4 Things You Must Know to Run a Startup in Uganda Legally

Often times, when one comes up with a "nice" idea, all they think of is translating it into is a very successful a startup. What they usually forget is the fact that their startup has to be operated in the real world and its success is partly hinged on how best it meets the legal requirements.

Norman Mbabazi, a legal consultant who has worked closely with a couple of Ugandan startup founders on their Intellectual Property issues talks about some of the legal requirements startups should put into consideration.

  1. Picking a name

This looks obvious but it is not as easy as you think. A lot of people have picked names only to find out that another business has the exact or very close name at the time of registration.

The most important thing is to disassociate yourself from similarity and confusion. You need to find a name of unique nature so that your name is separate from that of an existing business or company - Norman

Unless, you want to ride on the reputation of an already existing brand or get mistaken for it, then it's advisable that you pick a unique name for your startup. The name, ideally, should also reflect what your startup does.

2. Registering a business

Under normal circumstances, one is supposed to register their startup before they can kick into operation. However, this is not the case for Uganda. Startups start operation and think of registration at a later stage.

For the startup, registering should be able to help you actually find out if the name you're deciding to use is still available at the registry body or acceptable depending on which industry you're looking at operating in.

There are a couple of structures your startup can take on at registration which include Sole Proprietorship, Partnership, Limited by guarantee or Limited by Shares.

The kind of structure depends on the intentions of the startup founders. For example, if you're looking at promoting good will and you'd like to have other people to give donations at some point and not for profit organization, then a Limited by Guarantee. Yet a profit making one should be registered as limited by shares - Norman.

3. Labour Laws

As a startup, chances are you're going to employ people at certain point to help you run it. However, this has its own legal implications. Uganda has labor laws that any operating business has to put into consideration. Norman recommends that before you think of employing others, first abreast yourself with these laws before they get you offside.

You should know when to terminate one's contract or give disciplinary action, when to give maternity, paternity or sick leaves as well as compensations. You should check out for the employment act of Uganda for further details on this.

4. Trading Licence

As a startup, after registration, you'll be required to obtain a trading licence from the authorities in your area of operation. But given the nature of startups in Uganda - being based online, it is a challenge for the authorities to implement this.

Under NORMAL circumstances, if you're trading online, there are no specific laws in Uganda to treat or regulate online businesses - Norman

But according to Norman, whether you're online or not, one should obtain a trading licence. This is because when the startup is deciding to open up a bank account, it is one of the documents they'll have to present. The other documents that a bank is likely to ask from a startup are; certificate of registration, constitution, a resolution, recommendation from a lawyer as well as the trading licence.

In conclusion, as a startup, your focus is to scale as far wide as you desire. Yet ignoring any of the above may be a big dent to your ambition. The recommendation is that you prepare early to avoid the penalties that might affect your reputation as well as financially.

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