Removing a Director or Shareholder in Uganda involves a formal legal process governed by the Companies Act and managed through the Uganda Registration Services Bureau (URSB).
Working with an advocate like Arnold Ashaba (who is a practicing lawyer/advocate in Kampala) can simplify this, as these changes require specific legal drafting and physical filing.
1. Removing a Director
Under Companies Act, a company can remove a director by passing a Resolution.
The Process:
- Special Notice: Shareholders must give the company “Special Notice” (at least 28 days) of the intention to move a resolution to remove the director.
- Director’s Right to Reply: The company must send a copy of this notice to the director. The director has a legal right to make a written representation (defense) to the shareholders.
- General Meeting: An Ordinary Resolution (requiring >50% vote) is passed at a general meeting.
- Filing with URSB: Once passed, the following must be filed:
- Form 20 (Notice of Change of Directors and Secretary).
- The Resolution (extracted and certified).
- Resignation Letter (if the removal was voluntary/negotiated).
2. Removing a Shareholder
Removing a shareholder is more complex because shares are private property. You generally cannot “fire” a shareholder; you must facilitate a Transfer of Shares.
The Process:
- Board Approval: The Board of Directors must meet and approve the transfer of shares from the outgoing member to a new or existing member.
- Transfer Instrument: A Share Transfer Form must be signed by both the transfer or (outgoing) and transferee (incoming).
- Stamp Duty: The transfer forms must be assessed for Stamp Duty (usually 1.5% of the share value) and paid at a commercial bank via the URA portal.
- Filing with URSB: To update the registry, you must file:
- The Board Resolution approving the transfer.
- The Stamped Share Transfer Form.
- Form 10 (Return of Allotment) or an updated Beneficial Ownership Form.
- ID Copies of the new shareholder.
Important Tip: Always check your company’s Articles of Association first. Some companies have “weighted voting” or specific clauses that make removing a founder or majority shareholder more difficult than the standard statutory process.
FOR PERSONALIZED LEGAL SERVICES & GUIDANCE CALL OR EMAIL ARNOLD
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Location: Kampala road, Mabirizi complex, 6th floor, Office AP05-Kampala, Uganda.