Setting up business in Zambia
All businesses engaging in both domestic and /or international trade are required by law to be registered with the Patents and Companies Registration Office (PACRO), an agency of the Ministry of Commerce, Trade and Industry. Registration is either by; business name, public or private company (therefore being incorporated in Zambia) or foreign company.
The basic requirements a foreign investor must meet in order to form a company in Zambia are: to select name of the proposed company, and have alternative names in case the first choice is not available; to select the directors and company secretary; to select the registered office and accounting reference; to decide on what would be the authorised share capital and what the purpose of the company ; to decide as well whether you need to enter into a shareholders agreement; to and decide on articles of association.
The minimum capital required to register a public or private company is K5 million (USD 1,316). The registration fees (inclusive of name search, forms, processing of application forms) differ. The registration of a business name is K85, 000 (USD 23), while the minimum fee for the registration of a company is K245, 000 (USD 65). This amount is however dependant on share capital. It can increase by K5, 000 for each additional K200, 000 of share capital. For a foreign company, the amount is K585, 000 (USD 154).
A foreign investor can register either as a public company or a private company which may be private limited by shares or companies limited by guarantee or unlimited companies. However, should a foreign registered company desire, it may register as such in Zambia by lodging an application for this and the application must be accompanied by a certified copy of the charter, statues, regulations, memorandum of and articles of association or other instrument consulting or defining the constitution of the company. The application must be also accompanied by a statement regarding property acquired in Zambia by the company or in relation to each documentary agent and local director, a statement signed by that person accepting appointment of such position.
Suffice to note that the registration fee for a foreign company slightly differ from that of a local company. Firstly, a foreign company is required to have a registration of a certified copy of the charter, statues, regulations, and memorandum of articles of association or other instruments constituting or defining the constitution of the company. This costs K1, 000, 000 (USD 312.5). The company should also register any document or make a record of any fact authorised to be delivered, sent or forwarded to the Registrar not specified in (a) above. This registration is at K150, 000 (USD 47.00). In addition, certificate registration and sealing both cost K150, 000 (USD 47.00) each.
Company registration is a very easy process if all the necessary paper work is in place. It can be done in one day.
Legal Framework for investment protection
The Zambia Development Agency Act assures investors that property rights shall be respected. The Act states that no investment of any description can be expropriated unless parliament has placed an Act relating to the compulsory acquisition of that property. The Act also provides that in case of expropriation, full compensation will be made to market value and will be convertible at the present exchange rate.
Zambia is a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank and other international agreements. This guarantees foreign investment protection in cases of war, strife, disasters and other disturbances or in cases of expropriation.
Zambia has also signed Investment Treaties with eleven countries. These bilateral investment treaties are reciprocal agreements between two countries that encourage, promote and protect foreign investment. These countries are Belgium, Luxemburg,
China, Croatia, Cuba, Egypt, France, Germany, Ghana, Italy, the Netherlands and Switzerland.
Market Access
Zambia’s active participation in the fourteen countries region SADC Trade Protocol was well as the Africa Wide 20 Countries COMESA/FTA offers preferential tariff access to total market potential of nearly 380 million people.
Similarly, with advent of Africa Growth and Opportunity Act (AGOA) duty free access to the huge USA market has become a reality.
The AGOA Act provides preferences for quota and duty-free entry into the United States for certain goods. Notably, AGOA expanded market access for textile and apparel goods into the United States for eligible countries. Some AGOA countries have begun to export new products to the United States, such as cut flowers, horticultural products, automotives and steel. Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015. The Act’s apparel special provision, which permits lesser-developed countries to use foreign fabric for their garment exports, was to expire in 2007. However, legislation passed by Congress in December 2006 extended it through 2012.
The other agreement that eases Zambia’s market access is the Continou Agreement. The Continou Agreement provides for reciprocal trade agreements, meaning that not only the European Union (EU) provides duty-free access to its markets for Africa, Caribbean and Pacific Nations (ACP) exports, but ACP countries also provide duty-free access to their own markets for EU exports.
Zambia is also a signatory to the Continou Agreement, which aims to achieve free trade arrangements between the EU and the ACP regional groupings.
The other trade agreement worthy noting to which Zambia is a part is Everything But Arms (EBA) initiative of the EU. Under this initiative, all imports to the EU from least developed countries are duty-free and quota free, with the exception of armaments. EBA involves transitional arrangements for bananas, sugar and rice through different time frames.
Other trade agreements are regional, such as Common Market for Eastern and Southern Africa and Southern Africa Development Community.
