High Court Lifts Corporate Veil Against Out Media International Limited, Holds That an Untraceable Judgment Debtor Company With No Assets May Not Shield Its Directors From Execution

Sep 24

4 min read

ALEX TOZI v OUT MEDIA INTERNATIONAL LTD & 2 ORS

High Court of Uganda at Kampala (Commercial Division) | MA No. 0104 of 2026, arising from Civil Suit No. 1076 of 2023 | Before Hon. Lady Justice Patricia Kahigi Asiimwe | Ruling delivered 11 September 2026

Snapshot

The High Court reaffirmed the principle of separate corporate personality but held that the corporate veil may, in appropriate circumstances, be lifted where allowing the company to rely on its separate legal personality would result in injustice or frustrate enforcement of a valid court decree. Particularly, the Court recognised that the corporate veil may be lifted at the execution stage, enabling a judgment creditor, in a proper case, to pursue execution against directors or other persons behind the company.

Facts

Alex Tozi (the Applicant) entered an equipment hire agreement with Out Media International Limited (the 1st Respondent) in September 2022, hiring excavators for a quarry site in Kween District. The Applicant performed his obligations and invoiced the 1st Respondent, which failed to pay. He instituted Civil Suit No. 1076 of 2023 and obtained judgment for UGX 294,000,000, together with interest, transport costs, and nominal damages, with costs subsequently taxed at UGX 13,740,000.

Post-judgment searches at the Company and Land Registries revealed that the 1st Respondent held no registered assets. The Applicant instead discovered that the 1st Respondent had mortgaged property owned by its director, Muhinda Erias Karambuzi (the 2nd Respondent), to secure financing for its business. The 1st Respondent had also vacated its registered premises without a forwarding address, and a subsequently disclosed address could not be traced despite the Applicant's efforts, including engagement with the 2nd and 3rd Respondents, Kyoshaba Annet, both directors of the 1st Respondent. The Respondents did not enter appearance despite service, and the matter proceeded on the Applicant's uncontroverted affidavit evidence.

Issues

Whether the corporate veil of the 1st Respondent should be lifted to let the Applicant execute the decree against the 2nd and 3rd Respondents.

Representations

Applicant: represented by Erisata & Erisata Advocates
Respondents: did not enter appearance despite service

Applicant's case

The Applicant's case was premised on the fact that he had already obtained a valid decree against the 1st Respondent but had been unable to execute that decree because the company and its assets could not be traced.

It was submitted, in substance, that the Applicant had undertaken searches at the Companies Registry and Land Registry in an effort to identify assets belonging to the judgment debtor.

The Applicant's evidence showed that the 1st Respondent had no assets registered in its own name, while property belonging to the 2nd Respondent had been used as security for financing connected to the 1st Respondent's business.

It was further submitted that the 1st Respondent had moved from its former business premises and could not be traced at the new address appearing in the company records.

The Applicant consequently sought the lifting of the corporate veil to prevent the judgment from being rendered incapable of enforcement. Although the Respondents did not enter appearance, the Court considered the statutory and judicial principles governing the circumstances in which a company's separate legal personality may be disregarded.

Courts Reasoning

The Court reaffirmed that Section 18 of the Companies Act does not confine veil-lifting to fraud or tax evasion. In Beatrice Odongo & Noah Ochota v. Tamp Engineering Consultants Limited, Civil Appeal No. 8 of 2020, the Court of Appeal held that the statutory grounds are not exhaustive and that flagrant injustice and improper conduct may equally justify lifting the veil. The Court also relied on Guning v. Naguru Tripati Ltd & 5 Ors, Miscellaneous Application No. 232 of 2017, which held that the corporate form exists to promote trade, not to shield illegality, and that the veil may indisputably be pierced, including at the execution stage, where corporate personality is deployed against justice and the interests of those dealing with the company.

Application to the Facts

Applying Equity Bank Uganda Limited v. HD Resources Limited and 2 Others, Miscellaneous Application No. 1833 of 2022, the Court held that a company registered in Uganda that cannot be traced through its physical address, and none of whose assets can be traced for purposes of satisfying a decree, ought to be restrained from taking undue advantage of its creditors. Denying an application to lift the veil in such circumstances would, in the Court's words, "make a blatant mockery of justice" by leaving the judgment creditor without recourse. On the evidence, the Court found the 1st Respondent and its assets untraceable, and that the 1st Respondent had instead relied on property mortgaged by its own director to fund its operations.

The Holding

The Court granted the Application in full. It ordered that the corporate veil of the 1st Respondent be lifted, that a Notice to Show Cause issue to the 2nd and 3rd Respondents as to why execution should not be levied against them in place of the 1st Respondent, and that the Applicant be awarded the costs of the Application.

Key Takeaways

Judgment creditors facing an untraceable or asset-less corporate debtor may seek to lift the corporate veil at execution stage, without needing to plead a fresh cause of action, once diligent efforts to locate the company and its assets are documented.
The grounds for lifting the veil under Section 18 of the Companies Act are not closed. Flagrant injustice and improper conduct, evidenced by a company's disappearance after judgment, can independently justify piercing corporate personality.
Directors who use personal or third-party assets to secure financing for a company that itself remains asset-free expose themselves to scrutiny and potential personal liability once the company defaults and cannot be traced.
Financiers, landlords, and commercial counterparties should maintain updated address and asset records for corporate clients, since courts treat an untraceable registered address as material evidence supporting execution against directors.