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Wealth and Investment

Special edition on
Succession and
Estate planning

In collaboration with
AF Mpanga Advocates ENS Africa Arcadia Advocates East Africa Venture Capital Association (EAVCA)
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Stanbic - Wealth and Investment (WI)

The Wealth and Investment proposition centres on
managing, growing and protecting the generational
wealth of our clients and their families. Our
Bernice Kamahunde Mvano goals-driven investment approach allows our clients
Head Wealth & Investment
Stanbic Bank Uganda
to take a long-term view of their investments, whilst
simultaneously meeting their short-term lifestyle
needs.The Wealth and Investment focus is on finding
out what matters most to the clients, by
understanding the dreams, goals and ambitions they
have for themselves, their families and their
businesses. The WI team crafts a financial plan that
ensures they are living their desired lifestyle, safe in
the knowledge that the generational needs of their
families are taken care of.
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Our Wealth Quotient Plan

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Access to:
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Creating Value Giving Purpose
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Tax Structuring and Planning

for Estates In Uganda
AF Mpanga Advocates

Introduction
Tax structuring and planning involves understanding
the tax laws and regulations related to estate
planning and implementing strategies to minimize
the tax burden on the estate.
General Key Considerations
Here are some key considerations and strategies for
tax-efficient estate planning in Uganda:
1. Understand the Inheritance Tax: Uganda
does not currently have a specific inheritance
tax. However, it is important to consider other
applicable taxes, such as capital gains tax and
stamp duty, which may be triggered during the
transfer of assets.
2. Should one keep assets in a company/Trust or
Not?
3. Will and Testament: Creating a valid will is
essential for effective estate planning. A will
allows you to specify how your assets should
be distributed and can help minimize tax
implications by utilizing exemptions and reliefs
available under the law.
4. A transfer of assets from the estate to the
beneficiary attracts stamp duty, whereas a
transfer from the deceased person to the
administrator does not attract stamp duty.
5. Trusts: Establishing a trust can provide various
benefits for estate planning. Trusts can help
protect assets, provide for specific beneficiaries,
and potentially reduce tax liabilities.
6. Life Insurance: Life insurance policies can be a
useful tool for estate planning. The proceeds from
a life insurance policy are generally tax-free in
Uganda and can be used to cover estate expenses
or provide for beneficiaries.
7. Asset Valuation: Accurate valuation of assets
is crucial for estate planning, especially for
calculating potential tax liabilities. Ensure that
your assets are properly appraised to establish
their fair market value.
8. Marital deductions: transfer of assets between
spouses does not attract capital gains tax.
9. Transmission of shares in a company from the
deceased to a beneficiary do not attract capital
gains tax.
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Common Assumptions Vs Reality
1. Assumption that Uganda has an inheritance
tax. Reality: There is no inheritance tax in
Uganda.
2. Assumption: All inherited assets are subject to
tax: Reality: In Uganda, the mere act of inheriting
assets itself does not trigger a tax liability.
However, income generated from inherited
assets, such as rental income or dividends, may
be subject to income tax in the hands of the
beneficiary.
3. Assumption: There is a fixed tax rate for
inherited assets. Reality: The tax treatment of
inherited assets depends on the type of asset and
the income generated from it. Different tax rates
and rules may apply to different types of income,
such as rental income, dividends, or capital gains.
4. Assumption: The recipient of an inheritance must
pay tax immediately. Reality: Tax on inherited
assets is generally due when income is earned
from those assets. For example, if a beneficiary
sells an inherited property and realizes a capital
gain, the capital gains tax becomes payable at the
time of the sale.

