LAWDEVELOPMENT CENTREPOSTGRADUATE BAR COURSE 2024/2025FIRST TERM,WEEK THREECORPORATE& COMMERCIAL PRACTICEWEEK OF 14TH– 18TH OCTOBER 2024 CORPORATE PRACTICE (1) – MODULE 1 Introduction This module deals with the establishment of various businesses andstructures that enable clients effectively run their businesses.There is a very wide range of businesses that can be set up inUganda. Legal practitioners are oftentimes called upon to advise on formalitiesfor the formation and management of these businesses. It is therefore important that lawyers areequipped with skills to enable facilitate the set up and running of thesebusinesses.WORKSHOP 1Aims:The aims of this workshop are to:The aim of this module is to:1. Develop theability to advise on business setup and management.2. Develop ability toset up businesses,3. Develop theability to structure the management of businesses.4. Recognise andresolve ethical issues arising in set up and management of business entities.Learning outcomesLearningoutcomes By the end of this module, youshould be able to;1. Explain features of various Business Associations; Soleproprietorship, Partnership – General, LLP, Professional, Company- Private, NGOs,Incorporated Trusts, SMC, Private & Public Companies.2. Establish an appropriate Business Association for your clients;3. Draft documents necessary for the establishment of businessassociation 4. Recognise and resolve ethical issues relating to businessestablishment and management of Business entities.PART AJackson Mazimoto (“Jackson”) is in your chambers and relays the followinginformation to you: He has been engaged in the business of selling Sportsjerseys and casual wear for men. He carries out his business along Luwuum Street,Kampala on Mugaga Mall. Because of challenges of high rent in Kampala, heconvinced his friend Jonah “Fire-man” (“Jonah”) whom he went to High Schoolwith to come and carry out his business of selling perfumes in the samepremises so as to reduce rent. This was way back in 2020 after Covid-19lockdown. The two friends would contribute money for rent every month to reducecosts. This went on for three years and the two friends were really happy.In 2023 November, they decided to make the business bigger. Theydecided to combine their resources so that they could import merchandisedirectly from China and Indonesia. They started running their business underthe name & style of “NRA COMMANDOS” because they sold a lot ofmilitary-looking cargo pants similar to the ones used by the U.S Military inDesert Storm in 1990. These pants are popular among the young generation. Theydid not formally register their business or carry out any formalities. Theyraised the sum of USD 29,000 and started business. Their business has sincegrown and their capital has risen to over USD 35,000. Jonah’s brother-in-law SeprianoMakhosi (“Sepiriano”) (a South African National) has picked interest inthe business of Jackson and Jonah. He is ready to invest a sum of USD 100,000in the business and benefit from the growth of the business. However, he has notime to run the business with Jonah and Jackson. He works in Ethiopia and comesto Uganda once or twice a year to check on his family. He wants to be protectedfrom any business failure to the best possible extent. Jackson’s girlfriend ShirleyMurungi (“Shirley”) graduated from Makerere University 4 years ago with adegree in Marketing. However, she has failed to get a job. She is a very goodmarketeer and can offer her services to the business in return for a stake inthe business.Jackson tells you that he along with Jonah, Sepiriano &Shirley would like to formalise their business to carry out their affairs. Theydo not want a lot of formalities and would like to run a simple and efficientbusiness which relies on and benefits from their personal expertise withoutcreating unnecessary corporate structures. They believe this will make theirbusiness flourish and quicken decision making.TASK 1: 1. Formalise your instructions.2. Extract any missing information to enable youexecute your instructions. 3. Advise your clients on the nature of thebusiness relationship between them tracing it from the time Jackson startedrunning the business. 