the company proposes to be registered.
(2)In the case of a company limited by guarantee, the articles must state the number of members with which the company proposes to be registered.
(3)Where an unlimited company or a company limited by guarantee has increased the number of its members beyond the registered number, it shall, within fourteen days after the increase was resolved on or took place, give to the registrar notice of the increase, and the registrar shall record the increase.
(4)If default is made in complying with subsection (3), the company and every officer of the company who is in default are liable to a default fine.

10. Adoption and application of Table A

(1)Articles of association may adopt all or any of the regulations contained in Table A.
(2)In the case of a company limited by shares and registered after the commencement of this Act, if articles are not registered, or, if articles are registered, insofar as the articles do not exclude or modify the regulations contained in Table A, those regulations shall, so far as applicable, be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles.

11. Printing and signature of articles

Articles shall be—(a)in the English language;(b)printed;(c)divided into paragraphs numbered consecutively; and(d)signed by each subscriber to the memorandum of association in the presence of at least one witness, who shall attest the signature and add his or her occupation and postal address.

12. Alteration of articles by special resolution

(1)Subject to this Act and to the conditions contained in its memorandum, a company may by special resolution alter or add to its articles.
(2)Any alteration or addition so made in the articles shall, subject to this Act, be as valid as if originally contained in the articles, and be subject in like manner to alteration by special resolution.

Form of memorandum and articles of association

13. Statutory forms of memorandum and articles

The form of—(a)the memorandum of association of a company limited by shares;(b)the memorandum and articles of association of a company limited by guarantee and not having a share capital;(c)the memorandum and articles of association of a company limited by guarantee and having a share capital;(d)the memorandum and articles of association of an unlimited company having a share capital,shall be respectively in accordance with the forms set out in Tables B, C, D and E in the First Schedule to this Act, or as near to those forms as circumstances admit.

Registration

14. Registration of memorandum and articles

The memorandum and the articles, if any, shall be delivered to the registrar, and he or she shall retain and register them.

15. Effect of registration

(1)On the registration of the memorandum of a company, the registrar shall certify under his or her hand that the company is incorporated and, in the case of a limited company, that the company is limited.
(2)From the date of incorporation mentioned in the certificate of incorporation, the subscribers to the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company, with power to hold land and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Act.

16. Evidence of compliance with registration requirements

(1)A certificate of incorporation given by the registrar in respect of any association shall be conclusive evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental to registration have been complied with and that the association is a company authorised to be registered and duly registered under this Act.
(2)A statutory declaration by an advocate engaged in the formation of the company, or by a person named in the articles as a director or secretary of the company, of compliance with all or any of the said requirements shall be produced to the registrar, and the registrar may accept such a declaration as sufficient evidence of compliance.

17. Registration of unlimited company as limited; re-registration of a limited company

(1)Subject to this section, a company registered as unlimited may register under this Act as limited, or a company already registered as a limited company may reregister under this Act, but the registration of an unlimited company as a limited company shall not affect the rights or liabilities of the company in respect of any debt or obligation incurred, or any contract entered into, by, to, with or on behalf of the company before the registration.
(2)On registration in pursuance of this section, the registrar shall close the former registration of the company, and may dispense with the delivery to him or her of copies of any documents with copies of which he or she was furnished on the occasion of the original registration of the company, but, except as aforesaid, the registration shall take place in the same manner and shall have effect as if it were first registration of the company under this Act.

Provisions with respect to names of companies

18. Reservation of name and prohibition of undesirable name

(1)The registrar may, on written application, reserve a name pending registration of a company or a change of name by an existing company. Any such reservation shall remain in force for a period of thirty days or such longer period, not exceeding sixty days, as the registrar may, for special reasons, allow, and during that period no other company shall be entitled to be registered with that name.
(2)No name shall be reserved and no company shall be registered by a name which, in the opinion of the registrar, is undesirable.

19. Change of name

(1)A company may by special resolution and with the approval of the registrar signified in writing change its name.
(2)If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name is registered by a name which, in the opinion of the registrar, is too like the name by which a company in existence is previously registered, the first-mentioned company may change its name with the sanction of the registrar and, if the registrar so directs within six months of its being registered by that name, shall change it within six weeks from the date of the direction or such longer period as the registrar may think fit to allow.
(3)If a company makes default in complying with a direction under subsection (2), it is liable to a fine not exceeding one hundred shillings for every day during which the default continues.
(4)Where a company changes its name under this section, it shall within fourteen days give to the registrar notice of the change of name, and the registrar shall enter the new name on the register in place of the former name, and shall issue to the company a certificate of change of name, and shall notify the change of name in the Gazette.
(5)A change of name by a company under this section shall not affect any rights or obligations of the company or render defective any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name.

20. Power to dispense with “limited” in the name of charitable and other companies; licences issued under this section

(1)Where it is proved to the satisfaction of the Minister that an association about to be formed as a limited company is to be formed for promoting commerce, art, science, religion, charity or any other useful object, and intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Minister may by licence direct that the association may be registered as a company with limited liability, without the addition of the word “limited” to its name, and the association may be registered accordingly and shall, on registration, enjoy all the privileges and, subject to this section, be subject to all the obligations of limited companies.
(2)Where it is proved to the satisfaction of the Minister—(a)that the objects of a company registered under this Act as a limited company are restricted to those specified in subsection (1) and to objects incidental or conducive to them; and(b)that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members,the Minister may by licence authorise the company to make by special resolution a change in its name including or consisting of the omission of the word “limited”, and section 19(3) and (4) shall apply to a change of name under this subsection as they apply to a change of name under that section.
(3)A licence by the Minister under this section may be granted on such conditions and subject to such regulations as the Minister thinks fit, and those conditions and regulations shall be binding on the body to which the licence is granted, and where the grant is under subsection (1) shall, if the Minister so directs, be inserted in the memorandum and articles, or in one of those documents.
(4)A body to which a licence is granted under this section shall be excepted from the provisions of this Act relating to the use of the word “limited” as any part of its name, the publishing of its name and the sending of lists of members to the registrar.
(5)The Minister may upon the recommendation of the registrar revoke a licence under this section, and upon revocation the registrar shall enter in the register the word “limited” at the end of the name of the body to which it was granted, and the body shall cease to enjoy the exemptions and privileges or, as the case may be, the exemptions granted by this section; but before recommendation is made to the Minister, the registrar shall give to the body notice in writing of his or her intention and shall afford it an opportunity of being heard in opposition to the revocation.
(6)Where a body in respect of which a licence under this section is in force alters the provisions of its memorandum with respect to its objects, the registrar may (unless he or she sees fit to recommend the revocation of the licence) recommend to the Minister the variation of the licence by making it subject to such conditions and regulations as the Minister may think fit, in lieu of or in addition to the conditions and regulations, if any, to which the licence was formerly subject.
(7)Where a licence granted under this section to a body the name of which contains the words “Chamber of Commerce” is revoked, the body shall, within six weeks from the date of revocation or such longer period as the registrar may think fit to allow, change its name to a name which does not contain those words, and—(a)the notice to be given under subsection (5) to that body shall include a statement of the effect of the foregoing provisions of this subsection; and(b)section 19(3) and (4) shall apply to a change of name under this subsection as they apply to a change of name under that section.
(8)If the body makes default in complying with the requirements of subsection (7), it is liable to a fine not exceeding one thousand shillings for every day during which the default continues.

General provisions with respect to memorandum and articles

21. Effect of memorandum and articles

(1)Subject to this Act, the memorandum and articles shall, when registered, bind the company and the members of the company to the same extent as if they respectively had been signed and sealed by each member and contained covenants on the part of each member to observe all the provisions of the memorandum and of the articles.
(2)All money payable by any member to the company under the memorandum or articles shall be a debt due from him or her to the company.

22. Interpretation of certain provisions in the memorandum, articles or resolutions of a company limited by guarantee

(1)In the case of a company limited by guarantee and not having a share capital, and registered after the 3rd April, 1923, every provision in the memorandum or articles or any resolution of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member shall be void.
(2)For the purpose of the provisions of this Act relating to the memorandum of a company limited by guarantee and of this section, every provision in the memorandum or articles, or in any resolution, of a company limited by guarantee and registered on or after the 3rd April, 1923, purporting to divide the undertaking of the company into shares or interests shall be treated as a provision for a share capital, notwithstanding that the nominal amount or number of the shares or interests is not specified thereby.

23. Alterations in memorandum or articles increasing liability to contribute to share capital not to bind existing members without consent

Notwithstanding anything in the memorandum or articles of a company, no member of the company shall be bound by an alteration made in the memorandum or articles after the date on which he or she became a member, if and so far as the alteration requires him or her to take or subscribe for more shares than the number held by him or her at the date on which the alteration is made, or in any way increases his or her liability as at that date to contribute to the share capital of, or otherwise to pay money to, the company; but this section shall not apply in any case where the member agrees in writing, either before or after the alteration is made, to be bound by the alteration.

24. Power to alter conditions in memorandum which could have been contained in articles

(1)Subject to sections 23 and 211, any condition contained in a company’s memorandum which could lawfully have been contained in articles of association instead of in the memorandum may, subject to this section, be altered by the company by special resolution; but if an application is made to the court for the alteration to be cancelled, it shall not have effect except insofar as it is confirmed by the court.
(2)This section shall not apply where the memorandum itself provides for or prohibits the alteration of all or any of the said conditions, and shall not authorise any variation or abrogation of the special rights of any class of members.
(3)Section 7(2), (3), (4), (7) and (8) (except subsection (2)(b)) shall apply in relation to any alteration and to any application made under this section as they apply in relation to alterations and to applications made under that section.
(4)This section shall apply to a company’s memorandum whether registered before or after the commencement of this Act.

25. Copies of memorandum and articles to be given to members

(1)A company shall, on being so required by any member, send to him or her a copy of the memorandum and of the articles, if any, and a copy of any written law which alters the memorandum, subject to payment, in the case of a copy of the memorandum and of the articles, of five shillings or such lesser sum as the company may prescribe, and, in the case of a copy of a written law, of such sum not exceeding the published price thereof as the company may require.
(2)If a company makes default in complying with this section, the company and every officer of the company who is in default are liable for each offence to a fine not exceeding two hundred shillings.

26. Issued copies of memorandum to embody alterations

(1)Where an alteration is made in the memorandum of a company, every copy of the memorandum issued after the date of the alteration shall be in accordance with the alteration.
(2)If, where any such alteration has been made, the company at any time after the date of the alteration issues any copies of the memorandum which are not in accordance with the alteration, it is liable to a fine not exceeding fifty shillings for each copy so issued, and every officer of the company who is in default is liable to the like penalty.

Membership of a company

27. Definition of member

(1)The subscribers to the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.
(2)Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.

28. Membership of a holding company

(1)Except in the cases hereafter in this section mentioned, a body corporate cannot be a member of a company which is its holding company, and any allotment or transfer of shares in a company to its subsidiary shall be void.
(2)Nothing in this section shall apply where the subsidiary is concerned as personal representative, or where it is concerned as trustee, unless the holding company or a subsidiary of it is beneficially interested under the trust and is not so interested only by way of security for the purposes of a transaction entered into by it in the ordinary course of business which includes the lending of money.
(3)This section shall not prevent a subsidiary which is, at the commencement of this Act, a member of its holding company, from continuing to be a member but, subject to subsection (2), the subsidiary shall have no right to vote at meetings of the holding company or any class of members thereof.
(4)Subject to subsection (2), subsections (1) and (3) shall apply in relation to a nominee for a body corporate which is a subsidiary, as if references in subsections (1) and (3) to such a body corporate included references to a nominee for it.
(5)In relation to a company limited by guarantee or unlimited which is a holding company, the reference in this section to shares, whether or not the company has a share capital, shall be construed as including a reference to the interest of its members as such, whatever the form of that interest.

