Partnerships and limited liability partnerships in Uganda

1. At a glance

This note is written for advocates and clerks advising founders on whether to structure a joint venture as an ordinary partnership or an LLP, for a partner in dispute with co-partners over profits or dissolution, and for anyone trying to work out whether a partnership that started informally years ago is still legally alive. It does not cover company incorporation as an alternative structure (see the companion note on that), nor winding up an insolvent company (a separate note in the foundation cluster) — only partnerships and LLPs under the Partnerships Act, 2010.

The Partnerships Act, 2010 (Act 2 of 2010) is cited by Act number, not a chapter number, so it is unaffected by the 2023 chapter-renumbering exercise that moved several adjacent registry statutes in this cluster (the Business Names Registration Act moved from Cap. 109 to Cap. 105 and the Trade (Licensing) Act moved from Cap. 101 to Cap. 79). But those adjacent statutes are relevant here — a partnership frequently trades under a registered business name, and s.14 of the Business Names Registration Act (notice of cessation of business) came up, and was distinguished, in the leading case below.

2. What counts as a partnership

Section 2(1) of the Partnerships Act, 2010 defines a partnership as the relationship which subsists between persons, not exceeding twenty in number (or fifty where the partnership carries on a profession), who carry on a business in common with a view to making profit. Every element of that definition does real work: there must be a business (not a one-off transaction), it must be carried on 'in common' (the partners must actually be operating it together, not merely co-owning an asset), and it must be for profit (a joint charitable or social venture is not a partnership under the Act, whatever the parties call it).

This definition is not merely academic. Because a partnership's existence turns on the actual carrying-on of business rather than on any particular document, the presence or absence of a signed partnership deed is evidence of the parties' intentions, not conclusive proof either way. A written deed helps enormously in practice — it fixes profit shares, management rights and exit terms that the Act would otherwise leave to default rules or silence — but it does not, on its own, guarantee that a partnership continues to exist if the partners' conduct has moved on.

3. Ordinary partnership: unlimited joint liability

In an ordinary partnership, s.9 makes every partner liable jointly with the other partners for all debts and obligations of the firm incurred while that person was a partner. This is unlimited liability in the fullest sense — a partner's personal assets are exposed to satisfy firm debts, and this exposure does not end with the partner's death: the estate remains severally liable in due course of administration. There is no mechanism in an ordinary partnership to cap a partner's exposure to their capital contribution.

This is the single most important commercial fact for a client to understand before entering an ordinary partnership. A partner who contributes a modest sum of capital but signs (or is treated in law as having agreed to) the firm's dealings can be pursued for the whole of a debt run up by a co-partner acting within the ordinary course of the partnership's business — the joint liability in s.9 is not proportional to each partner's stake.

4. The limited liability partnership: a different animal

Part VI of the Act creates the limited liability partnership as a distinct vehicle, not merely a variant of the ordinary partnership. Under s.47, an LLP consists of not more than twenty persons and must have one or more general partners, who remain liable for all the debts and obligations of the firm exactly as in an ordinary partnership, together with one or more limited liability partners, who contribute a stated amount of capital and are not liable for the firm's debts beyond the amount contributed.

The trade-off: limited partners cannot manage, and cannot withdraw capital

The protection an LLP gives a limited partner comes with a condition built into s.47 itself: a limited liability partner may not, during the partnership, draw back any part of the capital contributed. The practical corollary — well established in the general law of limited partnerships and consistent with the structure of s.47 — is that a limited partner's protection depends on staying out of the management of the firm; a limited partner who takes an active hand in running the business risks being treated as if they were a general partner for liability purposes. An advocate structuring an LLP for a client who wants both limited liability and a say in day-to-day decisions should flag this tension clearly: those two wants are, to a significant degree, in conflict under the Act's own design.

5. Registration and the twenty/fifty partner cap

Registration of a partnership is mandatory under s.4 — this is not an optional formality that only matters for tax or banking purposes. An unregistered partnership does not thereby cease to be a partnership as between the partners themselves (their mutual rights and obligations still arise from s.2(1) and the general law), but operating without registration exposes the firm and its partners to the consequences discussed later in this note, and complicates dealings with third parties, banks and regulators who will expect to see a registration certificate.

The Act caps ordinary partnership membership at twenty persons, rising to fifty where the partnership carries on a profession (the classic example being a firm of advocates, accountants or similar professional practice). A firm that exceeds the applicable cap is not a partnership recognised under the Act — clients expanding an existing partnership by adding new partners should check the running total against the cap before each admission, not only at formation.

