Corporate M&A 2025 Comparisons

Uganda’s M&A landscape has been shaped by an interplay of legal, economic, political and social factors. As the country draws closer to the 2026 general elections, political dynamics are expected to exert a significant influence on transactional activity, creating ripple effects across various sectors. The above notwithstanding, in the past 12 months, Uganda has experienced significant growth in M&A activity across different sectors, including technology (particularly fintech), financial services, insurance, healthcare, manufacturing, and oil and gas. By way of example, there has been an uptick of investment in the telecommunications space, on account of regulatory requirements that have led major mobile network operators such as MTN and Airtel to list a portion of their shares on the Uganda Securities Exchange. There have also been noteworthy tax reforms, including exemptions for private equity and venture capital funds regulated by the Capital Markets Authority (CMA), and this will certainly trigger more M&A activity. Furthermore, the clean energy sector is witnessing a rise in M&A, fuelled by incentives in the Energy Policy 2023.

In 2024, the financial services, insurance, agro processing, telecommunications, pharmaceutical and healthcare sectors were popular in Uganda’s M&A transactions. A notable trend was the increase in cross-border acquisitions of local entities, such as the recent acquisition of Uganda Telecommunications Corporation Limited, Uganda’s national telecom provider, by Rowad Capital Commercial LLC.

In the banking sector, Finance Trust Bank and Access Bank PLC announced the signing of a definitive agreement for Access Bank’s equity investment in Finance Trust Bank. Upon completion of the transaction, Access Bank PLC is expected to have an approximately 80% shareholding in the target company.

Another significant transaction, this time in the natural resources sector, involved Rare Earths Limited, an Australian mining company, which signed a conditional share purchase agreement to acquire an additional 34% stake in Rwenzori Rare Metals Limited. This acquisition increased its majority interest in the Makuutu Rare Earths Project to 94%. The project is one of the world’s largest and most advanced ionic adsorption clay rare earth deposits.

In the pharmaceutical sector, Cipla Quality Chemical Industries Ltd announced the completion of its acquisition by Africa Capitalworks SSA 3, a Mauritius-based investment vehicle, from India’s Cipla Group, making Africa Capitalworks the new majority shareholder. The transaction was valued at USD25 million. Africa Capitalworks acquired a 51.18% stake in the pharmaceutical company from the Indian group.

Several key developments have driven M&A activity in Uganda, including the passing of the Competition Act, Cap 66 (“the Competition Act”) in 2024, heightened environmental, social and governance (ESG) considerations and shifts in the tax regime. In the energy sector, the push for clean cooking solutions, supported by fiscal incentives such as VAT exemptions on liquefied gas and ethanol stoves, is creating an influx of both local and international investments, fuelling M&A activity. This sector is poised for growth as investors take advantage of government incentives and the country’s focus on clean energy solutions.

The global transition towards sustainability and decarbonisation is reshaping business priorities and creating new opportunities, significantly influencing M&A strategies. The incorporation of renewable energy assets, carbon footprint reduction initiatives and alignment with ESG objectives have become key drivers of M&A activity. Another emerging trend is the continued growth of the Business Process Outsourcing sector, spurred by the 2024 National Business Process Outsourcing Policy. The Government’s emphasis on strengthening infrastructure and providing incentives to foreign investors has positioned Uganda as a key outsourcing destination in East Africa. This is likely to drive further M&A activity as firms look to expand and tap into emerging opportunities in the sector.

The industries in Uganda that experienced significant M&A activity include banking and telecommunications. In the banking sector, local banks have pursued consolidation to strengthen capital adequacy and enhance operational efficiencies. Similarly, the telecommunications industry has witnessed major M&A activity, with leading companies such as MTN and Airtel adapting to market pressures and regulatory shifts.

In Uganda, the predominant means of acquisition of a private company is by way of a share purchase, which involves the transfer of the shares of existing shareholders and/or subscription for new shares. Companies may also be acquired through an asset purchase or through an amalgamation, which entails the unification of two or more companies to form one in accordance with the provisions of the Companies Act, Cap 106 (“the Companies Act”). A company that intends to amalgamate must authorise an amalgamation proposal, which must detail the terms of the amalgamation.

