KAMPALA, Uganda — The Uganda Supreme Court ruled Friday that companies without explicit restrictions on transferring shares to noncitizens cannot legally own Mailo land, reaffirming constitutional limits on foreign land ownership.
The landmark decision also allows innocent purchasers to recover funds in voided transactions to prevent unjust enrichment.
The ruling stems from a dispute over land in Plot 7, Block 118, between Biyinzika Farmers Ltd. and Biyinzika Enterprises Ltd., involving competing claims and cross-border financial elements.
The court held that a company is considered a noncitizen under the Land Act if its articles of association do not explicitly restrict the transfer of shares to non-Ugandans. This classification applies even if Ugandan citizens hold the majority of the company’s shares.
Under the Ugandan Constitution and the Land Act, noncitizen companies are barred from owning Mailo land. The court declared any purported ownership or registration of Mailo land by such companies illegal and void from the beginning.
The original dispute arose when Biyinzika Enterprises Ltd. challenged land transactions funded by Agro Business Development that were later transferred. Lower courts previously struggled with questions of illegality, property titles, damages and unjust enrichment.
While the Supreme Court struck down claims based on illegal titles, it adopted a nuanced approach to restitution. Drawing on principles similar to those in the U.K. Supreme Court case Patel v. Mirza, the justices ruled that innocent parties who made payments could recover their money due to a failure of consideration.
Legal experts say the decision brings significant clarity to corporate structuring, foreign investment and land transactions in Uganda. Companies incorporated in the country with open share transfer provisions — common in joint ventures and businesses with international investors — must revise their articles of association to include explicit restrictions if they intend to hold Mailo or freehold land.
The ruling, delivered by a panel that included Justice Catherine Bamugemereire, is expected to impact ongoing land disputes, bank securities backed by such land, and due diligence practices in real estate and agribusiness.
The decision reinforces the country’s protective stance on its unique Mailo land tenure system, which holds historical and cultural significance, while showing the judiciary’s willingness to apply equitable remedies in complex commercial disputes.
