Insolvency Act

Defines interpretation and key terms used throughout the Act.

A debtor is presumed unable to pay debts in specified circumstances; a contingent or prospective creditor may petition for liquidation only with the court's leave, and the court may grant leave only if satisfied a prima facie case exists.

A creditor must make a statutory demand for a debt at least the prescribed amount, in the prescribed form, verified by statutory declaration unless it is a judgment debt, served on the debtor, and requiring payment or other security within twenty working days or a longer period as ordered by the court.

The court may set aside a statutory demand on application by the debtor; the debtor must apply within ten working days, support the application by affidavit and serve it on the creditor within ten working days; the court may extend time, set conditions, order payment within a specified period, or dismiss and make insolvency orders.

A debtor may petition the court for bankruptcy; if the debtor fails to satisfy a statutory demand a creditor or the debtor must present a petition; the court may make a bankruptcy order subject to sections 21 and 22; the Official Receiver has powers to sell or dispose of perishable or diminishing-value goods unless the court limits those powers; bankruptcy commences on the date the order is made.

The court must require a debtor (in respect of whom a petition under section 20 has been presented) to file a verified statement of affairs; failure is an offence punishable by a fine not exceeding twenty-four currency points or imprisonment not exceeding one year, or both.

When a bankruptcy petition is presented the court must order a public examination; the debtor must attend and be examined on affairs, dealings and property, answer on oath, and certain persons (creditors, Official Receiver, trustee) may take part or question the debtor; the court may make directions including dispensing with the examination for unfit debtors.

The court may require certain persons to submit an affidavit about their dealings with the debtor or to produce documents relating to the debtor’s dealings, affairs or property.

The Official Receiver must, within fourteen days after the commencement of the bankruptcy, give public notice of the date of commencement and call the creditors' first meeting.

The creditors' first meeting must appoint a trustee and vest the bankrupt's estate in the trustee.

The trustee must, within five working days after appointment, give public notice containing their full name, office address, daytime telephone number, electronic address, and the date the bankruptcy commenced.

On the making of a bankruptcy order, the bankrupt's estate shall vest first in the Official Receiver and then in the trustee.

The court may appoint a person as special manager of a bankrupt’s estate, certain businesses or property; the trustee or interim receiver may apply; a special manager shall have powers and duties as the court gives.

Section Duties of trustee Section Without prejudice to subsection (1) , a trustee shall— permit those accounts and records to be inspected by— The fundamental duty of a trustee is to collect, realise as advantageously as is reasonably

A trustee must, within four working days after issuing the notice under section 24 (or within a further period the court allows), send written notice to every known creditor explaining their right to require a creditors' meeting under section 46; the court must consider any non-compliance by the debtor with section 21 when deciding on an extension.

This Part applies to foreign companies; 'company' includes a foreign company; 'property' means property in Uganda.

This Part applies to foreign companies; 'company' includes a foreign company and 'property' includes property in Uganda.

If a court appoints a receiver the receivership begins and takes effect as specified in the court order; in other cases the receivership begins and the appointment takes effect when the receiver accepts the appointment in writing.

If a non‑court appointment of a receiver is found invalid, the court may order the appointing person to indemnify the receiver; bona fide transactions of the receiver are not affected.

Receivers must give public notice within fourteen working days of receivership; must immediately notify the grantor in writing on appointment; when the grantor is a body corporate the receiver must deliver the notice to the Registrar and Official Receiver within fourteen working days; non-compliance with subsection (4) is an offence with specified defences and penalties.

A receiver must exercise their powers in the best interests of all persons for whom the receiver was appointed and must have regard to the interests of specified parties when acting over property in receivership; the receiver is prohibited from certain defences and from taking compensation or indemnity for liabilities arising from breaches of duty.

A receiver must take custody and control of property under receivership and perform specified duties including registering assets, investigating affairs, giving notice of interest, keeping money and accounts separate, maintaining accounting records, retaining records for at least six years, and causing registration of recovered land.

A receiver has the powers given by the appointing document and, unless excluded, may perform specified actions (different powers for administrative receivers, and different powers where the grantor is a company or an individual).

A person who pays money or gives other consideration to a receiver is not required to inquire whether the receiver was validly appointed or authorised to act.

When a company (the grantor) is in administrative receivership, the company and its directors/secretaries must not exercise functions or powers except with the administrative receiver’s approval; the grantor must provide documents, information and assistance to the receiver and, if required, verify completeness by statutory declaration; directors/secretaries must comply as if they were the grantor; non-compliance is an offence punishable by a fine of one hundred sixty-eight currency points or up to seven years imprisonment.