4. Advise your clients on any potential breaches ofthe law committed thus far, and challenges they may encounter in registeringtheir business. 5. Assuming Jackson & Jonah are agreeable toco-opting Sepiriano and Shirley, Draft the documents necessary to register themost appropriate business for them. Explain the core provisions and components ofthe documents. The documents should offer as much protection to the partiesas possible considering their unique circumstances as highlighted in the facts.6. Advise Jackson, Jonah, Sepiriano, Shirley on thenecessary licenses and registrations to lawfully carry on business. 7. What are the likely challenges you envisageconsidering the business entity your clients opted for and the uniquecircumstances as highlighted in the facts. Task 2:Assuming that, on 11th July 2024,Jonah, Sepiriano & Shirly perished in a road accident. This was after thebusiness had been formalised as envisaged under Task 1 above. The business hadno business continuity provisions in its documentation. At the time of death,the business owed several suppliers and creditors the sum of UGX 56,780,000.The business itself was worth UGX 450,001,000/=. (1)What are the rights and obligations arising between and amongstJackson and the families of his deceased business partners? (2)Draft and register the necessary documentation to reflect thechanges arising from the deaths of Jonah, Sepiriano, and Shirley.Assuming further, that after fulfilling theobligations under Task 2 (1) & (2) above), Jackson has learnt fromexperience. He is wary of his business collapsing in the event of him dying inan untimely manner as his former business associates. He has continued inbusiness alone since the death of his business associates but wants toformalise the business. He intends to continue owning it alone. He wants toensure that even if he dies, his business continues as an entity of its own. Jacksonis married to Sheila Mumba (“Sheila”) and they are blessed with onechild. Jackson has a brother a one Peter Mukunzi (“Peter”) whooccasionally helps him with purchases. He trusts his wife and Peter in theevent that he meets his maker in an untimely manner.(3)Advise Jackson on the most appropriate business entity to set up.(4)What roles would Sheila & Peter play in the business. (5)Extract any missing information necessary to execute yourinstructions. PART B:Use the facts in Part A Task 2 (2) & (3) with the followingmodifications, Jackson has since decided to set up another entity with good andsound corporate structures. He wants the entity set up under Part A Task 2 (3)to hold a significant stake in the new entity so as to be able to make anydecisions. He also wants to co-opt his wife, and son of minority age into thenew entity as co-owners. His wife is not bringing any money into the businessbut will help in managing it. Jackson wants to protect the stakeholders of the newentity from loss of personal property in case the business gets into financialdistress. Because Jackson is not very well educated like his wife, he wants thewife to help him in managing the business but with him (Jackson) being theoverall person in charge of managing the business. Jackson also wants to ensurethat through the entity set up Part A Task 2 (3) he maintains control of thebusiness just in case his wife ‘grows a big head’ and tries to disturb him.Task 3: 1. Extract any missing information to execute your instructions.2. Advise Jackson on the most appropriate entity to set up. 3. Draft the necessary documents for 2. Above, using information youhave obtained to set up the entity that suits Jackson’s interests.4. Ensure that your fees get paid.5. Assuming the entity above has been set up, draft the necessarydocumentation to call the necessary meeting(s) and set up management structuresof the new entity. Ensure that all the legal processes are followed.6. Assume that the business you have lawfully set up has been runningfor a period of 55 days, complete and file the necessary documentation ‘postset up’.PART C:Task 4:Through the entity set up in Part B Task 3, Jackson wants to helppoor vulnerable children from his village in Kyasampata, Busunju, WakisoDistrict. He wants to put aside a fund from the profits that his business (inPart B) makes so that the entity can sponsor education of the best student atPrimary Level Education amongst all the UPE schools in the Subcounty. Thedirectors in the entity (setting up the entity to cater for the children) areJackson and his wife. 1. Advise Jackson on the most appropriate entity toset up to help vulnerable children in his village, give reasons for your answer. 