UGANDA Law and Practice Contributed by: Arnold Lule Sekiwano, Ritah Nakalema, Evelyn Maria Nakigudde and Collette Melvina Awano, Engoru, Mutebi Advocates
combination. The principal duties of a director are the following: • to act in a manner that promotes the success of the business of the company; • to exercise a degree of skill and care as a reason - able person would do when looking after his or her own business; • to act in good faith in the interests of the company as a whole; • to declare any conflicts of interest; • not to make personal profits at the expense of the company; and • not to accept benefits from third parties that will compromise him or her. In terms of the Companies Act, directors have a duty to resolve, following the assessment of the amalga - mation proposal, that the amalgamation is in the best interests of the shareholders and that the company will be solvent immediately after the amalgamation, and sign a certificate to that effect. Generally speaking, director duties are owed to the company. However, there is now a widely accepted view that there is an interconnection between the company and other stakeholders in its ecosystem, such as employees, suppliers and creditors. As such, these duties can be construed widely to apply to the other stakeholders of the company. 8.2 Special or Ad Hoc Committees The Capital Markets Authority (Corporate Governance) Regulations 2025 mandate that listed companies establish key board committees, including nomina - tion, audit and remuneration committees, to enhance transparency and corporate governance. However, the Regulations do not impose any restrictions on the formation of additional committees. Boards of direc - tors have the discretion to establish special or ad hoc committees when dealing with complex transactions such as business combinations or situations involving conflicts of interest. 8.3 Business Judgement Rule From a Ugandan perspective, there are no established precedents dealing with the application of the busi - ness judgement rule in takeover scenarios. Generally,
courts will uphold a decision of the board provided that there is no evidence of a breach of duty, fraud or negligence. 8.4 Independent Outside Advice Under the Takeovers and Mergers Regulations, the board of directors is obligated to appoint an inde - pendent adviser on receipt of the acquirer’s state - ment. The independent adviser appointed must be an investment adviser, broker or dealer. The form of independent outside advice will focus on the commer - cial, tax and legal structure of the transaction. It is also common practice for advisers to liaise with the regula - tory authorities to procure the requisite approvals from the CMA and USE to consummate the transaction. 8.5 Conflicts of Interest Conflicts of interest are scrutinised in Uganda. In terms of the Ugandan company legislation, directors are required to avoid conflicts of interest in whatever form. A director is prohibited from making personal profits at the expense of the company or obtaining benefits that will compromise him or her while man - aging the company’s affairs. Additionally, any director who has a direct or indirect interest in a transaction or proposed transaction with the company is required to promptly disclose the nature of their interest in writing to the board. The CMA Corporate Governance Guidelines recom - mend the following: • directors should monitor and manage potential conflicts of interest at management, board and shareholder levels; • there should be a formal and transparent proce - dure for the appointment of directors to the board, and such persons availing themselves for appoint - ment must disclose any potential areas of conflict that may undermine their position or service as directors; and • a director should immediately declare any conflicts of interest arising from his or her position on the board. According to the Capital Markets Authority (Conduct of Business) Regulations 2025, advisers are prohib -
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