Law on Companies
A Company can simply be defined as a business which is incorporated under the Companies Act of Uganda Act No. 1 of 2012.
A company is made up of shares which can be explained as the value of the company itself. In order to have a stake in a company one must own shares in it- this is where the term shareholder comes from.
When a company is properly formed under that law it becomes a person in the sense that it can;
- own property
- have a bank account
- borrow money
- enter into contracts
- employ people
Because of the nature of a company, and the requirements involved in forming and fully registering a company as well as how they are managed, there are numerous advantages to incorporating a company as opposed to starting another type of business and these include the following:
- Corporate personality is endowed upon every properly registered company which means it can do business in it's own name own property and be liable as an entity for its decisions and actions.
- Companies are easier to securely deal with than individuals and preferred by many organisations and government agencies because a properly incorporated company can technically not just disappear. It has an address, it has multiple persons who can be held responsible as well as it's decisions being registered in the form of resolutions.
As mentioned before, a company is considered a legal person this means that the decisions of the company are made by the company- but as we all know, there are actual people who are running the company, so how does one know a decision made by an individual versus a decision made by the company?
Company decisions are made through resolutions. This is very important because without a resolution, the Company cannot be said to have made a decision..
The Companies Act directs that companies are managed through resolutions which are made at company meetings. There are two types of company meetings general meetings of the company and meetings of directors.
Meetings of Directors
Directors are the officials of the company who are charged with the day to day management of a company. The most basic decisions in running the company are made by the Company Directors.
The first Directors of a Company are appointed during the First Annual General Meeting of the Company- (this is explained in a few paragraphs)- but even before their appointment, if the Directors are not named at the formation of the Company then the subscribers to the Memorandum of Association of the Company are to be considered as the first Directors of the Company.
An example of a decision that the Directors can make is where there is a need to hire an employee. The Directors shall meet, decide that there is a need to employ someone else and thereafter resolve to contract a new employee as well as any other considerations such as the maximum salary the Company will be willing to pay. When the Directors have resolved to do this, they can issue the the appropriate orders to the people responsible for going through with this process.
General Meetings of the Company
Decisions of the Company are made at a meeting of the members which can generally be termed as a general meeting. At these meetings, the decisions are referred to as resolutions
A Resolution is a formal way/means by which decisions are made by a meeting of company members. If you desire more information about Company Resolutions please chat with our lawyers using the chat terminal