In relation to publicly listed companies, shares can be acquired through the relevant securities exchange, a private placement or a takeover (mandatory or otherwise). The Takeover and Mergers Regulations, S.I. No. 55 of 2012 (“the Takeover and Mergers Regulations”) stipulate threshold requirements that trigger the application of the takeover procedure. This arises in instances where a person that makes an offer to acquire voting rights of a listed company:

• holds more than 15% but less than 50% of the voting rights of a listed company and acquires in any one year more than 5% of the voting rights of such a company;
• holds 50% or more of the voting rights of a listed company and acquires additional voting rights in the listed company;
• acquires a company that holds effective control in the listed company or together with the voting rights already held by an associated person or related company, resulting in acquiring effective control; or
• acquires any shareholding of 20% or more in a subsidiary of a listed company that has contributed 50% or more of the average annual turnover in the latest three financial years of the listed company preceding the acquisition.

The relevant notifications and approvals to and from the CMA must be sought for the transaction to proceed, and the necessary corporate and sector regulatory approvals, if required, must be obtained in order to consummate the transaction.

The primary regulators of M&A activity in Uganda are:

• the Ministry of Trade, Industry and Cooperatives (“the Ministry”), which is responsible for overseeing mergers, joint ventures, acquisitions and antitrust matters under the framework of the newly enacted Competition Act;
• the CMA, which regulates M&A activity concerning companies listed on the Uganda Securities Exchange and their subsidiaries, including entities licensed by it such as brokers, fund managers, securities exchanges and dealers;
• the Uganda Securities Exchange (USE), which is the primary platform for listing and trading companies in Uganda’s stock market. The USE falls under the regulatory purview of the CMA and serves as the principal marketplace where companies can raise capital through debt and equity issuances. The USE is a demutualised exchange and is self-regulating;
• ALTX Uganda, which is licensed by the CMA and serves as a complementary trading platform to the USE, particularly for retail investors, institutional traders and high-frequency trading participants. In order to list on either market segment, companies must meet the listing requirements set out in the ALTX Securities Rules v2.0, Book 1 and Book 3;
• the COMESA Competition Commission, which regulates M&A transactions with a regional dimension. A transaction is deemed to be of a regional dimension in circumstances where either or both of the parties to a proposed transaction operate in two or more member states; and
• the East African Competition Commission (EACC), which regulates M&A transactions that have a cross-border effect within the EAC common market. This means that the transaction must impact competition in more than one EAC member state. The EACC has extra-territorial jurisdiction over activities that occur outside the EAC if those activities have an impact on competition within the EAC common market.

There are specific sector-related rules that apply to M&A transactions. The Financial Institutions Act, Cap 57, has provisions which govern the amalgamations and arrangements for the transfer of all of the assets and liabilities of a financial institution to another person. The Uganda Communications Act, Cap 103, regulates the acquisition of entities, mergers and takeovers in the telecommunications sector. The Petroleum Supply Act, Cap 163, requires that the prior approval of the Commissioner for Petroleum be obtained before any transfer of a permit or licence in a regulated company. This would apply in cases where the structure of the M&A transaction culminates in a transfer of a permit or licence. The Insurance Act, Cap 191, governs the amalgamation and transfer of insurance business. These laws require the approval and/or notification of the relevant sector regulator in respect to the proposed M&A transaction in the industry. The oil and gas laws, particularly in the midstream and upstream sectors, also stipulate local content requirements that may apply to an acquirer.

Under the Financial Institutions (Ownership and Control) Regulations, no individual or corporate entity, with the exception of licensed financial institutions, the Government of Uganda, foreign governments, state-owned enterprises, foreign financial institutions licensed in their respective jurisdictions and non-operating holding companies approved by the Bank of Uganda, may own more than 49% of the share capital in a Ugandan financial institution.

In the oil and gas industry, the Petroleum (Exploration, Development and Production) (National Content) Regulations require a licensee, its contractors and its subcontractors to give preference to Ugandan goods and services, and in the event that such goods and services are not available in Uganda, that the same be provided by a joint venture company with a maximum of 52% foreign participating interest and at least 48% Ugandan participating interest.

Under the Land Act, Cap 236, foreigners are restricted from owning land under the freehold and mailo land tenure systems. Instead, they can only acquire land through leasehold tenure, typically for a maximum period of 99 years.