Private companies

29. Meaning of “private company

(1)For the purpose of this Act, the expression “private company” means a company which by its articles(a)restricts the right to transfer its shares;(b)limits the number of its members to fifty, not including persons who are in the employment of the company and persons who, having been formerly in the employment of the company, were while in that employment, and have continued after the determination of that employment to be, members of the company; and(c)prohibits any invitation to the public to subscribe for any shares or debentures of the company.
(2)Where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this section, be treated as a single member.

30. Consequences of default in complying with conditions constituting a company a private company

(1)Where the articles of a company include the provisions which, under section 29, are required to be included in the articles of a company in order to constitute it a private company but default is made in complying with any of those provisions, the company shall cease to be entitled to any privilege or exemption conferred on private companies under any of the provisions of this Act, and thereupon this Act shall apply to the company as if it were not a private company.
(2)Notwithstanding subsection (1), the court, on being satisfied that the failure to comply with the conditions was accidental or due to inadvertence or to some other sufficient cause, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any other person interested and on such terms and conditions as seem to the court just and expedient, order that the company be relieved from the consequences provided in subsection (1).

31. Statement in lieu of prospectus to be delivered to the registrar by a company on ceasing to be a private company

(1)If a company, being a private company, alters its articles in such manner that they no longer include the provisions which under section 29 are required to be included in the articles of a company in order to constitute it a private company, the company shall, as on the date of the alteration, cease to be a private company and shall, within fourteen days after that date, deliver to the registrar for registration a statement in lieu of prospectus in the form and containing the particulars set out in Part I of the Second Schedule to this Act and, in the cases mentioned in Part II of that Schedule, setting out the reports specified in that Part, and Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule; except that a statement in lieu of prospectus need not be delivered under this subsection if within the fourteen days a prospectus relating to the company which complies with the Third Schedule to this Act is issued and is delivered to the registrar as required by section 42.
(2)Every statement in lieu of prospectus delivered under subsection (1) shall, where the persons making any such report as aforesaid have made in it or have, without giving the reasons, indicated in it any such adjustments as are mentioned in paragraph 5 of the Second Schedule, have endorsed on it or attached to it a written statement signed by those persons setting out the adjustments and giving the reasons for the adjustments.
(3)If default is made in complying with subsection (1) or (2), the company and every officer of the company who is in default are liable to a default fine of one thousand shillings.
(4)Where a statement in lieu of prospectus delivered to the registrar under subsection (1) includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration is liable on conviction to imprisonment for a term not exceeding two years or to a fine not exceeding ten thousand shillings or to both, unless he or she proves either that the untrue statement was immaterial or that he or she had reasonable ground to believe and did up to the time of the delivery for registration of the statement in lieu of prospectus believe that the untrue statement was true.
(5)For the purposes of this section—(a)a statement included in a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and(b)a statement shall be deemed to be included in a statement in lieu of prospectus if it is contained therein or in any report or memorandum appearing on the face thereof or by reference incorporated therein.

Reduction of number of members below the legal minimum

32. Members severally liable for debts where a business is carried on with fewer than the required number of members

If at any time the number of members of a company is reduced, in the case of a private company, below two, or, in the case of any other company, below seven, and it carries on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with fewer than two members, or seven members, as the case may be, is severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued for the payment of those debts.

Contracts, etc.

33. Form of contracts

(1)Contracts on behalf of a company may be made as follows—(a)a contract which if made between private persons would be by law required to be in writing, signed by the parties to be charged therewith, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied;(b)a contract which if made between private persons would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the company by any person acting under its authority, express or implied.
(2)A contract made according to this section shall be effectual in law and shall bind the company and its successors and all other parties to it.
(3)A contract made according to this section may be varied or discharged in the same manner in which it is authorised by this section to be made.

34. Bills of exchange and promissory notes

A bill of exchange or promissory note shall be deemed to have been made, accepted or endorsed on behalf of a company if made, accepted or endorsed in the name of, or by or on behalf or on account of, the company by any person acting under its authority, express or implied.

35. Execution of deeds abroad

(1)A company may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place not situate in Uganda.
(2)A deed signed by such an attorney on behalf of the company and under his or her seal shall bind the company and have the same effect as if it were under its common seal.

36. Power for a company to have official seal for use abroad

(1)A company whose objects require or comprise the transaction of business beyond the limits of Uganda may, if authorised by its articles, have for use in any place not situate in Uganda an official seal which shall take the form of an embossed metal die, which shall be a facsimile of the common seal of the company, with the addition on its face of the name of every place where it is to be used.
(2)A deed or other document to which an official seal is duly affixed shall bind the company as if it had been sealed with the common seal of the company.
(3)A company having an official seal for use in any such place may, by writing under its common seal, authorise any person appointed for the purpose in that place, to affix the official seal to any deed or other document to which the company is party in that place.
(4)The authority of any such agent shall, as between the company and any person dealing with the agent, continue during the period, if any, mentioned in the instrument conferring the authority, or if no period is there mentioned, then until notice of the revocation or determination of the agent’s authority has been given to the person dealing with him or her.
(5)The person affixing any such official seal shall, by writing under his or her hand, certify on the deed or other instrument to which the seal is affixed, the date on which and the place at which it is affixed.

37. Authentication of documents

A document or proceeding requiring authentication by a company may be signed by a director, secretary or other authorised officer of the company and need not be under its common seal.

Part III – Share capital and debentures

Prospectus

38. Dating of a prospectus

A prospectus issued by or on behalf of a company or in relation to an intended company shall be dated, and that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus.

39. Matters to be stated and reports to be set out in a prospectus

(1)Every prospectus issued by or on behalf of a company, or by or on behalf of any person who is or has been engaged or interested in the formation of the company, must state the matters specified in Part I of the Third Schedule to this Act and set out the reports specified in Part II of that Schedule, and Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.
(2)A condition requiring or binding an applicant for shares in or debentures of a company to waive compliance with any requirement of this section, or purporting to affect him or her with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.
(3)Subject to section 40, it shall not be lawful to issue any form of application for shares in or debentures of a company unless the form is issued with a prospectus which complies with the requirements of this section; except that this subsection shall not apply if it is shown that the form of application was issued either—(a)in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or(b)in relation to shares or debentures which were not offered to the public.
(4)If any person acts in contravention of subsection (3), he or she is liable to a fine not exceeding ten thousand shillings.
(5)In the event of noncompliance with or contravention of any of the requirements of this section, a director or other person responsible for the prospectus shall not incur any liability by reason of the noncompliance or contravention, if—(a)as regards any matter not disclosed, he or she proves that he or she was not cognisant thereof;(b)he or she proves that the noncompliance or contravention arose from an honest mistake of fact on his or her part; or(c)the noncompliance or contravention was in respect of matters which in the opinion of the court dealing with the case were immaterial or was otherwise such as ought, in the opinion of that court, having regard to all the circumstances of the case, reasonably to be excused,but in the event of failure to include in a prospectus a statement with respect to the matters specified in paragraph 16 of the Third Schedule to this Act, no director or other person shall incur any liability in respect of the failure unless it is proved that he or she had knowledge of the matters not disclosed.
(6)This section shall not apply—(a)to the issue to existing members or debenture holders of a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures will or will not have the right to renounce in favour of other persons; or(b)to the issue of a prospectus or form of application relating to shares or debentures which are or are to be in all respects uniform with shares or debentures previously issued,but, subject as aforesaid, this section shall apply to a prospectus or a form of application whether issued on or with reference to the formation of a company or subsequently.

40. Provisions of section 39 not to limit any other liability

Nothing in section 39 shall limit or diminish any liability which any person may incur under the general law or this Act apart from this section.

41. Expert’s consent to issue of a prospectus containing statement by him or her

(1)A prospectus inviting persons to subscribe for shares in or debentures of a company and including a statement purporting to be made by an expert shall not be issued unless—(a)he or she has given and has not, before delivery of a copy of the prospectus for registration, withdrawn his or her written consent to the issue thereof with the statement included in the form and context in which it is included; and(b)a statement that he or she has given and has not withdrawn his or her consent as aforesaid appears in the prospectus.
(2)If, after delivery of the prospectus for registration but prior to its registration, the expert withdraws his or her consent, the person who has delivered the prospectus for registration shall immediately notify the registrar.
(3)If any prospectus is issued in contravention of this section, the company and every person who is knowingly a party to the issue of the prospectus are liable to a fine not exceeding ten thousand shillings.
(4)In this section, “expert” includes engineer, valuer, accountant and any other person whose profession gives authority to a statement made by him or her.

42. Registration of a prospectus

(1)No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless, on or before the date of its publication, there has been delivered to the registrar for registration a copy of the prospectus signed by every person who is named in it as a director or proposed director of the company, or by his or her agent authorised in writing, and having endorsed on it or attached to it—(a)any consent to the issue of the prospectus required by section 41 from any person as an expert; and(b)in the case of a prospectus issued generally, also—(i)a copy of any contract required by paragraph 14 of the Third Schedule to this Act to be stated in the prospectus, or in the case of a contract not reduced into writing, a memorandum giving full particulars of the contract; and(ii)where the persons making any report required by Part II of that Schedule have made in it, or have, without giving the reasons, indicated in it, any such adjustments as are mentioned in paragraph 29 of that Schedule, a written statement signed by those persons setting out the adjustments and giving the reasons for the adjustments and the prospectus has been registered by the registrar.
(2)The references in subsection (1)(b)(i) to the copy of a contract required thereby to be endorsed on or attached to a copy of the prospectus shall, in the case of a contract wholly or partly in a language other than English, be taken as references to a copy of a translation of the contract in English or a copy embodying a translation in English of the parts in a language other than English, as the case may be, being a translation certified in the prescribed manner to be a correct translation.
(3)Every prospectus shall, on the face of it—(a)state that a copy has been delivered for registration as required by this section;(b)specify, or refer to statements included in the prospectus which specify, any documents required by this section to be endorsed on or attached to the copy so delivered; and(c)state that the prospectus has been registered by the registrar and the date of registration.
(4)The registrar may for the purpose of reaching an opinion on whether a prospectus(a)does not comply with the provisions of this Act;(b)contains any untrue statement;(c)omits to state any material fact; or(d)is otherwise incomplete or misleading, refer the prospectus to the Capital Markets Authority established by the Capital Markets Authority Act, for its opinion, and the authority shall give its opinion accordingly within a period of twenty-one days in relation to the prospectus.
(5)The registrar shall not register a prospectus unless—(a)it is dated and the copy of it signed in a manner required by this section;(b)it has endorsed on it or attached to it the documents, if any, specified as mentioned before; and(c)where the registrar has, under subsection (4) referred the prospectus to the Capital Markets Authority for its opinion, the authority has approved the prospectus.
(6)If a prospectus is issued without a copy of it being delivered under this section to the registrar or without the copy so delivered having endorsed on it or attached to it the required documents, the company, and every person who is knowingly a party to the issue of the prospectus, are liable to a fine not exceeding one hundred shillings for every day from the date of the issue of the prospectus until a copy of it is so delivered with the required documents endorsed on it or attached to it.

