WHAT YOU SHOULD KNOW ABOUT INVESTING AND INVESTMENT LICENCES IN UGANDA
According to the Investment Code Act 1991, Section 15 (1 and 2), Uganda Investment Authority (UIA) shall issue to the applicant an investment license which shall; Authorize the holder of a license to make all arrangements necessary for establishing the business enterprise described in the license. The Executive Director shall liaise with Government Ministries and departments, local authorities and other bodies as may be necessary in order to assist an investment license holder to comply with any formalities or requirements for obtaining any permission, authorizations, licenses, land and other requirements for implementing the business enterprise.
After a company has been incorporated/ registered (foreign company) in Uganda, it is eligible for an investment license provided its capital investment exceeds US$ 100,000 (Foreign firms) and US $ 50,000 (Local firms).
Application for an investment license is made to Uganda Investment Authority. After all required documentation is submitted along with the filled application form, the investment license is issued within one week.
Documentation required includes:
- Copy of the Certificate of Incorporation
- Copy of the Memorandum and Articles of Association
- A business plan
- Proof of financial ability to implement proposed project i.e. bank statement or letter project support form a bank.
- Proof of proposed physical location of project Secondary Licenses.
There are some sectors that require regulatory approvals from the relevant entities and these include: energy generation, mining, banking, air transport, pharmaceuticals production, education and health. In most cases, the regulatory approvals/permits/or licenses must be acquired before applying for the Investment License.
BENEFITS OF AN INVESTMENT LICENSE
Benefits of an Investment License to the Holder
The benefits that accrue to the holder of an investment license include:
- Assistance in acquiring secondary licenses or approvals except in the following sectors, where a secondary license is mandatory i.e. mining, banking, drugs/ pharmaceutical, as well as the health and education services.
- Assistance in recommendations for various services e.g. loans from commercial banks, project development assistance from Development Partners, and introductions to Equity Funders etc.
- Assistance in recommendations and the follow up on the acquisition of work permits
- Assistance in access to land for investment. Industrial land can be allocated land in the operational and planned Industrial Parks and linkages to private land owners for purchase can be made.
- Possibility of Joint Venture Partnerships through the Match making of the licensed domestic investors with foreign inward missions, as well as the establishment of markets for licensed investors to supply raw material or finished products
- Participation in outward missions and organized international fora, at which licensed investors (domestic and foreign) get exposure, markets and machinery
- Timely access to the one stop centre for all necessary first hand information on any matters regarding their investment
- Provision of aftercare services in relation to specific challenges such as tax disagreements, closures due to non compliance, and support in negotiations with other parties e.g. Government Departments, equity funders, Community Based Organisations etc.
- Participation in free specialized training and workshops for especially domestic investors who need to build their capacity to measure up to best international practices in carrying out business with Transnational Corporations.
Benefits of an investment license to the Government
The licensing of investments in Uganda provides vital information for the Government in the following areas:
- The Monitoring of private sector inflows for purposes of formulating policies that will sustain and increase the current levels of economic growth and development
- The assessment of confidence levels of the private sector in the economy deduced from the trends of inflows
- The provision of timely and reliable data on foreign assets and liabilities to formulate policies that will guard Uganda’s economy from negative external effects experienced by down turns in the international economies. The data enables government to plan for mitigations against any such destabilizing effects.
- Management of the financial sector and planning for aversion of potential economic crises to foster stable growth. It is important in Uganda’s investment promotion, facilitation and retention efforts
- Better decision making and to meet international standards and codes in reporting
- Compilation of Uganda`s Balance of payments and International Investment Position statistics
- Assessment of how foreign investment complements local investment in form of feedback from the private sector, which is critical for policy fine tuning that benefits all stakeholders in the economy
- Assessment of the perceptions of the private sector investors on the investment climate in Uganda in order to evaluate the impact of the existing policies. This can be done from the results of the periodic private sector surveys carried out among licensed companies.
INVESTMENT (TAX) INCENTIVES IN UGANDA
The absolute exemption on plant and machinery only applies to plant and machinery used in the agricultural sector. The plant and machinery items are specified under paragraph 1(s) of the second schedule to the VAT Act.
Other importers of plant and machinery benefit from VAT deferment provided under the statutory instruments provided in the VAT Act.
