PUBLIC ENTERPRISES REFORM AND DIVESTITURE ACT.

(a) "appointed day" means the date appointed by the responsible Minister by statutory instrument made under section 29(1) for the vesting of the undertaking of a public enterprise named in the instrument in the successor company of that enterprise;

(b) "associate", in relation to a person, means—

(i) a body corporate of which that person beneficially owns or controls, directly or indirectly, shares or securities currently convertible into shares carrying more than 10 percent of the voting rights (either under all circumstances or by reason of the occurrence of an event that has occurred and is continuing) or a currently exercisable right or option to acquire such shares or securities;

(ii) a partner of that person acting on behalf of the partnership of which they are partners;

(iii) a trust in which that person has a substantial beneficial interest or in respect of which he or she serves as trustee or in a similar capacity;

(iv) a spouse or child of that person; or

(v) a relative of that person or of his or her spouse, if the relative has the same residence as that person;

(i) in relation to a public enterprise that is a company, the board of directors of that enterprise; and

(ii) in relation to any other public enterprise, the persons occupying the positions in or in relation to that enterprise that are comparable with those of the board of directors of a company;

(d) "committee" means the Divestiture and Reform Implementation Committee;

(e) "currency point" has the meaning assigned to it in the Third Schedule to this Act;

(f) "Development Credit Agreement" means the Development Credit Agreement entered into on the 9th"> day of January, 1992, between the Republic of Uganda and the International Development Association;

(g) "divestiture" means the transfer of the proprietary interest in, or operational control of, a public enterprise or its assets from the State or that enterprise to private persons utilising one or more of the methods referred to in paragraph 7(1) of the Second Schedule to this Act, and includes where appropriate the winding up or dissolution of that enterprise;

(h) "divestiture account" means the divestiture account established by virtue of the Development Credit Agreement;

(i) "financial year" means the financial year of the public enterprise;

(j) "instrument" includes—

(i) any instrument of any form or kind that creates, evidences, modifies or extinguishes rights, interests or liabilities or would do so if it or a copy of it were lodged, filed or registered under any enactment; and

(ii) any judgment, order or process of a court;

(k) "liabilities" means liabilities, debts, charges, duties and obligations of every description, whether present or future, actual or contingent, and whether payable or to be observed or performed in Uganda or outside Uganda;

(l) "line Minister", in relation to a public enterprise, means the Minister responsible for the sector in which that enterprise falls;

(m) "net book value" means the value in accounting terms of total assets less total liabilities and includes shareholders' interest or equity or net worth;

(n) "present value" means the current hypothetical price of a given quantum of future profits as a basis for determining the notional value of an enterprise;

(o) "private", in relation to ownership of an enterprise, means ownership by persons other than the State;

(p) "property" means property of every kind whether tangible or intangible, real or personal, corporeal or incorporeal and, without limiting the generality of the foregoing, includes—

(i) choses in action and money;

(ii) goodwill; and

(iii) rights, interests and claims of every kind in or to property, whether arising from, occurring under, created or evidenced by, or the subject of, an instrument or otherwise and whether liquidated or unliquidated, actual, contingent or prospective;

(q) "public", in relation to ownership of the proprietary interest in any enterprise, means ownership by the State;

(r) "public enterprise" means—

(i) an enterprise specified in the First Schedule to this Act;

(ii) any other body corporate, whether established under the Companies Act or under any other enactment, in which the State owns the whole or part of the proprietary interest or which is otherwise controlled directly or indirectly by the State; and

(iii) any company established for the purposes of, or in connection with, the divestiture of an enterprise specified in the First Schedule to this Act, whether pursuant to section 28 or otherwise;

(s) "redundancy account" means the redundancy account established by virtue of the Development Credit Agreement;

(t) "reform" means—

(i) the strengthening or improvement of the policies and procedures of a public enterprise and of its relationship with the Government; and

(ii) the restructuring of a public enterprise;

(u) "registrar" means the registrar of companies;

(v) "responsible Minister" means the Minister responsible for the reform and divestiture of public enterprises;