43. Prospectus for shares or debentures quoted on approved stock exchange

(1)Where a prospectus for registration relates to shares or debentures dealt in on an approved stock exchange or states that application has been or will be made to an approved stock exchange for permission to deal in the shares or debentures to which it relates, there shall be delivered to the registrar with the prospectus a certificate signed by or on behalf of that approved stock exchange that the prospectus has been scrutinised by the stock exchange and that its requirements relating to its contents have been satisfied, and the registrar shall, thereupon, register the prospectus forty-eight hours after the delivery of the prospectus to him or her, unless it is incomplete or irregular on its face or unless, prior to registration, any consent of an expert required by section 41 has been withdrawn.
(2)In any case not falling within subsection (1), the registrar shall register the prospectus and any documents required to be endorsed on it or attached to it at the expiration of twenty-one days from the delivery to him or her in accordance with section 42, or such shorter time as he or she may allow in any particular case, unless any consent of an expert required by section 41 has been withdrawn or unless, in the opinion of the registrar, the prospectus does not comply with this Act or contains any untrue statement or omits to state any material fact or is otherwise incomplete or misleading, in which case he or she shall refuse to register it until any necessary consents are given or the prospectus is amended to the registrar’s satisfaction.
(3)In the case of a refusal by the registrar to register a prospectus, the company or any other person who has delivered the prospectus for registration may apply to the court which, after hearing the applicant and the registrar, and such evidence as they may call, may either order the registrar to register the prospectus or may dismiss the application and prohibit any person before the court from publishing the prospectus until it has been amended to the satisfaction of the registrar.
(4)If the court orders the prospectus to be registered, it shall be registered by the registrar upon delivery to him or her of an office copy of the order.
(5)Every copy of a prospectus which has been delivered for registration in accordance with section 42 or 382 shall state at its head:“A copy of this prospectus has been delivered to the registrar of companies, Uganda, for registration. The registrar has not checked and will not check the accuracy of any statements made and accepts no responsibility for it or for the financial soundness of the company or the value of the securities concerned”.
(6)In this section, “approved stock exchange” has the meaning assigned to it in the Capital Markets Authority Act.

44. Restriction on alteration of terms mentioned in the prospectus or statement in lieu of prospectus

(1)A company limited by shares or a company limited by guarantee and having a share capital shall not previously to the statutory meeting vary the terms of a contract referred to in the prospectus, or statement in lieu of prospectus, except subject to the approval of the statutory meeting.
(2)This section shall not apply to a private company but shall apply to a company which was a private company before becoming a public company.

45. Civil liability for misstatements in a prospectus

(1)Subject to this section, where a prospectus invites persons to subscribe for shares in or debentures of a company, the following persons are liable to pay compensation to all persons who subscribe for any shares or debentures on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement included in the prospectus(a)every person who is a director of the company at the time of the issue of the prospectus;(b)every person who has authorised himself or herself to be named and is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time;(c)every person being a promoter of the company; and(d)every person who has authorised the issue of the prospectus,except that where, under section 41, the consent of a person is required to the issue of a prospectus and he or she has given that consent, he or she shall not by reason of his or her having given it be liable under this subsection as a person who has authorised the issue of the prospectus except in respect of an untrue statement purporting to be made by him or her as an expert.
(2)No person is liable under subsection (1) if he or she proves—(a)that having consented to become a director of the company, he or she withdrew his or her consent before the issue of the prospectus and that it was issued without his or her authority or consent;(b)that the prospectus was issued without his or her knowledge or consent and that on becoming aware of its issue he or she immediately gave reasonable public notice that it was issued without his or her knowledge or consent;(c)that after the issue of the prospectus and before allotment under it, he or she, on becoming aware of any untrue statement in it, withdrew his or her consent to it and gave reasonable public notice of the withdrawal and of the reason for the withdrawal; or(d)that—(i)as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, he or she had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, believe that the statement was true;(ii)as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or extract from a report or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report or valuation, and he or she had reasonable ground to believe and did up to the time of the issue of the prospectus believe that the person making the statement was competent to make it and that person had given the consent required by section 41 to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration or, to the defendant’s knowledge, before allotment under the prospectus; and(iii)as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document,except that this subsection shall not apply in the case of a person liable, by reason of his or her having given a consent required of him or her by section 41, as a person who has authorised the issue of the prospectus in respect of an untrue statement purporting to be made by him or her as an expert.
(3)A person who, apart from this subsection would under subsection (1) be liable, by reason of his or her having given a consent required of him or her by section 41, as a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made by him or her as an expert shall not be so liable if he or she proves—(a)that, having given his or her consent under section 41 to the issue of the prospectus, he or she withdrew it in writing before delivery of a copy of the prospectus for registration;(b)that, after delivery of a copy of the prospectus for registration and before allotment under it, he or she, on becoming aware of the untrue statement, withdrew his or her consent in writing and gave reasonable public notice of the withdrawal and of the reason for the withdrawal; or(c)that he or she was competent to make the statement and that he or she had reasonable ground to believe and did up to the time of the allotment of the shares or debentures believe that the statement was true.
(4)Where—(a)the prospectus contains the name of a person as a director of the company, or as having agreed to become a director of the company, and he or she has not consented to become a director, or has withdrawn his or her consent before the issue of the prospectus, and has not authorised or consented to the issue of the prospectus; or(b)the consent of a person is required under section 41 to the issue of the prospectus and he or she either has not given that consent or has withdrawn it before the issue of the prospectus,the directors of the company, except any without whose knowledge or consent the prospectus was issued, and any other person who authorised the issue of the prospectus are liable to indemnify the person named as aforesaid or whose consent was required as aforesaid against all damages, costs and expenses to which he or she may be made liable by reason of his or her name having been inserted in the prospectus or of the inclusion in the prospectus of a statement purporting to be made by him or her as an expert, as the case may be, or in defending himself or herself against any action or legal proceeding brought against him or her in respect of the prospectus.
(5)A person shall not be deemed for the purposes of subsection (4) to have authorised the issue of a prospectus by reason only of his or her having given the consent required by section 41 to the inclusion in the prospectus of a statement purporting to be made by him or her as an expert.
(6)For the purposes of this section—(a)“promoter” means a promoter who was a party to the preparation of the prospectus, or of the portion of it containing the untrue statement, but does not include any person by reason of his or her acting in a professional capacity for persons engaged in procuring the formation of the company; and(b)“expert” has the same meaning as in section 41.

46. Criminal liability for misstatements in a prospectus

(1)Where a prospectus issued after the commencement of this Act includes any untrue statement, any person who authorised the issue of the prospectus is liable on conviction to imprisonment for a term not exceeding two years or to a fine not exceeding ten thousand shillings or to both, unless he or she proves either that the statement was immaterial or that he or she had reasonable ground to believe and did, up to the time of the issue of the prospectus, believe that the statement was true.
(2)A person shall not be deemed for the purpose of this section to have authorised the issue of a prospectus by reason only of his or her having given the consent required by section 41 to the inclusion in it of a statement purporting to be made by him or her as an expert.

47. Document containing an offer of shares or debentures for sale to be deemed a prospectus

(1)Where a company allots or agrees to allot any shares in or debentures of the company with a view to all or any of those shares or debentures being offered for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be a prospectus issued by the company, and all enactments and rules of law as to the contents of prospectuses and to liability in respect of statements in and omissions from prospectuses, or otherwise relating to prospectuses, shall apply and have effect accordingly, as if the shares or debentures had been offered to the public for subscription and as if persons accepting the offer in respect of any shares or debentures were subscribers for those shares or debentures, but without prejudice to the liability, if any, of the persons by whom the offer is made, in respect of misstatements contained in the document or otherwise in respect thereof.
(2)For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, shares or debentures was made with a view to the shares or debentures being offered for sale to the public if it is shown—(a)that an offer of the shares or debentures or of any of them for sale to the public was made within six months after the allotment or agreement to allot; or(b)that at the date when the offer was made the whole consideration to be received by the company in respect of the shares or debentures had not been so received.
(3)Section 39 as applied by this section shall have effect as if it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus—(a)the net amount of the consideration received or to be received by the company in respect of the shares or debentures to which the offer relates; and(b)the place and time at which the contract under which those shares or debentures have been or are to be allotted may be inspected,and section 42 as applied by this section shall have effect as though the persons making the offer were persons named in a prospectus as directors of a company.
(4)Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document aforesaid is signed on behalf of the company or firm by two directors of the company or not less than half of the partners, as the case may be, and any such director or partner may sign by his or her agent authorised in writing.

48. Interpretation of provisions relating to prospectuses

For the purpose of the foregoing provisions of this Part of this Act—(a)a statement included in a prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and(b)a statement shall be deemed to be included in a prospectus if it is contained therein or in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.

Allotment

49. Prohibition of allotment unless minimum subscription received

(1)No allotment shall be made of any share capital of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount which, in the opinion of the directors, must be raised by the issue of share capital in order to provide for the matters specified in paragraph 4 of the Third Schedule to this Act has been subscribed and the sum payable on application for the amount so stated has been paid to and received by the company.
(2)For the purposes of subsection (1), a sum shall be deemed to have been paid to and received by the company if a cheque for that sum has been received in good faith by the company and the directors of the company have no reason for suspecting that the cheque will not be paid.
(3)The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Act referred to as the “minimum subscription”.
(4)The amount payable on application on each share shall not be less than 5 percent of the nominal amount of the share.
(5)If the conditions aforesaid have not been complied with on the expiration of sixty days after the first issue of the prospectus, all money received from applicants for shares shall be forthwith repaid to them without interest, and, if any such money is not so repaid within seventy-five days after the issue of the prospectus, the directors of the company are jointly and severally liable to repay that money with interest at the rate of 5 percent per year from the expiration of the seventy-fifth day; but a director is not liable if he or she proves that the default in the repayment of the money was not due to any misconduct or negligence on his or her part.
(6)Any condition requiring or binding any applicant for shares to waive compliance with any requirement of this section shall be void.
(7)This section, except subsection (4), shall not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

50. Prohibition of allotment in certain cases unless a statement in lieu of a prospectus is delivered to the registrar

(1)A company having a share capital which does not issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures there has been delivered to the registrar for registration a statement in lieu of prospectus signed by every person who is named in it as a director or a proposed director of the company or by his or her agent authorised in writing, in the form and containing the particulars set out in Part I of the Fourth Schedule to this Act and, in the cases mentioned in Part II of that Schedule, setting out the reports specified in that Part, and Parts I and II shall have effect subject to Part III of that Schedule.
(2)Every statement in lieu of prospectus delivered under subsection (1) shall, where the persons making any such report as aforesaid have made in it or have, without giving the reasons, indicated in it any such adjustments as are mentioned in paragraph 5 of the Fourth Schedule, have endorsed thereon or attached to it a written statement signed by those persons setting out the adjustments and giving the reasons therefor.
(3)This section shall not apply to a private company.
(4)If a company acts in contravention of subsection (1) or (2), the company and every director of the company who knowingly and wilfully authorises or permits the contravention are liable to a fine not exceeding two thousand shillings.
(5)Where a statement in lieu of prospectus delivered to the registrar under subsection (1) includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration is liable on conviction to imprisonment for a term not exceeding two years or to a fine not exceeding ten thousand shillings or to both, unless he or she proves either that the untrue statement was immaterial or that he or she had reasonable ground to believe and did up to the time of delivery for registration of the statement in lieu of prospectus believe that the untrue statement was true.
(6)For the purposes of this section—(a)a statement included in a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and(b)a statement shall be deemed to be included in a statement in lieu of prospectus if it is contained therein or in any report or memorandum appearing on the face thereof or by reference incorporated therein.

51. Effect of an irregular allotment

(1)An allotment made by a company to an applicant in contravention of the provisions of sections 49 and 50 shall be voidable at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, or in any case where the company is not required to hold a statutory meeting, or where the allotment is made after the holding of the statutory meeting, within one month after the date of the allotment, and not later, and shall be so voidable notwithstanding that the company is in course of being wound up.
(2)If any director of a company knowingly contravenes, or permits or authorises the contravention of, any of the provisions of sections 49 and 50 with respect to allotment, he or she is liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby; but proceedings to recover any such loss, damages or costs shall not be commenced after the expiration of two years from the date of the allotment.

