CURRENT NUMBER OF LISTED COMPANIES

10

EXCHANGE

Rwanda Stock Exchange – visit website here

LISTING RULES

East African Community Directives – downloaded here

Capital Market Authority Guidelines - downloaded here

Rwanda Stock Exchange Rules – downloaded here

Rwanda Stock Exchange Small and Medium Enterprise Market Segment Rules 2013 – downloaded here

PRINCIPAL LEGISLATION

Law Nº 057/2021 of 18/09/2021 establishing the Capital Market Authority of Rwanda

Law N°01/2011 of 10/02/2011 regulating Capital Market in Rwanda.

Law N°45/2018 of 13/08/2018 modifying law n°01/2011 of 10/02/2011 regulating Capital Market in Rwanda as modified to date.

Law N° 062/2021 of 14/10/2021 governing Collective Investment Schemes.

Regulation N° 04/2017 of 02/03/2017 on the operations of the Central Securities Depository.

For the entire  Regulatory Framework- visit here

REGULATORY BODY OR BODIES

Capital Markets Authority – visit website here

CORPORATE GOVERNANCE CODE

In Rwanda, the Law No 007/2021 of 5 February 2021 governing companies, Law No 008/2021 of 16 February 2021 governing partnerships, Regulation No 01/2018 of 24 January 2018 on corporate governance for banks, and the Capital Market Corporate Governance Code No 09/2012 have ensured the continuous application of corporate governance rules meant to entrench the effective management of companies in the country.

The Capital Market Corporate Governance Code N° 09, 2012 is accessed here.

TAKEOVER / MERGER REGULATION

Law Nº36/2012 of 21/09/2012 relating to Competition and Consumer Protection(Competition Law) in its Article 2(8) define a ‘merger’ as any direct or indirect acquisition or establishment of control by two or more persons over the whole or part of the business of a competitor, supplier or any other person.

Its Article 17 provides that an interested party to a notifiable merger shall notify the Regulatory Body of that merger within thirty days from the parties’ decision to merge.

Additionally, Article 18 of this Law states that parties to a merger shall not implement a merger until it has been approved, with or without conditions, by the Regulatory Body which is the Rwanda Inspectorate, Competition, and Consumer Protection Authority (the “RICA”).

Law nº 36/2012 of 21/09/2012 law relating to competition and consumer protection(Competition Law) (Download here) creates the legislative framework for a merger control regime. It applies to all economic sectors.

Under the Competition Law, a merger of enterprises occurs when: 1° two or more enterprises join together to form a new enterprise;2° one or more enterprises join together and directly or indirectly merge their assets through the purchase of equity shares or part of assets of another company.

For the notification of merger to be made to RICA, such merger or the proposed merger must be based on a threshold of combined annual turnover determined by RICA. However, it may require parties to a non-notifiable merger to notify it of such merger if there is evidence that such merger may prevent or undermine competition or public interest. In this case, conditions for notifiable merger shall apply.

An interested party to a notifiable merger has to notify RICA of that merger within thirty days from the parties’ decision to merge. RICA prescribes the form and content of the notification provided and the required fees.

Any merger notified in manner contrary to the provisions of this Law shall be legally null and void and rights or obligations arising from any agreement pertaining to such a merger shall not be respected.

MERGERS CONTRARY TO PUBLIC INTEREST

When determining whether the merger is likely to have the effect of substantially preventing or lessening competition in the market, RICA shall take into account any factor relevant to competition in that market, including the following: 1° the actual or potential level of import competition in the market; 2° free entry into the market without tariff or regulatory barriers; 3° the level of preference in products by the suppliers and status of business partnership; 4° the degree of countervailing power in the market; 5° the likelihood that the merger would result in the parties having a dominant position; 6° the dynamic characteristics of the market including growth, innovation and product differentiation; 7° the nature and level of merger in the market; 8° the assurance that the business or part of the business merged or proposed for a merger has been concluded or is not likely to be concluded; 9° the assurance that the merger will result in the exclusion of the honest competitors on the market.

RICA deems a merger as contrary to the public interest if it is satisfied that the merger: 1° has reduced substantially or is likely to reduce substantially the degree of competition in the economic sector or at country or regional level; 2° has resulted or is likely to result in a dominant position which is contrary to the public interest; 3° is likely to have a substantial negative effect on employment; 4° is likely to have a negative effect on the ability of small enterprises to become competitive; 5° has or is likely to have a negative effect on the ability of national industries to compete in international markets.

