Increasing the share capital of a company in Uganda is a statutory process governed by the Companies Act and the Companies Regulations, 2023. When working with a lawyer like Arnold Ashaba, the process ensures that the “Capital Clause” of your company is legally expanded to allow for more investment or share allocation.
Here is the professional step-by-step breakdown:
1. Preliminary Review (The “Rulebook” Check)
Before any action is taken, your lawyer will review your Memorandum and Articles of Association (MemArts).
- They are checking if the MemArts allow for an increase in capital.
- If the MemArts are silent or restrictive, the lawyer must first draft a resolution to amend the MemArts before proceeding with the capital increase.
2. The Board Meeting
The Board of Directors must meet and formally resolve to recommend an increase in the authorized share capital to the shareholders. They will also set the date for an Extraordinary General Meeting (EGM).
3. General Meeting & Special Resolution
The shareholders must meet to pass a Special Resolution (requiring at least 75% approval). This resolution officially authorizes the company to increase its nominal capital from the current amount to a new specified amount (e.g., from 1,000,000 UGX to 50,000,000 UGX).
4. Assessment and Payment of Stamp Duty
This is where the lawyer’s role is critical for tax compliance.
- Rate: In Uganda, Stamp Duty is generally 0.5% of the value of the increase.
- Process: The lawyer will generate a Payment Registration Number (PRN)
5. Filing with URSB
Once the tax is paid, your lawyer Ashaba will submit the following documents to the Uganda Registration Services Bureau (URSB):
- Form 24 (Notice of Increase of Share Capital): This is the formal statutory notice to the Registrar.
- Certified Special Resolution: A copy of the resolution signed by a director and the company secretary.
- URA Stamp Duty Receipt: Proof that the government has been paid its share.
- Amended MemArts: If the capital clause was changed within the document itself.
Why a Lawyer is Essential
While the steps seem mechanical, lawyer Ashaba adds value by managing these specific risks:
- Pre-emptive Rights: Ensuring that existing shareholders are given the first right to buy the new shares, otherwise, the increase could be challenged in court.
- Allotment (Form 22): Once the capital is increased, it is still “unissued.” Ashaba must then file a Return of Allotment (Form 22) to actually give those shares to specific people.
- Beneficial Ownership: Any shift in control caused by the increase must be updated on the Beneficial Ownership Register.
- Professional Liability: If Ashaba handles the filing, he is responsible for the accuracy of the “Statement of Capital,” protecting the directors from claims of filing false information.
Summary of Costs
- Stamp Duty: 0.5% of the increase amount.
- URSB Filing Fees
- Legal Fees
FOR PERSONALIZED LEGAL SERVICES & GUIDANCE CALL OR EMAIL ARNOLD
WhatsApp/Phone: +256 709 669443
Email: legalservice.uganda@gmail.com
Location: Kampala road, Mabirizi complex, 6th floor, Office AP05-Kampala, Uganda.