52. Applications for, and allotment of, shares and debentures

(1)No allotment shall be made of any shares in or debentures of a company in pursuance of a prospectus issued generally and no proceedings shall be taken on applications made in pursuance of a prospectus so issued until the beginning of the third day after that on which the prospectus is first so issued or such later time, if any, as may be specified in the prospectus.
(2)The beginning of the said third day or such later time as aforesaid is hereafter in this Act referred to as “the time of the opening of the subscription lists”.
(3)In subsection (1), the reference to the day on which the prospectus is first issued generally shall be construed as referring to the day on which it is first so issued as a newspaper advertisement; but if it is not so issued as a newspaper advertisement before the third day after that on which it is first so issued in any other manner, the reference shall be construed as referring to the day on which it is first so issued in any manner.
(4)The validity of an allotment shall not be affected by any contravention of subsections (1) to (3) but, in the event of any such contravention, the company and every officer of the company who is in default is liable to a fine not exceeding ten thousand shillings.
(5)In the application of this section to a prospectus offering shares or debentures for sale, subsections (1) to (4) shall have effect with the substitution of references to sale for references to allotment, and with the substitution for the reference to the company and every officer of the company who is in default of a reference to any person by or through whom the offer is made and who knowingly and wilfully authorises or permits the contravention.
(6)An application for shares in or debentures of a company which is made in pursuance of a prospectus issued generally shall not be revocable until after the expiration of the third day after the time of the opening of the subscription lists, or the giving before the expiration of the said third day, by some person responsible under section 45 for the prospectus, of a public notice having the effect under that section of excluding or limiting the responsibility of the person giving it.
(7)In reckoning for the purposes of this and section 53 the third day after another day, any intervening day which is a Saturday or Sunday or which is a public holiday shall be disregarded; and if the third day (as so reckoned) is itself a Saturday or Sunday or a public holiday, there shall for those purposes be substituted the first day thereafter which is none of them.

53. Allotment of shares and debentures to be dealt in on a stock exchange

(1)Where a prospectus, whether issued generally or not, states that application has been or will be made for permission for the shares or debentures offered by the prospectus to be dealt in on any stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void if the permission has not been applied for before the third day after the first issue of the prospectus or if the permission has been refused before the expiration of three weeks from the date of the closing of the subscription lists or such longer period not exceeding six weeks as may, within the said three weeks, be notified to the applicant for permission by or on behalf of the stock exchange.
(2)Where the permission has not been applied for as aforesaid, or has been refused as aforesaid, the company shall forthwith repay without interest all money received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company are jointly and severally liable to repay that money with interest at the rate of 5 percent per year from the expiration of the eighth day; except that a director is not liable if he or she proves that the default in the repayment of the money was not due to any misconduct or negligence on his or her part.
(3)All money received as aforesaid shall be kept in a separate bank account so long as the company may become liable to repay it under subsection (2); and, if default is made in complying with this subsection, the company and every officer of the company who is in default are liable to a fine not exceeding ten thousand shillings.
(4)Any condition requiring or binding any applicant for shares or debentures to waive compliance with any requirement of this section shall be void.
(5)For the purposes of this section, permission shall not be deemed to be refused if it is intimated that the application for it, though not at present granted, will be given further consideration.
(6)This section shall have effect—(a)in relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus as if he or she had applied therefor in pursuance of the prospectus; and(b)in relation to a prospectus offering shares for sale with the following modifications—(i)references to sale shall be substituted for references to allotment;(ii)the persons by whom the offer is made, and not the company, shall be liable under subsection (2) to repay money received from applicants, and references to the company’s liability under that subsection shall be construed accordingly; and(iii)for the reference in subsection (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who knowingly and wilfully authorises or permits the default.

54. Return as to allotments

(1)Whenever a company limited by shares or a company limited by guarantee and having a share capital makes any allotment of its shares, the company shall within sixty days thereafter deliver to the registrar for registration—(a)a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and descriptions of the allottees and the amount, if any, paid or due and payable on each share; and(b)in the case of shares allotted as fully or partly paid up otherwise than in cash, a contract in writing constituting the title of the allottee to the allotment together with any contract of sale, or for services or other consideration in respect of which that allotment was made, such contracts being duly stamped, and a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up and the consideration for which they have been allotted.
(2)Where such a contract as above-mentioned is not reduced to writing, the company shall within sixty days after the allotment deliver to the registrar for registration the prescribed particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing, and those particulars shall be deemed to be an instrument within the meaning of the Stamps Act, and the registrar may as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section 38 of that Act.
(3)If default is made in complying with this section, every officer of the company who is in default is liable to a fine not exceeding one hundred shillings for every day during which the default continues.

Commissions and discounts, etc.

55. Power to pay certain commissions; prohibition of payment of all other commissions, discounts, etc.

(1)A company may pay a commission to any person in consideration of his or her subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company if—(a)the payment of the commission is authorised by the articles;(b)the commission paid or agreed to be paid does not exceed 10 percent of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is the less;(c)the amount or rate percent of the commission paid or agreed to be paid is—(i)in the case of shares offered to the public for subscription, disclosed in the prospectus; or(ii)in the case of shares not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and delivered before the payment of the commission to the registrar for registration, and, where a circular or notice, not being a prospectus, inviting subscription for the shares is issued, also disclosed in that circular or notice; and(d)the number of shares which persons have agreed for a commission to subscribe absolutely is disclosed in the manner aforesaid.
(2)Except as aforesaid, no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount or allowance, to any person in consideration of his or her subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money be paid out of the nominal purchase money or contract price, or otherwise.
(3)Nothing in this section shall affect the power of any company to pay such brokerage as it has heretofore been lawful for a company to pay.
(4)A vendor to, promoter of, or other person who receives payment in money or shares from, a company shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.
(5)If default is made in complying with the provisions of this section relating to the delivery to the registrar of the statement in the prescribed form, the company and every officer of the company who is in default are liable to a fine not exceeding five hundred shillings.

56. Prohibition of provision of financial assistance by a company for purchase of or subscription for its own or its holding company’s shares

(1)Subject as provided in this section, it shall not be lawful for a company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company, or, where the company is a subsidiary company, in its holding company.
(2)Nothing in this section shall be taken to prohibit—(a)where the lending of money is part of the ordinary business of a company, the lending of money by the company in the ordinary course of its business;(b)the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully-paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the company;(c)the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully-paid shares in the company or its holding company to be held by themselves by way of beneficial ownership.
(3)If a company acts in contravention of this section, the company and every officer of the company who is in default are liable to a fine not exceeding twenty thousand shillings.

Construction of references to offering shares or debentures to the public

57. Construction of references to offering shares or debentures to the public

(1)Any reference in this Act to offering shares or debentures to the public shall, subject to any provision to the contrary contained therein, be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner; and references in this Act or in a company’s articles to invitations to the public to subscribe for shares or debentures shall, subject as aforesaid, be similarly construed.
(2)Subsection (1) shall not be taken as requiring any offer or invitation to be treated as made to the public if it can properly be regarded, in all the circumstances, as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation, or otherwise as being a domestic concern of the persons making and receiving it, and, in particular—(a)a provision in a company’s articles prohibiting invitations to the public to subscribe for shares or debentures shall not be taken as prohibiting the making to members or debenture holders of an invitation which can properly be regarded as aforesaid; and(b)the provisions of this Act relating to private companies shall be construed accordingly.

Issue of shares at premium and discount and redeemable preference shares

58. Application of premiums received on issue of shares

(1)Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called “the share premium account”, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the company.
(2)The share premium account may, notwithstanding anything in subsection (1), be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares, in writing off—(a)the preliminary expenses of the company; or(b)the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company,or in providing for the premium payable on redemption of any redeemable preference shares or of any debentures of the company.
(3)Where a company has before the commencement of this Act issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act; but any part of the premium which has been so applied that it does not at the commencement of this Act form an identifiable part of the company’s reserves within the meaning of the Sixth Schedule to this Act shall be disregarded in determining the sum to be included in the share premium account.

59. Power to issue shares at a discount

(1)Subject as provided in this section, a company may issue at a discount shares in the company of a class already issued; except that—(a)the issue of the shares at a discount must be authorised by resolution passed in general meeting of the company and must be sanctioned by the court;(b)the resolution must specify the maximum rate of discount at which the shares are to be issued;(c)not less than one year must at the date of the issue have elapsed since the date on which the company was entitled to commence business;(d)the shares to be issued at a discount must be issued within one month after the date on which the issue is sanctioned by the court or within such extended time as the court may allow.
(2)Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the court for an order sanctioning the issue, and on any such application the court, if, having regard to all the circumstances of the case, it thinks proper so to do, may make an order sanctioning the issue on such terms and conditions as it thinks fit.
(3)Every prospectus relating to the issue of the shares must contain particulars of the discount allowed on the issue of the shares or of so much of that discount as has not been written off at the date of the issue of the prospectus.
(4)If default is made in complying with subsection (3), the company and every officer of the company who is in default are liable to a default fine.

60. Power to issue redeemable preference shares

(1)Subject to this section, a company limited by shares may, if so authorised by its articles, issue preference shares which are, or at the option of the company are to be liable, to be redeemed; except that—(a)no such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption;(b)no such shares shall be redeemed unless they are fully paid;(c)the premium, if any, payable on redemption, must have been provided for out of the profits of the company or out of the company’s share premium account before the shares are redeemed;(d)where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall out of profits which would otherwise have been available for dividend be transferred to a reserve fund, to be called “the capital redemption reserve fund ”, a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid-up share capital of the company.
(2)Subject to this section, the redemption of preference shares thereunder may be effected on such terms and in such manner as may be provided by the articles of the company.
(3)The redemption of preference shares under this section by a company shall not be taken as reducing the amount of the company’s authorised share capital.
(4)Where in pursuance of this section a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued, and, accordingly, the share capital of the company shall not for the purpose of any enactments relating to stamp duty be deemed to be increased by the issue of shares in pursuance of this subsection; but where new shares are issued before the redemption of the old shares, the new shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of this subsection unless the old shares are redeemed within one month after the issue of the new shares.
(5)The capital redemption reserve fund may, notwithstanding anything in this section, be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

Miscellaneous provisions as to share capital

61. Power of a company to arrange for different amounts being paid on shares

A company, if so authorised by its articles, may do any one or more of the following things—(a)make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares;(b)accept from any member the whole or a part of the amount remaining unpaid on any shares held by him or her, although no part of that amount has been called up;(c)pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

62. Reserve liability of a limited company

A limited company may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purposes of the company being wound up, and thereupon that portion of its share capital shall not be capable of being called up except in the event and for the purposes aforesaid.

63. Power of a company to alter its share capital

(1)A company limited by shares or a company limited by guarantee and having a share capital, if so authorised by its articles, may alter the conditions of its memorandum as follows; that is to say, it may—(a)increase its share capital by new shares of such amount as it thinks expedient;(b)consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;(c)convert all or any of its paid-up shares into stock, and reconvert that stock into paid-up shares of any denomination;(d)subdivide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;(e)cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.
(2)The powers conferred by this section must be exercised by the company in general meeting.
(3)A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

64. Notice to registrar of consolidation of share capital, conversion of shares into stock, etc.

(1)If a company having a share capital has—(a)consolidated and divided its share capital into shares of larger amount than its existing shares;(b)converted any shares into stock;(c)reconverted stock into shares;(d)subdivided its shares or any of them;(e)redeemed any redeemable preference shares; or(f)cancelled any shares, otherwise than in connection with a reduction of a share capital under section 68,it shall within thirty days after so doing give notice thereof to the registrar specifying, as the case may be, the shares consolidated, divided, converted, subdivided, redeemed or cancelled, or the stock reconverted.
(2)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine.