2. Extract the information required to executethese instructions 3. What are the authorisations and process flowsrequired to set up the entity in task 4 (part 1.) above?4. Draft the relevant document authorising theentity set up in Part B Task 3 to set up whichever charitableorganisation/entity you will have opted for. PERSONAL READING/EXERCISES. 1. Draft documents for resignation from apartnership. 2. Draft pleadings for dissolution of partnershipby way of court order. State the grounds for dissolution succinctly. 3. Read (in their entirety) Tables A (Parts I &II and determine which part applies to Private Companies and Public Companies),B, C, D, E & F of the Companies Act. You ought to know when to apply eachof these Tables. 4. Fill in the necessary statutory forms under PartC (Parts 1. 2. & 3) above. 5. Look up a Minute Book of any company or onlineand note how resolutions are registered in the minute book. Attempt to fill indetails of resolutions in the minute book. Please note: Resolutionsregistered in the minute book include those outside section 150 of theCompanies Act. Resolutions relating to internal management of the company e.g.appointment of employees in top management, payment of bonuses, e.t.c will alsobe registered in the Minute Book. 6. Assume you are company Secretary of a privateCompany:ii. What documents would you need to maintain to ensure good soundcorporate governance?iii. what evidence will you keep to ensure that: you have evidence thatany meeting in issue was called according to the law; notice, where necessary,was served; the meeting had the requisite quorum was present at the meeting;and the minimum threshold for voting was realised. 5. Company XYZ Limited was incorporated with share capital of UGX 100,000,000divided into 100 ordinary shares of 1,000,000 each, and the following personssubscribed for shares as follows: Billy Wang (60 shares), Jane Wang (10 shares)and Jiao Wang (15 shares). i. Fill in a return of allotment for the shares above.ii. Assuming that later another 15 shares are allotted to Billy Wang,fill in a return of allotment in respect of these shares so allotted. Draft a Trust Deed for Part C.Special Note: When filling in statutory forms or drafting any agreements forthis workshop and any future workshops, DO NOT leave any gaps. Theagreements or forms MUST be complete. Where you have not beengiven enough information from the facts, feel free to assume any given set offacts/information which does not deviate from the facts given so as to fill informs or draft agreements.Allocation of Workshop Tasks Firm leader to split the firm into 4 groups.Group 1 to handle task 1Group 2 to handle task 2. Group 3 to handle task 3.Group 4 to handle task 4. Lesson Plan.1. Introduction of workshop by Professionaladvisor (10 Minutes)2. Analysis of facts (30 Minutes)Group Presentations. o Group 1 – 20 minutes o Group 2 – 15 minuteso Group 3 – 15 minuteso Group 4 - 15 Minutes o Wrap up &questions – 15 MinutesNotes: 1. Studentswho refuse to participate when picked upon will be ejected from the class.2. Everystudent must prepare personal notes.3. Therespective groups must have their presentations ready before class. 