Introduction

Businesses contemplating mergers, acquisitions, restructuring, or joint ventures must adhere to the strict implementation of the Competition Act, Cap. 66 and the Regulations thereunder.

The Ministry of Trade, Industry, and Cooperatives is responsible for assessing transactions, imposing conditions, and enforcing compliance with the Competition Laws.

One of the key compliance requirements under the Competition regime in Uganda is mandatory notification to the Ministry before completion of any merger, acquisition, restructuring, or joint venture that is notifiable under the Regulations.

Notification thresholds

The Regulations require notification to be given by the person acquiring control through the merger, acquisition or joint venture.

Definition of Control:

Section 15(10) of the Act provides that ownership of more than 49% of voting rights, appointment of a majority of the board, or the ability to direct corporate affairs would amount to control under the Act.

The parties to the transaction may also seek an opinion from the Ministry on whether a transaction falls within the notification threshold.

Suspensory Regime: Section 15(3) of the Act provides that transactions cannot be implemented until clearance is granted. Implementation without approval renders the transaction void.

Review Timelines: Section 15 (6) of the Act provides that the Ministry has 120 days to complete its inquiry; transactions are deemed approved if no decision is issued within this period.

Public Interest Assessment: Under Section 15 (11) of the Act it provides that approval may be conditioned or rejected based on broader socio-economic impacts, such as effects on employment, SMEs, or market access.

Notification Thresholds (Under Regulation 26 and Schedule 4 to the Competition Regulations, 2025):

Combined turnover/assets of parties exceeds UGX 1 billion, and target entity turnover/assets is more than UGX 500 million.

Acquirer turnover/assets is above UGX 10 billion in the same or related market.

A transaction that exceeds these thresholds would then make it mandatory to notify the Ministry before proceeding with the transaction.

Ministry may review transactions below thresholds if potential harm to competition is identified, as is stated under Regulation 30(2) of the Competition Regulations.

Exemptions: These include but are not limited to Intra-group restructurings or minority shareholdings without control, as is stated under Regulation 31.

Publication Requirements: Under Regulation 27(1) of the Competition Regulations, it requires mandatory public notice in widely circulated newspapers. It must be published in the names of the parties involved in the transaction.

Interaction with Regional Regimes: Under Regulation 31(4) of the Competition Regulations, coordinated review with EAC/COMESA may be required for cross-border MAJVs

Practical Implications for Businesses

Mandatory Pre-Clearance: No MAJV subject to thresholds can be implemented without prior approval unless they fall under the permitted exceptions in the Regulations.

Strategic Planning: Transaction timelines must account for Ministry review and potential conditions.

Broad Definition of Control: Minority investments may trigger notification obligations if it is deemed a transaction that affects the control of the target company.

Public Interest Scrutiny: Beyond market effects, socio-economic consequences can influence approvals or conditions.

Regional Coordination: Cross-border deals may require multiple filings with national and regional authorities.

Conclusion

Financial institutions, investors, and corporate entities must ensure compliance with notification requirements, account for review timelines, and prepare for public interest assessments.

Prior approval is mandatory; failure to comply can result in void transactions, fines, and other sanctions.

Strategic planning and integration of competition law considerations into transaction documentation are essential for risk mitigation.

END

Jamwa Rhees Remo