65. Notice of increase of share capital

(1)Where a company having a share capital, whether its shares have or have not been converted into stock, has increased its share capital beyond the registered capital, it shall, within thirty days after the passing of the resolution authorising the increase, give to the registrar notice of the increase, and the registrar shall record the increase.
(2)The notice to be given as aforesaid shall include such particulars as may be prescribed with respect to the classes of shares affected and the conditions subject to which the new shares have been or are to be issued, and there shall be forwarded to the registrar of companies together with the notice a printed copy of the resolution authorising the increase.
(3)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine.

66. Power of unlimited company to provide for reserve share capital on re-registration

An unlimited company having a share capital may, by its resolution for registration as a limited company in pursuance of this Act, do either or both of the following things—(a)increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, but subject to the condition that no part of the increased capital shall be capable of being called up except in the event and for the purposes of the company being wound up;(b)provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up.

67. Power of a company to pay interest out of capital in certain cases

Where any shares of a company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a lengthened period, the company may pay interest on so much of that share capital as is for the time being paid up for the period and subject to the conditions and restrictions in this section mentioned, and may charge the sum so paid by way of interest to capital, as part of the cost of construction of the work or building or the provision of plant; but—(a)no such payment shall be made unless it is authorised by the articles or by special resolution;(b)no such payment, whether authorised by the articles or by special resolution, shall be made without the previous sanction of the registrar;(c)before sanctioning any such payment the registrar may, at the expense of the company, appoint a person to inquire and report to him or her as to the circumstances of the case, and may, before making the appointment, require the company to give security for the payment of the costs of the inquiry;(d)the payment shall be made only for such period as may be determined by the registrar, and that period shall in no case extend beyond the close of the half-year next after the half-year during which the works or buildings have been actually completed or the plant provided;(e)the rate of interest shall in no case exceed 5 percent per year or such other rate as the Minister may for the time being by statutory instrument prescribe;(f)the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.

Reduction of share capital

68. Special resolution for reduction of share capital

(1)Subject to confirmation by the court, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles, by special resolution reduce its share capital in any way, and, in particular, without prejudice to the generality of the foregoing power, may—(a)extinguish or reduce the liability on any of its shares in respect of share capital not paid up;(b)either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or(c)either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company,and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.
(2)A special resolution under this section is in this Act referred to as a “resolution for reducing share capital”.

69. Application to the court for a confirming order; objections by creditors and settlement of the list of objecting creditors

(1)Where a company has passed a resolution for reducing share capital, it shall apply by petition to the court for an order confirming the reduction.
(2)Where the proposed reduction of share capital involves either diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, and in any other case if the court so directs, the following provisions shall have effect, subject, nevertheless, to subsection (3)—(a)every creditor of the company who at the date fixed by the court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company, shall be entitled to object to the reduction;(b)the court shall settle a list of creditors so entitled to object, and for that purpose shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction;(c)where a creditor entered on the list whose debt or claim is not discharged or has not determined does not consent to the reduction, the court may, if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his or her debt or claim by appropriating, as the court may direct, the following amount—(i)if the company admits the full amount of the debt or claim, or though not admitting it, is willing to provide for it, then the full amount of the debt or claim;(ii)if the company does not admit and is not willing to provide for the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the court after the like inquiry and adjudication as if the company were being wound up by the court.
(3)Where a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the court may, if having regard to any special circumstances of the case it thinks proper so to do, direct that subsection (2) shall not apply as regards any class or classes of creditors.

70. Order confirming the reduction and powers of the court on making such order

(1)The court, if satisfied, with respect to every creditor of the company who under section 69 is entitled to object to the reduction, that either his or her consent to the reduction has been obtained or his or her debt or claim has been discharged or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as it thinks fit.
(2)Where the court makes any such order, it may—(a)if for any special reason it thinks proper so to do, make an order directing that the company shall, during such period, commencing on or at any time after the date of the order, as is specified in the order, add to its name as the last words thereof the words “and reduced”; and(b)make an order requiring the company to publish as the court directs the reason for reduction or such other information in regard thereto as the court may think expedient with a view to giving proper information to the public and, if the court thinks fit, the causes which led to the reduction.
(3)Where a company is ordered to add to its name the words “and reduced”, those words shall, until the expiration of the period specified in the order, be deemed to be part of the name of the company.

71. Registration of order and minute of reduction

(1)The registrar, on production to him or her of an order of the court confirming the reduction of the share capital of a company, and the delivery to him or her of a copy of the order and of a minute approved by the court, showing with respect to the share capital of the company, as altered by the order, the amount of the share capital, the number of shares into which it is to be divided, and the amount of each share, and the amount, if any, at the date of the registration deemed to be paid up on each share, shall register the order and minute.
(2)On the registration of the order and minute, and not before, the resolution for reducing share capital as confirmed by the order so registered shall take effect.
(3)Notice of the registration shall be published in such manner as the court may direct.
(4)The registrar shall certify under his or her hand the registration of the order and minute, and his or her certificate shall be conclusive evidence that all the requirements of this Act with respect to reduction of share capital have been complied with and that the share capital of the company is such as is stated in the minute.
(5)The minute when registered shall be deemed to be substituted for the corresponding part of the memorandum and shall be valid and may be altered as if it had been originally contained therein.
(6)The substitution of any such minute as aforesaid for part of the memorandum of the company shall be deemed to be an alteration of the memorandum within the meaning of section 26.

72. Liability of members in respect of reduced shares

(1)In the case of a reduction of share capital, a member of the company, past or present, is not liable in respect of any share to any call or contribution exceeding in amount the difference, if any, between the amount of the share as fixed by the minute and the amount paid, or the reduced amount, if any, which is to be deemed to have been paid, on the share, as the case may be; except that if any creditor, entitled in respect of any debt or claim to object to the reduction of share capital, is, by reason of his or her ignorance of the proceedings for reduction, or of their nature and effect with respect to his or her claim, not entered on the list of creditors, and, after the reduction, the company is unable, within the meaning of the provisions of this Act with respect to winding up by the court, to pay the amount of his or her debt or claim, then—(a)every person who was a member of the company at the date of the registration of the order for reduction and minute is liable to contribute for the payment of that debt or claim an amount not exceeding the amount which he or she would have been liable to contribute if the company had commenced to be wound up on the day before the said date; and(b)if the company is wound up, the court, on the application of any such creditor and proof of his or her ignorance as aforesaid, may, if it thinks fit, settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up.
(2)Nothing in this section shall affect the rights of the contributories among themselves.

73. Penalty for concealing the name of a creditor, etc.

If any officer of the company(a)wilfully conceals the name of any creditor entitled to object to the reduction;(b)willfully misrepresents the nature or amount of the debt or claim of any creditor; or(c)aids, abets or is privy to any such concealment or misrepresentation as aforesaid,he or she commits an offence and is liable on conviction to imprisonment for a term not exceeding one year or to a fine not exceeding two thousand shillings or to both.

Variation of shareholders’ rights

74. Rights of holders of special classes of shares

(1)If in the case of a company the share capital of which is divided into different classes of shares, provision is made by the memorandum or articles for authorising the variation of the rights attached to any class of shares in the company, subject to the consent of any specified proportion of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares, and in pursuance of the said provision the rights attached to any such class of shares are at any time varied, the holders of not less in the aggregate than 15 percent of the issued shares of that class, being persons who did not consent to or vote in favour of the resolution for the variation, may apply to the court to have the variation cancelled, and, where any such application is made, the variation shall not have effect until it is confirmed by the court.
(2)An application under this section shall be made by petition within thirty days after the date on which the consent was given or the resolution was passed and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.
(3)On any such application, the court, after hearing the applicant and any other persons who apply to the court to be heard and appear to the court to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation, and shall, if not so satisfied, confirm the variation.
(4)The decision of the court on any such application shall be final.
(5)The company shall within thirty days after the making of an order by the court on any such application forward a certified copy of the order to the registrar, and, if default is made in complying with this provision, the company and every officer of the company who is in default are liable to a default fine.
(6)In this section, “variation” includes abrogation, and “varied” shall be construed accordingly.

Transfer of shares and debentures, evidence of title, etc.

75. Nature of shares

The shares or other interest of any member in a company shall be movable property transferable in a manner provided by the articles of the company.

76. Numbering of shares

Each share in a company having a share capital shall be distinguished by its appropriate number; except that if at any time all the issued shares in a company, or all the issued shares in a company of a particular class, are fully paid up and rank pari passu for all purposes, none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.

77. Transfer not to be registered except on production of an instrument of transfer

(1)Notwithstanding anything in the articles of a company, it shall not be lawful for the company to register a transfer of shares in or debentures of the company unless a proper instrument of transfer has been delivered to the company.
(2)Nothing in this section shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in or debentures of the company has been transmitted by operation of law.

78. Transfer by personal representative

A transfer of the share or other interest of a deceased member of a company made by his or her personal representative shall, although the personal representative is not himself or herself a member of the company, be as valid as if he or she had been such a member at the time of the execution of the instrument of transfer.

79. Registration of a transfer at request of the transferor

On the application of the transferor of any share or interest in a company, the company shall enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.

80. Notice of refusal to register a transfer

(1)If a company refuses to register a transfer of any shares or debentures, the company shall, within sixty days after the date on which the transfer was lodged with the company, send to the transferee notice of the refusal.
(2)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine.

81. Certification of a transfer

(1)The certification by a company of any instrument of transfer of shares in or debentures of the company shall be taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on the face of them show a prima facie title to the shares or debentures in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares or debentures.
(2)Where any person acts on the faith of a false certification by a company made negligently, the company shall be under the same liability to him or her as if the certification had been made fraudulently.
(3)For the purposes of this section—(a)an instrument of transfer shall be deemed to be certificated if it bears the words “certificate lodged” or words to the like effect;(b)the certification of an instrument of transfer shall be deemed to be made by a company if—(i)the person issuing the instrument is a person authorised to issue certificated instruments of transfer on the company’s behalf; and(ii)the certification is signed by a person authorised to certificate transfers on the company’s behalf or by any officer or servant either of the company or of a body corporate so authorised;(c)a certification shall be deemed to be signed by any person if—(i)it purports to be authenticated by his or her signature or initials (whether handwritten or not); and(ii)it is not shown that the signature or initials was or were placed there neither by himself or herself nor by any person authorised to use the signature or initials for the purpose of certificating transfers on the company’s behalf.

82. Duties of a company with respect to issue of certificates

(1)Every company shall, within sixty days after the allotment of any of its shares, debentures or debenture stock and within two months after the date on which a transfer of any such shares, debentures or debenture stock is lodged with the company, complete and have ready for delivery the certificates of all shares, the debentures and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures or debenture stock otherwise provide.
(2)For the purposes of subsection (1), “transfer” means a transfer duly stamped and otherwise valid, and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register.
(3)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine.
(4)If any company on whom a notice has been served requiring the company to make good any default in complying with the provisions of subsection (1) fails to make good the default within ten days after the service of the notice, the court may, on the application of the person entitled to have the certificates or the debentures delivered to him or her, make an order directing the company and any officer of the company to make good the default within such time as may be specified in the order, and any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company responsible for the default.

83. Certificate to be evidence of title

A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to the shares.

84. Evidence of grant of probate

The production to a company of any document which is by law sufficient evidence of—(a)probate of the will, or letters or certificate of administration of the estate, of a deceased person having been granted to some person; or(b)the Administrator General having undertaken administration of an estate under the Administrator General’s Act,shall be accepted by the company, notwithstanding anything in its articles, as sufficient evidence of such grant or undertaking.