5. Allstudents should endeavour to prepare the necessary document(s). Statutes1. The Partnerships Act, Cap 110.2. The Contracts Act Cap 284.3. The Business Names Registration Act, Cap 105.4. The Registration of Documents Act, Cap 291.5. The Companies Act Cap 106.6. The Trade Licensing Act, Cap 79.7. The Stamp Duty Act, Cap 339.8. Uganda Registration Services Bureau Act, Cap 217.9. The Advocates Act, Cap 295.10. The Non-Governmental Organisations Act, Cap 10911. The Trustees Incorporation Act, Cap 27112. The Investment Code Act Cap74 -Part III Rules/Regulations1. The Business Names Registration Rules S.I 109-1.2. The Business Names Registration (Amendment) Rules S.I 53 of 2005.3. The Registration of Documents (Fees) (Amendment) Rules S.I 55 of2005.4. The Registration of Documents Rules S.I 81-2.5. The Companies Act (Single Member) Regulations,S.I 72/20166. TheCompanies (General) Regulations S.I 7/20167. TheCompanies (Powers of the Registrar) Regulation S.I 71/20168. TheCompanies (Single Member) Regulations S.I 72/20169. TrusteesIncorporation (Beneficial Owners) Regulations, 2023. Casesa) Formation of Partnerships1. W. Vs. Commissioner of taxes (1969) 1. ALR. Comm. 912. Mercantile Credit Co Ltd v. Garrod (1962) 3 ALL ER 1103.3. Dubai Aluminum Co Ltd v. Salaam (2003) 1 ALL ER 97; (2002) 3 WLR1913.4. Lord Millett, Bristol & West Building Society v. Mothew (1998)Ch D.1.b) Existence of Partnership1. Bubare Company v. Meble Kente [1982] HCB 143.2. Wilson v. Commissioner of Taxes 161 F.2d 661 (7th Cir. 1947).3. All port Ports Freight Service v. Julius Kamanyi & Anor.[1996] V KALR 21.4. Kafero Mohamed v. Turyagenda [1980] HCB 122.5. Dr. Okello N. David v. Komakech Steven, HCCS No. 30 Of 2006.6. Sonko v. Patel 20 (EACA) 99.7. Omella Emorut v. Raymond Ojakol [1984] HCB 62.8. Okwera Donation Henry v. Abdalla Saleh [1982] HCB 123.9. Uganda Freight Forwarders Association and Anotherv. Attorney General and Another, Constitutional Petition No. 22/2009.10. Francis Sembuya v. Allports Services (U) Ltd – SCCA No. 6 of 1999.11. National Drug Authority v. John Chris Bakiza T/A Kabyesiza and Co.Advocates HCCS NO. 34 of 2008.12. Nankya Faridah T/a Offenders Rehabilitation International v.Tinasah Investments Limited M.A 648 of 2011 (Commercial Court). c) Pre-incorporation agreements. 1. Salmon v. Salmon [1897] AC 22.2. Kelner v. Baxter [1866] LR 2 CP 174.3. Price v. Kelsall [1954] EA 752.4. Ngaremntoni Estates Ltd. v. CIT [1969] 1 ALR Comm 186.5. Kololo Curing Co. Ltd v. West Mengo Co-op Union Ltd (1981) HCB 60.d) Name of a Company1. Java Coffee & TeaLimited v. Uganda Registration Services Bureau, Café Javas Limited &Mandela Auto Spares Limited Company Cause No. 16 of 2014.4.5.5.4 Text Books1. Halsbury’s Laws of England, 4thEdition, Vol 35.WORKSHOP 2Aims:The Aims of this workshop are to:a) Develop your ability to hold various company meetings.b) Develop the identify and deal with shareholder rights.c) Develop your capacity to convert a company from a private Companyto a Public Company.d) Address ethical issues arising from shareholder disputes. Learningoutcomes:By the end of this workshop, you should be able to; 1. Illustrate the process of holding Company meetings.2. Illustrate regulatory compliance processes.3. Illustrate enforcement of shareholders rights.4. Demonstrate the process of converting a private company into aprivate company.5. Recognise and deal with ethical issues relating to businessestablishment and management.PART A:Assume that the entity set up in Workshop 1 Part B (Task 3) hasbeen operational for a period of one year. You are the Company Secretary. Youhave been tasked with the duty of calling for an Annual General Meeting. The‘Constitutuion’ of the Company that you adopted in Workshop No. 1 Part B (Task3) shall be your guide.Task 1: 1. Draft the necessary notices to convene the meeting.2. Draft the Agenda of the meeting.3. Assuming that due to emergency and poor planning on your part, themeeting is called with notice shorter than the statutory minimum, what stepswill you take to rectify this? Documentthis process. 