5. Assumption: The value of the inherited assets is
the same as the taxable amount. Reality: In some
cases, the taxable amount may not be the same
as the fair market value of the inherited assets.
Certain deductions, exemptions, or reliefs may
be available under the law, reducing the taxable
amount.
6. Assumption: Inherited assets abroad are not
subject to Ugandan tax. Reality: Uganda follows
the worldwide income principle, which means
that residents are generally subject to tax on
their worldwide income, including income
earned from inherited assets located outside
the country. However, double tax treaties, if
applicable, may provide relief from double
taxation.
7. Assumption: Informal transfers of inheritance
are tax-free. Reality: Even if an inheritance
transfer is conducted informally, it is still subject
to tax obligations. It is important to adhere to the
tax laws and properly account for any income
generated from inherited assets.
Types of Asset vehicles subject to tax in
Uganda
The Income Tax Act imposes taxes on every person
who has chargeable income for the year of income.
A person includes an individual, a partnership, a
trust, a company, a retirement fund, a government,
a political subdivision of a government and a listed
institution.
When selecting what establishment to use, different
considerations are made based off the nature of
business and assets to be held, the tax deductions
and benefits, the various tax obligations among
others.
Taxation of Trusts in Uganda
When establishing and managing a trust in Uganda,
there are several key aspects of taxation applicable
to trusts in Uganda to consider:
1. Income Tax for Trusts: Trusts in Uganda are
subject to income tax on their chargeable
income. (Section 70- 73 of the ITA). The income
of the trust is generally taxed at 30%.
2. Trustee’s Tax Obligations: The trustee of a
trust is responsible for filing a separate tax
return for the trust and paying the income tax
due on behalf of the trust. The trustee must
register for tax purposes with the Uganda
Revenue Authority (URA) and obtain a Tax
Identification Number (TIN) for the trust.
3. Taxable Income of the Trust: The taxable
income of a trust in Uganda is calculated
similarly to other persons/taxpayers. It includes
income generated from all geographical sources
for a resident trust and income sourced from
Uganda for non-resident trusts. Specific sources
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include; rental income, dividends, interest,
capital gains, and other income earned by the
trust’s assets. Deductions and allowances
applicable to corporations are also available to
trusts.
4. Withholding Tax: If the trust receives income
from certain sources, such as dividends, interest,
or royalties, the payer of such income may be
required to withhold tax at the applicable rates
before making the payment to the trust. The
trustee can utilise this as a withholding tax credit
when calculating the trust’s overall tax liability.
5. Capital Gains Tax: If a trust sells or transfers
business assets and realizes capital gains, it may
be subject to capital gains tax. Capital gains are
generally taxed at a rate of 30% imposed on
the gain realized from the sale or transfer of the
asset.
6. Compliance and Reporting: The trustee of
a trust is required to keep proper accounting
records and submit an annual tax return to the
URA, disclosing the trust’s income, deductions,
and tax payable. Failure to comply with tax
obligations can result in penalties and interest
charges.
NB: There are similar requirements and obligations
with a company.
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Ronald Kalema Vanessa Mbekeka

Partner, Head Tax Practice
AF Mpanga
LLB, Makerere University, LLM New York University
Ronald Kalema is a partner in the Corporate
Department and Head of our Tax Practice.
He has twelve years of high-level tax advisory
and litigation experience, having held senior and
managerial positions at both KPMG and Ernst &
Young.
Ronald has advised major Ugandan and
multinational companies across various sectors
on issues ranging from tax dispute resolution and
tax audit support to tax restructuring, customs
planning, international tax, transfer pricing, tax
policy and the tax implications of private equity
transactions and mergers and acquisitions.
Notably, he has extensive experience in assisting
clients whose tax disputes have reached the Tax
Appeals Tribunal.
LLB (Hons), Post Graduate Diploma Legal Practice, Certified Tax Advisor ICPAU
In addition to an LLM in International Taxation
from the New York University School of Law,
Ronald has a Post Graduate Diploma in Legal
Practice from the Law Development Centre
where he won the Uganda Law Society prize for
academic excellence, and an LLB from Makerere
University, where he graduated among the top
5% in his year.
He is a member of the East African Law Society
and the Uganda Law Society where he is actively
involved with the tax cluster. He has successfully
led discussions with the Parliamentary Public
Finance Committee on adoption of key tax
amendments for Uganda.
Associate
AF Mpanga
Mbekeka Vanessa M is an Associate at
AF Mpanga and is an Advocate of the
High Court and all courts subordinate
thereto. She is a member of the East
African Law Society and Uganda law
society. She completed the Certified
Tax Advisory course with the Institute
of Certified Public Accountants
Uganda. She is a specialized tax
practitioner with about 5 years’
experience having worked at Grant
Thornton and Ernst & Young.
Vanessa has advised multi-sectoral
clients on the legal and tax implications
of their various business transactions
and undertakings.
She has experience drafting tax
opinions, handling tax objections, tax
audits and reconciliations, tax health
checks, private ruling applications,
representation at the Tax Appeals
Tribunal, and applications for tax
exemptions among other tax-related
matters.
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A Private Equity
Perspective
Estate and Succession Planning in
Family-Owned Businesses (FoBs)
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1 | A Private
A Private Equity Perspective
Equity Perspective | |Estate
Estateandand Succession
Succession Planning
Planning in Family-Owned
in Family-Owned Businesses Businesses

Presentation Scope
A Private Equity Perspective-Estate and Succession Planning in FoBs

This presentation addresses the following questions:

1. What are the defining characteristics of FoBs in Uganda?

2. What are the capital needs of FoBs, and what are the potential sources of capital?
3. What is private equity financing, and what is the value-add of the financing option to an FoB?
4. What estate and succession planning considerations should an FoB take into account when seeking
out private equity financing?
5. How can FoBs leverage private equity financing in the estate and succession planning process?
6. What are the risks to FoBs associated with Private Equity Financing, primarily as relates to family and
succession planning, and how can these be mitigated?

