Opinion
Commercial Law in Uganda: Where are we now?
Publish Date: Jun 19, 2014
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By Chrispas Nyombi

Since the turn of the 21st Century, the Uganda Law Reform Commission has been at the forefront of legal development in the country. The Law Commission is an independent body set up by the Ugandan Parliament to keep law in the country under review and to recommend reforms.
 

This makes the Law Commission an instrument for not only legal but social and economic development. In a bid to spur economic development, major reforms were made between 2010- 2012 in Uganda.

The trail of commercial law development began in 2004 when the Uganda Law Reform Commission published four major reports; ‘A Study Report on Company Law’ which eventually led to the enactment of the reformed Companies Act 2012; ‘A study report on the reform of business associations’ which resulted in the enactment of a new Partnership Act 2010; ‘A Study Report on Insolvency Law’ which led to the enactment of the reformed Insolvency Act 2011; and finally ‘A study on Competition Law’, which is still under review.

Even though the latter is regrettably still struggling to make it onto the statute books, it can be argued that Uganda has entered a new era of legal development and turned a corner on its pre-independence laws.

First, the Companies Act 2012 has simplified rules on company formation and brought new rules to combat modern challenges such as insider dealing and abuse of corporate form. It is a major step in the right direction, one that would encourage more people to set up companies and the economic benefits that would flow from having in place a robust and fair legal system.

Second, prior to the Insolvency Act 2010, the lack of modern insolvency laws cast a shadow of uncertainty over commercial activity in Uganda for companies that fell into insolvency. The new legislation brings much needed clarity on corporate insolvencies by offering a clear account of the various ways a company could be declared insolvent and new rules for cross-border insolvencies.

Thus, the Act as modernised insolvency administration in Uganda and infused in a great deal of fairness. Thirdly, the Partnership Act 2010 made several amendments to some of the provisions in the 1950 Act and introduced the concept of Limited Partnership. However, the provisions of the previous legislation remained largely unchanged.

Although the Limited Partnership structure is a novelty in Uganda, it has been a common feature of the British commercial industry since the 1907. This business structure is simply a hybrid of a company and a partnership but remains highly situated under Partnership Law.

Finally, Competition laws are generally designed to prevent unethical actions that damage consumer confidence and hurt fair trade. Despite the importance of competition law to the people and commercial sector, the Competition Bill 2004 remains on the shelves of Parliament. The commercial law reforms in other areas can only be sustained in the long run, if competition policies in place. Thus, there is an urgent need to pass the Bill through Parliament and onto the statute books.

The aim behind these commercial law reforms was to make the law simpler, more accessible, modern, fairer and cost-effective for its beneficiaries.

The recent reforms have, to a large extent, achieved those aims but reform should not be a once or twice in a century activity, it should be constant. In coming years, as courts embark on the journey to bring greater clarity over the new rules, the government must remain vigilant and observant of legal developments in Uganda and other countries in order to continue modernising commercial laws for a new age.

The writer is a Doctoral researcher in Law, University of Essex, United Kingdom

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