PENALTIES

RICA may impose administrative sanctions if the parties to a merger fail to give notice of such a merger as required by the Competition Law. Article 52 provides that an administrative fine of 5-10 percent of the enterprise’s annual turnover (calculated on the basis of the previous fiscal year) can be imposed by the competition authority if an enterprise is found to have violated the provisions of this Law.  

PROHIBITED PRACTICES

The Competition Law prohibits horizontal and vertical agreements, decisions and concerted practices between undertakings that have, as their object, the undermining, prevention, restriction or distortion of competition, unless they are exempt or form part of a single economic entity.

Cartel conduct i.e price fixing, market division and collusive tendering and also minimum resale price maintenance are prohibited by the Competition Law. The same law prohibits abuse of dominance.

A firm engaging in a restrictive horizontal or vertical agreement, or abusing its dominant position, commits an offence and may face sanctions including administrative fines ranging from 5% to 10% of the enterprise’s annual turnover for the fiscal year preceding the year in which the offence occurred.  The EAC and COMESA regulate prohibited practices in the EAC and COMESA areas respectively and activities in Rwanda should be conducted with these regional competition bodies in mind.

CORRUPTION PERCEPTION INDEX RANK WORLDWIDE FOR 2022 BY TRANSPARENCY INTERNATIONAL

54

CORRUPTION PERCEPTION INDEX SCORE FOR 2022 BY TRANSPARENCY INTERNATIONAL

51

RATIFIED THE UNITED NATIONS CONVENTION AGAINST CORRUPTION?

Yes, on the 4th October 2006

SIGNATORIES TO THE AFRICAN UNION CONVENTION ON PREVENTING AND COMBATING CORRUPTION?

Yes

SIGNATORIES TO THE OECD CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS?

No

SIGNATORIES TO UNITED NATIONS CONVENTION AGAINST CORRUPTION (UNAC)?

Yes

UNAC RATIFIED?

Yes

ARBITRATION

Rwanda has adopted the United Nations Commission on International Trade Law (UNCITRAL) model of arbitration. It is thus party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention.

Rwanda also has the Kigali International Arbitration Center (KIAC) which was established to provide institutional support to domestic and international dispute resolution proceedings using Arbitration, Mediation and other Alternative Dispute Resolution (ADR) mechanisms.

Effectively, Rwanda is party to the following;

• Convention on the Settlement of Investment Disputes (ICSID Convention)
• Permanent Court of Arbitration
• United Nations Commission on International Trade Law (UNCITRAL)
• United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)

EFFECTIVENESS OF THE COURT SYSTEM

Law No 22/2018 of 29/04/2018 relating to the civil, commercial, labour and administrative procedure under Article 16 provides the time limit for deciding a case. Any case referred to the court must be decided within six months from the date the claim is referred to the court.

With the exception of urgent claims and at any time it is considered necessary in the interests of the administration of justice, the hearing date for all cases is set according to the order of registration thereof on the list of cases.

The adjournment of a case for reasons specific to parties is subject to consideration and approval by the court and can only occur in case of unforeseen and special reasons. The adjournment of a case for reasons specific to parties cannot occur more than twice. After the adjournment has taken place twice, the case is heard or removed from the list of cases if no party appears.

ENFORCEMENT OF ARBITRAL AWARDS

Rwanda is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.

Under the Law N° 005/2008 of 14/02/2008 on arbitration and conciliation in commercial matters, arbitral awards are enforceable in Rwanda award, irrespective of the country in which it was made and shall be recognized as binding. However, this shall not be respected if the country in which the award was issued does not respect cases decided in Rwanda. The party relying on an award taken or applying for its enforcement shall supply the duly authenticated original award or its duly certified copy, a copy of original arbitration agreement or its duly certified copy. If the award or agreement is not made in an official language of the Republic of Rwanda, the party shall supply a translated copy in one of the recognised languages in Rwanda.  In Rwanda, it is the Commercial High Commercial Court that has authority to hear in the first instance, complaints against the arbitration awards rendered outside of Rwanda which require the exequatur on the Rwandan territory. The High Commercial Court does not review nor interpret the merits of the case in the foreign Award it only enforces the outcomes of the decided Awards.

