By Fortunate Kirabo, Legal Assistant & Faith Okiria, Associate

Uganda’s financial landscape is poised for transformation with the introduction of the Partnership Regulations 2025, promulgated under the Partnership Act, Cap 110. These regulations establish a comprehensive legal framework for the registration and operation of both domestic and foreign Limited Liability Partnerships (LLPs). This development is significant for the Private Capital (PC) and Venture Capital (VC) sectors.

Private Capital refers to investments in assets not traded on public markets. These include; private equity, venture capital, private debt, real estate, infrastructure, and natural resources.

Venture Capital, a subset of Private Capital,

specifically targets start-ups and early-stage businesses with high growth potential. Despite growing interest from local investors, Uganda’s private capital market remains relatively nascent.

The Partnership Regulations 2025 are expected to act as a catalyst for sectoral growth by enabling the establishment and efficient operation of PC/VC funds structured as partnerships—a model widely adopted in global markets.

KEY HIGHLIGHTS OF THE REGULATIONS

Streamlined Registrations Highlights of the Regulations

The regulations set out a clear, simplified process for registering LLPs, easing the organizational and operational setup for PC/VC firms.

 Limited Liability Protection:

The liability of partners, particularly limited partners, is restricted to their capital contributions. This provision will enhance investor confidence and participation by safeguarding against excessive financial exposure.

Promotion of Foreign Direct Investment:

The regulations explicitly permit body corporates, trusts, and other entities; both domestic and foreign; to become partners in an LLP. Additionally, provisions for the registration of foreign LLPs help address previous domiciliation and cross-border investment challenges.

Investor Comfort in Governance:

Passive investors in PC/VC funds are assured of the ability to exercise oversight over key fund decisions without forfeiting their limited liability status, thereby striking a balance between governance and protection.

Enhanced Liquidity

 Provisions governing the transfer of partnership interests, including the requirement for written consent, improve liquidity and make Ugandan LLPs more attractive investment vehicles.

Conclusion

The Partnership Regulations 2025 mark a pivotal step toward fostering a more enabling environment for private and venture capital investment in Uganda. By addressing core investor concerns such as liability limitations, foreign participation, governance rights, and exit mechanisms. These regulations are poised to reduce both perceived risks and transactional barriers. Ultimately, the regulations are expected to unlock the substantial potential of Uganda’s private capital markets.