The financial sector in Uganda operates under the 2004 Financial Institutions Statute that presents the financial institutions operating in Uganda. It is in a tiered structure as shown below;

Microfinance institutions can be registered as Limited Companies, Cooperatives or NGOs). These MFIs therefore abide by the laws that govern the particular form of legal status they have opted to take either the company Act, NGO Act or Cooperative society Act.

When registering a Microfinance Institution as a Ltd Company, the following apply:

• Companies limited by guarantee or by shares are registered under the Companies Act of 1961 in the Ministry of Justice by the Registrar of Companies.
• A minimum of two persons (Subscribers) is required in order to register a limited Company but the number should not exceed fifty as the status will then change from a private to a public limited company, which has other requirements that are different from a private company.
• The Company should have memorandum and Articles of Association signed by each Subscriber as one of the requirements for registration
• A Limited Company that wants to operate as a Microfinance Institution is not permitted under the Ugandan Law to mobilize savings from the public. Therefore, it has to mobilize its own resources to lend to its clients.
• A microfinance institution registered as a Company will also be required to obtain a license from the Uganda Microfinance Regulatory Authority (UMRA)
• Directors may exercise all such powers to run the business of the company including borrowing, or mortgaging or charging its undertaking within limits sanctioned by the general meeting

The process of starting a SACCO begins with community mobilization and sensitization. However, this has to be done after the promoters have established that there is demand for establishing a financial institution in that area. A SACCO is built on member-based co-operative principles and registration as a SACCO provides sufficient flexibility to mobilize savings from members and on-lend them.

The registration process includes:

1. SACCOs are registered under the Co-operative Societies statute of 1991 under the Ministry of Tourism, Trade and Industry by the Commissioner for Cooperative Development or his Assistants.
2. A minimum of thirty members is required in order to be registered as a SACCO and there is no limit to the maximum members. Membership to a SACCO entitles you to ownership of that SACCO however, no member, other than a registered Society can hold more than one-third of the paid-up share capital of any Co-operative Society.
3. Recommendation from the District Commercial Officer and by-laws signed by at least thirty of the qualified members are required before submitting the registration documents to the Commissioner of Co-operatives
4. In Societies registered with unlimited liability, a member shall not transfer or charge any share held by him, or his interest in the capital of the society unless he has held such a share or interest for not less than one year and the transfer is made to the society or its member
5. A registered SACCO shall not make a loan to any person other than a member, but with general or special sanction of the Registrar, a registered Society may make loans to, or invest or deposit funds in another registered Society
6. Any decisions that concern the SACCO are made by the members during the Annual General meeting that should be held every year

Yes. A registered society can only carry out business of financial services after obtaining a license issued by UMRA.

The Tier 4 Microfinance sector is governed by the Tier4 Microfinance Institutions and Money Lenders Act 2016. The law came into effect in July 2017 and it established the Uganda microfinance regulatory authority (UMRA), an independent body responsible for licensing, regulation and supervision of tier 4 microfinance institutions and money lenders.

a) Duly completed application form that can be picked from UMRA office
b) Certified copy of the Business Registration certificate (certificate of incorporation for a company issued by URSB or a Certificate of Registration for an NGO by the National Bureau of Non-governmental Organization, as the case may be
c) Certified copy of the registered Memorandum and Articles of Association, constitution, or other incorporation documents, as the case may be
d) Certificate of Good conduct of the Directors
e) Official notification of the company’s registered place of business (Head Office, Post address, branches, agency and outlets, if any)
f) Organization and management structure
g) Proof of payment of a non-refundable application fee

The Non-Deposit Taking Microfinance Institution must submit to UMRA annually no later than the 31st March of the following year, the audited financial statements and any other reports as may be determined by the Authority.

a) Duly completed application form that can be picked from UMRA office
b) Certified copy of the Business Registration certificate (certificate of incorporation for a company issued by URSB or a Certificate of Registration for an NGO by the National Bureau of Non-governmental Organization, as the case may be
c) Certified copy of the registered Memorandum and Articles of Association, constitution, or other incorporation documents, as the case may be
d) Certificate of Good conduct of the Directors
e) Official notification of the company’s registered place of business (Head Office, Post address, branches, agency and outlets, if any)
f) Organization and management structure
g) Proof of payment of a non-refundable application fee