(w) "rights" means all rights, powers, privileges and immunities, whether actual, contingent or prospective;

(x) "shares" includes other proprietary interest;

(y) "State", in relation to the ownership of the proprietary interest in an enterprise, includes a statutory corporation;

(z) "subsidiary" has the meaning assigned to it in the Companies Act;

(aa) "successor company", in relation to a public enterprise, means the company in which the undertaking of the public enterprise is to be vested in accordance with section 29(1);

(bb) "undertaking", in relation to a public enterprise, means the property, rights and liabilities of the public enterprise;

(cc) "valuation" means an estimate of the worth of an enterprise.

2. Objectives of this Act.

(1) The main objective of this Act is to give effect to the Government Policy for Public Enterprise Reform and Divestiture published in Gazette No. 48 of 1st"> November, 1991, and also the Action Plan for Public Enterprise Reform and Divestiture.

(2) Without prejudice to the general effect of subsection (1), the following objectives shall be deemed to fall under the objective specified in that subsection—

(a) the reduction of Government equity holding in the public enterprises and thereby, inter alia, relieving the Government of the financial drain on its resources and the burden of their administration and raising revenue by means of divestiture, including, where necessary, liquidation or dissolution of public enterprises and by the promotion, development and strengthening of the private sector;

(b) the promotion of institutional arrangements, policies and procedures for—

(i) ensuring the efficient and successful management, financial accounting and budgetary discipline of public enterprises;

(ii) ensuring the separation of ownership and management functions;

(iii) enabling the Government to play its proper role more effectively as owner of public enterprises; and

(iv) enforcing accountability;

(d) the promotion of local entrepreneurship.

PART II
INSTITUTIONAL FRAMEWORK FOR REFORM AND DIVESTITURE.

3. Divestiture and Reform Implementation Committee.

There shall be a body to be known as the Divestiture and Reform Implementation Committee.

4. Membership of committee and participation in its proceedings and functions.

(1) The committee shall consist of the following members—

(a) the Minister responsible for finance who shall be the chairperson;

(b) the responsible Minister;

(c) four eminent Ugandans with considerable knowledge and experience in industry, commerce, law, finance or economics appointed by the Minister responsible for finance; and

(d) the chairperson of the Uganda Investment Authority.

(2) The Attorney General is entitled to attend personally or by a representative and participate in the proceedings of the committee in an advisory capacity without the right to vote.

(3) The line Minister shall be entitled to attend and participate in the proceedings of the committee and shall have a right to vote in respect of the reform and divestiture of a public enterprise under his or her sector and shall for that purpose be deemed to be a member of the committee.

(4) The committee may co-opt any person to assist the committee in carrying out its functions if the committee is satisfied that the person possesses expertise in relation to the public enterprise; but the person co-opted under this subsection shall have no right to vote on any matter coming before the committee.

5. Functions of committee.

(1) The committee shall be responsible for implementing the Government's policy on reform and divestiture of public enterprises under this Act.

(2) The committee shall also have such other functions as are prescribed by this Act.

(3) The committee may co-opt to any of its meetings any person whom the committee is satisfied can assist it at the meeting; and a person so co-opted may participate in proceedings of the committee at that meeting but shall have no right to vote.

(4) The proceedings of the meetings of the committee shall be as set out in the Fourth Schedule to this Act.

6. Disclosure of interest.

(1) If a member of the committee, or any associate of any such member, is directly or indirectly interested in a private or professional capacity in a matter being considered or about to be considered by the committee, the member shall, as soon as possible after the relevant facts have come to his or her knowledge, disclose the nature of the interest to the committee.

(2) A disclosure of interest under subsection (1) shall be recorded in the minutes of the meeting of the committee, and the member making the disclosure shall not—

(a) be present during any deliberation on the matter by the committee; or

(b) take part in the decision of the committee.

(3) This section shall, with the necessary modifications, apply to a person who is co-opted to a committee meeting as referred to in section 5.

PART III
INSTITUTIONAL FRAMEWORK FOR MONITORING.

