How to start a steward owned business in Uganda?
Find out all about Steward Ownership, why it’s an important opportunity for building impactful and long-term businesses in Uganda, and how to set up a steward owned company structure in the Ugandan legal context.
What is Steward Ownership?
Find out all about it here. Make sure to check the video and Purpose book via that link!
Or read this contribution from one of Rootical’s friends.
Steward-ownership is an ownership and governance model that aligns the interests of entrepreneurs, workers, investors and society. It is based on two principles:
Entrepreneurship equals ownership, or the Company owns itself
(self-governance, self-determination);
Profits serve the company’s purpose. They are a means to an end, not an end in itself.
It’s a hack of venture capitalism and corporate ownership structures, to build businesses that make a positive difference. It’s a movement, quite old actually, but gaining a lot of traction globally in more recent years. Small family businesses to multinationals like Rolex, Bosch, Zeiss, Ecosia, Carlsberg, and more recently, Patagonia, they are all steward owned in their unique way.
Why Steward Ownership with Rootical?
Steward ownership is new in Uganda, and Rootical aims to contribute to pioneering structures that align the needs of the venture alongside partners like Fresh Ventures, Purpose, the DOEN Foundation and other core investors. Steward ownership is a key pillar of our approach to lock-in the purpose of the regenerative businesses we build together and protect them from mission drift, absentee ownership, push for exit, short term-ism, and other flaws of the classic venture capital model.
How about the legal context in Uganda?
Rootical has conducted a legal study titled “Setting up a Steward Owned business in Uganda” in 2022. The study shows that SO is possible within the legal framework in Uganda with two main options.
The best option seems to be the Golden Share model, with a purpose lock-in by means of a Company limited by Guarantee (which is not allowed to pay out profits) holding a golden share in one or more companies limited by shares (the classic limited liability company). The former holds the purpose lock-in in the latter, for-profit entity.
Another option is the Trust-Foundation model. However, the downside of this model is that there is barely any law governing private trusts which could make the structure difficult to understand for start-up entrepreneurs. In addition, the trust deed would need to be amended for each new company seeking to allocate a golden share to it. Download the Rootical study below to learn more.