The Partnerships Regulations, 2025 and the beneficial-owners register

Registration mechanics, ongoing filing obligations and fees sit in the Partnerships Regulations, 2025, and partnerships additionally maintain a register of beneficial owners under the Partnerships (Beneficial Owners) Regulations, 2023 — mirroring the equivalent beneficial-ownership regime for companies. Confirm the current prescribed fees and forms with the registry before filing, since fee schedules under subsidiary legislation are revised more often than the parent Act.

6. How the courts approach whether a partnership still exists

The leading Ugandan authority on when a partnership has actually come to an end is Walakira v Walusimbi. Two men entered a Deed of Partnership in 2008 to run a hotel business on land contributed by the plaintiff. A company, Jazzbridge Hotel Ltd, was later incorporated and, on the evidence, took over the running of the business. The plaintiff sued for dissolution of the partnership (which he maintained was still subsisting), an account, and a share of profits.

The court's reasoning has three practical layers that an advocate should keep separate. First, on the existence question: applying s.2(1), the test is functional, not documentary — a partnership is what the partners are actually doing, and if that activity has migrated into a company, the partnership has migrated with it, deed or no deed. Second, on evidence: because the written deed said nothing about what would happen on incorporation, the court was not shut out by the parol-evidence principle (which ordinarily restricts contradicting a written instrument with oral evidence) from hearing evidence of conduct — the deed simply did not cover the scenario, so conduct filled the gap. Third, on the court's power: although the plaintiff's counsel invoked s.37 (the court's discretionary jurisdiction to dissolve a partnership on application), the court found there was no subsisting partnership left to dissolve — s.37 presupposes a live partnership, so the dissolution claim itself failed on the facts even as the account-of-profits framing shifted.

A quietly important remedies point survives the loss on the main claim: the land the plaintiff had originally contributed to the partnership was held as tenants in common, and title to it had never been formally transferred into the successor company's name. The court treated that property as remaining subject to the partners' original agreement even though the partnership relationship itself had ended — a genuinely useful practical lesson: partnership property can outlive the partnership relationship where title was never moved, so a partner is not automatically left with nothing merely because the business has been incorporated away from under them.

The case also disposed of a losing side-argument on business names: the plaintiff sought to rely on s.14 of the Business Names Registration Act (notice of cessation of business) to argue the partnership's continuation. The court held that s.14 presupposes a registered business name, and there was no proof one existed on the facts, so the provision did not assist either side. This is a point about business-name law that the case declined to decide on the merits — it is worth reading alongside the companion note on Business name vs company in Uganda: choosing a structure, but Walakira should not be cited as deciding how s.14 applies to a business name that IS registered.

For the pattern of an informal founder arrangement predating a company's incorporation more generally, see Seremba Mark v Isanga Emmanuel.

7. Consequences of getting it wrong

The most common way partners come to grief is exactly the Walakira pattern: business drifts from a partnership into a company (often for perfectly good tax or liability reasons) without the partners squarely addressing what happens to the partnership itself, its property, and each partner's stake in the successor company. Years later, one partner feels shut out and sues for a partnership account — only to discover the partnership itself is found to have ended, so the claim has to be reframed (often unsuccessfully, and always at real cost) around what happened to specific assets rather than an ongoing partnership relationship.

Failing to register a partnership (s.4) or exceeding the partner-number cap (s.2(1)) does not necessarily dissolve the relationship between the partners, but it weakens the firm's standing with banks, regulators and third parties, and can complicate proof of the partnership's terms in any later dispute — an unregistered firm has less documentary footing to rely on.

In an LLP, a limited partner who involves themselves in management or draws back their contributed capital risks losing the very protection s.47 was designed to give them — converting what the parties intended as a ring-fenced investment into exposure indistinguishable from a general partner's unlimited liability.

8. Practical guidance and drafting tips

Draft the partnership deed to anticipate the Walakira scenario directly, rather than leaving it to be litigated years later. A well-drafted deed should say, in terms, what happens to the partnership, its property and each partner's economic interest if the business is later incorporated or otherwise restructured — whether the partnership is to be treated as automatically dissolved on incorporation, whether partners become shareholders in agreed proportions, and what happens to any partnership property (particularly land) that is not formally transferred into the new entity.

