Steps for Setting up a single member company in Uganda

Brief facts
Mr. Davido wants a “go it alone business” as he is not in position to trust anyone else. He is however desirous of ensuring continuity of the business in event of his death for a very long time just like Guinness. He also believes that at one time he may be able to work with his son.

Issues of consideration.
1. what is the best possible business organization to setup?
2. What structures does Davido need to set up?
3. The salient features of the necessary documents.

Resolutions
(i) what is the best possible business organization to setup?
According to the facts at hand, Davido is not in position to work with anyone due to his mistrust for anyone else the Companies act No.1 of 2012 regulates the incorporation and formation of companies in Uganda.
S.4 of the Act provides that any one or two persons may for lawful purposes form a company by subscribing their names to the memorandum of association or registering the company as provided under the Companies Act.
According to the facts therefore, the best possible business organization available for Davido’s interests is a single member company
Single Member Companies are regulated by the Companies (Single Member) Regulations, 2016 which provide the procedure for their registration.

(ii) What structures does Davido need to set up?
Directors are the engine of the company as they are responsible for the day to day functioning of the same. Davido therefore needs to setup these structures.

S. 186 of the companies act provides for the structures that are key and vital in the operation of a single member company and it provides that a single member shall nominate two individuals, one of whom shall become nominee director in case of death of the single member and the other shall become alternate nominee director to work as nominee director in case of non-availability of the nominee director.

S.186 (2) of the companies Act spells out the powers of the nominee director who shall—
(a) manage the affairs of the company in case of death of the single member until the transfer of shares to legal heirs of the single member
(b) Inform the registrar of the death of the single member, provide particulars of the legal heirs and in case of any impediment report the circumstances seeking directions within fifteen days after the death of the single member;
(c) Transfer the shares to the legal heirs of the single member; and
(d) Call the general meeting of the members to elect directors.

S.187 provides for company secretaries however, S.187 (3) of the single member company provides that a single member company is not obliged to have a secretary.

(iii) The necessary documents for the formation of a single member company
Regulation 4 of the Companies Single Member Regulations provides that a single member shall submit to the registrar a dully filled form for registration of a company provided in the Second Schedule of the Act.
Regulation 5 of the Regulations provides a standard form memorandum of association of a single member company in the form set out in Table B of the Second Schedule to the Act which may be adopted by the company with or without modifications.
The law also provides standard form articles of association of a single member company in the form set out in the First Schedule to the Companies (Single Member) Regulations, which may be adopted by the company with or without modifications.

THE SALIENT FEATURES OF THE NECESSARY DOCUMENTS.

1. Memorandum of Association
· Name of the Company.
· The objects clause.
· Share capital.
· Value of the shares.
· Borrowing powers.
· The seal of the company.
· Notices.
· Nominee Directors and Alternate Directors.
· The subscriber, his occupation and postal address.
· Provision of a signature and witnessed.

2. Articles of association.
· Must be signed by the subscriber
· Clauses that bind the relationship of the director with the company
· Name and occupation of the Director.

Additional registration documents include the statutory declaration of compliance by the director or advocate engaged in the formation of the company, statement of nominal share capital and the particulars of directors including the particulars of a nominee director and alternate nominee and secretary of the company.( provided for in the schedules)
Regulation 6 requires that a nominee director or alternate nominee director shall be an individual; not being the secretary of the company or the single member of the company.
Under r.8 and r.9, upon registration of a company as single member company, it is issued a certificate of registration in its name with the initials “SMC LTD” or the words “Single Member Company Limited” at the end of its name.