Classified as Internal use only

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A2Private Equity
| A Private Equity Perspective | Estate
Perspective | Estate and Succession
and Succession PlanningPlanning in Family-Owned
in Family-Owned Businesses Businesses

Uganda’s Family-Owned Businesses (FoBs)

Defining Characteristics of FoBs with a turnover of +$5 million

Dominant Sectors Sector Breakdown Annual Revenues

Transport
7.2% Agriculture
Telecommunications 11.65%
1.4% Consumer Goods
Real Estate 7.2% 5.8%
Education
.
Manufacturing Agriculture Food and Beverages 1.4%
21.7% 11.6% 17.4% Oil & Gas 4.3%
Financial Services
Media 1.4% 8.7%

Food &
Leisure and Beverages
Traditional Sectors: Most FoBs operate in traditional Tourism 7.2% 17.4%
sectors, which take up a big share of Uganda’s economic
Industrial
output (GDP).These sectors tend to be fast growing when a Manufacturing
country is relatively poor such as Uganda. Healthcare
21.7% 4.3%
Multi-Sector Focus:A Significant number of FoBs are large
conglomerates with interests across various sectors often Tertiary Sectors: Besides the dominant sectors, the other half of Revenue: by virtue of operating in multiple sectors,
structured as a group of companies. FoBs operate across ten (10) sectors, largely in the tertiary sector. hedging the risk of sector concentration, FoBs earn
substantive revenues of $10 million -$100 million.This
Source:Asoko (2020) East Africa’s Family Owned Business Landscape applies to FoBs with annual revenues of +$5million.
Classified as Internal use only
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A3Private Equity
| A Private EquityPerspective
Perspective | |and
Estate Estate and Succession
Succession Planning in
Planning in Family-Owned Family-Owned Businesses
Businesses

Financing the Growth of FoBs

Capital Needs and Sources

Financing Needs Financing Sources

Horizon FoB Financing Needs

Auto-financing
1. Expansion in existing markets through (retained earnings)
Short term organic growth, Internal financing
financing 2. Funding day to day operations,
needs Family members
3. Development of new or improved
investing in equity
products or services.
Financing Sources

1. Acquisitions, Bank debt

Long term 2. Expansion in new geographical markets,
financing 3. Expansion in new sectors
External financing
needs (diversification).
Private equity

Source: KPMG (2014) Financing Matters | Financing Family Business Growth through individual investors
Classified as Internal use only

A4
Private Equity
| A Private Perspective
Equity Perspective | | and
Estate Estate and Succession
Succession Planning inBusinesses
Planning in Family-Owned Family-Owned Businesses
Unpacking Private Equity
Patient Capital - An Alternative Capital Source for FoBs
with….
Product : A product or service with
•a competitive edge or unique selling
point.
Team : An experienced management
•team able to drive company growth.
This is important as investors are not
involved in the day to day
management of the company.
Growth potential : High growth
•prospects in a market and evidence
A Private Equity of ability to obtain substantive market
Investment Fund share.
Business plan : Sufficiently ambitious
• Growth Stage
•but realistic development prospects
Private Equity :
with a focus on companies that are
Range of $250,000 to looking for capital to grow into new
$10 million per markets or restructure operations.
investment in a Interest is in projected annual profits
company. (EBITDA) of 20-25%.
• Mid Private Equity :
Range of $10 million
to $100 million per
investment in a
company.
Classified as Internal use only
Invests capital in the companies
in the form of either….
Invests in mature companies
•Equity financing – this involves
take up of a minority or majority
equity position –by an investor in
exchange for capital.The funding is
unsecured (no collateral) and the
investor shares the risks (losses) and
rewards (profits) with the founders.
•Quasi-Equity /Mezzanine
financing – this is subordinated
debt that blends features of debt
with features of equity. It is
subordinated to pure debt but senior
to equity. It allows founders to
retain ownership but often has
embedded options for converting
debt into equity.The funding is
unsecured (no collateral).
•Private debt financing- this is
senior debt , but differs from
commercial bank debt as it is offered
by non-bank institutions. Ownership
is retained by the founder .The
funding may be secured. Interest rates
have a fixed timeframe and conclude
when the debt matures.
Hold its investment interests in
the company for a period of …
•3-5 years- medium term horizon
•OR
•5-10 years- long term horizon
13
During the holding period, the At the end of the holding period,
investor creates value in the exit their investment in the
company by…. company through either….
•Board oversight : Get sits on the •Exit by management buyout –
board so that they can adequately the Founders buy back shares held by
guide a company towards growth. For the investor, with the investor exiting.
equity and quasi equity providers, as This may be the best option for FoBs
they do not request (collateral) as it ensures full ownership of
security for capital extended, their interests reverts back to the family at
oversight at board level is also a the end of the holding period.
means to ensure their investment is
secure.Through their oversight role,
•Exit by trade sale – The investor
the board can influence decisions to transfers their [majority or minority]
enhance a company’s EBITDA.
equity interests in a company to a
strategic acquirer.
•Valuable connections : For
companies that have expanded as far
as their various resources or •Exit by secondary buyout – The
management team can take them, investor transfers their [majority or
investors offer access to a wealth of minority] equity interests in a
company to another investor.
invaluable resources accessible
through their network.These may
include operational executives, •Exit by Initial Public Offering
industry experts, new suppliers, –Listing on the stock exchange
economies of scale and access to through an Initial public offer.
new markets.
•BUT
•Non-participation in
management : Investors Do not
engage in the day to day management
of the company. For this reason,
investors will typically want to invest
in a company with a sound and
competent management team.