85. Issue and effect of share warrants to bearer

(1)A company limited by shares, if so authorised by its articles, may, with respect to any fully paid up shares, issue under its common seal a warrant stating that the bearer of the warrant is entitled to the shares specified in it and may provide, by coupons or otherwise, for the payment of the future dividends on the shares included in the warrant.
(2)Such a warrant as aforesaid is in this Act termed a “share warrant”.
(3)A share warrant shall entitle its bearer to the shares specified in it, and the shares may be transferred by delivery of the warrant.

86. Penalty for personation of shareholder

If any person falsely and deceitfully personates any owner of any share or interest in any company, or of any share warrant or coupon, issued in pursuance of this Act, and thereby obtains or endeavours to obtain any such share or interest or share warrant or coupon, or receives or endeavours to receive any money due to any such owner, as if the offender were the true and lawful owner, he or she commits an offence and is liable on conviction to imprisonment for any term not exceeding seven years.

87. Offences in connection with share warrants

(1)If any person—(a)with intent to defraud, forges or alters, or offers, utters, disposes of or puts off, knowing the same to be forged or altered, any share warrant or coupon, or any document purporting to be a share warrant or coupon, issued in pursuance of this Act; or by(b)means of any such forged or altered share warrant, coupon or document, purporting as aforesaid, demands or endeavours to obtain or receive any share or interest in any company under this Act, or to receive any dividend or money payable in respect thereof, knowing the warrant, coupon or document to be forged or altered,he or she commits an offence and is liable on conviction to imprisonment for life.
(2)If any person without lawful authority or excuse, proof whereof shall lie on him or her—(a)engraves or makes on any plate, wood, stone or other material any share warrant or coupon purporting to be—(i)a share warrant or coupon issued or made by any particular company in pursuance of this Act;(ii)a blank share warrant or coupon so issued or made; or(iii)a part of such a share warrant or coupon;(b)uses any such plate, wood, stone or other material for the making or printing of any such share warrant or coupon, or of any such blank share warrant or coupon, or any part thereof respectively; or(c)knowingly has in his or her custody or possession any such plate, wood, stone or other material, he or she commits an offence and is liable on conviction to imprisonment for any term not exceeding fourteen years.

Special provisions as to debentures

88. Provisions as to registers of debenture holders

(1)Every company which, after the 1st January, 1961, issues a series of debentures shall keep at the registered office of the company a register of holders of such debentures; except that—(a)where the work of making up such register or duplicate as aforesaid is done at some office of the company other than the registered office, such register or duplicate may be kept at such office;(b)where the work of making up such register or duplicate is by arrangement by the company undertaken by some person on behalf of the company, such register or duplicate may be kept at the office of that person at which the work is done; and(c)where the company keeps in Uganda both such a register and duplicate as aforesaid, it shall keep them at the same place.
(2)Every company shall give notice to the registrar of the place where the register and any duplicate is kept and of any change in that place; except that a company shall not be bound to give notice under this subsection if the register or duplicate has, at all times since it came into existence after the commencement of this Act, at all times since then, been kept at the registered office of the company.

89. Rights of debenture holders and shareholders to inspect the register of debenture holders and to have copies of a trust deed

(1)Every register of holders of debentures of a company shall, except when duly closed (but subject to such reasonable restrictions as the company may in general meeting impose so that not less than two hours in each day shall be allowed for inspection), be open to the inspection of the registered holder of any such debentures or any holder of shares in the company without fee, and of any other person on payment of a fee of two shillings or such lesser sum as may be prescribed by the company.
(2)Every registered holder of debentures and every holder of shares in a company may require a copy of the register of the holders of debentures of the company or any part thereof on payment of one shilling for every hundred words required to be copied.
(3)A copy of any trust deed for securing any issue of debentures shall be forwarded to every holder of any such debentures at his or her request on payment in the case of a printed trust deed of the sum of one shilling or such lesser sum as may be prescribed by the company, or, where the trust deed has not been printed, on payment of one shilling for every hundred words required to be copied.
(4)If inspection is refused, or a copy is refused or not forwarded, the company and every officer of the company who is in default are liable to a fine not exceeding one hundred shillings, and further are liable to a default fine of forty shillings.
(5)Where a company is in default as aforesaid, the court may by order compel an immediate inspection of the register or direct that the copies required shall be sent to the person requiring them.
(6)For the purposes of this section, a register shall be deemed to be duly closed if closed in accordance with provisions contained in the articles or in the debentures or, in the case of debenture stock, in the stock certificates, or in the trust deed or other document securing the debentures or debenture stock, during such period or periods, not exceeding in the whole thirty days in any year, as may be therein specified.

90. Liability of trustees for debenture holders

(1)Subject to the following provisions of this section, any provision contained in a trust deed for securing an issue of debentures, or in any contract with the holders of debentures secured by a trust deed, shall be void insofar as it would have the effect of exempting a trustee thereof from or indemnifying him or her against liability for breach of trust where he or she fails to show the degree of care and diligence required of him or her as trustee, having regard to the provisions of the trust deed conferring on him or her any powers, authorities or discretions.
(2)Subsection (1) shall not invalidate—(a)any release otherwise validly given in respect of anything done or omitted to be done by a trustee before the giving of the release; or(b)any provision enabling such a release to be given—(i)on the agreement thereto of a majority of not less than three-fourths in value of the debenture holders present and voting in person or, where proxies are permitted, by proxy at a meeting summoned for the purpose; and(ii)either with respect to specific acts or omissions or on the trustee dying or ceasing to act.
(3)Subsection (1) shall not operate—(a)to invalidate any provision in force at the commencement of this Act so long as any person then entitled to the benefit of that provision or afterwards given the benefit thereof under subsection (4) remains a trustee of the deed in question; or(b)to deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him or her while any such provision was in force.
(4)While any trustee of a trust deed remains entitled to the benefit of a provision saved by subsection (3), the benefit of that provision may be given either—(a)to all trustees of the deed, present and future; or(b)to any named trustees or proposed trustees of the deed, by a resolution passed by a majority of not less than three-fourths in value of the debenture holders present in person or, where proxies are permitted, by proxy at a meeting summoned for the purpose in accordance with the provisions of the deed or, if the deed makes no provision for summoning meetings, a meeting summoned for the purpose in any manner approved by the court.

91. Perpetual debentures

A condition contained in any debentures or in any deed for securing any debentures, whether issued or executed before or after the commencement of this Act, shall not be invalid by reason only that the debentures are thereby made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding.

92. Power to reissue redeemed debentures in certain cases

(1)Where either before or after the commencement of this Act a company has redeemed any debentures previously issued, then—(a)unless any provision to the contrary, whether express or implied, is contained in the articles or in any contract entered into by the company; or(b)unless the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled,the company shall have, and shall be deemed always to have had, power to reissue the debentures, either by reissuing the same debentures or by issuing other debentures in their place.
(2)Subject to section 93, on a reissue of redeemed debentures the person entitled to the debentures shall have, and shall be deemed always to have had, the same priorities as if the debentures had never been redeemed.
(3)Where a company has either before or after the commencement of this Act deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit while the debentures remained so deposited.
(4)The reissue of a debenture or the issue of another debenture in its place under the power by this section given to, or deemed to have been possessed by, a company, whether the reissue or issue was made before or after the commencement of this Act, shall be treated as the issue of a new debenture for the purposes of stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued.
(5)Any person lending money on the security of a debenture reissued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his or her security without payment of the stamp duty or any penalty in respect of stamp duty, unless he or she had notice or, but for his or her negligence, might have discovered, that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp duty and penalty.

93. Saving, in case of reissued debentures, of rights of certain mortgagees

Where any debentures which were redeemable before the 12th October, 1935, have been reissued after that day and before the commencement of this Act or are reissued after the commencement of this Act, the reissue of the debentures shall not prejudice and shall be deemed never to have prejudiced any right or priority which any person would have had under or by virtue of any mortgage or charge created before that date.

94. Specific performance of contracts to subscribe for debentures

A contract with a company to take up and pay for any debentures of the company may be enforced by an order for specific performance.

95. Payment of certain debts out of assets subject to floating charge in priority to claims under the charge

(1)Where either a receiver is appointed on behalf of the holders of any debentures of a company secured by a floating charge, or possession is taken by or on behalf of those debenture holders of any property comprised in or subject to the charge, then, if the company is not at the time in the course of being wound up, the debts which in every winding up are under the provisions of Part VI of this Act relating to preferential payments to be paid in priority to all other debts shall be paid out of any assets coming to the hands of the receiver or other person taking possession as aforesaid in priority to any claim for principal or interest in respect of the debentures.
(2)The periods of time mentioned in those provisions of Part VI of this Act shall be reckoned from the date of the appointment of the receiver or of possession being taken as aforesaid, as the case may be.
(3)Where the date referred to in subsection (2) occurred before the commencement of this Act, subsections (1) and (2) shall have effect with the substitution, for references to those provisions of Part VI of this Act, of references to those provisions which by virtue of section 315(9) are deemed to remain in force in the case therein mentioned.
(4)Any payments made under this section shall be recouped as far as may be out of the assets of the company available for payment of general creditors.

Part IV – Registration of charges

Registration of charges with the registrar

96. Registration of charges

(1)Subject to this Part of this Act, every charge created after the fixed date by a company registered in Uganda and being a charge to which this section applies shall, so far as any security on the company’s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced are delivered to or received by the registrar for registration in manner required by this Act within forty-two days after the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section the money secured thereby shall immediately become payable.
(2)This section applies to the following charges—(a)a charge for the purpose of securing any issue of debentures;(b)a charge on uncalled share capital of the company;(c)a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale;(d)a charge on immovable property, wherever situate, or any interest therein;(e)a charge on book debts of the company;(f)a floating charge on the undertaking or property of the company;(g)a charge on calls made but not paid;(h)a charge on a ship or any share in a ship;(i)a charge on goodwill, on a patent or a licence under a patent, on a trademark or on a copyright or a licence under a copyright.
(3)In the case of a charge created out of Uganda comprising property situate outside Uganda, the delivery to and the receipt by the registrar of a copy verified in the prescribed manner of the instrument by which the charge is created or evidenced shall have the same effect for the purposes of this section as the delivery and receipt of the instrument itself, and forty-two days after the date on which the instrument or copy could, in due course of post, and if dispatched with due diligence, have been received in Uganda, shall be substituted for forty-two days after the date of the creation of the charge, as the time within which the particulars and instrument or copy are to be delivered to the registrar.
(4)The instrument creating or purporting to create the charge may be sent for registration under this section notwithstanding that further proceedings may be necessary to make the charge valid or effectual.
(5)Where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instrument for the purpose of securing an advance to the company shall not for the purposes of this section be treated as a charge on those book debts.
(6)The holding of debentures entitling the holder to a charge on immovable property shall not for the purposes of this section be deemed to be an interest in immovable property.
(7)Where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari passu is created by a company, it shall for the purposes of this section be sufficient if there are delivered to or received by the registrar within forty-two days after the execution of the deed containing the charge or, if there is no such deed, after the execution of any debentures of the series, the following particulars—(a)the total amount secured by the whole series;(b)the dates of the resolutions authorising the issue of the series and the date of the covering deed, if any, by which the security is created or defined;(c)a general description of the property charged; and(d)the names of the trustees, if any, for the debenture holders,together with the deed containing the charge or a copy of the deed verified in the prescribed manner, or, if there is no such deed, one of the debentures of the series; except that where more than one issue is made of debentures in the series, there shall be sent to the registrar for entry in the register particulars of the date and amount of each issue, but an omission to do this shall not affect the validity of the debentures issued.
(8)Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his or her subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars required to be sent for registration under this section shall include particulars as to the amount or rate percent of the commission, discount or allowance so paid or made, but omission to do this shall not affect the validity of the debentures issued.
(9)The deposit of any debentures as security for any debt of the company shall not for the purposes of subsection (8) be treated as the issue of the debentures at a discount.
(10)In this Part of this Act—(a)“charge” includes mortgage;(b)“the fixed date” means in relation to the charges specified in subsection (2)(a) to (f), the 3rd April, 1923, and in relation to the charges specified in subsection (2)(g) to (i), the 31st December, 1935;(c)a charge shall be deemed to be created in the case of an instrument creating a charge on the date of the execution thereof by or on behalf of the company, and in the case of a charge created by deposit of title deeds on the date of the deposit thereof.

