Business name vs company in Uganda: choosing a structure
In brief
The key difference is legal personality. Registering a business name under the Business Names Registration Act, Cap. 105 simply records who is trading under a name — it does not create a separate legal person, so the owner or partners remain personally liable. Incorporating a company under the Companies Act, Cap. 106 creates a body corporate, separate from its members, that can own property and sue in its own name, usually with limited liability (s.20). A business name must be registered within fourteen days of starting business (Cap. 105, s.6), and failure to register makes the defaulter's business contracts unenforceable by action (s.9).
1. Governing law
A business name is governed by the Business Names Registration Act, Cap. 105. Every firm or person carrying on business under a name that is not simply the true surnames of the individuals (or corporate names of corporate partners) must be registered (s.2); the particulars must be furnished within fourteen days of commencing business (s.6); the Registrar General files the statement and issues a certificate of registration, which must be displayed (s.12). Default is an offence carrying a daily fine (s.8) and, importantly, a defaulter's rights under business contracts are not enforceable by action while the default continues (s.9). Registering a business name does not create a separate legal person — the individual or partners trade personally and bear personal liability. By contrast, the Companies Act, Cap. 106 creates a distinct legal entity: on incorporation the company becomes a body corporate, separate from its members, able to hold land and to sue and be sued in its own name, and the certificate of incorporation is conclusive evidence of registration (s.20); members of a company limited by shares are liable only up to any amount unpaid on their shares. Statutory text verified against the consolidated Laws of Uganda as at 31 December 2023. Sourced from the Uganda Legal Information Institute (ulii.org).
2. Key statutes & rules
- Business Names Registration Act, Cap. 105 — s.2 (firms and persons trading under a business name must register); s.6 (register within fourteen days of commencing business); s.8 (default: daily fine); s.9 (a defaulter's business contracts are not enforceable by action while in default); s.12 (certificate of registration; must be displayed).
- Companies Act, Cap. 106 — s.3 (formation of a company); s.20 (certificate of incorporation conclusive; the company is a body corporate separate from its members with capacity to own property and sue in its own name).
3. Practical guidance
Decide on liability and scale: a business name keeps you personally liable; a company gives a separate legal person with (usually) limited liability.
If trading under a business name, register it within fourteen days of starting (Cap. 105, s.6) and display the certificate (s.12).
Remember the enforceability trap: while a business-name default continues, your business contracts are not enforceable by action (s.9).
If you want a separate legal entity, perpetual succession and limited liability, incorporate a company (Companies Act; see the company-registration guide).
Match the structure to financing, tax and growth plans, and take advice on the trade-offs.
This note is a practitioner orientation, not legal advice, and does not create an advocate–client relationship. Ugandan law changes and chapter and section numbers were revised in the 2023 Laws of Uganda. Verify every statute, rule and authority against the current primary source — and the specific facts of your matter — before filing or relying on it.