A5
Private Equity
| A Private Perspective
Equity Perspective | | and
Estate Estate and Succession
Succession Planning inBusinesses
Planning in Family-Owned Family-Owned Businesses
Private Equity and FoBs
Estate and Succession Planning Considerations
Generation Personal Motivations and Priorities
Legacy versus business continuity
(what the family/ FoB seeks to achieve as relates to the
generational transition.This influences ownership and
management transition decisions)
1 st Legacy and family togetherness : Maintaining family
Generation control and leaving a legacy for the 2 nd generation (children)
(Founders) to inherit is a key driver for the 1 st generation.
Business continuity :A secondary priority for the founder
is to minimise conflict between children- particularly where
children may not get along. Here, the founder may choose-
during their lifetime- to grant some children ownership of
the company, and in fairness, bequeath other children with
other [real estate] properties outside the business.
2nd Legacy and family togetherness : Sentimental
Generation attachments to [departed] parents who founded an FoB
(Children of make keeping the business in the family an overriding
Founders) motivation for the 2 nd generation, with very little appetite
for even partial transfer of control, even where the business
may benefit from alternative financing.
3rd Business continuity: The priority is often to 1) minimise
Generation family conflict and litigation–often between cousins and
(Grand different family branches- 2) continue the family
Children of legacy-regardless of who leads [or owns] the company as
Founders) either a family or non-family member.
Classified as Internal use only
Defining Characteristics Suitability When to seek private equity
of private financing
equity
financing
The 1 stgeneration (Founders) of FoBs often possess a strong Moderate Succession Motivation: Want to
drive and have a clear vision for the company both during and build a business empire to outlast
nd
beyond their lifetime. In developing countries such as Uganda, ones own lifetime into the 2 and 3
they build their businesses in traditional sectors driving GDPs generation but lack adequate
of developing economies, and leverage on personal networks financing (own or bank debt) or
and political ties to build their businesses towards success. technical ability to drive aspirations
relating to acquisitions, diversification
into new products, or expansion into
new markets.
nd
The 2 generation observed their parents build the FoB (from Succession motivation: Similar to
scratch), were personally mentored by the 1 stgeneration, the above, but due to sentimental
therefore retaining and pursuing the original vision, and are able reasons, may not be open to transfer
to quickly resolve inter-sibling conflicts relating to the FoB as Low of minority ownership as would be
they shared a similar upbringing in the same household.They the case under equity financing.
also may still have and maintain the political connections their
parents built the business on.
rd
The 3 generation often lacks the vision, drive and [business] Succession motivation: Cousins
st nd
connections as did the 1 and 2 generation, and may not have interested in the business may want
sentimental attachments to the company as their parents did. to buy out those not active or
Many are better educated than previous generations –mostly interested.Those not active or
abroad- and may want to pursue careers outside the family interested may want to liquidate their
rd High
business. Further, by the 3 generation, the FoB’s ownership [equity] positions in the company and
may split among cousins who may not have a similar upbringing move on to their own lives and
or strong relationships as their parents did for amicable pursue their own personal and
resolution of conflicts arising, resulting in litigation. business aspirations.
14
Ideal private equity financing
options
Mezzanine financing or equity
financing with minority stake with
rd
management buyout as the agreed
upon exit strategy.An exit by
management buyout would ensure the
business ownership reverts to the
nd
family for the 2 and subsequent
generations to inherit.
Mezzanine financing with
management buyout as the agreed
upon exit strategy.As mezzanine
financing allows owners to retain
ownership to the extent possible
(unless equity options rights are
triggered), this may be suitable.
Equity financing with no restrictions
on exit options if business continuity is
st
the core objective.The Founders (1
generation) must anticipate and plan
for the eventuality of non-family
ownership in their will under
provisions for share transfer (i.e. who
can and cannot own shares in the
company in subsequent generations).
 A6
Private Equity 15
| A Private EquityPerspective
Perspective | |and
Estate Estate and Succession
Succession Planning in
Planning in Family-Owned Family-Owned Businesses
Businesses