97. Duty of a company to register charges created by the company

(1)It shall be the duty of a company to send to the registrar for registration the particulars of every charge created by the company and of the issues of debentures of a series, requiring registration under section 96, but registration of any such charge may be effected on the application of any person interested therein.
(2)Where registration is effected on the application of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him or her to the registrar on registration.
(3)If any company fails for a period of forty-two days or such extended period as the court may have ordered to send to the registrar for registration the particulars of any charge created by the company, or of the issues of debentures of a series, requiring registration as aforesaid, then, unless the registration has been effected on the application of some other person, the company and every officer or other person who is a party to the default are liable to a default fine of one thousand shillings.

98. Duty of a company to register charges existing on property acquired

(1)Where after the commencement of this Act a company acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Part of this Act, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the prescribed manner to be a correct copy) of the instrument, if any, by which the charge was created or is evidenced, to be delivered to the registrar for registration in the manner required by this Act within forty-two days after the date on which the acquisition is completed; except that if the property is situate and the charge was created outside Uganda, thirty days after the date on which the copy of the instrument could in due course of post, and if dispatched with due diligence, have been received in Uganda, shall be substituted for forty-two days after the completion of the acquisition as the time within which the particulars and the copy of the instrument are to be delivered to the registrar.
(2)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine of one thousand shillings.

99. Certificate of registration of a charge

The registrar shall give a certificate under his or her hand of the registration of any charge registered in pursuance of and within any period allowed under this Part of this Act, stating the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of this Part of this Act as to registration have been complied with.

100. Endorsement of certificate of registration on debentures

(1)The company shall cause a copy of every certificate of registration given under section 99 to be endorsed on every debenture or certificate of debenture stock which is issued by the company, and the payment of which is secured by the charge so registered.
(2)Nothing in subsection (1) shall be construed as requiring a company to cause a certificate of registration of any charge so given to be endorsed on any debenture or certificate of debenture stock issued by the company before the charge was created.
(3)If any person knowingly and wilfully authorises or permits the delivery of any debenture or certificate of debenture stock which under the provisions of this section is required to have endorsed on it a copy of a certificate of registration without the copy being so endorsed upon it, he or she, without prejudice to any other liability, is liable to a fine not exceeding two thousand shillings.

101. Entries of satisfaction and release of property from charge

The registrar on evidence being given to his or her satisfaction with respect to any registered charge—(a)that the debt for which the charge was given has been paid or satisfied in whole or in part; or(b)that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking,may enter on the register a memorandum of satisfaction in whole or in part, or of the fact that part of the property or undertaking has been released from the charge or has ceased to form part of the company’s property or undertaking, as the case may be; and where he or she enters a memorandum of satisfaction in whole, he or she shall, if required, furnish the company with a copy of the memorandum of satisfaction.

102. Extension of time to register charges

The court, on being satisfied that the omission to register a charge within the time required by this Act or that the omission or misstatement of any particular with respect to any such charge or in a memorandum of satisfaction was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested, and on such terms and conditions as seem to the court just and expedient, order that the time for registration shall be extended, or, as the case may be, that the omission or misstatement shall be rectified.

103. Registration of enforcement of security

(1)If any person obtains an order for the appointment of a receiver or manager of the property of a company, or appoints such a receiver or manager under any powers contained in any instrument, he or she shall, within seven days from the date of the order or of the appointment under the said powers, give notice of the fact to the registrar.
(2)Where any person appointed receiver or manager of the property of a company under the powers contained in any instrument ceases to act as such receiver or manager, he or she shall, within seven days of so ceasing, give the registrar notice to that effect.
(3)If any person makes default in complying with the requirements of this section, he or she is liable to a fine not exceeding one hundred shillings for every day during which the default continues.

Provisions as to a company’s register of charges and as to copies of instruments creating charges

104. Copies of instruments creating charges to be kept by the company

Every company shall cause a copy of every instrument creating any charge requiring registration under this Part of this Act to be kept at the registered office of the company; except that in the case of a series of uniform debentures, a copy of one debenture of the series shall be sufficient.

105. Company’s register of charges

(1)Every limited company shall keep at the registered office of the company a register of charges and enter in it all charges specifically affecting property of the company and all floating charges on the undertaking or any property of the company, giving in each case a short description of the property charged, the amount of the charge and, except in the case of securities to bearer, the names of the persons entitled thereto.
(2)If any director, manager or other officer of the company knowingly and willfully authorises or permits the omission of any entry required to be made in pursuance of this section, he or she is liable to a fine not exceeding one thousand shillings.

106. Right to inspect copies of instruments creating mortgages and charges and company’s register of charges

(1)The copies of instruments creating any charge requiring registration under this Part of this Act with the registrar, and the register of charges kept under section 105, shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day shall be allowed for inspection) to the inspection of any creditor or member of the company without fee, and the register of charges shall also be open to the inspection of any other person on payment of such fee, not exceeding one shilling for each inspection, as the company may prescribe.
(2)If inspection of the copies or register is refused, any officer of the company refusing inspection, and every director and manager of the company authorising or knowingly and wilfully permitting the refusal, is liable to a fine not exceeding one hundred shillings, and a further fine not exceeding forty shillings for every day during which the refusal continues; and the court may by order compel an immediate inspection of the copies or register.

Part V – Management and administration

Registered office and name

107. Registered office of a company

(1)A company shall, as from the day on which it begins to carry on business or as from the fourteenth day after the date of its incorporation, whichever is the earlier, have a registered office and a registered postal address to which all communications and notices may be addressed.
(2)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine.

108. Notification of the situation of the registered office and the registered postal address and of change in them

(1)Notice of the situation of the registered office and the registered postal address, and of any change in them, shall be given within fourteen days after the date of incorporation of the company or of the change, as the case may be, to the registrar, who shall record them.
(2)The inclusion in the annual return of a company of a statement as to the situation of its registered office or as to its registered postal address shall not be taken to satisfy the obligations imposed by this section.
(3)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine.

109. Publication of name by company

(1)Every company(a)shall paint or affix, and keep painted or affixed, its name on the outside of every office or place in which its business is carried on, in a conspicuous position, in easily legible Roman letters;(b)shall have its name engraven in legible Roman letters on its seal which shall take the form of an embossed metal die;(c)shall have its name mentioned in legible Roman letters in all business letters of the company and in all notices and other official publications of the company, and in all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills of parcels, invoices, receipts and letters of credit of the company.
(2)If a company does not paint or affix its name in the manner directed by this Act, the company and every officer of the company who is in default are liable to a fine not exceeding one hundred shillings, and if a company does not keep its name painted or affixed in the manner so directed, the company and every officer of the company who is in default are liable to a default fine.
(3)If a company fails to comply with subsection (1)(b) or (c), the company is liable to a fine not exceeding one thousand shillings.
(4)If an officer of a company or any person on its behalf—(a)uses or authorises the use of any seal purporting to be a seal of the company on which its name is not so engraven as aforesaid or which is not in the form of an embossed metal die;(b)issues or authorises the issue of any business letter of the company or any notice or other official publication of the company, or signs or authorises to be signed on behalf of the company any bill of exchange, promissory note, endorsement, cheque or order for money or goods in which its name is not mentioned in the manner aforesaid; or(c)issues or authorises the issue of any bill of parcels, invoice, receipt or letter of credit of the company in which its name is not mentioned in the manner aforesaid, he or she is liable to a fine not exceeding one thousand shillings, and further is personally liable to the holder of the bill of exchange, promissory note, cheque or order for money or goods for the amount thereof unless it is duly paid by the company.

Statement of amount of paid-up capital

110. Statement of amount of capital subscribed and amount paid up

(1)Where any notice, advertisement or other official publication of a company contains a statement of the amount of the authorised capital of the company, the notice, advertisement or other official publication shall also contain a statement in an equally prominent position and in equally conspicuous characters of the amount of the capital which has been subscribed and the amount paid up.
(2)Any company which makes default in complying with the requirements of this section and every officer who is in default are liable to a fine not exceeding one thousand shillings.

Restrictions on commencement of business

111. Restrictions on commencement of business

(1)Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers unless—(a)shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;(b)every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him or her and for which he or she is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription;(c)no money is or may become liable to be repaid to applicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for or to obtain permission for the shares or debentures to be dealt in on any stock exchange; and(d)there has been delivered to the registrar for registration a statutory declaration by the secretary or one of the directors, in the prescribed form, that the aforesaid conditions have been complied with.
(2)Where a company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, or has issued a prospectus but has failed to raise the minimum subscription, the company shall not commence any business or exercise any borrowing powers unless—(a)there has been delivered to the registrar for registration a statement in lieu of prospectus;(b)every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him or her and for which he or she is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and(c)there has been delivered to the registrar for registration a statutory declaration by the secretary or one of the directors, in the prescribed form, that paragraph (b) of this subsection has been complied with.
(3)The registrar shall, on the delivery to him or her of the statutory declaration, and, in the case of a company which is required by this section to deliver a statement in lieu of prospectus, of such a statement, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled.
(4)Any contract made by a company before the date at which it is entitled to commence business shall be provisional only, and shall not be binding on the company until that date, and on that date it shall become binding.
(5)Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on application for debentures.
(6)If any company commences business or exercises borrowing powers in contravention of this section, every person who is responsible for the contravention is, without prejudice to any other liability, liable to a fine not exceeding one thousand shillings for every day during which the contravention continues.
(7)This section shall not apply—(a)to a private company but shall apply to a company which was a private company before becoming a public company;(b)to a company registered before the 15th January, 1906, which has not issued a prospectus inviting the public to subscribe for its shares.

Register of members

112. Register of members

(1)Every company shall keep a register of its members and enter in that register the following particulars—(a)the names and postal addresses of the members, and in the case of a company having a share capital, a statement of the shares held by each member, distinguishing each share by its number so long as the share has a number, and of the amount paid or agreed to be considered as paid on the shares of each member;(b)the date at which each person was entered in the register as a member;(c)the date at which any person ceased to be a member,except that where the company has converted any of its shares into stock, the register shall show the amount of stock held by each member instead of the amount of shares and the particulars relating to shares specified in paragraph (a) of this subsection.
(2)The register of members shall be kept at the registered office of the company; except that—(a)if the work of making it up is done at another office of the company, it may be kept at that other office; and(b)if the company arranges with some other person for the making up of the register to be undertaken on behalf of the company by that other person,it may be kept at the office of that other person at which the work is done; so, however, that it shall not be kept at a place outside Uganda.
(3)Every company shall send notice to the registrar of the place where its register of members is kept and of any change in that place; except that a company shall be bound to send notice under this subsection where the register has, at all times since it came into existence or, in the case of a register in existence at the commencement of this Act, at all times since then been kept at the registered office of the company.
(4)Where a company makes default in complying with subsection (1) or makes default for fourteen days in complying with subsection (3), the company and every officer of the company who is in default are liable to a default fine.

