UGANDA Law and Practice Contributed by: Onyango Owor, Miriam Babirye Kaggwa and Namugera Joel Peter, Onyango & Company Advocates
free treatment include obtaining Uganda Revenue Authority (URA) approval, demonstrating a genuine business purpose (eg, operational efficiency or stra- tegic restructuring) and complying with corporate restructuring rules. Non-compliance may result in the transaction being treated as a taxable disposal or divi-
tive control of the company, a notification must be made to the Capital Markets Authority (CMA) and the USE within 24 hours of the decision being made or approved by the directors of the intending offeror. This disclosure obligation applies both to direct and indi- rect acquisitions, ensuring transparency in sharehold- ing changes that could affect control of the company. Failure to comply with this requirement may result in penalties. Disclosure of Purpose and Intentions The regulations require the buyer to disclose the pur- pose of the acquisition and their intentions regarding the company in the notification to the CMA and USE, as well as in the takeover offer. This includes stating: • whether the acquisition is a precursor to a takeover offer, strategic investment, or for other purposes, such as portfolio diversification; and • whether the offeror has intentions regarding the continuation of the target company’s business, among other things. The disclosure must provide sufficient detail to inform shareholders and the market of the buyer’s plans, pro- tecting against undisclosed control attempts. “Put Up or Shut Up” Requirement The Capital Markets (Takeovers and Mergers) Regula- tions do not explicitly impose a “put up or shut up” requirement, whereby a buyer must make a formal offer or declare no intention to do so within a specified period after acquiring a stake. However, the regula- tions require that an offeror intending to acquire effec- tive control must issue a takeover notice and state- ment to the CMA and shareholders promptly. This only implies a practical expectation for timely action, as prolonged uncertainty could trigger CMA intervention to protect market stability. 4.2 Mandatory Offer A mandatory offer is triggered whenever any of the following circumstances is in place: • where a person holds more than 15% but less than 50% of the voting rights of a listed company and acquires in any one year more than another 5% of the voting rights of that company;
dend distribution, triggering tax liabilities. 3.3 Spin-Off Followed by a Business Combination
Spin-offs followed by mergers are rare but feasible, particularly for companies consolidating renewable energy assets. Such transactions require shareholder approval and compliance with the applicable laws, which is on a case-by-case basis. 3.4 Timing and Tax Authority Ruling Spin-offs typically take six to 12 months. A rollover relief is self-assessed, and as such, URA approval is not mandatory. However, for complex spin-offs, such as those involving debt allocation, obtaining a private advance tax ruling is recommended to miti- gate audit risks and confirm tax treatment with rollover relief inclusive of URA clearance for tax implications. Advance tax rulings are advisable to ensure compli- ance and minimise tax liabilities. 4. Acquisitions of Public (Exchange- Listed) Energy and Infrastructure Companies 4.1 Stakebuilding Acquiring a stake in a public company prior to making a takeover offer is not a common practice in Ugan- da’s energy and infrastructure sector due to the lim- ited number of listed companies on the USE and the stringent disclosure requirements under the Capital Markets (Takeovers and Mergers) Regulations, 2012. Investors typically prefer direct negotiations or pri- vate acquisitions. However, stakebuilding may occur in strategic assets to gain influence before launching a formal offer, particularly for companies listed on the USE. Reporting Threshold and Timing The regulations require that if any person intends to make an acquisition that gives such person effec-
401 CHAMBERS.COM
Powered by FlippingBook