The Uganda Registration Services Bureau (URSB) has announced an impending mass de-registration of at least 10,001 companies that have failed to comply with statutory requirements. This move is part of a broader effort to maintain the integrity of the business register, promote transparency, and enhance accountability in Uganda’s corporate sector.
Why URSB is De-registering Non-Compliant Companies
URSB has emphasized that immediately de-registering inactive companies is a necessary step to clean up its records and ensure that only legally compliant businesses remain operational. According to Mr. Denise Nabende, the URSB Communications and Public Affairs Officer, the action follows a February 7 notice that initially declared at least 1,000 companies legally non-existent.
“URSB will continue to take measures to ensure compliance with statutory requirements, and we urge all businesses to prioritize their registration and filing obligations to avoid being struck off the register,” Mr. Nabende stated.
This de-registration process will also free up company names that have been removed from the register, allowing them to be reassigned after 12 months.
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When was the last purge?
This is not the first time URSB has undertaken such an exercise. In 2022, the bureau struck off 297,697 companies from its register due to failure to update their records and file annual returns for at least five years. Companies that wished to remain operational were required to file the necessary documents; however, many failed to do so, leading to their removal.
How often do people often register businesses?
Despite the large number of companies being de-registered, URSB has seen a steady rise in new business registrations. According to URSB’s latest annual report, company registrations increased by 19 percent in the 12 months leading to June 2024. The number of newly registered businesses rose from 23,789 in the previous year to 28,414.
This increase indicates that more entrepreneurs are formalizing their businesses, contributing to Uganda’s growing business ecosystem. However, with growth comes the need for compliance, and URSB is determined to ensure that registered businesses meet their legal obligations.
Consequences of Operating a De-registered Company
URSB has warned that individuals found guilty of conducting business under a de-registered company will face heavy penalties. The Companies Regulations, 2023, under Regulation 41, prescribe fines of up to UGX 4 million for operating a company that has been struck off the register.
Additionally, both private and public entities have been cautioned against engaging in transactions with de-registered companies, as this could expose them to legal and financial risks.
Increased Compliance with Annual Returns
One positive outcome of URSB’s vigilance has been a dramatic improvement in the number of companies filing annual returns. According to the latest report, at least 95,023 companies fulfilled their filing obligations in the 12 months leading to June 2024. This represents an impressive 111 percent increase compared to the previous period.
What is URSB?
The Uganda Registration Services Bureau (URSB) is a government agency responsible for the registration of businesses, companies, intellectual property, marriages, and other legal documents. It operates under the Ministry of Justice and Constitutional Affairs, ensuring that all entities comply with Uganda’s legal framework. URSB plays a critical role in streamlining business registration, protecting intellectual property rights, and maintaining an updated corporate register to enhance business credibility and economic development.
Conclusion
This decision to de-register over 10,000 companies underscores its commitment to maintaining an accurate and credible business register. While the move may pose challenges for non-compliant businesses, it serves as a wake-up call for companies to fulfill their legal obligations. Businesses must ensure timely registration, update their records, and file annual returns to avoid penalties and potential de-registration.