ENFORCEMENT OF FOREIGN JUDGMENTS

Article 250 of Law No 22/2018 of 29/04/2018 relating to the Civil, Commercial, Labour and Administrative Procedure states that except where international agreements provide otherwise, judgements ruled by foreign courts and foreign deeds issued by foreign officials are not subject to execution in Rwanda, unless they are rendered enforceable by the competent Court.

An applicant seeking to enforce a foreign judgment has to lodge a claim in the Commercial High Court.

The Commercial High Court hears at first instance, applications seeking execution in Rwanda of decisions and judgements rendered by foreign courts on commercial, financial and fiscal cases.

The examination of such applications is conducted in consideration of:

1. whether the foreign judgment does not contradict public order and legal principles of Rwandan laws;
2. whether the case was finally heard and determined in accordance with the laws of the country in which the judgment was rendered;
3. whether the copy of the judgment is by all means authentic in accordance with laws of the Country in which the judgment was rendered;
4. whether the right of defence was respected.

The judgment must be notarized by the High Commission of Rwanda in that foreign country. If there is no High Commission or Embassy then any notary officer may notarize, but thereafter the party must address the judgment to the Rwanda Ministry of Foreign Affairs to confirm the notarization and only then be filed in the competent court.

The foreign judgment, if it is not rendered in Kinyarwanda, English, French or Swahili, must be translated into one of these languages and the translation certified by a Notary Public.

Once the Commercial High Court accepts that the above criteria have been satisfied, then the matter will follow exactly the same process as any other court matter. This means that the applicant must serve a copy of the claim on the other party, there will be an opportunity for both parties to make their case in front of the court and a decision (which can be appealed) will be handed down.

While it might look superficially like any other matter, there is a fundamental difference in that the Commercial High Court will not review or attempt to interpret the merits of the case which was decided in the foreign court. Therefore, the arguments at this stage of the enforcement process, if any, will be centered on whether the jurisdictional matters set out above have been satisfied and thus whether the Commercial High Court is able to decide the matter.

There is also no jurisdiction to order costs against the losing party and there is no ability to award interest on top of the nominated award amount in the foreign judgment.

Once the applicant has obtained a favorable decision from the Commercial High Court, and assuming that no appeal is lodged, then the applicant is free to start enforcing the award against assets or individuals located in Rwanda. Normally, with the help of a professional bailiff, the execution of the judgment can be finalized within six months.

STRUCTURE OF THE COURT SYSTEM

The Rwandan Constitution of 2003, as revised in 2015, provides that courts consist of Ordinary and Specialised courts.

Ordinary Courts are comprised of:

• the Supreme Court;
• the Court of Appeal;
• the High Court;
• Intermediate Courts; and
• Primary Courts.

Specialised Courts are comprised of Commercial Court and Military Courts. 

The courts have two levels of appeal in the following hierarchy from the lowest to the highest court.

APPROVAL OF FOREIGN INVESTMENTS

There is no legal obligation for foreign investors to solicit and procure special approvals from authorities. A foreign investor is given equal treatment with Rwandan investors with regard to investment incentives and investment facilitation.

However, a foreign investor, similarly to a local investor wishing to register an investment, files an application thereof with the Rwanda Development Board (RDB). This investment registration enables an investor to enjoy investment incentives and investment facilitation in accordance with Law N° 006/2021 of 5 February 2021 on Investment Promotion and Facilitation.  

INVESTMENT CERTIFICATE

An investor seeking to commence operations in Rwanda is advised to first acquire an investment certificate from Rwanda Development Board in order to benefit from incentives provided by the government to registered investors in Rwanda. Once the investor fulfils the given requirements, they are entitled to certain privileges as provided for under Law No 006/2021 of 5 February 2021 on investment promotion and facilitation. Some of the investment incentives include among others:

• a preferential corporate income tax rate of 0%;
• a preferential corporate income tax rate of 3%;
• exemption from customs taxes and duties for products used in export processing zones;
• a corporate income tax holiday of up to 7 years; and
• a corporate income tax holiday of up to 5 years.

PROCEDURE AND SANCTIONS IN THE EVENT OF NON-COMPLIANCE

There is no mandatory investment registration for foreign investors. Thus, there are no applicable sanctions in relation to such registration.

