September 1, 2025

Background
In a unanimous decision delivered on the 22nd of August 2025, the Court of Appeal reaffirmed Uganda’s position that foreign lenders are not required to register locally in order to enforce contractual rights in Ugandan courts. This judgment further strengthens Uganda’s stance as a jurisdiction open to cross-border lending and international finance, echoing the judicial reasoning applied in the recent Simbamanyo Estates Ltd v Equity Bank (U) Ltd & Ors, a case we analyzed in our August Edition.

The Case

Between 2012 and December 2014, Vantage Mezzanine Fund II Partnership (“Vantage”) entered a Mezzanine Term Facility Agreement (“MFTA”) with Simba Properties Investment Limited (“Simba Properties”) where Vantage extended a USD 10 Million facility to the latter. Security for the facility was created over shares in its related companies; Simba Telecom Limited, Linda Properties Limited, and Elgon Terrace Hotel Limited (all the companies and Simba Properties are together, the “Simba Companies”).

Upon default, the Simba Companies filed multiple suits in the High Court challenging the recovery process by Vantage, which were dismissed.

Vantage lodged documents with the Uganda Registration Services Bureau (“URSB”) to effect a share transfer in line with the Mezzanine Term Facility Agreement (“MTFA”). URSB declined to register the transfer, and Vantage lodged an application for judicial review with the High Court. The High Court found in favor of URSB on grounds that Vantage had no capacity to sue or bring an action in Ugandan courts as it was not registered under Ugandan laws.

An appeal against the decision of the High Court was lodged by Vantage to the Court of Appeal. In this article, we analyze the decision of the Court of Appeal (“the Court”), reflect on the challenges courts continue to face in cases involving foreign lenders, and outline the practical lessons for future transactions.

Analysis of the Court’s decision
The Court determined that foreign lenders carrying on one-off transactions are not required by law to be registered in Uganda in order to extend facilities to Ugandans or bring enforcement action in Ugandan courts. The Court emphasized that the phrase “carrying on business” under the Partnerships Act, implies continuous, ongoing business activity in Uganda, rather than isolated transactions.

Court also held that registration is only required where a firm has a place of business in Uganda, defined by a physical address or sustained commercial presence.

On this reasoning, a foreign lender who advances a facility to a Ugandan borrower without establishing an office or local presence cannot be said to be “carrying on business” in Uganda. Vantage’s involvement with Simba Companies was limited to providing the facility and seeking to enforce its contractual rights. This did not amount to “carrying on business” in Uganda and therefore did not trigger the mandatory registration obligation that is applicable to partnerships based in Uganda.

The Court ruled Vantage had the right to enforce its rights under the MTFA in Ugandan courts without being registered under Ugandan law.
This decision reinforces a consistent judicial trend: Uganda remains a lender- friendly jurisdiction that facilitates cross-border financing without imposing unnecessary technical barriers. The Court distinguished between isolated lending transactions and continuous business activity which has provided clarity on when foreign lenders need register locally.

The decision is also an important complement to Ham v DTB (Supreme Court) and Simbamanyo Estates V Equity Bank (High Court), which held that foreign lenders are not required to register and obtain licenses locally in order to extend credit to Ugandan borrowers. Together, the decisions demonstrate a coherent policy direction that Ugandan courts will enforce legitimate contractual arrangements involving foreign lenders and resist attempts by defaulting borrowers to frustrate recovery on technical grounds.

Conclusion

The Court’s decision offers much-needed clarity on the distinction between “transacting” in Uganda and “carrying on business” within the meaning of local registration laws. For the financial services sector, this distinction is critical. It reassures international lenders that advancing credit to Ugandan borrowers, taking security, and enforcing rights under cross-border financing arrangements do not, in themselves, amount to “carrying on business” in Uganda so as to trigger local registration requirements.

This decision is a positive step towards ensuring that borrowers cannot weaponize
technicalities around registration to evade their repayment obligations.

Disclaimer:
This publication is for general consumption and should not be taken and relied upon without seeking specific legal advice on any of the matters above.