Revitalizing Capital Markets in Uganda


This Court decision is important for preserving free competition in the capital market’s space, clarifying on the meaning of public interest considerations in the regulation of securities in Uganda and reigning in the abuse of regulatory power. It also protected and preserved the participation of small investors who have investible funds to trade in new innovative and accessible financial products available on the applicant’s securities exchange.

On the 28th of February 2020, the Honourable Justice Ssekaana Musa delivered judgment quashing the decision of Capital Markets Authority herein (the Respondent)  that led to the cancellation of  ALTX East Africa Ltd herein (the Applicant)’s approval to operate as a securities exchange.

The applicant was represented by Mr Ebert Byenkya, Oscar Kihika and Dinah Mukasa of Byenkya, Kihika and Co advocates.


ALTX East Africa is a securities exchange owned by ALTX Africa Group, a holding company whose target is to establish a set of fully interconnected markets in Africa with full access to each other.

Securities exchanges are key components of the Capital markets industry because they provide an avenue where investors to make investments and also offer opportunities s for issuers to raise patient capital which propels economic growth.

The instant application for judicial review challenged the decision of the Respondent, a regulatory authority, to withdraw an approval previously granted to the Applicant to operate a stock exchange in Uganda. The approval was granted on 15th September, 2014 and the applicant has been in lawful operation since.

The Applicant argued that there are no “continuing approval requirements” and as such the Respondent had no power to introduce any new conditions for approval except those set out in the law by Parliament. The Applicant also argued that a notice of cancellation of approval by the Respondent could only be done on a public interest premise.

The applicant further submitted that the applicant was denied the right to a fair hearing and or the Respondent violated the principles of natural justice, a right both guaranteed under the 1995 Constitution and the Capital Markets Authority Act hereinafter referred to as ‘the Act’) was a lawful decision.

The Respondent justified the decision as having resulted from the Applicant’s refusal to comply with the requirements of the law relating to the regulation of securities exchanges in Uganda despite being given guidance, audience and several opportunities to be heard by the Respondent.

Court’s decision.

The powers conferred under The Capital Markets Authority where never intended to be exercised in such a way that would defeat the entire spirit of the Act of regulating operations of the stock exchange.

Court observed that is not enough for a public officer or decision maker like the respondent to claim reliance on the public interest principle to justify wrongful exercise of power. The test is of what is in public interest is two-fold; whether both the objective and the outcomes of the decision making process are in public interest. Secondly, whether the process adopted and procedures followed by decision-makers in exercising their discretionary powers are in public interest.

Court condemned attempts to rely on illegitimate considerations to substitute the right test for the public interest and observed that “interests of a small or narrowly defined group of people with whom the decision-maker shares an interest or concern can never amount to public interest.”

Court agreed with Applicant’s counsel that the respondent did not meet the public interest justification standard for recalling or cancellation for approval to operate a stock exchange by the applicant. The record as presented to court did not show any considerations of public interest.

The respondent acted illegally or unlawfully when it decided to cancel the approval of the Applicant to operate a securities exchange.

Court reaffirmed the mandatory principle of natural justice before taking decisions that may affect the livelihood of citizenry like cancellation of licences. Court further observed that failure to attend a hearing on being given short notice did not amount to a refusal to attend a hearing.

Court quashed the decision of respondent of the cancellation of approval to operate a securities exchange as communicated in letter dated 20th November 2019.

Key outcomes of the decision

  • Court reaffirmed public interest as a key consideration before cancellation of a licence by a regulator like the Respondent. The Respondent as a regulator has some power to issue directives to a stock exchange but the power to issue directives must also be based on a public interest premise.
  • Failure to attend a hearing following a short notice does not amount to refusal to attend a hearing. When the law envisages giving an opportunity of hearing before a decision is made against a person, then this means giving an effective hearing not merely a cosmetic hearing to justify a decision taken or to be taken.

The decision is welcome in the field of capital markets as it promotes opening up and competition the financial markets whose doors had been previously closed but have been granted the opportunity to participate in financial markets. The decision further restrains the power or regulators who are required to operate within the parameters of the law.

Should you require more information on this article, please do not hesitate to contact our own;

  1. Oscar John Kihika at 0772671717 /
  2. Ebert Byenkya at 0792203203/
  3. Dinah Mukasa at 0712776620 /

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