Part 2 - Foreign Investment In Uguanda

The Legal Requirement for Business Permits:

In Uganda, all businesses, whether owned by nationals or foreigners, are required by law to hold a valid business permit issued by the local government authority in the jurisdiction where the business operates. For businesses situated in Kampala, this authority is the Kampala Capital City Authority (KCCA); in other parts of the country, it is the relevant municipal, district, or city council.¹

The permit serves not only as a means to regulate commercial activity but also as a framework for ensuring adherence to public health, zoning, and safety regulations. Operating without one exposes businesses to hefty penalties, including closure or legal prosecution.

Key Prerequisites:

Before approaching the local authority for a business permit, foreign investors must ensure that the business is formally established and compliant with national-level regulatory bodies. Typically, this includes registering the business entity with the Uganda Registration Services Bureau², acquiring a Tax Identification Number (TIN) from the Uganda Revenue Authority (URA), and, where applicable, obtaining an investment license from the Uganda Investment Authority (UIA).

The investment license is especially important for non-citizens intending to invest over USD $250,000 in Uganda. The UIA not only facilitates this process free of charge, but also houses a One-Stop Centre that expedites other requirements such as work permits, immigration, and utility access.

The Application Process:

Once your business is registered and tax-compliant, you can proceed to apply for a business permit from the relevant local authority. The process is relatively straightforward but requires strict attention to documentation and regulatory guidelines.

A foreign investor will need to provide evidence of incorporation, their TIN certificate, the physical address of their business premises (usually confirmed through a tenancy agreement or proof of ownership), and, in some cases, proof of sector-specific licenses. Some local authorities may also conduct a physical inspection of your premises to verify compliance with planning and public health standards.

The cost of obtaining a permit varies depending on the nature and scale of your business. For example, a small consulting firm operating out of a shared workspace will pay significantly less

than a factory or retail store. Processing times range from three to seven business days, depending on the responsiveness of the authority and completeness of your application.

Permit Validity and Renewal:

A business permit in Uganda is valid for one calendar year and must be renewed annually. While renewals are generally more straightforward than initial applications, businesses must remain compliant with tax filings and local ordinances to be eligible. Late renewals attract financial penalties and, in some cases, business suspension. It's also worth noting that a change in the nature or location of your business may require an update to your existing permit or a fresh application altogether.

A business permit may seem like a routine administrative step, but it forms the legal backbone of operating a business in Uganda. For foreign investors, navigating the system successfully hinges on early preparation, compliance with national and local regulations, and an understanding of the specific obligations that apply to foreign-owned entities. Uganda has made considerable strides in streamlining its business formalisation process, particularly through digital platforms and centralised support offered by the Uganda Investment Authority. With the right guidance and due diligence, foreign entrepreneurs can move from registration to full operation with relative ease, contributing to Uganda's growth story while building a strong foothold in the region.

INCORPORATION OF A FOREIGN ENTITY IN UGANDA:

Company registration is the first step to formalising a business in Uganda. The Uganda Registration Services Bureau is mandated by the Registration Services Act to register all business entities in Uganda.³ The process of incorporating a local company or registering a company in Uganda is governed by the Companies Act 2012.

The first step for a foreign company aiming to conduct mining operations in Uganda is to establish a legal presence within the country. This is primarily achieved through registration with the Uganda Registration Services Bureau (URSB), which functions as the central agency for the registration of all business entities in Uganda. Operating as a semi-autonomous government body under the purview of the Ministry of Justice and Constitutional Affairs, URSB has implemented an online Business Registration System (OBRS) designed to streamline and facilitate the registration process for businesses.

When considering establishing a legal presence, a foreign company typically has two principal options: registering as a branch of the existing foreign entity or incorporating a new, legally distinct company in Uganda as a subsidiary. The decision regarding which structure to adopt carries significant implications for aspects such as liability exposure, taxation obligations, and the overall framework for regulatory compliance.

Step-by-Step Incorporation Process:

Step 1 - Name Reservation:

Before proceeding with the formal registration, a foreign company must conduct a name search with the URSB to ascertain that the intended company name is unique and available for registration. This search can be conveniently performed online via the URSB website using the online name search tool accessible at brs.ursb.go.ug, or by visiting a URSB office to request an in-person search. It is advised to submit at least three potential company names in order of priority to mitigate the risk of the preferred name being unavailable.