Other incentives under the Income Tax Act include; Income tax exemption on exporters of finished consumer and capital goods produced in Uganda as provided under Section 21(1)(y) of the Income tax Act; and Income tax exemption on income derived by the person carrying on agro-processing.
In addition, investors also benefit from industrial building deduction as per Section 29, and for those in agricultural sector Section 35 provides for more allowable expenditure.
Other reasons why you should consider investing in Uganda
- Uganda attained and has had political and social stability since 1986.
- Effective macro-economic policies that maintained economic growth at an average of 6.5% and enabled the country to withstand external economic shocks during the global economic downturn from 2008 to 2011 during which the economy still grew by 3%
- Natural resource rich country (Human and Minerals).
- Totally liberalised foreign exchange regime.
- Consistently improving infrastructures.
- Trainable and fast adaptable workforce from over 30 universities.
- Welcoming population.
- No labour tensions.
- Dedicated Commercial and Industrial courts for quick resolution of business disputes
- A unique multi climate varies from winter on the snow capped Mountain Rwenzori in the west, to the temperate highlands of Western Uganda and tropical forests of the Central region as well as the semi arid North Eastern Uganda.
M/s Angualia Busiku & Co. Advocates
Plot 3 Parliament Avenue, Raja Chambers
Mobile Telephone: +256774477656
(Trademarks, company and investment law)
HOW DO YOU DETERMINE THE VALUE OF YOUR TRADEMARK?
In general, the value of a trademark is based directly on the trademark’s earning power. Where little or no income history is available, however, imagination, common sense and experience may be the best guides to apply in ascertaining a trademark’s value. In addition, studies of the industry in which the trademark will be used or the products marketed, market surveys of probable sale prices and expected profits, and opinions of industry experts may also be applied.
The value of a trademark lies in the goodwill associated with that trademark. Goodwill is an intangible asset that provides added value to the trademark owner’s worth (such as a recognizable brand). However, in many cases it can be quite difficult to ascertain the goodwill and then place a true value on it at a point in time, because of the many variables that must be considered. For example, reasonable people can differ on future expectations, such as opportunities for increasing the value of the trademark and competitive threats and marketplace risks to the trademark. Read more
Regional protection of trademarks in African states that are member states to the Banjul Protocol on Marks is achieved through registration of a trademark(s) in a member state (s) through ARIPO secretariat offices or directly through the Intellectual Property Office of the member state. The African Regional Intellectual Property Organisation (ARIPO) which is an Intergovernmental Organisation for Cooperation among African States on Matters of Intellectual Property is entrusted with the registration of marks and the administration of such registered marks on behalf of the Contracting States.
- A Service mark. This is a trademark that is used for advertisement of services. For example a hotel can register its mark for its services. Businesses use service marks to identify their services and distinguish them from the services of their competitors.
- A Collective mark. This is a trademark that distinguishes the goods and services of members of an association from those of any other undertaking. Collective marks usually belong to a group or association of enterprise. Their use is reserved to the members of such group or association.
- Certification mark. This is a mark indicating that the goods or services in connection with which it is used are certified by the proprietor of the mark in respect of the origin, mode or manufacture of goods, quality and other characteristics. The certification mark may only be used in accordance with the defined standards.
- Defensive mark. This is a trademark applied for by a trademark owner of a well known trademark for goods and or services that are not intended to be used by that owner. The purpose of filing a defensive mark is to reduce the possibility of other traders using the trademark for unrelated goods or services because the use of the trademark by a third party may cause confusion in the market place. For example the owners of Sumsung trademark which is widely known for electronics may register the same mark for other goods or services which may be plastics, beverages among others in order to prevent others from using the mark.
- An Associated mark. This is a trademark that is identical to another trademark which is registered or is the subject of an application for registration in the name of the same person in respect of similar goods.
It is a well established principle in trademarks law that the exclusive right to use a trademark applies to its use as a whole and not in parts. Many a times a trademark can be a composite trademark having various elements in it, and when the trademark is registered, the protection is provided to the mark as a whole and not in parts.
DANGERS OF USING UNREGISTERED TRADEMARKS AND BENEFITS OF REGISTRATION
What is a trademark?. Different authorities have given the meaning of a trademark. The Trademarks Act 2010 of Uganda defines a trademark to mean: a sign or mark or combination of signs or marks capable of being represented graphically and capable
of distinguishing goods or services of one undertaking from those of another undertaking.
