The legal and regulatory framework governing access to equity finance in Uganda

Abstract

This study critically examines the legal and regulatory barriers to equity financing for High-Growth Enterprises (HGEs) in Uganda, enterprises which play a vital role in driving innovation, employment, and economic transformation. Using a qualitative approach that combined doctrinal analysis with field interviews involving regulators, institutional investors, and HGE managers, the research identifies taxation inefficiencies, rigid capital markets regulations, weak corporate governance structures, and investor risk aversion as the main obstacles limiting access to equity. Findings reveal that despite Uganda’s comprehensive legal framework, including the Companies Act, Capital Markets Authority Act, and recent reforms such as Limited Liability Partnerships, the practical environment remains unfavorable, with high compliance costs, cultural biases toward debt, and underdeveloped venture capital markets hindering growth. Institutional investors like pension funds and insurance companies also remain cautious, preferring government securities over equity participation in HGEs. The study concludes that Uganda’s equity financing ecosystem is underutilized and misaligned with entrepreneurial realities, and recommends legal, policy, and institutional reforms to reduce tax disincentives, simplify regulatory processes, mobilize domestic capital, and build investor readiness among HGEs. Strengthening the equity finance framework would unlock the growth potential of these enterprises and contribute significantly to Uganda’s economic competitiveness and sustainable development