Section gives the grantor the permission to bring actions against receivers, secured creditors or others; requires the grantor to establish a prima facie case and provide security for costs in such actions; allows the court to entertain inter partes applications and to grant extensions of caveats or encumbrances on conditions; makes persons who publish notices that obstruct receivers liable for compensation and creates an offence punishable by a fine up to twenty-four currency points or up to one year imprisonment.

If a person does not comply with section 187 or a receiver's request (on application by the receiver), the court may order the grantor or any director or secretary to comply and may make ancillary orders.

A receiver is personally liable for wages, salary and allowances (including sickness and holiday) but not for payments in lieu of notice; receiver's liability for certain rent or payments is limited to amounts accruing within seven days after commencement of the receivership; nothing in subsections (3) or (4) shall be taken as adoption by the receiver or render the receiver liable for other obligations under the agreement.

A receiver is entitled to be indemnified out of the property under receivership for personal liability under section 190 and for reasonably incurred remuneration and expenses; the section also lists limits on what this provision does not do.

The court may relieve a receiver from personal liability incurred during receivership if satisfied the liability arose from a defective appointment or the receiver acted honestly and reasonably; the court may also direct, impose terms, and apportion liability.

A receiver must, subject to the appointing document, within forty working days after appointment prepare and send a preliminary report on the state of affairs of the property in receivership to the persons referred to in section 195(2).

A receiver must, within twenty working days after the end of every six months during the receivership and after the termination of the receivership, (report as specified).

A receiver must send copies of reports to specified recipients, may omit prejudicial matters (but must note the omission), must provide copies on written request within ten working days on payment of a prescribed fee, and must allow entitled persons to inspect reports during regular business hours.

Defines "proceeds" for the section and sets an order of priority under which certain claims specified in section 11(3), (4) and (5) are to be paid before payment of any claim of the secured creditor; it also states that payments made under this section may be recouped as an unsecured debt.

Receivers may resign by giving at least five working days' written notice to the appointer (or to the interested person if appointed for them); a person leaving the receiver's office must give information and assistance to their successor; unreasonably refusing that information is an offence punishable by a fine up to twenty-four currency points or imprisonment up to one year, or both.

Receivers may be appointed (or continue) and may exercise all receiver powers over property of a company in liquidation or a bankrupt individual, subject to subsection (2) and unless the court orders otherwise; a receiver holding office may act as the grantor’s agent only with the court’s approval or the written consent of the liquidator or trustee.

Court may, on application by certain parties, give directions about a receiver's functions and may review remuneration, order refunds, and determine appointment or control of property; a receiver who acted under a court direction is entitled to rely on it as a defence subject to subsection (4) and subject to a court's power to remove that protection.

Specifies who may apply to court under this section; grants the court powers to relieve a receiver of duties, order compliance, remove the receiver, and make preservation orders including requiring documents; requires proceedings be served on the Official Receiver and kept on a public file; defines “failure to comply.”

The court may order termination of a receivership, persons including a liquidator, administrator, provisional liquidator or trustee in bankruptcy may apply to the court, and the receiver may appear and be heard.

The Registrar or the court may direct that fines (whole or part) be applied to costs or rewarded to the informant; the Registrar must pay money collected under this section into the Consolidated Fund.

The High Court has jurisdiction over company matters and may order cross-border insolvency proceedings; a court presided by a chief magistrate has jurisdiction over individual insolvency matters up to fifty million shillings.

Identifies the acts of specified insolvency office-holders and committees.

A person required to give public notice must insert the notice in at least one issue of a widely circulated Ugandan newspaper in the official language.

Dispositions of a company's property made after the commencement of a court liquidation are void unless the court orders otherwise.

If insolvency proceedings are started against a company listed on any stock exchange, the company must notify the Capital Markets Authority in writing within fourteen working days of commencement.

Persons convicted of an offence under this Act for which no other penalty is specified are liable to a fine not exceeding twenty-four currency points or imprisonment for up to two years, and must pay a default fine.

Subject to the Access to Information Act and the Data Protection and Privacy Act, any person may request and access information or data held by a trustee, receiver, liquidator, administrator or supervisor.

The Minister may make regulations by statutory instrument to carry the Act into effect; those regulations may prescribe forms, procedures, fees and other matters and may set penalties including fines (up to one hundred currency points), imprisonment (up to one year), and continuing-offence daily fines (up to ten currency points).

The Minister may amend the Schedules to this Act by statutory instrument with the approval of Cabinet.

Rules of equity and common law relevant to corporate insolvency, bankruptcy of individuals and receivership apply except where they conflict with this Act.