Best principles and practices for continuity of your business:
This week, we discuss the legal perspective of the best principles and practices your company should abide by for successful continuity of business.
Regulatory compliance:
The need for regulatory compliance cannot be over-emphasised. As discussed in the previous weeks, your business could incur serious losses or even closure in the event of negligence regarding regulatory compliance. Follow the discussion on regulatory compliance here: https://www.lawgicadvocates.com/regulatory-and-compliance-requirements-for-your-business-2/
Decision on management structure:
The directors must clearly set out their roles and those of the managers who will run the day-to-day affairs of the company. These roles must be clearly documented so that each member of the team is aware of what is expected of them.
Holding periodic meetings:
It is important that the directors and members of the company meet periodically to discuss the affairs of the business. It is an offence under the law for the directors of the company to omit to call meetings of the company.
Next week, we will discuss the different types of meetings of the company.
Issuing the right notices for meetings:
The law provides for different lengths of notices to call different types of meetings. For example, a notice of 21 days is to be given calling any general meeting; a notice of 28 days is required for any meeting at which a special resolution (discussed below) is to be passed.
If a member is given shorter notice than they should receive, the notice may be deemed void. It is advisable to consult your lawyer about the various notices to be given for the different types of meetings.
Writing minutes of meetings:
It is important to write down the minutes of every meeting the Company has. These are written down by the Secretary appointed by the Company and registered with the registrar of companies on Company Form 20. The minutes should be properly dated and signed by at least one director of the company and the secretary. These are necessary for easy reference on the decisions taken by the company.
It would be ideal to appoint a lawyer as the secretary of the company, as they have an understanding of the regulations to be complied with.
Passing the right resolutions:
These are the decisions passed in a meeting of the company. It is important that the correct type of resolution is passed; otherwise, the wrong type of resolution may, in some cases, be deemed null and void.
We will discuss the different types of resolutions next week.
Continuous filing of changes within the company:
A company must ensure to notify the registrar of any changes in the company; be it in the composition of the shareholding or in the change of address of the company.
Inform the registrar of any change of directors or secretary of the company. This is done by filing Company Form 20 reflecting the changes.
Inform the registrar of any change of address by filing Company Form 18. Failure to do this attracts a penalty of UGX. 500,000/=.
It is not enough to file annual returns reflecting these changes. You must find out from your lawyer what documents to file to notify the Companies Registrar of the various changes in the company.
Keep proper books of accounts:
Every asset, liability, income or expenditure, profits or losses of the company must be documented and kept in an organised manner. This will help with accountability and for making good business plans for the company.
Adopt the Code of Corporate Governance:
This Code is set out under the Companies Act of Uganda. It spells out the ideal governance structure a company should adopt and an ethical code of conduct of the company.
It would be ideal if your company could adopt as nearly as your company’s circumstances permit, the principles laid down in this Code. In any case, your company should adhere to a code which encompasses the principles of transparency, fairness, integrity, accountability, team work, due process and procedures in the governance of the company. The Directors must then signify their commitment to be bound by this Code.
Retain the services of these key consultants:
It is advisable to retain the services of the following:
- An accountant: to manage your books of accounts and the company budget.
- Auditor: to audit your books of accounts
- Lawyers: to advise you on which laws and regulations apply to your business so as to always remain compliant.
- Tax consultant: to advise you in-depth on tax management for your company.
Read again next week; we will discuss the different types of meetings and resolutions of a company.
Kokunda Patience- Associate Partner Lawgic Advocates