Risks and Risk Management Strategies

FoB Strategies for Mitigating Risks and Challenges associated with Private Equity Financing

FoB Concern Risk Mitigation Strategy by the FoB Private Equity Risk Mitigation Strategy by the FoB
(Risk) Concern (Risk)

Concern Remedy : Sale only a minority stake in the business to a private equity firm. Concern Remedy : Streamline corporate governance
Loss of control Poor corporate policies, practices and systems prior to seeking
This will ensure: governance out private equity financing.
1. The FoB retains majority control of the business. within FoBs and
2. The FoB gains incremental access to capital and subject matter expertise from the investor and the unclear lines of Aspects of good corporate governance include:
investors’ network of advisors and consultants. separation 1. A properly constituted Board
3. The owners of the FoB obtain liquidity for their equity positions transferred to the investor. between family 2. A clearly and explicitly drawn line between
and business. the business and the family.
Concern Remedy : Conduct due diligence on private equity firms to assess the alignment between the practices of
3. Evidence of management accountability.
Misalignment the capital provider with the FoBs needs and expectations.
between the
expectations of the Aspects to assess include:
FoB and private 1. The history of the private equity firm in investing in FoBs.
equity investor 2. References from other FoBs the private equity firm has invested in previously.
3. The private equity firms’ experience in the sector in which the FoB operates.
4. Alignment of the private equity firm’s exit strategy with the needs of the FoB as regards succession
planning (e.g. planned exit by management buyout as opposed to trade sale to a strategic acquirer)
5. Alignment of private equity firm’s investment horizon with that of the FoB with a preference for
those with longer holding periods (5-10 yeas).
6. The governance protections that are available to the FoB owner.
7. Clarity from the private equity firm on what value uplift the partnership will result in i.e. on how the
private equity firm intends to create value over and above what the owner can achieve on their own.
Classified as Internal use only
 16
A7
Private Equity
| A Private Perspective
Equity Perspective | | and
Estate Estate and Succession
Succession Planning inBusinesses
Planning in Family-Owned Family-Owned Businesses

Conclusion and Key Takeaways

A Private Equity Perspective-Estate and Succession Planning in FoBs

The following are the key takeaways:

1. Private Equity financing can be an important alternative source of capital and financing for large and established (mature) FoBs
with aspirations consisting of Acquisitions, Expansion in new geographical markets or Expansion in new sectors (diversification).
2. Besides extending capital access to an FoB, the private equity financing model ensures that an FoB has access to a resource pool
of expertise to accelerate business growth.
3. For the 1 stgeneration (founders), private equity can provide a company with the needed impetus for growth. On exit by the
private equity firm through a management buyout, the founder can hand over to subsequent generations a sound business.
4. For the 3rdgeneration (founders’ grandchildren), private equity can provide an avenue through which different conflicting
branches of the family can liquidate their positions and exit.The Founders (1st generation) must anticipate and plan for the
eventuality of non-family ownership in their will under provisions for share transfer (i.e. who can and cannot own shares in the
company going forward).
5. To manage risks associated with private equity investors, such as loss of control, owners of FoBs can opt for minority stake
private equity investments. Most investors in Africa take on minority positions.
6. To qualify for private equity financing, FoBs must strengthen their corporate governance policies, systems and structures

Classified as Internal use only

 17
A8
Private Equity
| A Private Perspective
Equity Perspective | | and
Estate Estate and Succession
Succession Planning inBusinesses
Planning in Family-Owned Family-Owned Businesses

References and Useful Resources

Asoko Insight. (2020).East Africa's family-owned business landscape
. Asoko Insight.

