Competitive advantages

African Countries are rapidly growing economies. Consistent economic growth makes registering a new business in Africa attractive for entrepreneurs.

Business entities

Since 2009, Astertax Consulting Group provides the best corporate structures for doing business in Africa. There are several ways of doing business. The common structure is the limited liability company. Entrepreneurs may establish a public limited company for larger investments. Foreign entities may lastly set up a branch office or a representative office.

  1. Limited liability company (LDA)
    The limited liability company (LLC, also known as Lda in the country) is the most commonly used corporate structure by entrepreneurs setting up small and medium businesses in Mozambique. A Lda requires at least 1 director and 2 shareholders of any nationality and who do not need to be resident in Mozambique. The shareholders may be individuals or corporate bodies. The Mozambique LLC can also be established by a single shareholder. In such case, the shareholder must be an individual.
  2. Public limited company (SA)
    The public limited company (PLC, also known as SA in Mozambique) is recommended for larger investments in Mozambique. This entity requires at least 3 shareholders, who can either be individuals or legal entities, to be established. A Mozambique public limited company may only appoint a single director when its share capital does not exceed US$17,500. The director can be of any nationality and is not required to be resident in Mozambique. A Mozambique public limited company does not have a stated required minimum share capital, but at least 25% of the entire agreed share capital must be paid in at Mozambique company setup. The Mozambique PLC is required by law to appoint a statutory auditor or a board of auditors comprising of 3 or more auditors.
  3. Branch Office
    The Mozambique Commercial Code allows foreign legal entities looking to do business in Mozambique to establish branch offices. A branch office is not considered a separate legal entity therefore the scope of its operations in Mozambique is defined and controlled by the parent company. During Mozambique business setup, the parent company must appoint at least one resident individual of any nationality to be the company’s representative in Mozambique. In order to be able to invoice its Clients, this entity must also register and obtain a business license from the Ministry of Industry and Trade.
  4. Representative office (commercial representation)
    Foreign entities are permitted to establish representative offices in Mozambique. Unlike a branch office, such corporate structure does not need to be registered for tax and VAT but is then not allowed to engage in any commercial activities within the country. A representative office is permitted to carry on activity in Mozambique for a renewable 3 year period. During Mozambique business setup, the parent company must appoint at least one representative in Mozambique, who can be of any nationality. A representative office is only allowed to conduct i) market research and ii) promote activities of the parent company.
  1. Limited liability company (LDA)
    The LLC is the business entity most commonly used by foreign entrepreneurs when incorporating a company in Angola. Capital is divided into quotas and shareholders are jointly liable for their investments. An Angolan LLC must appoint 1 director and 2 shareholders and deposit US$1,000 as the minimum paid-up share capital. Shareholders are allowed to defer 50% of the minimum share capital as long as the amount is paid in full by the date of incorporation of the company.
  2. Public limited company (SA)
    This Angola company setup will require at least 5 shareholders and 3 directors for company incorporation. The minimum paid-up share capital required is US$20,000, 30% of which must be fully paid before the incorporation of the company. All Angola public limited companies are required to go through an annual audit and appoint for this purpose, a board of auditors with at least three members.
  3. Branch office (Sucursal)
    This Angola business setup requires a local resident be appointed as the entity’s registered representative in the country. The scope of operations for this entity will be defined by the parent company. Also, the branch office will have an independent management team and corporate bank account based in Angola.
  4. Representative office (Escritório de representação)
    A representative office is set up for the purpose of i) market research and ii) promoting the business of the foreign firm it represents. A representative office is not allowed to pursue production-related or commercial activities and can only have a maximum of 6 employees, with a 50% quota on foreign employees. The company must also deposit a performance bond guarantee in an Angola corporate bank account in the amount of US$60,000.
  1. Foreign owned entities
    Foreign entrepreneurs interested in doing business in Nigeria can wholly own a limited liability company (LLC) with a minimum of 2 shareholders and 2 directors of any nationality. The minimum share capital is US$1. Foreign corporations are unable to create a wholly foreign owned presence in the country by setting up a Nigeria branch office or Nigeria representative office. Nigeria’s companies law requires all foreign businesses desiring to do business in Nigeria to establish a company. None of these entities require Nigerian nationals to be involved as shareholders or resident directors. Free zone companies allow international entrepreneurs to import and export goods from the country with tax advantages on VAT and customs duties.
  2. Private limited company
    An LLC, referred to as the “Private limited company” in Nigeria, is the most common entity used for Nigeria company setup. As always, the company is a separate legal entity or person. In particular, a company is separate from its owners, shareholders, and the persons who run it, the directors.
  1. Private limited company
    The private limited company (also known as a limited liability company) is the type of business entity most commonly used for Kenya business setup by both local and foreign entrepreneurs; A Kenya LLC requires a minimum of 1 director and 1 shareholder of any nationality and who can be living outside of Kenya; In accordance with the Kenya Companies Act, there is no minimum share capital requirement when setting up a company in Kenya. However, foreigners wishing to relocate to Kenya by obtaining an entrepreneur visa are required to show that they have (or will) invest at least US$100,000 in the company; After business setup in Kenya, all companies are required to i) register for tax with the Kenya Revenue Authority and ii) prepare financial statements, which must always be audited.