The Competition Act has established a merger control regime in Uganda. The legislation introduces a mandatory requirement to notify the Ministry where the proposed merger results in a change in control, being the ability to exercise 49% or more of the voting rights in the other person, the ability to appoint more than half of the members of the board of directors or similar body of the other person or the ability to control the affairs of the other person. It is prudent to note that a merger, acquisition or joint venture entered into in contravention of the aforesaid provision is void.

The Competition Act introduces a suspensory regime – ie, approval must be obtained before closure of the proposed transaction. In the case of a proposed merger or amalgamation, notice is required to be given after the board of directors or similar body of the respective persons has accepted the proposal to merge or amalgamate, while in the case of a proposed acquisition of control of another person, the notification will be required after the conclusion of the negotiations of the agreement of acquisition of control. At present, there is no value threshold in terms of assets and turnover which has been provided. However, the Minister of Trade, Industries and Cooperatives is vested with the jurisdiction to prescribe applicable value thresholds through a statutory instrument.

However, the Competition Act does not explicitly define the jurisdictional relationship between the technical committee on competition established in the Ministry and other independent regulators responsible for overseeing competition within their respective sectors. These regulators include the Uganda Communications Commission, the Bank of Uganda, the Electricity Regulatory Authority, the Insurance Regulatory Authority, the CMA and the Petroleum Authority. Additionally, certain government ministries, such as the Ministry of Energy, play a role in regulating competition in the downstream petroleum and mining subsectors. However, it remains unclear whether a transaction approved by a sector regulator after assessing its competition impact would require further approval from the technical committee on competition. It is also uncertain whether the committee has the authority to modify or override a decision made by a sector regulator.

In the context of Uganda, merger transactions with a regional dimension are not only subject to local regulations but also potentially notifiable to the Common Market for Eastern and Southern Africa (COMESA). To trigger COMESA notification, a transaction must qualify as a merger under COMESA regulations and, crucially, satisfy the regional dimension test. This means that at least one of the acquiring and target firms must operate in two or more COMESA member states, including Uganda. Furthermore, the transaction must exceed the financial thresholds established by COMESA for mandatory notification.

There are numerous laws which regulate employment-related matters in Uganda.

These laws include the following:

• the Constitution of the Republic of Uganda, 1995;
• the Employment Act, Cap 226;
• the Uganda Citizenship and Immigration Control (Amendment) Act, Cap 313;
• the Occupational Safety and Health Act, Cap 231;
• the Labour Disputes (Arbitration and Settlement) Act, Cap 227;
• the Workers Compensation Act, Cap 233;
• the Labour Unions Act, Cap 228;
• the National Social Security Fund Act, Cap 230;
• the Petroleum (Exploration and Development and Production) Act, Cap 161;
• the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, Cap 162;
• the Employment Regulations, 2011; and
• the Protocol on the Establishment of the East African Community Common Market.

From a Ugandan perspective, in addition to these mandatory laws, employment relationships are primarily contractual in nature. As such, acquirers must adhere to the existing contractual obligations with the target company’s employees. Upon the transfer of a business from the target to the acquirer, the contracts of service of all employees shall automatically be transferred to the acquirer on the same terms and obligations. A purchaser of a listed company must state its intention with regard to the continued employment of employees in the takeover document.

There is no national security review of acquisitions in Uganda.

The Income Tax (Amendment) Act, Cap 338, introduced new tax amendments that are likely to have an impact on M&A activity in Uganda. One key development is the tax exemption for income derived by private equity and venture capital funds regulated by the CMA.

The income of individuals and entities meeting specific investment criteria is exempt from income tax. Investors that, within a period of ten years from the commencement of business or from making additional capital investment, invest at least USD10 million (for foreign investors) or USD300,000 (for Ugandan citizens operating in urban areas) or USD150,000 (for Ugandan citizens operating in upcountry areas) qualify for tax exemptions. However, such investors must meet the following conditions:

• at least 70% of their raw materials must be locally sourced, subject to availability;
• at least 70% of their employees must be Ugandan citizens, earning an aggregate wage of at least 70% of the total wage bill; and
• they must be engaged in the manufacture of electric vehicles, electric batteries or electric vehicle charging equipment; the fabrication of electric vehicle frames and bodies; or the operation of specialised hospital facilities.