BVCA. (2010). A Guide to Private Equity. BVCA.

Deloitte. (2020). Private company issues and opportunities 2020- Family business edition
. Deloitte.

EVCA. (2007). A guide to private equity and venture capital for entrepreneurs. EVCA.

KPMG. (2014). Family matters | Financing family business growth through individual investors
. KPMG.

KPMG. (2023). Succession planning in family businesses

. KPMG.

OECD. (2015). New approaches to SME and entrepreneurship financing: broadening the range of instruments
.

OECD.

Classified as Internal use only

 18

A Will:
As a tool to protect
business and
preserve wealth.
Presentation by Isaac Bakayana.
Advocate with Arcadia Advocates. Lecturing Estate
Planning at School of Law, Makerere University.

A Will: As a tool to protect business and preserve wealth.
Why must you have a Will?
• A business (property) is built over a lifetime.
• The business owner will grow it, will make forecasts,
will give it direction, find customers, not sleep, have
dreams (nightmares)…
• Just like planning for the business, a plan for what
happens to the business upon the pioneer’s death, is
important/very important…
• Manage the future and the risk associated with the
future (business continuity and preservation of
wealth).
But what is a Will?
• Will is – a “Wish; desire; choice”. It is a “legal expres-
sion of an individual’s wishes about the disposition of
his or her property after death;…a document by which
a person directs his or her estate to be distributed
upon death…”
• A Will is a wish or desire or choice about what a person
desires to be done with their property, their remains,
their business upon death.
• A Will may stipulate who should or should not attend a
burial, the color of clothes that should be used, which
child has been a nuisance.
When to draft a Will?
• Drafting a Will commences in thought and will be
complete upon fulfilment of all legal requirements.
• To start a business, maintain it successfully and
generate wealth that will run across generations takes
a lot of ingenuity, time and effort.
• As a business runs during the lifetime of its proprietor
(s), the writing of the Will should also be running
simultaneously.
• The Will, upon fulfilling the few legal requirements,
is a document that carries ideas, principles, themes
against which the business was built or should be
preserved.
• During the proprietor’s lifetime, he/she should identify
individuals within and outside the family that have the
skill to run the business.
• The beneficiaries of the Will need not be the managers
of the business.
• Therefore, running the business today, must run
simultaneously with writing the Will.
• Better still, if the business is run through a successful
structure, that ought to be suggested/maintained in
the Will.
• A Will for emphasis contains the desires/wishes of
the author. So, the author will write his/her desires/
wishes for his/her business.
19
How to draft a Will?
• Though a Will may not remove conflict in a business/
family, it reduces the chances of conflict.
• If preparing the Will commenced with the business,
the Will will re-affirm what is already in place.
• A Will must be signed by its author and his/her
signature attested to by two adults.
• A Will being the “wishes” of the maker contains: The
author’s particulars, confirmation of soundness of
mind, A person’s history, burial site and distribution of
roles for the burial, Spouse (s) (If any).
• Child (ren).
• Property (if any) and its management or distribution
• Heir.
• Executors.
• Desires/Word of advice, Signatures (of author and
witnesses), date.
• Writing vague Wills.
• Running a business and giving no thought at all to its
continuity.
• Being “surprised” by the onset of death and making a
Will in those circumstances.

A Will: As a tool to protect business and preserve wealth.
• Amending a Will under the influence of “new
influencers” and abandoning the ethos on which the
business was built, run and managed.
• Introducing “new” people to the business who have no
business acumen
• Making complex Wills that may be impossible to
implement (at times making “unacceptable” Wills).
• Making a Will without duly assessing the strengths
and weakness of the beneficiaries in whose charge the
business is placed.
• Making a Will to punish either a spouse or a child
(writing a Will not on business principles).
Recommended practices:
• Have a Will.
• Write a Will (on clear principles) simultaneously as
you run the business.
• Avoid a discussion of the Will during your lifetime
especially with the potential beneficiaries/or
keeping it within their reach.
What of a Trust as a wealth
preservation tool?
• A trust is a proprietary (property) relationship
involving the owner (settlor), the trustee (the
manager) and the beneficiaries.
• It is has been labelled as one of the greatest
innovations of the English man because of its
versatile nature and the capacity to be put to
various uses.
• For the preservation of wealth, it can be used
to protect the beneficiaries against themselves
(protective trusts), the Trustees can be
empowered to confer benefit when they deem it
fit (discretionary trusts), can confer benefit to the
beneficiaries but without giving them the asset
(entitlement to income and not capital), can benefit
the children and their children (life tenants and
remainder persons), can be used to encourage the
hard-working beneficiaries (advancement).
20
• In the creation of the trust, the owner (settlor)
appoints suitable trustees to manage the property/
run the business.
• Appoints other professionals to render services to
the trust while simultaneously conferring benefit
onto the beneficiaries.
• The trustees manage the property/business, are
fully accountable to the beneficiaries, but the latter
are not permitted to interfere in the function of the
trust.
• Therefore, a trust if well utilized and appropriately
designed, is a tool for preservation of wealth.
• Thoughts as we end…
• Grow the business.
• The World will continue after you, so must your
business.
• Your business should not follow you after your
death.
• The business generation of tomorrow, starts its
training today.
• It is your Will. Its pulse should be business
preservation.
 21