FOREIGN INVESTMENT DISPUTES

When a dispute arises between a foreign investor and the Rwanda Development Board (“RDB”) or the government in respect of a registered investor, all efforts are made to settle the dispute through negotiations towards an amicable settlement. If the dispute is not settled, it may be submitted for arbitration within the framework of bilateral or multilateral agreement on investment protection to which the government and the country of which the investor is a national are parties or in accordance with any other international procedure for the settlement of investment disputes.

INCENTIVES

Incentives include:

• reduced corporate income tax rates applying for a period of five years to newly listed companies;
• tax exemption available to an international company which has its headquarters or regional office in Rwanda;
•  a seven-year tax holiday and reduced corporate income tax rate of 15% available to registered investors in priority sectors;
• a five-year tax holiday available to microfinance institutions and specialised industrial and innovation parks developers; and
•  customs duties exemption for a registered investor investing in products used in export processing zones (EPZs).

Law n° 006/2021 of 05/02/2021 has the purpose to promote and facilitate investment in Rwanda.It provides a number of incentives that are available to registered investors. It is downloadable here.

SPECIAL ECONOMIC ZONES

The creation and regulation of Special Economic Zones in Rwanda is governed by the Law n°05/2011 of 21/03/2011 regulating special economic zones in Rwanda.

The main purpose of this Law is to regulate the establishment, development, operation and maintenance of special economic Zones in Rwanda.

It can be downloaded here.

ADVERTISING REGULATIONS

Promotions and Adverts have to be in line with Article 38, Law Nº36/2012 of 21/09/2012 relating to competition and Consumer protection which prohibits any advertising that may encourage risky behavior dangerous for health or safety of persons.

Instructions N° 01/09 of 15/09/2016 Instructions of City of Kigali Council reviewing Instructions n° 05/12 of 28/10/2012 of the Kigali City Council relating to advertisement rules in the Kigali City.

These instructions determine the advertising modalities in the City of Kigali and provides that Advertising in Kigali City is done according to the following three (3) modes: 1° implanted billboards or posters on houses, on bridges, on walls and other areas; 2° movable signs on vehicles, on ribbons, papers, and other; and 3° audio-visual advertising.

It can be downloaded here.

FOOD AND DRUG ADVERTISING REGULATIONS

Law nº 003/2018 of 09/02/2018 establishing Rwanda food and drugs authority and determining its mission, organisation and functioning regulates among others human and veterinary drugs and processed food for humans and animals, food supplements and fortified foods. (Available here)

Promoting, informing or advertising regulated products should be done after obtaining approval from the Rwanda Food and Drugs Authority (Rwanda FDA).

The advertisement of food and drugs is done in line with the Regulations Governing the Promotion, Advertisement and Marketing of regulated products which apply to all activities related to the advertisements or promotion and marketing of regulated products that are manufactured, imported, distributed, stored, sold or used in Rwanda. (Available here)

Guidelines for Control of Promotion, Advertisement and Marketing of Food Products in Rwanda highlight general conditions and requirements as well as specific requirements for promoting food products to the public, procedures for submission of application to promote regulated products. They apply to the product promotion, advertisement and marketing by all manufacturers, wholesalers, retailers, dealer’s applicants and/or anyone wishing to promote, advertise or market food products locally processed or imported in Rwanda. (Downloadable here)

FINANCIAL ADVERTISING REGULATIONS

Law nº 017/2021 of 03/03/2021 relating to financial service consumer protection under its Article 12 provide that a financial service provider or a representative must ensure that any advertising or promotional materials in relation to any specific financial product or service are clear and that they include all the necessary information to be disclosed. A financial service provider is liable for false information he or she has given while advertising or promoting a financial product or service.

LAND

The use and management of land are governed by Law nº 27/2021 of 10/06/2021 governing Land.

Under this law, foreigners are entitled to an emphyteutic lease or land concession for a maximum period of 99 years or 49 years as the case may be, but only for investment purposes.

Foreigners may be granted freehold titles by a presidential order in exceptional circumstances.

The Land Law can be downloaded here.

INSURANCE

Law n° 030/2021 of 30/06/2021 governs the organisation of insurance business in Rwanda.

It applies to:

1. insurers or reinsurers being public or private entities;
2. insurance intermediaries;
3. health maintenance organisations;
4. other authorised entities carrying out insurance related business;
5. insurance contract;
6. reinsurance contracts entered into in Rwanda, unless otherwise provided by other laws or international treaties.