A nominal fee would be required for the name reservation⁴. Once the availability of a name is confirmed, a formal application for name reservation should be submitted. The online name reservation process through URSB is typically efficient, taking approximately 1 to 3 hours to complete, and successfully reserves the name for exclusive use for a period of six months⁵.

A company cannot have a name similar to any other existing company. Where a company infringes the name of another existing company, the aggrieved company can ask the Registrar of Companies to set aside the similar name. However, before directing the change of the name under Section 40 of the Companies Act, the registrar must act in line with Section 287 too and also afford the company to be directed to change the name a right to be heard.⁶

It should also be noted that any foreign company which infringes against the name of any existing company in Uganda can be liable to passing off proceedings. Trademark matters interplay with company name matters, and company names if similar can lead to passing off. In Reckitt and Colman v. Borden (1997) R.P.C 341, HL, the court clearly pointed out that "no man may pass off his goods as those of another". In Java Coffee & Tea Ltd case, Café Javas argued that Java Coffee's use of a name similar to its name amounted to passing. The court held that there was no passing. It explained that passing off must be real and not speculative. The use of a similar word, which is common to the industry, does not amount to passing off.

Step 2: Preparing Necessary Documents:

Foreign companies are required to compile and submit a specific set of documents to the URSB for the registration process. These documents generally include:

• Certified copies of the parent company's foundational documents, such as the Memorandum of Articles of Association (MOA), charter, constitution, and the Certificate of Incorporation, all originating from the company's country of incorporation, duly witnessed and, if the original documents are not in English, they must be accompanied by a certified English translation.
• Various registration forms such as Form 24 (Particulars of Director and Secretary), Form 25 (List of authorized persons residing in Uganda who are authorized to accept service on behalf of the company), Form 26 (Address and principal office of the company in Uganda), and Form 13 (Statement of all current charges, if applicable), depending on whether a branch or a subsidiary is being registered.
• Passport-size photographs and valid travel passports of all the directors and shareholders, along with details of the registered physical address of the company within Uganda, which should be the official location of the company's principal office (as indicated on Company Form 9).
• A board resolution from the parent company authorizing the registration in Uganda and clearly designating the individual(s) empowered to act on its behalf.
• In cases where an agent is appointed to handle the registration, a registered Power of Attorney may be needed, supported by a registered board resolution if the agent is a corporate entity.
• While not always mandatory at the initial registration stage, the Tax Identification Number (TIN) of the directors may be requested.
• To incorporate a subsidiary, authorized copies of the Memorandum of Agreement and the Articles of Association of the newly formed subsidiary will also be required.

Step 3: Submitting Registration Documents:

This involves formally filing these documents with the URSB. This can be done either by submitting them in person at a URSB office or, where feasible, through the online Business Registration System (OBRS). Prior to submission, it is advisable to obtain an assessment form from the URSB to accurately determine the total registration fees payable. The exact amount of these fees will depend on factors such as the chosen business structure (branch or subsidiary) and, for subsidiaries, the declared share capital. Payment of the assessed fees, along with the applicable stamp duty.

Subsequently, the prepared documents and the proof of payment should be presented at the Business Registry. For foreign companies registering a branch, a specific fee of US$350 is needed for a certified copy of the Memorandum of Equivalent (MoE). Upon successful review and verification of the submitted documents and confirmation of fee payment, the Registrar of Companies at URSB will issue the certificate of registration.⁷

Step 4: Obtaining a Certificate of Registration/Incorporation:

This official document, either a Certificate of Registration for a branch or a Certificate of Incorporation for a subsidiary, serves as conclusive legal proof that the company has been duly registered in Uganda and has met all the necessary compliance requirements. The process of obtaining this certificate is generally efficient, with a potential turnaround time ranging from four to six hours to within two working days after the complete set of documents has been filed.

Step 5: Post-Incorporation Requirements:

Beyond the core incorporation process, several Post-Incorporation Requirements must be addressed to ensure the foreign company can legally operate and conduct its mining business in Uganda. These include:

• Registering the company and its directors with the Uganda Revenue Authority (URA) to obtain a Tax Identification Number (TIN); a process typically done online through the URA website (ura.go.ug).
• Obtaining a trading license from the relevant local authority, such as the Kampala Capital City Authority (KCCA) for businesses operating within Kampala, to legally conduct business in a specific location, with fees varying based on the nature and grade of the business.
• If the company plans to employ staff, registration with the National Social Security Fund (NSSF) and the contribution of mandatory funds for employees are required.
• Establishing a company bank account in Uganda is essential for financial transactions, with banks usually requiring the Certificate of Registration/Incorporation, MOA and Articles, a board resolution, a list of directors, and the company's TIN.
• Obtaining an investment license from the Uganda Investment Authority (UIA) can provide access to certain investment incentives, particularly for substantial investments that generate employment for Ugandan citizens, with the application requiring company documents, a business proposal, and proof of financing.
• Acquiring a company seal is equally important for the authentication of official documents.