Corporate
governance for
family businesses
By Donald Nyakairu & Martha Mutamba
30 June 2023

Corporate governance for family businesses
Scope of presentation
• Introduction: What is corporate governance and why is it important?
• Principles of corporate governance
• Forms of business ownership
• Environmental, Social and Governance (ESG)
• How to effectively implement corporate governance
• Separation of ownership and control
• Corporate governance for family-owned businesses
Intention of presentation
• Understand corporate governance and its importance
• Understand relationship between shareholders, management and the
board of directors
• Understand why corporate governance is necessary to incentivize
good business practices
• How to implement corporate governance in the most effective way
• Relevance of good corporate governance practices for family owned-
businesses
Introduction
• Corporate governance involves a set of
relationships and the networks between a
company’s management, its board of directors,
its shareholders and other stakeholders
• It can be defined as the system by which
companies are directed and controlled
• It is the structure through which the objectives
of a company are set and the means in which
those objectives are attained and monitored
• It is a key tool for reconciling divergent interests,
planning for strategy and succession, accessing
capital, cultivating a company image and
ensuring legal compliance
Why is corporate governance
important?
• Improved share performance
• Good corporate governance ensures the
shareholders get a fair return from their
investment
• Improved operational performance
• Improved oversight, monitoring and evaluation
• Effective decision making
• Succession planning
• Improved access to external financing
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Principles of corporate
governance
• Responsibility – Companies should
ensure that procedures and structures are
in place so that people know what they are
responsible for and what they are liable to
account for.
• Accountability – Companies should clearly
set out who is accountable for what and over
what time period, so that stakeholders are
clear on who they should hold responsible.
• Transparency – Clarity of process in
making decisions and carrying them
out. Transparency builds trust between a
company and its stakeholders.
• Fairness – All key stakeholders should be
treated fairly when decisions are made or
actions are taken by a company.

Corporate governance for family businesses
Forms of business ownership
• Sole proprietorship
• Partnership
• Joint venture
• Private limited liability company
• Single member company
• Company limited by guarantee
Environmental, Social and Governance
(ESG)
• New priorities in the business of the future
• It is the framework for responsible corporate action
that reconciles social and environmental concerns in
business operations
• More and more family business leaders are confronted
with the fact that ‘stakeholders’ expect them to
actively contribute to solving global challenges. The
bar is higher than ever, and they are expected to take
responsibility – not only for their company´s financial
performance but also for societal goals, for a better
world
• ESG strategy: to position companies as leading
providers of sustainable, responsible, and innovative
products and services – and to demonstrate
exemplary corporate governance
23
How to effectively implement corporate • Management reports and is accountable to the board
governance of directors
• Balance board composition – Greater diversity on • The board of directors reports and is accountable to
boards introduces new ways of thinking and better the shareholders at the annual general meeting
decision making
Corporate governance for family-owned
• Evaluate the board regularly
businesses
• Ensure director independence • Founders are often the owners, decision makers and
managers in family-owned businesses
• Ensure auditor independence – Have both internal
and external auditors • This can create conflict with other family members
who may have different views as to the future direction
• Transparency – Share accurate, clear and easy to
of the business
understand information with stakeholders. Both good
and bad news • Corporate governance attempts to keep conflict at a
minimum
• Define shareholder rights
• It ensures long-term sustainability of the business and
• Aim for long-term value creation
is a key tool in succession planning
• Document policies and procedures
Separation of ownership and control
• Shareholders own shares in a company – an intangible
interest in an intangible entity.
• Shareholders delegate the right to control a company
and use its assets to the board of directors and
management of the company
• The board of directors and management have the
time and expertise to get the most out of a company’s
assets for the benefit of the company – which returns
value to the shareholders