All tax payers must register with the Rwanda Revenue Authority. A company is automatically registered with the Rwanda Revenue Authority upon incorporation and its company code serves as its TIN.

Every company must register for a trading license at the tax administration sector where it is located for the purpose of paying a trading license tax.

Law Nº 027/2022 of 20/10/2022 establishing taxes on income can be downloaded here.

CORPORATE INCOME TAX (CIT)

Resident companies and permanent establishments of foreign companies are subject to corporate income tax at a rate of 30% as the standard. It should be noted that the government intends to reduce CIT rate from 30% to 28% with an aim of reducing it to 20%.

However, micro-enterprise companies (with turnover of less than 12 million Rwanda francs [RWF] in a tax period) pay flat tax amounts, and small businesses (whose turnover is between RWF 12 million and RWF 20 million in a tax period) pay a lump sum tax at the rate of 3% of turnover.

Preferential rates apply to qualifying investors, including newly listed companies, venture capital companies, international companies and micro-finance companies.

CAPITAL GAINS TAX (“CGT”)

Capital gains tax is charged on the direct or indirect sale or transfer of shares or debentures. The capital gains tax is charged at the rate of 5% of the capital gain. Capital gains arising on the sale of business assets are included in ordinary taxable income and subject to tax at the standard rate of 30%.

WITHHOLDING TAXES(WHT)

A withholding tax of fifteen (15%) percent is levied on:

• dividends, except those governed by paragraph 2 of Article 47 of the Income Tax Law;
• Interests;
• Royalties, service fees including management and technical service fee;
• performance payments made to a crafts person, a musician, an artist, a player, sports, cultural or leisure activities irrespective of whether paid directly or indirectly;
• goods sold in Rwanda;
• profit after tax or retained earnings that are converted into shares, except for financial institution with paid-up capital below the minimum requirement set by the National Bank of Rwanda;
• profits repatriated from Rwanda;
• payments made in cash or in kind by a resident person in Rwanda on behalf of a non-resident in Rwanda contracted person provided for under the contract in addition to contractual remuneration, and on a company that carries out gaming activities on the difference between winnings of the player and amount invested by the player.

The new income tax law under its Article 65 has introduced a provision providing for the exemption on from paying the withholding tax of 15% stipulated in Articles 60, 62 and 63 for newly registered tax payers during the concerned annual tax period. These exemptions concern taxpayers who are subject to withholding tax on payments, withholding tax on goods imported for commercial use and withholding tax on public tenders.

The withholding tax rate may be reduced in terms of a relevant double tax agreement.

VALUE ADDED TAX (VAT)

VAT is levied on the supply of goods and services in Rwanda and on the importation of goods and services and the rate is at 18%. Any person whose annual turnover exceeds RWF20-million in the previous fiscal year or RWF5-million in the preceding calendar quarter, or is likely to exceed such thresholds in the coming year, must register for VAT purposes.

Resident companies are required to account output VAT in respect of imported services rendered by non-resident companies in terms of the VAT reverse charge mechanism. When the same or similar services are not available in Rwanda, such VAT may be claimed as an input credit by the recipient of the services.

Resident companies are required to account output VAT in respect of imported services rendered by non-resident companies in terms of the VAT reverse charge mechanism.

When the same or similar services are not available in Rwanda, such VAT may be claimed as an input credit by the recipient of the services
EXCHANGE CONTROL
Rwanda does not impose any foreign exchange controls.
However, under Law n° 42/2022 of 13/04/2022 governing foreign exchange operations, foreign payments need to be made through licensed intermediaries defined as licensed banks and deposit taking microfinance institutions and  foreign Exchange Bureaus and other institutions authorised by the Central Bank to deal in foreign exchange.

FOREIGN TAX RELIEF

This applies only to countries with double taxation agreements with Rwanda.

TRANSFER PRICING

Related persons involved in controlled transactions must have documents justifying that their prices and profits are applied according to arm’s length principle.

 If such persons do not provide documents or the documents provided do not justify that the price and the profit are applied in accordance with the arm’s length principle, the tax administration adjusts transaction prices or profits in accordance with general rules on transfer pricing.

However, before determining the price arrangement between related persons, the taxpayer may request the tax administration to enter into an advance pricing agreement for a fixed period to determine modalities of setting prices and profit complying with arm’s length principle.

LOSSES

Losses may be carried forward for five years, which may be extended. Foreign-source losses may not be offset against domestic-source business profits.