Timeline for Incorporation and Mining License Acquisition:

The process of incorporating a foreign company in Uganda can be achieved in a relatively short time frame. Name reservation with the URSB can typically be completed online within 1 to 3 hours. Following the submission of all required documents and the payment of necessary fees, the URSB generally issues the Certificate of Incorporation/Registration within 4 to 6 hours to within two working days. Therefore, the entire incorporation process for a foreign company can potentially be finalized within a few days to a week, if all documentation is readily available and accurately prepared.

Obtaining a Tax Identification Number (TIN) from the URA involves an online application, and the processing time for this can vary. Similarly, the timeline for acquiring a trading license from the relevant local authority can also vary, potentially taking a few days depending on the specific location and the authority's procedures. If the company chooses to apply for an Investment License from the Uganda Investment Authority, the processing time is reported to be approximately 2 to 5 days.

The timelines for the processing of mining license applications by the Directorate of Geological Survey and Mines (DGSM) are as follows, calculated from the date of receipt of a complete application:

• Prospecting License: Fifteen (15) days.
• Exploration License: Thirty (30) days.
• Retention License: Forty-five (45) days.
• Small Scale Mining License: Forty-five (45) days.
• Medium Scale Mining License: Sixty (60) days.
• Large Scale Mining License: Sixty (60) days.
• Artisanal Mining License: Thirty (30) days.
• License for extraction of geothermal resources for direct use: Sixty (60) days.
• Certificate of amalgamation: Thirty (30) days.

It is important to note that these are the processing times that DGSM aims to adhere to after a complete application has been submitted. The time required for a foreign company to prepare a comprehensive application, gather all the necessary documentation (which can be substantial, particularly for Exploration Licenses and Mining Leases), conduct detailed feasibility studies, and obtain the required environmental approvals can be significantly longer and is not factored into these official processing times.

The fees associated with applying for and obtaining mining licenses in Uganda are as specified in Schedule 2 of the Mining and Minerals (Licensing) Regulations, 2023.

In addition to these initial application and license fees, holders of mineral rights (excluding Prospecting Licenses) are also required to pay annual mineral rents. The rates for these rents vary depending on the specific type of license and are typically calculated based on the size of the licensed area, either per square kilometre or per hectare.

Beyond these direct fees and rents payable to the government, foreign mining companies should also anticipate incurring other significant costs, which include the potential expenses associated with conducting a comprehensive Environmental Impact Assessment (EIA), which will vary depending on the scale and complexity of the proposed mining project.

Furthermore, significant operational costs will be incurred for exploration activities, the development of mine infrastructure, the actual extraction of minerals, processing, and transportation. Finally, companies should also budget for costs related to community engagement initiatives, potential land acquisition (if necessary), and the implementation of local content requirements.

NAVIGATING THE MINING REGULATORY LANDSCAPE:

Uganda presents considerable opportunities for foreign investment in its mining sector, boasting of a diverse range of mineral resources including copper, cobalt, gold, iron ore, and significant deposits of rare earth elements. Recent geological surveys have further indicated the presence of substantial untapped reserves, exposing the potential for lucrative ventures for companies equipped with the necessary expertise and capital. ⁸ This mineral wealth serves as a strong incentive for attracting foreign direct investment (FDI) into the country's growing mining industry.

The Mining and Minerals Act, 2022 (MMA) ⁹ defines the legal framework governing mining operations in Uganda. This Act, which replaced the earlier Mining Act of 2003, was enacted to modernize the legal landscape, fostering a more attractive investment climate and ensuring the sustainable development of Uganda's mineral resources. The MMA 2022 consolidates and refines the laws pertaining to mineral resources, strengthens the administrative bodies responsible for sector management, and establishes a contemporary licensing regime. A key provision of this Act was the creation of the Uganda National Mining Company (UNMC) ¹⁰.