Furthermore, income derived by private equity and venture capital funds regulated by the CMA is now exempt from income tax. The prior provision that granted non-recognition of capital gains tax on the sale of investment interests in a registered venture capital fund, as long as at least 50% of the sale proceeds were reinvested within the year of income, has been repealed. This means that venture capital funds are no longer required to reinvest at least 50% of the proceeds of the sale of their interest in Uganda for them not to be charged with capital gains tax.

There is also a noteworthy amendment concerning stamp duty under the Stamp Duty Act, Cap 339: investors acquiring shares in a private equity or venture capital fund, or private equity or venture capital funds regulated by the CMA, are not required to pay stamp duty on nominal share capital or any increase of share capital, or a transfer of shares or other securities, to or by them.

There have not been any significant changes to the takeover law in the past 12 months, nor is it under review.

Under Ugandan law, there are no prohibitions and/or restrictions imposed on stakebuilding prior to making a takeover bid. Bidders are entitled to, and often do, build stakes in the target prior to launching an offer; however, it is not a requirement. A bidder may elect to build a stake in the target prior to launching an offer as a demonstration of commitment to the target and a means of increasing the acquirer’s leverage during pricing negotiations. Until a potential bidder breaches the 25% shareholder level of the target, other than for certain disclosure obligations, stakebuilding is unregulated.

Under both the Companies Act and Listing Rules 2025, there are material disclosure requirements and filing obligations. A company is obligated to file an annual return at the end of each calendar year.

Under the Listing Rules, major shareholders of any class of voting securities must disclose any significant changes in their ownership over the past three years. Similarly, issuers for the Fixed Income Securities Market Segment must disclose any changes in the ownership percentage of major shareholders during the same period.

Stakebuilding is not common in Uganda, and therefore we are not in a position to contemplate any hurdles to stakebuilding.

There are no restrictions imposed on transactions involving derivatives. Derivatives are also known as secondary securities whose value is solely based on the value of the primary security that they are linked to, called the underlying. Typically, derivatives are considered advanced investing. Unlike in similar jurisdictions, where derivatives are often traded on exchanges, there is no dedicated derivatives exchange in the country. Consequently, derivatives transactions occur over the counter (OTC). However, investors need to be aware of the risks with OTC markets since the transactions do not have a central marketplace nor the same level of regulatory oversight as those transactions done via regulated exchanges.

There are no filing and/or reporting obligations for derivatives under securities disclosure and competition law.

In private companies, there are no rules or regulations on what information must be made available to a buyer. Usually, information is made available to a potential buyer during the due diligence process. On the other hand, in listed companies, the Takeover and Mergers Regulations obligate the acquirer to disclose in the offer document all such information as the target and its shareholders would require. The disclosure shall state: the identity of the ultimate bidder; names of the directors and shareholders and the extent of their interest in the bidder; long-term commercial justifications for the proposed takeover offer; and intentions regarding the continuation of the business of the target.

The Takeover and Mergers Regulations provide for offences and penalties in the event that the information disclosed is false or misleading. There is also a provision for a purchaser that discovers that information disclosed was false, misleading or contained a material omission to disclose the fact to the CMA and issue a press notice rectifying the false or misleading information.

In private companies, there are no requirements to disclose a deal. As such, M&A transactions in private companies tend to be confidential.

For listed companies, the Takeover and Mergers Regulations stipulate that a purchaser that intends or proposes to acquire effective control in a listed company shall make a public announcement through a press notice and serve a notice of intention of the scheme on the target within 24 hours of making a decision to acquire effective control in a company or from the passing of a resolution of its board approving the transfer. The notice of intention must also be officially served on the target company at its registered office.

Furthermore, copies of this notice must be simultaneously delivered to the CMA and the USE. It is imperative to note that where there has been a press notice of an intention to make a takeover offer, the bidder is prohibited from withdrawing the takeover offer without the prior written consent of the CMA.

There is no specific stage at which a target is required to disclose a deal.

Market practice on timing of disclosure does not differ from legal requirements.

