LEGAL REQUIREMENTS FOR BUSINESS START-UPS
Anyone who wants to set up and formulate company documents in the Kingdom of Eswatini is expected to comply with The Companies Act of 2009.
It is on this basis that government established the Registrar of Companies, a department under the Ministry of Commerce, Industry and Trade. The mission of the department is to ensure legal protection of both local and foreign companies. Furthermore, government established the Small Enterprises Development Company (SEDCO) which also facilitates company formation. Below are some of the things that you will need for company registration.
Requirements for company registration
• Company Name
• Identity Cards-photocopied both sides and certified
• Shares amongst directors
• Postal address
• Graded Tax number
• Company Objectives
Requirements for acquiring a trading license for a company
• Lease Agreement
• Memorandum of Association
• Form J and C
• Identity Cards
• Certificate of Incorporation
Requirements for a Sole Trader License
• Lease Agreement
• Identity Card
• Recommendation from Commercial Amadoda if the business is in the rural area
• King’s consent
Winding up
A company can be liquidated or winded up voluntary, by the court or subject to the supervision of the court. During this process, its assets are collected and sold in order to pay its debts. Any monies remaining after all debts, expenses and costs have been paid off, are then distributed amongst the shareholders of the company.
Business formation analysis
1. Sole Proprietorship
• It does not comply with any stringent statutory requirements on formation.
• Doesn’t require special devices for raising capital. It is only through savings.
• Since there is no obligation to file certain official public documents, it therefore enjoys privacy.
• Profits made are not subject to taxation, as such profits are taxed only when they reach the hands of the proprietor.
• Liability is not anyway limited.
• Both ownership and control of the business rests in the owner who has the powers to define the affairs of the business.
2. Partnerships analysis
A partnership is a relationship between two or more persons who are in business with the common view of earning a profit. It comes into existence when participating individuals contribute something to the business venture. This include but not limited to; skill, labour, or property as the foundation of the business.
• There should be an affidavit or sworn declaration prepared on behalf of the new business.
• Must have date on which it came into existence.
• Name of parties and their residential addresses.
• Proceedings against a partnership may be instituted in the region where the business is located.
• Profits are shared equally.
• A partner is taxed once.
• Partnerships terminates on the death of one partner, or as a result of being bankrupt.
• Admission of new members is done with consent of all members.
Types of Partnerships
1. Sleeping partner: partners agree that business will be carried out by one or more persons without declaring other partners to members of the public. A sleeping partner is not liable to third parties for debts of the business.
2. Partnership en commendite- it share similarities with the sleeping partner. However, the sleeping partner is still liable for co-partners. Liability of this partnership is limited to the extent of his contribution.
Classification of companies
Companies can either be private or public.
1. Private companies- maybe formed by one or more persons who subscribes to the Memorandum of Association. In a private company, shareholders are legally bound to offer shares to the other members of the company, and company assets are not at risk in times of difficulty. The number of members may not exceed fifty.
2. Public companies- maybe incorporated by at least seven people who must subscribe to the Memorandum of Association. Shares in the public company are freely transferable, and members of the company are liable in excess of the paid shares
Types of shares
1. Ordinary shares- have no special rights or restrictions. The company can divide them into classes of different value.
2. Preference shares-normally carry a right that the company should pay any annual dividends available for distribution on these shares before other classes. They have a preferential right over all other shares.
3. Cumulative preference shares- carry a right that if a company cannot pay the dividend in one year, it will carry it forward to successive years.
4. Redeemable preference shares- are issued by the company with an agreement that it will buy them back at a later date.
>> Quote of the week
“If you think compliance is expensive, try noncompliance.” –FORMER U.S. DEPUTY
ATTORNEY GENERAL PAUL MCNULTY.
For feedback;
• Email: business@sedco.biz.
• WhatsApp: 7811 2899