  2. Limited liability partnership
    Since 2012, it is also possible to register a limited liability partnership (LLP) in Kenya with only i) two corporate or individual partners ii) US$2 as the minimum capital contribution and iii) a manager, who must be an individual allowed to work in Kenya (Kenya citizen or foreigner with a work permit); Unlike many other countries, all partners of a Kenya LLP can be limited partners, enjoying limited liability against the partnership’s losses; The main advantage of the limited liability partnership is that it is a tax transparent entity, not subject to corporate income tax: all the income channeled through the partnership is directly taxed at the partners level, and must be included in their personal/corporate income tax filings; It is also easy to convert an existing Kenya company into a limited partnership, by submitting an application to the Kenyan Companies Registrar along with the certificate of incorporation of the company, an up to date list of its shareholders and their ID documents.
  3. Public limited company
    Setting up a Kenya public limited company requires a minimum of seven shareholders and two directors; Other requirements are like those of a private limited company, except that the company will also have to file its (audited) financial statements with the Kenya Companies Registry. A Kenya public company is mostly preferred by entrepreneurs or investors looking to list their company on the Nairobi Stock Exchange.
  4. Branch office
    The branch office is allowed to invoice local customers, sign local sales contracts and receive income from customers. However, the branch office will be required to obtain the necessary licensing for its industry of business; The foreign company will also be required to appoint one resident representative in Kenya.
  5. EPZ company
    Local and foreign business looking to establish a manufacturing company or an agriculture oriented business in Kenya for export purposes can choose to set up a limited liability company in an Export Processing Zone (EPZ); All limited liability companies that wish to secure EPZ status must register and get approval with the Export Processing Zone Authority.
  1. Limited liability company
    The Zimbabwe LLC is commonly used by entrepreneurs to setup an SME. An LLC must appoint at least one director and shareholder who can be of any nationality. The minimum paid-up share capital is not distinctively mentioned in the Zimbabwe companies act thus the investors have the liberty to decide the limit of their company share capital to complete the incorporation process. This business entity is generally not required by law to file annual audit reports with the Registrar of Companies.
  2. Public limited company
    This business entity is recommended when the investors intend to publicly list the company on the Zimbabwe Stock Exchange and offer shares to the general public. Such a company has no limits on the required share capital for incorporation. A registration fee of US$5 is charged for every US$100 of the company’s share capital, with a minimum fee of US$100. At least 2 shareholder and 1 director must be appointed. PLCs are required to file annual financial reports and must designate a statutory auditor for that purpose.
  3. Branch Office
    Companies that are not domiciled in Zimbabwe are allowed to establish businesses within Zimbabwe by opening a branch and carrying out their business as a branch of the foreign company. The scope of operations for this entity will be defined by the parent company. Also, the branch office will have an independent management team and corporate bank account based in Zimbabwe.
  4. Representative office
    While the Zimbabwe representative office can be 100% foreign owned, it is not allowed to make direct sales with Zimbabwe for profit. Consequently, this entity can only engage in i) market research and ii) promoting the business of the parent company.
  1. Limited liability company
    A Zambia LLC, also known locally as a private company limited by shares, is the entity most commonly used by investors starting a SME in Zambia. An LLC requires two shareholders and must appoint at least two directors who can be of any nationality. One of the directors must however be resident in Zambia. There is no required paid up minimum share capital when incorporating a Zambia private company limited by shares.
  2. Public limited company
    Setting up a Zambia PLC requires at least 2 shareholders and 2 directors of any nationality. Like for a LLC, one of the directors must however be resident in Zambia. The minimum share capital required to incorporate the PLC is US$10,000. This business entity has the capacity to venture into any type of business in Zambia, including banking and financial services. A Zambian PLC is recommended for entrepreneurs looking to publicly list the company in the Zambia capital market. PLCs newly listed in the Lusaka Stock Exchange market enjoy a 1 year period of reduced corporate tax at 10%. Companies with local shareholders benefit from an even more advantageous 7% rate.
  3. Branch office
    A branch of a foreign company is considered as a foreign entity in Zambia. The Law allows 100% ownership of branches of foreign companies. The scope of operations for this entity will be defined by the branch’s parent company. All branches must appoint a resident director or manager to oversee to the affairs of the company’s activities in Zambia. Branches of foreign companies in Zambia are subject to the provisions of Chapter 388 the Companies Act. The branch is liable to corporate income tax and is required to submit audited annual financial reports and tax returns.
  4. Representative office
    A representative office can be 100% foreign owned. The entity is however not permitted to engage in direct sales nor productive activities within Zambia. A representative office is only permitted to i) conduct research and ii) promote and market the activities of the parent company.