In Uganda, due diligence exercises will usually cover legal, commercial, financial and tax issues. The scope of the due diligence exercise will differ from one transaction to the other and could also depend on whether the transaction is structured as a share or asset deal.

In order to minimise legal risk, lawyers carry out due diligence on the merging companies, advise on the regulatory requirements applicable to the proposed transaction, review transaction documentation to ensure compliance with local law (in the event that the documentation is originated out of jurisdiction), and provide legal opinions on the enforceability of transaction documents, material contracts and litigation.

In Uganda, standstill agreements are not commonly used in transactions. Instead, it is more typical for a prospective acquirer to seek an exclusivity arrangement, which is often a point of negotiation between the parties. The target company, however, will usually aim to restrict the duration of this exclusivity to ensure that negotiations are not unnecessarily prolonged.

It is permissible under Ugandan laws for tender offer terms and conditions to be documented in definitive terms.

In the context of M&A transactions between private companies, there is no specified timeline under the law, and the parties may agree on the length of the merger or acquisition. The timeline will generally depend on the transaction structure, and the parties tend to typically agree to the transaction timetable.

For transactions involving publicly listed companies, the acquirer will have to factor the statutory and regulatory steps and timelines to execute the transaction into its timetable. Some of the factors that could impact the timeline for a transaction include internal approvals, regulatory filings and approvals, financing arrangements, the preparedness of the seller for due diligence and the complexity of the transaction.

For mandatory takeovers, there are prescribed timelines within which each required step must be completed. Some of the times are as follows:

• the acquirer is required to announce its proposed offer within 24 hours from the resolution of its board to acquire effective control in the target;
• the acquirer must serve on the target within ten days from the date of the notice of intention, an acquirer’s statement of the takeover scheme;
• upon receipt of the acquirer’s statement, the target is required to inform the relevant stock exchange and the CMA of this receipt and make an announcement by press notice of the proposed takeover offer within 24 hours after receipt of the statement;
• the acquirer shall, within 14 days from the date of service of the acquirer’s statement, submit the takeover offer document in relation to the takeover offer to the CMA for approval;
• the CMA shall make a decision on the offer document within 30 days;
• following the approval by the CMA, the acquirer is required to serve the target with the takeover document within five days from its date of approval;
• upon receipt of the approved takeover document, the target is mandated to circulate the takeover document and the independent adviser’s circular to its shareholders within 14 days from receipt of the approved takeover document;
• the takeover document shall remain open for acceptance by the target for 30 days from the date of service of the takeover document by the acquirer; and
• the takeover offer shall be deemed to close on the last day of the offer period.

On acceptance of the takeover offer, the acquirer shall notify the Ministry of the takeover. The Ministry shall, within 120 days, inquire into the takeover with the view to determining whether the takeover is likely to cause an adverse effect on competition within the market.

Under the Takeover and Mergers Regulations, persons shall be required to make a mandatory offer under the following circumstances:

• 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 5% of the voting rights of such company;
• where a person holds 50% or more of the voting rights of a listed company and acquires additional voting rights in the listed company;
• where a person acquires a company that holds effective control in the listed company or together with the voting rights already held by an associated person or related company, resulting in acquiring effective control; or
• where a person acquires any shareholding of 20% or more in a subsidiary of a listed company that has contributed 50% or more to the average annual turnover in the latest three financial years of the listed company preceding the acquisition.

The consideration in most M&A transactions is either cash or a mixture of cash and shares. In respect of an amalgamation, the consideration is shares in a newly incorporated entity.

In relation to an M&A transaction in listed companies, there are special rules which apply if the consideration is cash in whole or in part. The takeover document must state the period within which the payment will be made and the method of payment, in addition to a confirmation obtained from the purchaser’s financial adviser indicating sufficient funds to carry out the takeover offer in full. Further, the purchaser is obligated to deposit in an escrow account 10% of the total consideration payable as a security for the performance of its obligations. The escrow account takes the form of either a cash deposit in a commercial bank or a bank guarantee in favour of the target that is payable on demand.

In Uganda, the terms of a takeover offer are typically outlined in a contractual agreement between the contemplated parties to the transaction. Common conditions often include securing necessary corporate approvals and obtaining regulatory clearance. In the case of public M&A transactions, the acquirer must specify the conditions under which the shares will be acquired, along with other relevant details.