• Address incorporation head-on in the deed: if the business may later be moved into a company, say so, and set out how partnership property, debts and profit entitlements convert.
• Transfer title to any partnership property (especially land) into the successor company's name at the time of incorporation, not later — leaving title in the partners' joint names is exactly what created the residual dispute in Walakira.
• Keep contemporaneous records of the transition — board resolutions, asset-transfer agreements, correspondence showing the partners agreed the business was moving into the company — since conduct, not just the deed, is what the court will examine if the transition is later disputed.
• For an LLP, document each limited partner's contribution precisely and keep limited partners out of day-to-day management decisions, confining their involvement to consent/approval rights over major decisions.
• Register the partnership (s.4) and file with the beneficial-owners register promptly — do this at the same time as agreeing the deed, not as an afterthought.

Where a client comes to you mid-dispute — one partner claiming the partnership still exists, the other saying it ended when the company took over — start by establishing the facts of what actually happened to the business operationally (who invoiced whom, whose name is on the lease, who holds the trading licence) before reaching for the deed. Walakira makes clear the deed is only the starting point of the analysis, not the end of it.

9. Common pitfalls

• Assuming an ordinary partnership limits liability — partners are jointly liable for all firm debts under s.9, with no cap tied to each partner's contribution.
• Exceeding the twenty-partner cap (fifty for a profession) under s.2(1) without noticing, especially when admitting new partners to an established firm.
• Not registering the partnership under s.4, weakening the firm's standing and evidential footing.
• In an LLP, a limited partner taking part in management or drawing back contributed capital, risking the very protection s.47 exists to give.
• Treating a signed deed as conclusive proof a partnership still exists (or has ended) — Walakira shows the courts look at conduct and the actual carrying-on of business, not the paper alone.
• Leaving partnership property, particularly land, in the partners' joint names after the business has moved into a successor company, creating an unresolved ownership dispute down the line.
• Citing s.14 of the Business Names Registration Act as if Walakira decided how it applies to a registered business name — the case only held it presupposes registration, and found none proved on its facts; it did not rule on s.14's effect where a name is properly registered.

10. Grey areas and points to confirm

• Section 47's provisions on the limited liability partnership structure were not independently re-fetched verbatim from the current consolidated Act in this research round — the summary here is consistent with everything else found about the Act's structure, but a verifier should re-confirm the exact text of s.47 (and any neighbouring Part VI sections on LLP formation and conversion) before it is quoted directly in a filed document.
• No genuine leading case addressing an LLP dispute specifically (as opposed to an ordinary partnership) was located in this research round — the LLP-liability analysis above rests on the statutory text (s.47) rather than on judicial interpretation; treat it accordingly until a leading LLP case is identified.
• The current prescribed fees under the Partnerships Regulations, 2025 and the Partnerships (Beneficial Owners) Regulations, 2023 were not independently verified in this research round — confirm the current schedule with the registry before quoting a figure.
• Whether the 5-year professional partnership cap or any sector-specific variations exist beyond the general twenty/fifty split in s.2(1) was not separately checked; the fifty-partner threshold is stated here as applying to 'a profession' generally, consistent with the statutory text quoted in Walakira, but sector-specific regulatory overlays (e.g. for law firms specifically) were outside the scope of this research pass.

11. Practitioner checklist

1. Confirm the arrangement meets s.2(1): a genuine business, actually carried on in common, with a view to profit.
2. Count the partners against the cap — twenty ordinarily, fifty for a profession.
3. Decide ordinary partnership vs. LLP based on the client's liability appetite, and if an LLP, identify at least one general partner.
4. Draft a deed covering profit shares, management, exit, and — expressly — what happens if the business is later moved into a company.
5. Register the partnership (s.4) and file the beneficial-owners register.
6. For any partnership property (especially land), keep title documentation current and transfer it formally if the business is later incorporated.
7. If a dispute arises over whether the partnership still exists, gather evidence of actual conduct (invoices, leases, licences, correspondence) alongside the deed, not instead of it.
8. Before invoking s.37 for dissolution, confirm a partnership actually still subsists to be dissolved — Walakira shows that claim can fail entirely if the partnership has already ended in substance.

12. Sources and further verification

Statutory text for the Partnerships Act, 2010 (s.2(1), s.4, s.9, s.37) was verified against the Commercial Court's own verbatim quotation in Walakira v Walusimbi and cross-checked against the consolidated Laws of Uganda. Section 47 (the LLP structure) was not independently re-fetched verbatim in this research round — see grey-areas above. Statutory text verified against the consolidated Laws of Uganda as at 31 December 2023. Sourced from the Uganda Legal Information Institute (ulii.org).

Before filing anything relying on this note, re-confirm the current text of s.47 and the current Partnerships Regulations, 2025 fee schedule directly with the registry or the consolidated Act, and re-check Walakira v Walusimbi ([2016] UGCommC 92) in full for any point being quoted directly to a court.