THE SEARCH FOR GOOD CORPORATE GOVERNANCE PRACTICES IN UGANDA

TABLE OF CONTENTS

Declaration: ............................................................................................................................................ iii

Approval: ............................................................................................................................................... iv

Ackno\vledgment .................................................................................................................................... v

Dedication .............................................................................................................................................. vi

Abstract ................................................................................................................................................. vii

List of abbreviations ............................................................................................................................. viii

1. INTRODUCTION ............................................................................................................................... 1

1.1 The background to corporate governance ......................................................................................... 1

1.2 The research question ......................................................................................................................... 2

1.3 Scope of the Study ............................................................................................................................ 2

1.4 Corporate governance: An overview ................................................................................................. 3

1.4.1 What is corporate governance? ...................................................................................................... 3

1.4.2 Why corporate governance? ........................................................................................................... 4

1.5 Hypothesis ......................................................................................................................................... 6

1.6 SIGNIFICANCE OF THE STUDY .................................................................................................. 6

1. 7 RESAERCH METHODODLGY ...................................................................................................... 6

Chapter 2 ................................................................................................................................................. 7

2. THE CORPORATE GOVERNANCE INSTITUTIONAL FRAMEWORK IN UGANDA .............. 7

2.1 Institutional framework ..................................................................................................................... 7

2.1.1 An overview of the economy ......................................................................................................... 7

2.1.2 The Capital Markets Authority ............................ : ......................................................................... 7

2.1.3 The Uganda Securities Exchange and the listing requirements ..................................................... 8

2.1.4 The Institute of Corporate Governance of Uganda ...................................................................... 10

2.2 The history of corporate law in Uganda and the need for reform ................................................... 12

2.2.1 Uganda's corporate history .......................................................................................................... 12

2.2.2 The evolution of company law ..................................................................................................... 13

2.2.3 The need for refo1n1 ..................................................................................................................... 14

2.2.4 A changing environn1ent .............................................................................................................. 16

2.2.5 Company law for a competitive economy .................................................................................... 16

2.2.6 Regional co-operation .................................................................................................................. 17

2.3 The significance of corporate governance in Uganda ..................................................................... 17

CHAPTER 3 ......................................................................................................................................... 19

3.1 COMPANYLAWINUGANDA ................................................................................................... 19

3.2 DEFINATION OF A COMPANY .................................................................................................. 19

3.3 TYPES OF COMPANIES .............................................................................................................. 19

3.4 INCORPORATIONPROCESS ...................................................................................................... 21

3.5 RAISING CAPITAL ....................................................................................................................... 21

3.6 DIRECTORS .................................................................................................................................. 22

3.7 Fraudulent Trading .......................................................................................................................... 25

3.8 RAISING CAPITAL THROUGH THE SALE OF SHARES ........................................................ 26

3.10 LIQUIDATION (WINDING UP) ................................................................................................. 29

3.11 DISSOLUTION OF THE COMPANY. ........................................................................................ 31

Chapter 4 ............................................................................................................................................... 3 2

4. AN ANALYSIS OF CORPORATE GOVERNANCE REFORMS IN ............................................ 32

UGANDA IN COMPARISON WITH REFORMS IN SOUTH AFRICA ........................................... 32

AND THE UNITED KINGDOM ......................................................................................................... 32

4.1 Introduction ..................................................................................................................................... 32

4.2 Sources of Corporate Governance guidelines in Uganda ................................................................ 32

4.3 The board and the directors ............................................................................................................. 34

4.3 .1 The role and composition of the board ......................................................................................... 34

4.3.2 Chairperson and chief executive officer. ...................................................................................... 36

4.3.3 Appointment of directors ............................................................................................................. 36

4.3.4 Meetings of the board ................................................................................................................... 37

4.3.5 Board committees ......................................................................................................................... 39

4.4 Director's common law duties ........................................................................................................ 40

4.5 Codifying directors' common law duties ........................................................................................ 40

4.6 Statutory duties of directors ............................................................................................................ 43

4.7 Recognizing the rights of stakeholders ........................................................................................... 44

4.8 Shareholders' rights and engagement ............................................................................................. 45

4.8.1 Shareholder ren1edies ................................................................................................................... 47

4.8.2 The derivative action .................................................................................................................... 47

4.8.3 The alternative remedy to winding up the company .................................................................... 48

4.9 Corporate governance in private businesses and other small organizations ................................... 49

4.1 0.1· Application of codes of best practice ..................................... : ................................................... 5!

4.10.2 Consequences ofbreach of directors' duties .............................................................................. 53

4.1 0.3 Disqualification of directors ....................................................................................................... 54

4.1 0.4 Removal of directors .................................................................................................................. 55

Chapter 5 Conclusion ............................................................................................................................ 57

5.0 Introduction ..................................................................................................................................... 57

BIBLIOGRAPHY ................................................................................................................................. 60

Statutes and Acts ................................................................................................................................... 60