There are no statutorily prescribed minimum acceptance conditions under Ugandan law.

In private companies, parties to an M&A transaction are at liberty to agree to any financial arrangement.

For public M&A transactions, the Takeover and Mergers Regulations require the acquirer to deposit 10% of the total consideration in an escrow account as security for fulfilling its obligations. This ensures the acquirer’s financial capacity to complete the takeover. Additionally, the full purchase consideration must be deposited in a designated account with a commercial bank within 21 days.

The Takeover and Mergers Regulations do not restrict the implementation of measures to ensure the safety of a deal. However, such measures must be disclosed in the takeover document and the notice of intention.

The Takeover and Mergers Regulations do not restrict the implementation of measures to ensure the safety of shareholder agreements. Particularly in private equity transactions or situations where the buyer does not seek full ownership, buyers often negotiate governance rights. These may include the attainment of board representation and veto powers over certain decisions, including the entrenchment of founder member rights. For public M&A transactions, the CMA Corporate Governance Guidelines mandate the fair treatment of all shareholders, including minority and foreign investors.

Under the Companies Act, a shareholder is entitled to appoint a proxy to attend a meeting on behalf of the shareholder, speak and even vote. Such shareholder must give notice of the appointment of the proxy before the meeting is held.

In Uganda, when a takeover leads to the acquirer acquiring at least 90% of the voting rights in the target company, a squeeze-out mechanism is triggered. Under this framework, the acquirer is required to extend an offer to the remaining minority shareholders, providing them with compensation equivalent to either the prevailing market price of the voting rights or the price offered to other shareholders, whichever is higher. This mechanism presents an exit opportunity for minority shareholders.

There are no restrictions imposed on bidders from obtaining irrevocable commitments from principal shareholders of the target company. The commitments will be subject to negotiations and agreements before a formal offer is made to the target company.

The timing and method of making a takeover bid public differ significantly between private and public companies.

For private companies in Uganda, the Companies Act does not prescribe public disclosure requirements. However, if the proposed acquisition triggers competition sector-related approvals, notification to the specific sector regulator is mandatory. In contrast, for companies listed on the USE, there are ongoing disclosure requirements which must be met by way of releasing an announcement by press notice of the proposed takeover offer within 24 hours, and formal notifications must be initiated and issued to the CMA, the USE and the board of the target.

Under the USE Listing Rules of 2025, an issuer is obligated to announce significant events as soon as possible and no later than 24 hours after they occur. The Listing Rules define significant events to include any changes in substantial shareholdings, acquisitions of shares that lead to a company becoming a subsidiary or associated company, sales of shares that result in a company no longer being a subsidiary, and any sale of assets that amounts to 10% or more of the issuer’s net assets, and the announcement must include the information necessary to enable holders of the issuer’s listed securities and the public to avoid the creation of a false market in its listed securities.

The Companies Act imposes a requirement to disclose the details of any shares or debentures held by directors, as well as any rights they have to acquire such securities, if these holdings are affected by the transaction. This includes shares held in the company, its subsidiaries, its holding companies, or subsidiaries of its holding companies.

The Takeover and Mergers Regulations generally require all persons concerned with acquisitions, takeovers and mergers to make full and prompt disclosure of all relevant information and take every precaution to avoid the creation or continuance of an uninformed market. During a takeover offer period, the acquirer is not allowed to sell any voting rights related to the offer.

There is no requirement to disclose the financial statements of the acquirer to the shareholders of the target. However, in terms of the Takeover and Mergers Regulations, a summary of audited financial statements – in particular, balance sheet, income statement, statement of changes in equity, cash flow statement, and basic and diluted earnings per share – must be included in the acquirer’s statement of intention. According to the Accountants Act, Cap 294, financial statements must be prepared in accordance with internationally accepted accounting standards, such as IFRS and/or GAAP.

It is important to disclose transaction documents in full to regulatory bodies in the process of obtaining requisite transaction approvals or waivers.

Under Ugandan law, directors have extensive common law and statutory duties which apply in the performance of their duties, including during a business 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 reasonable 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 amalgamation 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.