113. Index of members

(1)Every company having more than fifty members shall, unless the register of members is in such a form as to constitute in itself an index, keep an index of the names of the members of the company and shall, within fourteen days after the date on which any alteration is made in the register of members, make any necessary alteration in the index.
(2)The index, which may be in the form of a card index, shall in respect of each member contain a sufficient indication to enable the account of that member in the register to be readily found.
(3)The index shall be at all times kept at the same place as the register of members.
(4)If default is made in complying with this section, the company and every officer of the company who is in default are liable to a default fine.

114. Provisions as to entries in the register in relation to share warrants

(1)On the issue of a share warrant the company shall strike out of its register of members the name of the member then entered therein as holding the shares specified in the warrant as if he or she had ceased to be a member, and shall enter in the register the following particulars—(a)the fact of the issue of the warrant;(b)a statement of the shares included in the warrant, distinguishing each share by its number; and(c)the date of the issue of the warrant.
(2)The bearer of a share warrant shall, subject to the articles of the company be entitled, on surrendering it for cancellation, to have his or her name entered as a member in the register of members.
(3)The company shall be responsible for any loss incurred by any person by reason of the company entering in the register the name of a bearer of a share warrant in respect of the shares therein specified without the warrant being surrendered and cancelled.
(4)Until the warrant is surrendered, the particulars specified in subsection (1) shall be deemed to be the particulars required by this Act to be entered in the register of members, and, on the surrender, the date of the surrender must be entered.
(5)Subject to this Act, the bearer of a share warrant may, if the articles of the company so provide, be deemed to be a member of the company within the meaning of this Act, either to the full extent or for any purposes defined in the articles.

115. Inspection of the register and index

(1)Except when the register of members is closed under the provisions of this Act, the register, and index of the names, of the members of a company shall during business hours (subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day be allowed for inspection) be open to the inspection of any member without charge and of any other person on payment of two shillings, or such lesser sum as the company may prescribe, for each inspection.
(2)Any member or other person may require a copy of the register, or of any part of it, on payment of one shilling or such lesser sum as the company may prescribe, for every hundred words or fractional part thereof required to be copied.
(3)The company shall cause any copy so required by any person to be sent to that person within a period of fourteen days commencing on the day next after the day on which the requirement is received by the company.
(4)If any inspection required under this section is refused or if any copy required under this section is not sent within the proper period, the company and every officer of the company who is in default are liable in respect of each offence to a fine not exceeding forty shillings and further to a default fine of forty shillings.
(5)In the case of any such refusal or default, the court may by order compel an immediate inspection of the register and index or direct that the copies required shall be sent to the person requiring them.

116. Consequences of failure to comply with requirements as to register owing to agent’s default

Where by virtue of section 112(2)(b), the register of members is kept at the office of some person other than the company, and by reason of any default of his or hers the company fails to comply with section 112(3), 113(3) or 115 or with any requirements of this Act as to the production of the register, that other person is liable to the same penalties as if he or she were an officer of the company who was in default, and the power of the court under section 115(4) shall extend to the making of orders against that other person and his or her officers and servants.

117. Power to close the register

A company may, on giving notice by advertisement in some newspaper circulating in Uganda or in that district or area of Uganda in which the registered office of the company is situate, close the register of members for any time or times not exceeding in the whole thirty days in each year.

118. Power of the court to rectify the register

(1)If—(a)the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or(b)default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member,the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register.
(2)Where an application is made under this section, the court may either refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved.
(3)On an application under this section, the court may decide any question relating to the title of any person who is a party to the application to have his or her name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.
(4)In the case of a company required by this Act to send a list of its members to the registrar, the court, when making an order for rectification of the register, shall by its order direct notice of the rectification to be given to the registrar.

119. Trusts not to be entered on the register

No notice of any trust, expressed, implied or constructive, shall be entered on the register or be receivable by the registrar.

120. Register to be evidence

The register of members shall be prima facie evidence of any matters by this Act directed or authorised to be inserted in it.

Branch register

121. Power for a company to keep a branch register

(1)A company having a share capital may, if so authorised by its articles, cause to be kept in any part of the Commonwealth outside Uganda a branch register of members resident in that part of the Commonwealth (in this Act called a “branch register”).
(2)The company shall give to the registrar notice of the situation of the office where any branch register is kept, and of any change in its situation, and if it is discontinued, of its discontinuance, and any such notice shall be given within one month of the opening of the office or of the change or discontinuance, as the case may be.
(3)If default is made in complying with subsection (2), the company and every officer of the company who is in default are liable to a default fine.

122. Regulations as to a branch register

(1)A branch register shall be deemed to be part of the company’s register of members (in this section called “the principal register”).
(2)The branch register shall be kept in the same manner in which the principal register is by this Act required to be kept, except that the advertisement before closing the register shall be inserted in some newspaper circulating in the district or area where the branch register is kept.
(3)The company shall—(a)transmit to its registered office a copy of every entry in its branch register as soon as may be after the entry is made; and(b)cause to be kept at the place where the company’s principal register is kept a duplicate of its branch register duly entered up from time to time.
(4)Every duplicate branch register shall for all the purposes of this Act be deemed to be part of the principal register.
(5)Subject to the provisions of this section with respect to the duplicate register, the shares registered in a branch register shall be distinguished from the shares registered in the principal register, and no transaction with respect to any shares registered in a branch register shall, during the continuance of that registration, be registered in any other register.
(6)A company may discontinue to keep a branch register, and thereupon all entries in that register shall be transferred to the principal register.
(7)Subject to this Act, any company may, by its articles, make such provisions as it may think fit respecting the keeping of branch registers.
(8)If default is made in complying with subsection (3), the company and every officer of the company who is in default are liable to a default fine; and where, by virtue of section 112 (2)(b), the principal register is kept at the office of some person other than the company and by reason of any default of that other person the company fails to comply with subsection (3)(b), that other person is liable to the same penalty as if he or she were an officer of the company who was in default.

123. Stamp duties in cases of shares registered in branch registers

An instrument of transfer of a share registered in a branch register shall be deemed to be a transfer of property situate out of Uganda and, unless executed in any part of Uganda, shall be exempt from stamp duty chargeable in Uganda.

124. Provisions as to branch registers of Commonwealth companies kept in Uganda

If by virtue of the law in force in any part of the Commonwealth, companies incorporated under that law have power to keep in Uganda branch registers of their members resident in Uganda, the Minister may by statutory instrument direct that section 112(2) except for its exceptions and sections 115 and 118 shall, subject to any modifications and adaptations specified in the instrument, apply to and in relation to any such branch registers kept in Uganda as they apply to and in relation to the registers of companies within the meaning of this Act.

Annual return

125. Annual return to be made by a company having a share capital

(1)Every company having a share capital shall, once at least in every year, make a return containing with respect to the registered office of the company, registers of members and debenture holders, shares and debentures, indebtedness, past and present members and directors and secretary and the matters specified in Part I of the Fifth Schedule to this Act, and the return shall be in the form and shall be made up to the date set out in Part II of that Schedule or as near to that date as circumstances admit; except that—(a)a company need not make a return under this subsection either in the year of its incorporation or, if it is not required by section 131 to hold an annual general meeting during the following year, in that year;(b)where the company has converted any of its shares into stock, the list referred to in paragraph 5 of Part I of the Fifth Schedule must state the amount of stock held by each of the existing members instead of the amount of shares and the particulars relating to shares required by that paragraph;(c)the return may, in any year, if the return for either of the two immediately preceding years has given as at the date of that return the full particulars required by paragraph 5 of Part I of the Fifth Schedule, give only such of the particulars required by that paragraph as relate to persons ceasing to be or becoming members since the date of the last return and to shares transferred since that date or to changes as compared with that date in the amount of stock held by a member.
(2)In the case of a company keeping a branch register—(a)references subsection (1)(c) to the particulars required by paragraph 5 of Part I of the Fifth Schedule shall be taken as not including any such particulars contained in the branch register, insofar as copies of the entries containing those particulars are not received at the registered office of the company before the date when the return in question is made; and(b)where an annual return is made between the date when any entries are made in the branch register and the date when copies of those entries are received at the registered office of the company, the particulars contained in those entries, so far as relevant to an annual return, shall be included in the next or a subsequent annual return as may be appropriate having regard to the particulars included in that return with respect to the company’s register of members.
(3)If a company fails to comply with this section, the company and every officer of the company who is in default are liable to a default fine.
(4)For the purposes of this section and of Part I of the Fifth Schedule to this Act, “director” and “officer” include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

126. Annual return to be made by a company not having a share capital

(1)Every company not having a share capital shall once at least in every calendar year make a return stating—(a)the situation of the registered office of the company and the registered postal address of that office;(b)in a case in which the register of members is, under the provisions of this Act, kept elsewhere than at the registered office, the address of the place where it is kept;(c)in a case in which any register of holders of debentures of a company or any duplicate of any such register or part of any such register is, under this Act, kept, in Uganda, elsewhere than at the registered office of the company, the address of the place where it is kept;(d)all such particulars with respect to the persons who at the date of the return are the directors of the company and any person who at that date is secretary of the company as are by this Act required to be contained with respect to directors and the secretary respectively in the register of directors and secretaries of a company,except that a company need not make a return under this subsection either in the year of its incorporation or, if it is not required by section 131 to hold an annual general meeting during the following year, in that year.
(2)There shall be annexed to the return a statement containing particulars of the total amount of the indebtedness of the company in respect of all mortgages and charges which are required to be registered with the registrar under this Act, or which would have been required so to be registered if created after the 3rd April, 1923.
(3)If a company fails to comply with this section, the company and every officer of the company who is in default are liable to a default fine.
(4)For the purposes of this section, “officer” and “director” include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

127. Time for completion of the annual return

(1)The annual return shall be completed within forty-two days after the annual general meeting for the year, whether or not that meeting is the first or only ordinary general meeting, or the first or only general meeting of the company in the year, and the company shall within such period forward to the registrar a copy signed both by a director and by the secretary of the company.
(2)If a company fails to comply with this section, the company and every officer of the company who is in default are liable to a default fine.
(3)For the purposes of subsection (2), “officer” includes any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

128. Documents to be annexed to the annual return

(1)There shall be annexed to the annual return(a)a copy, certified both by a director and by the secretary of the company to be a true copy, of every balance sheet laid before the company in general meeting during the period to which the return relates (including every document required by law to be annexed to the balance sheet); and(b)a copy, certified as aforesaid, of the report of the auditors on, and of the report of the directors accompanying, each such balance sheet,and where any such balance sheet or document required by law to be annexed to it is in a foreign language, there shall be annexed to that balance sheet a translation in the English language of the balance sheet or document certified in the prescribed manner to be a correct translation.
(2)If any such balance sheet as aforesaid or document required by law to be annexed to it did not comply with the requirements of the law as in force at the date of the audit with respect to the form of balance sheets or those documents, as the case may be, there shall be made such additions to and corrections in the copy as would have been required to be made in the balance sheet or document in order to make it comply with those requirements, and the fact that the copy has been so amended shall be stated on it.
(3)If a company fails to comply with this section, the company and every officer of the company who is in default are liable to a default fine.
(4)For the purposes of subsection (3), “officer” includes any person in accordance with whose directions or instructions the directors of the company are accustomed to act.
(5)Subsection (1) shall not apply to a private company unless at least one shareholder is a company which is not a private company.

129. Certificates to be sent by a private company with the annual return

The annual return required by section 125 shall in the case of a private company be endorsed with or accompanied by a certificate signed both by a director and by the secretary of the company that the company has not, since the date of the incorporation of the company, issued any invitation to the public to subscribe for any shares or debentures of the company, and, where the annual return discloses the fact that the number of members of the company exceeds fifty, also a certificate so signed that the excess consists wholly of persons who under section 29(1)(b) are not to be included in reckoning the number of fifty.

Meetings and proceedings

130. Statutory meeting and statutory report