7. Monitoring by Minister responsible for finance.

(1) The Minister responsible for finance shall—

(a) exercise a strategic economic monitoring role in relation to public enterprises; and

(b) liaise as necessary with line Ministers in monitoring the performance of public enterprises and in participating in the development and supervision of their operating plans.

(2) Without prejudice to subsection (1), the Minister responsible for finance shall—

(a) monitor public enterprise subsidies both direct and indirect with a view to the phased elimination of all public enterprise subsidies;

(b) identify financial flows and dues between public enterprises and the Government and arrange for their settlement; and

(c) oversee caretaker costs and activities of public enterprises which have been selected for divestiture and those that are financially distressed.

PART IV
MONITORING.

8. Operational principles.

In determining the policies, operational issues and plans of a public enterprise generally, the managers, directors and line Ministers of enterprises and the Minister responsible for finance shall be guided by the following considerations—

(a) the commercial objectives of the enterprise;

(b) the need for financial self-sufficiency of the enterprise;

(d) international and regional obligations of Uganda;

(e) inducement for Ugandan and foreign investment and participation in business by the general public.

9. Management of public enterprises.

(1) In the management of public enterprises, Government policy shall recognise the need for the following fundamental conditions—

(a) autonomy in public enterprise management, which shall be deemed to be freedom of the enterprise to manage its operational and financial affairs efficiently without interference or hindrance;

(b) accountability of public enterprises;

(d) rewarding good performance while censuring poor performance;

(e) clear definition of the functions of boards of directors;

(f) selecting experienced and qualified boards of directors, chief executive officers and managers.

(2) Government policy towards the management of public enterprises shall also be guided by the following—

(a) an institutionalised mechanism with defined and published procedures and criteria;

(b) elimination of nonobjective and other extraneous factors for public enterprise appointments;

(d) promotion of confidence, initiative, professionalism and excellence in management.

(3) The managers and directors of a public enterprise shall be persons who are qualified by training and experience to assist the enterprise in achieving its objectives.

(4) The board of a public enterprise shall be appointed by the shareholders of the enterprise in a general meeting in accordance with the Companies Act where applicable.

(5) The board of directors of the enterprise shall appoint the managers, including the chief executive, based on merit and open competition through public advertisement indicating the qualifications and experience required and interviews by competent panels.

10. Employee participation in ownership.

A public enterprise may provide for participation in the ownership of the enterprise through investment by its employees in shares and may, to this end, permit—

(a) individual, union, collective and institutional ownership of shares;

(b) payment of share calls and other dues through discounts, installments, bonus schemes and other arrangements intended to benefit employees.

11. Operating plans.

(1) The board of directors of each public enterprise under divestiture shall submit to the Minister responsible for finance and the line Minister a draft operating plan in respect of the activities of that public enterprise and its subsidiaries during the next succeeding financial year, not later than two months prior to the commencement of that financial year.

(2) Each operating plan shall contain such information and be in such form as is specified in guidelines issued to the relevant public enterprise by the Minister responsible for finance in consultation with the line Minister and shall include without limitation to the foregoing the following information—

(a) the objectives of the public enterprise;

(b) the nature and scope of the activities to be undertaken;

(d) the performance targets and other measures by which the performance of the public enterprise may be judged in relation to its objectives;

(e) an estimate of the profit that is intended to be distributed to the Government in respect of the relevant financial year; and

(f) the kind of information to be provided to the Minister responsible for finance and the line Minister by the public enterprise during the course of the relevant financial year, including the information to be included in each half yearly report.

(3) The Minister responsible for finance, in consultation with the line Minister, shall review the draft operating plan and send his or her comments on it to the board of directors concerned within one month after its original submission, and the board shall incorporate those comments into the operating plan in a manner satisfactory to the Minister responsible for finance in consultation with the line Minister and deliver the final operating plan to each such Minister not later than the date of commencement of the financial year with which the operating plan is concerned.

(4) An operating plan for a public enterprise may be modified by the board of directors of that public enterprise at any time if the boa

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