Complementing the MMA 2022 are the Mining and Minerals (Licensing) Regulations, 2023. These regulations provide the detailed procedures that must be followed when applying for and obtaining the various mineral rights, licenses, and permits as outlined under the MMA 2022. They specify the necessary application forms, the comprehensive documentation required for each type of license, the applicable fees, and the anticipated timelines for the processing of applications. The recent update of these regulations in 2023 indicates an ongoing effort to refine the regulatory framework for the mining sector.¹¹

Furthermore, the National Environment Act, 2019, plays a significant role in governing mining operations due to the potential environmental consequences associated with such activities. This Act mandates that Environmental Impact Assessments (EIAs) are conducted for mining projects, particularly as a prerequisite for securing mining leases. ¹² It also establishes the environmental protection standards that all mining operations must adhere to throughout their duration¹³.

The key regulatory bodies that a foreign company will interact with when seeking to operate in Uganda's mining sector include:

• The Uganda Registration Services Bureau (URSB) for the initial company registration
• The Ministry of Energy and Mineral Development (MEMD), which provides overall policy direction and oversees licensing
• The Directorate of Geological Survey and Mines (DGSM) serving as the technical arm responsible for licensing and the administration of mineral rights
• The National Environment Management Authority (NEMA) for environmental oversight and approvals
• The Uganda Revenue Authority (URA) for all matters related to taxation and revenue collection
• The Uganda National Mining Company (UNMC), which manages the state's commercial interests within the mineral sector.

The Ministry of Energy and Mineral Development (MEMD) holds the primary responsibility for the overall policy direction, strategic management, and ensuring the rational and sustainable exploitation of Uganda's energy and mineral resources. MEMD is tasked with formulating and implementing policies that govern the mineral sector, and the Minister is vested with the

authority to grant various mineral rights, licenses, and permits as stipulated in the Mining and Minerals Act, 2022¹⁴. A key aspect of the Ministry's mandate is to cultivate an enabling environment that attracts both domestic and foreign investment into the development of Uganda's mineral resources.¹⁵

The Directorate of Geological Survey and Mines (DGSM) is responsible for the day-to-day administration and management of the mineral sector¹⁶. DGSM's functions encompass the administration of mineral rights through its Mining Cadastre Department, the issuance of various types of mining licenses including prospecting licenses, exploration licenses, and mining leases, and the maintenance of the Online Mining Cadastre Portal ( dgsmportal.minerals.go.ug). This online portal serves as the central platform for the electronic management of mineral rights, facilitating licensing processes, communication between stakeholders and the government, reporting, and payment of fees. Registration on this portal is a mandatory requirement for all existing and prospective mineral rights holders. In addition to its administrative functions, DGSM also engages in mineral exploration and development activities and disseminates geological data to encourage investment in the sector.

Footnotes

1. https://kcca.go.ug/

2. (URSB)https://ursb.go.ug/services/business-registration/

3. Companies Act 2012.

4. Business Name, Company and Document Registration Fee, https://ursb.go.ug/business-company-and-document-registration-fees/, Accessed on 20th May 2025.

5. Monitor Report on Thursday February 8, 2024, "It now takes three hours to register a business says URSB" https://www.monitor.co.ug/uganda/business/markets/it-now-takes-three-hours-to-register-a-business-says-ursb--4517524. Accessed on 20th May 2025.

6. Java Coff ee & Tea Ltd v. URSB.

7. Comprehensive Guide to URSB Services and Their Costs in Uganda, https://heconsulting.us/comprehensive-guide-to-ursb-services-and-costs-in-uganda-business-registration-more/#:~:text=The%20registration%20fee%20for%20a%20certified%20copy%20of%20a%20Memorandum,business%20registration%20in%20the%20country. Accessed on 20th May 2025.

8. The Prospects of Uganda's Iron ore Deposits in Developing the Iron and Steel Industries.

9. Act No. 25 of 2022.

10. Section 21 of the Mining and Minerals Act, 2022.

11. Mining and Minerals (Licensing) Regulations, 2023 - S.I. No. 72 of 2023, https://www.scribd.com/document/753809748/Mining-and-Minerals-Licensing-Regulations-2023-S-I-No-72-of-2023#:~:text=Mining%20and%20Minerals%20(Licensing)%20Regulations,by%20Order%20of%20the%20Government. Accessed on 20th May 2025.

12. Section 114 of the National Environment Act, 2019.

13. Section 103-109, National Environment Act 2019.

14. Section 17, Mining and Mineral Act 2022.

15. Section 3, Mining and Mineral Act 2022.

16. Section 19, Mining and Mineral Act 2022.

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