KENYA

Economic overview

Welcome to the first issue of ENSafrica's Uganda in brief, focusing on the latest legal and regulatory updates across Uganda's corporate commercial and banking and finance industries.

corporate and commercial

The High Court recently passed a decision (Bank Of India (U) Limited Vs NC Beverages Limited And Uganda Revenue Authority (Civil Suit 0009 of 2021) highlighting the priority of a secured creditor in the winding up or liquidation of a company. The court further checked the actions by the Uganda Revenue Authority (“URA”) of seizing and disposing secured assets before they can be realised by a secured creditor on commencement of insolvency proceedings.

Background

The indoor management rule is a common principle, codified in Ugandan law. However, recent decisions from courts have applied the rule inconsistently, and have been a cause of concern as to what reliance can be placed on a company resolution by a party contracting with a company.

What is the indoor management rule?

The Coronavirus (COVID-19) has had a significant impact on businesses in Uganda and the world over, with governments having to enforce lockdown measures to contain the spread of the virus. In Uganda, statutory instruments were published by the Ministry of Health directing certain places of business to remain closed and prohibiting movement of public transport and private cars for approximately 56 days, leading to interruptions in business operations, a reduction in consumer demand and low cash flows to meet expenses and debts owed to creditors.