Corporate governance for family businesses
Implementing corporate governance in family-owned
businesses
Shareholder level
• Agree on and document the family’s
vision, mission and values for the
business. This allows management to
be aware of the direction the business
should be moving in and under what
ethical framework.
• Agree on the process for appointing,
and the number of family members to
be appointed to the company’s board of
directors.
• Agree on a mechanism for family
members to sell their shareholding
and exit the company – pre-emption
rights, shares first offered to the existing
shareholders before they can be sold to
outsiders.
24
Board level
• Where the board is made up wholly of
family members, the board may set
up an advisory board or appoint non-
executive directors who are experienced
and respected, to support the family
in areas such as strategic planning,
marketing, development of human
capital and expansion into new markets
Management level
• Education and career planning to ensure
family members have the expertise to
take up management positions in the
company to ensure control stay with the
family.

Donald Nyakairu designation:
Partner, ENSafrica
LLB (Hons) (Makerere University)
LLM (University College, University of London)
Diploma in Legal Practice (Law Development Centre, Kampala, Uganda)
Donald Nyakairu is a Partner at ENSafrica l Uganda. He
is a highly experienced corporate commercial lawyer. He
has particular expertise in the information technology and
telecommunications sector, having acted as managing
director, chief legal counsel and company secretary at
one of the largest telecommunications solutions providers
in Uganda for 10 years. He is a registered insolvency
practitioner and has been involved in several insolvency
matters both as provisional administrator, a receiver and
has advised on business rescue. He advises several clients
operating in national and international payment systems.
Donald has been involved in various telecom sector
studies including rural community development funding,
determination of interconnection rates, mobile money,
spectrum re-farming and quality of service. He was
chairman of the Finance and Commercial Group for the
Eastern Africa Submarine Cable System and participated in
the drawing up of various documents including the contract
with the supplier and the construction and maintenance
agreement. Donald also served as the chairman of the
East African Backhaul System and, accordingly, has in-
depth knowledge and experience in respect of telecoms
infrastructure development.
His experience further includes advising clients in respect
of M&A, encompassing the evaluation of financials, due
diligence and post acquisition restructuring.
Donald is a respected former diplomat who, during his
posting to the Uganda High Commission in London, was
responsible for all Commonwealth-related matters. He
liaised with the Commonwealth Secretariat and numerous
international bodies in the United Kingdom such as the
International Coffee Organisation, Centre for Agriculture
and Biosciences International, the International Sugar
Organisation and the Commonwealth Partnership for
Technology Management.
Donald represents many corporate clients and assists
companies in setting up their local operations in Uganda and
with their regulatory compliance. His clients also include
banks, large corporates, insurance companies, fintechs
which he advises on licensing, various aspects of recovery,
business restructuring and securitisation.
He is a member of the following professional bodies/
associations:
25 25
• Uganda Law Society and the East African Law Society
• Commonwealth Partnership for Technology Management
– Networker
• Visiting lecturer on telecommunication law – International
Law Institute, Kampala, Uganda
• Member of Ministerial Task Force on the development of
ICT Infrastructure in Uganda – 2007
• Member of Procurement Committees for various World
Bank/African Development Bank projects including the
Project implementation Unit of the Ministry of Education,
National Water and Sewerage Corporation and the
Ministry of Works, Transport and Communications
Donald is recognised as a leading/recommended lawyer by:
• IFLR1000 Financial and Corporate Guide; Banking, M&A
– 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015
(Uganda)
• Chambers Global Guide 2023, 2022, 2021, 2020, 2019,
2018, 2017, 2016, 2015 – General Business Law (Uganda)
• The Legal 500 EMEA 2023, 2022, 2021, 2020, 2019, 2018
– Legal Market Overview (Uganda)
 26 26

Martha Mutamba
Associate, ENSafrica
LLM (London School of Economics and Political Science)
LLB (Hons) (University of Dar es Salaam)
Diploma in Legal Practice (The Law Development Centre)

Martha Mutamba is an Associate at ENSafrica reports, preparation and review of transaction

in Uganda. She specialises in M&A, corporate
restructurings, energy and general corporate
commercial advisory.
Her experience includes advising clients on
corporate and commercial matters, M&A
processes, conducting legal due diligence
investigations, preparation of due diligence
documents and drafting a number of commercial
documents including shareholders’ agreements
and share purchase agreements. Martha has also
been involved in advising telecommunication
companies on share and asset purchases.
Martha is a member of the Uganda Law Society
and East Africa Law Society.
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