The Capital Markets Corporate Governance Regulations mandate that listed companies establish key board committees, including nomination, 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 directors 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.

From a Ugandan perspective, there are no established precedents dealing with the application of the business 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.

Under the Takeover and Mergers Regulations, the board of directors is obligated to appoint an independent adviser on receipt of the acquirer’s statement. The independent adviser appointed must be an investment adviser, broker or dealer. The form of independent outside advice will focus on the commercial, tax and legal structure of the transaction. It is also common practice for advisers to liaise with the regulatory authorities to procure the requisite approvals from the CMA and USE to consummate the transaction.

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 managing 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 recommend the following:

• directors should monitor and manage potential conflicts of interest at management, board and shareholder levels;
• there should be a formal and transparent procedure for the appointment of directors to the board, and such persons availing themselves for appointment 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 CMA Conduct of Business Regulations, advisers are prohibited from rendering advice on transactions where they have a material interest or where, on account of a past relationship, a conflict of interest has arisen. Furthermore, advisers are obligated to have measures in place to ensure that their employees and/or agents do not solicit inducements that are likely to conflict with any duties owed to their clients.

Companies are generally expected to adopt a policy on related-party transactions and disclose all such transactions in their financial statements.

The Takeover and Mergers Regulations make no distinction between friendly and hostile takeovers. Hostile tender offers are not common in Uganda.

The use of defence by directors is not regulated under Ugandan law. However, directors may adopt commonly used defensive strategies from other jurisdictions, provided they act within the limits of their fiduciary duties and in the best interests of the company. Any defensive action taken must be justifiable and aligned with both their statutory duty and common law duties to promote the success of the company.

There are no examples of a transaction in Uganda where common defensive measures have been implemented.

The duties set out in the Companies Act remain in effect throughout a director’s tenure. However, in the context of a takeover bid, the most significant obligations include:

• Acting within their authority: Directors must exercise their powers strictly within the limits set by the company’s constitution and for their intended purpose. Even if directors believe they are acting in the company’s best interests, using these powers for any other reason is not permitted.
• Avoiding conflicts of interest: Directors must take care to avoid situations where they have, or could have, a direct or indirect interest that conflicts, or may conflict, with the company’s interests.
• Promoting the company’s success: Directors have a duty to act in a manner that furthers the company’s growth and long-term value. While the meaning of “success” may vary depending on the circumstances, it is ultimately determined by the directors’ good faith judgement.

Directors cannot “just say no” to a business combination, as their fiduciary duty requires them to act in the best interests of the company. Their decisions must be well reasoned and consider not only the company’s success but also the interests of its employees, shareholders and broader stakeholders. This assessment is based on an objective test rather than a subjective one, ensuring that directors act with proper justification rather than personal discretion.

Disputes in M&A transactions in Uganda are rarely resolved through litigation. Definitive agreements for private M&A deals typically include clauses specifying arbitration as the preferred dispute resolution mechanism. Additionally, in cross-border M&A transactions, parties frequently opt for a foreign jurisdiction as the governing law, with either English law or New York law being most commonly chosen.

Please refer to 10.1 Frequency of Litigation.

Please refer to 10.1 Frequency of Litigation.

Shareholder activism is a growing trend in Uganda, allowing investors to actively engage in shaping the policies and practices of the companies they invest in. The CMA Corporate Governance Guidelines encourage a constructive approach to shareholder activism, emphasising the importance of equitable treatment for all shareholders, including minority and foreign investors. Boards of directors are responsible for upholding this principle, fostering open dialogue and active participation between companies and their shareholders. In some cases, shareholders are represented as an interest group on the board and are typically awarded a board seat. An example of shareholder activism is seen in companies where the National Society Security Fund, a provident fund that covers all employees in the private sector, has acquired an equity stake. In such companies, it common for the Fund to acquire a board seat. 

There are no examples of transactions which have been aborted due to shareholder activism.

The focus of activists has been on corporate governance, management changes and company strategy. There is also increasing interest in ESG–related concerns. The Bank of Uganda has launched an ESG framework for the banking industry to guide financial institutions in adopting sustainability practices, thereby supporting the country’s broader sustainable development goals.

It is not common for activists to seek to interfere with the completion of announced transactions in Uganda.