4. What documentation will you provide to the Members prior to themeeting? PART B:Assuming further, that after the AGM in PART A above, Jackson andhis wife developed a serious misunderstanding. The accounts presented at theAGM were also far from satisfactory and showed a dire state of affairs. This followeddisputes between Jackson and his wife, stemmed from Jackson over fraternisingwith one of the sales girls in the business. Jackson has also taken advantageof his wife’s forced absence and his being a sole signatory to company accountsto use company funds in any manner he deems fit. He goes for expensive tripsabroad with his new love using company resources. Jackson’s wife, has found outthat the company is now indebted to Uganda Revenue Authority for taxes to thetune of UGX 67,000,000. Suppliers arealso demanding a sum of UGX 7,000,000 for supplies made but not paid for. Thishad never happened while she was in charge. Jackson denied his wife access tocompany premises and will not let her look at the books of account. The companybooks of account of the company are also poorly kept. In fact, Jackson’s wifehas never been received a share certificate. She knows she is a shareholder buthas never got any documentation save for signing the Memorandum & Articlesof Association.TASK 2: 1. Advise Jackson’s wife on hera. rights in the circumstances.b. Remedies in the circumstances. inthe circumstances 2. Draft and explain the necessary documents toseek the remedy you have proposed in 1. above.PART CAssume thatfurther to the conflict between Jackson & his wife above, Jackson wasordered by court to compensate his wife for her shares, which he has sincedone. The wife has since left the company. Jackson has since brought in extrashareholders in the company to stabilise it and ensure that it gets soundcorporate management. His entity’s shareholding in the Company has also beendiluted to just 20%. The new shareholders have decided that the company shouldrestructure so as to attract enough financing. They want the company to be opento any member of the public with capital to invest in it.TASK 3:1. Advise the Company on the steps to take totransform it as per the wishes of the new shareholders.2. Draft the necessary documentation authorisingthe transformation in Task 3 (Part 2. Above). DO NOT draft documents for raising capital from thepublic.Allocation of Workshop Tasks Firm leader to split the firm into 4 groups.Group 1 to handle task 1Group 2 to handle task 2. Group 3 to handle task 3.Lesson Plan.1. Introduction of workshop by Professional advisor (10 Minutes)2. Analysis of facts (20 Minutes)Group Presentations. o Group 1 – 25 minutes o Group 2 – 25 minuteso Group 3 – 25 minuteso Wrap up &Questions – 15 MinutesNotes: 1. Studentswho refuse to participate when picked upon will be ejected from the class.2. Everystudent must prepare personal notes.3. Therespective groups must have their presentations ready before class. 4. Allstudents should endeavour to prepare the necessary document(s). Statutes and Statutory Instruments Statutes1. The Partnerships Act, Cap 110.2. The Contracts Act Cap 2843. The Companies Act Cap 106.4. The Uganda Registration Services Bureau Act Cap 217 Rules/Regulations 1. TheCompanies (General) Regulations S.I 7/20162. TheCompanies (Powers of the Registrar) Regulation S.I 71/2016 Cases1. Mathew Rukikaire v. Incafex S.C.C.A No. 3 of 2015.2. Salim Jamal & Others v. Uganda Oxygen Ltd & Ors, S.C.C.ANo. 64 of 1995.3. Kakooza Lugunju Joseph v. Ethiopian Airlines Ltd. (1982) H.C.B111.4. Ssenyonga Ali & Ors v. Kakooza Rajab Hussein &Ors(1992-93) H.C.B 93.5. Kenya Seed Company Limited v. Nathaniel Kipkorir Tum &Eufrazio Juliao Goes HCCS No 180 of 2010 (unreported).6. Twycross v. Grant (1877) 2 CPD 469.7. Mawogola Farmersand Growers Ltd Vs. Kayanja & Ors8. Olive Kigongo V.Mosa Courts Apartment Ltd Co. Cause No. 1/2015WORKSHOP THREEYou are required to set up a class firm to take youthrough LDC.You must indicate what should be in a professionallaw firm. What is the Mission, vision, and values of the firmyou have set up?Suppose some members having contributed topartnership property, the LDC decided to discontinue them from the Bar courseand they have to leave, what is their fate and how do you handle them? Suppose LDC admits new students who are meant tojoin your firm, how would you admit them.TASKS:1.Discuss the process of establishment of the said firm,admission of new members and retirement of the partners.2.Draft all the necessary documents3.Calculate all the fees payable. PREPARED BY:Mr.Tom N. Mbalinda©The Law Development Centre, (September 2024)