All businesses engaging in both domestic and /or international trade are required by law to be registered with the Patents and Companies Registration Office (PACRO), an agency of the Ministry of Commerce, Trade and Industry. Registration is either by; business name, public or private company (therefore being incorporated in Zambia) or foreign company.
The basic requirements a foreign investor must meet in order to form a company in Zambia are: to select name of the proposed company, and have alternative names in case the first choice is not available; to select the directors and company secretary; to select the registered office and accounting reference; to decide on what would be the authorised share capital and what the purpose of the company ; to decide as well whether you need to enter into a shareholders agreement; to and decide on articles of association.
The minimum capital required to register a public or private company is K5 million (USD 1,316). The registration fees (inclusive of name search, forms, processing of application forms) differ. The registration of a business name is K85, 000 (USD 23), while the minimum fee for the registration of a company is K245, 000 (USD 65). This amount is however dependant on share capital. It can increase by K5, 000 for each additional K200, 000 of share capital. For a foreign company, the amount is K585, 000 (USD 154).
A foreign investor can register either as a public company or a private company which may be private limited by shares or companies limited by guarantee or unlimited companies. However, should a foreign registered company desire, it may register as such in Zambia by lodging an application for this and the application must be accompanied by a certified copy of the charter, statues, regulations, memorandum of and articles of association or other instrument consulting or defining the constitution of the company. The application must be also accompanied by a statement regarding property acquired in Zambia by the company or in relation to each documentary agent and local director, a statement signed by that person accepting appointment of such position.
Suffice to note that the registration fee for a foreign company slightly differ from that of a local company. Firstly, a foreign company is required to have a registration of a certified copy of the charter, statues, regulations, and memorandum of articles of association or other instruments constituting or defining the constitution of the company. This costs K1, 000, 000 (USD 312.5). The company should also register any document or make a record of any fact authorised to be delivered, sent or forwarded to the Registrar not specified in (a) above. This registration is at K150, 000 (USD 47.00). In addition, certificate registration and sealing both cost K150, 000 (USD 47.00) each.
Company registration is a very easy process if all the necessary paper work is in place. It can be done in one day.
Legal Framework for investment protection
The Zambia Development Agency Act assures investors that property rights shall be respected. The Act states that no investment of any description can be expropriated unless parliament has placed an Act relating to the compulsory acquisition of that property. The Act also provides that in case of expropriation, full compensation will be made to market value and will be convertible at the present exchange rate.
Zambia is a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank and other international agreements. This guarantees foreign investment protection in cases of war, strife, disasters and other disturbances or in cases of expropriation.
Zambia has also signed Investment Treaties with eleven countries. These bilateral investment treaties are reciprocal agreements between two countries that encourage, promote and protect foreign investment. These countries are Belgium, Luxemburg,
China, Croatia, Cuba, Egypt, France, Germany, Ghana, Italy, the Netherlands and Switzerland.Market Access
Zambia’s active participation in the fourteen countries region SADC Trade Protocol was well as the Africa Wide 20 Countries COMESA/FTA offers preferential tariff access to total market potential of nearly 380 million people.
Similarly, with advent of Africa Growth and Opportunity Act (AGOA) duty free access to the huge USA market has become a reality.
The AGOA Act provides preferences for quota and duty-free entry into the United States for certain goods. Notably, AGOA expanded market access for textile and apparel goods into the United States for eligible countries. Some AGOA countries have begun to export new products to the United States, such as cut flowers, horticultural products, automotives and steel. Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015. The Act’s apparel special provision, which permits lesser-developed countries to use foreign fabric for their garment exports, was to expire in 2007. However, legislation passed by Congress in December 2006 extended it through 2012.
The other agreement that eases Zambia’s market access is the Continou Agreement. The Continou Agreement provides for reciprocal trade agreements, meaning that not only the European Union (EU) provides duty-free access to its markets for Africa, Caribbean and Pacific Nations (ACP) exports, but ACP countries also provide duty-free access to their own markets for EU exports.
Zambia is also a signatory to the Continou Agreement, which aims to achieve free trade arrangements between the EU and the ACP regional groupings.
The other trade agreement worthy noting to which Zambia is a part is Everything But Arms (EBA) initiative of the EU. Under this initiative, all imports to the EU from least developed countries are duty-free and quota free, with the exception of armaments. EBA involves transitional arrangements for bananas, sugar and rice through different time frames.
Other trade agreements are regional, such as Common Market for Eastern and Southern Africa and Southern Africa Development Community.
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