  1. Limited Liability Company
    This is the most commonly used business structure in Tanzania. A private Tanzania LLC must appoint at least 2 directors and 2 shareholders, who can be of any nationality. There is no minimum paid up share capital requirement. This entity is generally used for the formation of small businesses in Tanzania, without lesser capital needs and simple shareholding structure. Following Tanzania business setup, this entity must submit audited financial statements to the Business Registrations and Licensing Agency (BRELA). The company is also required to register for VAT, unless its annual sales are below US$45,000 (TNS100 million).
  2. Public Limited Company
    A Tanzania public LLC must appoint at least i) 2 directors and ii) 7 shareholders with 1 Tanzanian national as a 40% shareholder. A minimum paid up share capital of US$300,000 must be deposited before Tanzania company setup. This entity is used when the promoters intend to raise capital from the Tanzanian public or list the company on the national stock exchange.
  3. Branch Office
    A branch office functions within the scope of operations defined by the parent company. This allows the company to i) invoice Tanzanian customers ii) sign local sales contracts and iii) receive income from local customers. Before the government issues a license to these entities, a Certificate of Compliance must be obtained from Business Registrations and Licensing Agency (BRELA). Foreign branches pay additional remittance tax of 10% on net profits.
  4. Representative Office
    A representative office assists the parent company in promoting export/import to and from Tanzania and promoting technical and financial collaborations with other resident firms. This entity can engage only in activities like promoting the business of the parent company and or market research.
  1. Limited liability company (LLC)
    Following the passage of the 2012 Act, a limited liability company in Uganda requires a minimum of two directors and one shareholder. Previously, only one director was required. There is no minimum paid up capital requirement for Ugandan LLCs. This is is the most common company type Uganda.
  2. Public Limited Company (PLC)
    A Uganda PLC does not require minimum paid up capital for incorporation. However, a minimum of two directors and five shareholders are required for the incorporation process to be completed. Company secretaries of public companies in Uganda are subject to qualification requirements. However, there is no licensing or regulation of company secretaries.
  3. Branch Office
    Instead of establishing a subsidiary in Uganda, international businesses can register as a branch office. This creates a branch of the existing company, giving it the right to trade in Uganda without creating a new company.
  1. Limited liability company (LLC)
    The Rwanda LLC is the most common entity used by entrepreneurs setting up an SME in Rwanda. An LLC must appoint at least 1 shareholder and 1 director, who can be of any nationality. There is a minimum share capital of US$850 required to complete the incorporation process.
  2. Branch Office
    The Rwanda Companies Law allows branches of foreign companies to be 100% foreign owned. The scope of operations for this entity will be defined by the parent company. Branches are considered separate legal entities and can have an independent management team and maintain a corporate bank account. A Branch is required to file its accounts with the Rwanda registrar of companies.
  3. Representative office
    Although the Rwanda representative office can be 100% foreign owned, it is not allowed to conduct profit making activities in Rwanda. This entity can only engage in i) market research and ii) promoting the business of the parent company.
  1. Limited liability company (LLC)
    This is the most common type of business entity by foreign entrepreneurs when incorporating in Botswana. A Botswana LLC must appoint one director who must be a resident of Botswana, and one shareholder of any nationality. Minimum paid-up capital is not required. The LLC must have a registered office in Botswana and must submit audited financial statements within five months of the year end and therefore must appoint a qualified company secretary.
  2. Public limited company (PLC)
    This entity must appoint at least two directors and seven shareholders of any nationality who must be natural persons for incorporation to be complete. One of the directors must be a resident of Botswana. Minimum paid up share capital is not required. The PLC must have a registered office in Botswana and must submit audited financial statements within five months of the year end and therefore must appoint an auditor in addition to the statutory company secretary required for all Botswana companies.
  3. Offshore company (IFSC company)
    Incorporating an offshore company in Botswana requires i) to setup a Botswana company and then ii) to apply to the International Financial Services Center Authority for an IFSC certificate. Such company can henceforth be created with only i) 1 shareholder of any nationality and ii) 1 resident director. The authority will however ask for i) a documented descriptive of current business ii) a business plan for the IFSC company and iii) an amount of share capital sufficient to finance the proposed business in Botswana. The IFSC company will only be allowed to conduct commercial operations with non-residents, but may however conduct limited productive operations in Botswana including i) BPO and call centers ii) asset management and iii) bank and insurance activities. It will benefit from incentives including: i) a reduced corporate tax rate of 15% ii) no VAT iii) no capital gains tax and iv) no withholding tax.
  4. Branch Office
    The branch may be 100% foreign owned and is allowed to engage in business activities related to the parent company within Botswana. Only one shareholder and one director are required for incorporation of a branch in Botswana. However, the corporate tax rate for the branch is 30% thus making this the least efficient tax option for business incorporation in Botswana.
  5. Representative office
    The Botswana representative office is established solely for market research and promoting business of the parent company and is not allowed to pursue production-related or commercial activities.