A critical review of Uganda’s UBO regime

Uganda is one of the countries listed by the Financial Action Task Force (FATF) on “the grey list ”.To rehabilitate its reputation and avoid the “blacklist ”, Uganda’s lawmakers swiftly enacted regulations to meet FATF recommendations. Several laws were amended, leading to passing of the Companies, Partnership and Trustees Incorporation (Amendment) Acts of 2022. In 2023, the Companies (Beneficial Owners) Regulations, 2023 were also passed.

These laws require legal entities to maintain a register containing beneficial ownership information and to notify the registrar through timely filings with the Uganda Registration Services Bureau.

Under the law, a beneficial owner is a natural person who has the final ownership or control of the company, or a natural person on whose behalf a transaction is conducted in a company, including a natural person who exercises ultimate control over a company.  However, the definition of “ultimate control” and the criteria to determine the ultimate controller has not been prescribed by the law. Therefore, companies have to disclose every ultimate beneficial owner irrespective of the level of shareholding.   

Ministry of Justice should revise the regulations and issue guidelines that establish thresholds and define the term “significant influence or control”. 

Firstly, the Ultimate Beneficial Ownership (UBO) regime creates an undue filing burden for companies that are already sector regulated. In some regulated sectors, such as, in the mining and extractive sectors, the law already provides disclosure requirements of beneficial owners to the sector regulator..

Secondly, the UBO regulations in Uganda do not provide any exemption for companies listed on the stock exchange, whether in Uganda or elsewhere. Many companies have complex shareholding structures that involve entities with cross-border registrations and circular ownership patterns.

These structures may include public and private equity funds and investment funds from entities listed on stock exchanges worldwide, all of which may directly or indirectly form part of the shareholding in a company registered in Uganda. These companies often have constantly changing numbers of shareholders due to the fluidity of share movement in the market, making it challenging and onerous to accurately identify the beneficial owners of the corporate structures.  Several other jurisdictions have recognised these complexities and created exemption regimes for companies with complex corporate structures.

Our recommendation is that the regulation is revised to provide an exemption regime for companies that are already filing disclosures under a sector regulator and companies listed on a specified stock exchange.

Under the Ugandan UBO regime, beneficial ownership information filed with the companies’ registry is available to any person who applies for it. Approval or denial of the request is left to the registrars’ discretion. However, the law does not provide the criteria for the exercise of the registrar’s discretion in this regard.  The current UBO regime in Uganda appears to overlook the potential risks associated with disclosing personal beneficial owner’s information indiscriminately. The regime lacks provisions that specify the extent of information that can be made public and does not establish a clear exemption framework for those with legitimate safety or economic considerations.

We implore the Minister of Justice and Constitutional Affairs with the support of the Attorney General and other stakeholders to revisit the UBO regulations, with a view of lessening the burden of compliance imposed on listed companies, and entities which are subject to disclosure requirements under the applicable market rules.

This article was co-authored by Arnold Lule Sekiwano and  Martin George Sseruwagi, Engoru, Mutebi Advocates.