For every successful and time tested corporate brand (trademark), that everyone wants to associate with, behind the scenes, a lot of effort and resources have been sunk into intricate trademark development and aggressive protection. Company brands and trademarks are amongst a company’s valuable assets. A study done by the UK’s IP office reveals that an estimated 6% of most company investments are spent in company brand protection.
Branding starts and centers around your use of distinctive images, symbols, colors and styles, and caricatures, which most appropriately separate and preposition your goods, or services as unique from others on the same market, giving both a protection to your customers and also acquiring brand image and build up brand loyalty amongst your consumers.
Dangers of using unregistered trademarks
Until a name or logo is registered as a trademark, you cannot be certain that it belongs to you. If another person or business registers the mark first, you may find yourself in the highly inconvenient and very costly position of becoming embroiled in litigation and potentially having to withdraw your products, redesign your packaging and marketing literature, and pay damages or an account of profits to the registered trademark owner. Besides the quantifiable costs, you could also risk any goodwill that you may have established in the brand name over the years, over a product that you have painfully taken years to create, just because you didn’t take the extra step of registering it.
Available research from world intellectual property organisation shows that over 80% of SMEs fail to register their trademarks. The majority think that it is not important to their business, with others citing lack of time, lack of understanding of the process of registration and costs associated with registration. By failing to register their trademarks, these businesses are not only damaging their brands and reputation, but also put their businesses at risk and in the end, loose out in the market battle.
Benefits of trademark registration
When you register your trademark, you ensure that you are in a position to prevent others from using or registering a similar one and that is the key to maintaining a strong brand.
Section 34 of the Trademarks Act 2010 is to the effect that a person may not institute proceedings to prevent or to recover damages for an unregistered trademark. Section 35 saves the right of action against a person for passing off goods or services as the goods or services of another or the remedies in respect of the right of action.
Protection under section 35 is only afforded to an unregistered trademark where a mark has acquired a substantial reputation. Even then, the hurdles to be over come in order to succeed in enforcing those unregistered rights against a third party, and the associated costs, are such that many businesses are inhibited from taking the legal action, and those that do, often fail.
By registering its trademark, a business greatly improves its ability to prevent a third party from using or seeking to register conflicting marks, and to seek appropriate remedies, such as an injunction and or damages, in the case of an infringement.
Trademark registrations are also valuable, transferable assets, which can be used as negotiating tools in business transactions and as security for financial transactions. Intellectual capital is recognised as the most important asset of many of the world’s largest and most powerful companies; it is the foundation for market dominance and continuing profitability of leading companies. It is often the key objective in mergers and acquisitions.
What to consider while developing a good trademark
Before coming up with the appropriate idea of a trademark, ask yourself, what your particular brand is and what word best expresses your brand. Also imagine what typography conveys the feeling of your brand. For example, what colors are consistent with your brand’s personality?. Your trademark can include a graphic, and if so, choose graphic expression which will best complement your brand. Finally, ask yourself the hard question on whether the trademark helps distinguish your brand from the competition?.
It is important that every business, however small, urgently puts in place an effective and proactive trademark development and registration strategy to ensure that all its brands are properly protected, and that those it enters into contract with to use the those brands are not going to land them in trouble with other trademark owners.
The use of effective trademark watching and monitoring procedures is also fundamental to the maintenance of a strong and enforceable trademark in the market; it helps to identify potential sources of conflict, including potential infringers, and prevents the dilution of one’s trademarks.
Where to find help
You should seek the advice of a trademark attorney for help in developing or implementing your trademark protection strategy. The trademark attorney should be in position to guide you through the trademark selection and registration process and advice on all aspects of the protection and enforcement of your trademarks.
M/s Angualia Busiku & Co. Advocates
Mobile Telephone: +256774477656
(Trademarks, company and investment law)
BMK House, 4th Floor, Suite No.402, Plot 4-5 Nyabong Road, Wampewo Avenue, (hotel Africana)
P.O.Box 27689 Kampala. Mob: +256774477656
ADVOCATES WITH EXPERIENCE
Angualia Busiku & Co. Advocates (Registration Number 179893) is a law firm which is comprised of lawyers with previous experience in government service, corporate institutions and law firms.
Outside the office working hours, we are available on video legal consultation after prior appointment.