Company Registration in Zambia

Nested in Southern Africa, the Republic of Zambia is a landlocked nation surrounded by the Democratic Republic of Congo, Zimbabwe, Tanzania, Malawi, Botswana, Mozambique, Namibia, and Angola. With the ever-evolving policies and stable economic environments, Zambia emerges as the strongest African nation for business endeavors.

Sectors like education, healthcare, copper fabrication, and agro-processing are thriving rapidly and seek considerable investment, posing ideal opportunities for entrepreneurs globally. The launch of a new business in Zambia attracts a myriad of legal implications, such as securing a company registration, registering with a tax authority, etc. Let’s dig into the legal requirements for setting up a brand-new venture in this country.

What makes Zambia a Potential Business Hub?

• Zambia connects with eight nations, ensuring a wider market size. It has never confronted a trade deficit with these nations. It has agreements with global markets, propelling business potential and market reach.

• Being a member of COMESA i.e. Common Market for East and Southern Africa, Zambia connects with 21 African States, allowing for an increased market size comprising 600 million people.

• Enrollment with the Southern Africa Development Community (SADC) allows Zambia to foster connection with 16 African States, translating to a significant market size having more than 350 million people.

• By leveraging the Everything But-Arms (EBA) agreement, Zambia has signed the AFCFTA i.e. Africa Continental Free Trade Agreement.

• The Africa Growth and Opportunity Act (AGOA) allows Zambia to ensure preferential market access to the United States of America. The country also has a WTO membership.

• The liberalized trade policies allow for uncompromised expatriation of profits and dividends for overseas entities. Payment digitization has also been increased to help businesses with prompt and hassle-free transactions.

• The Multilateral Investment Guarantee Agency in Zambia ensures all-encompassing protection for overseas funding and provides for free foreign exchange transfers.

• The well-developed sea, air, and road transport infrastructure provides for hassle-free movement- a game-changing attribute for businesses.

• Committed to the WTO’s trade facilitation agreement, Zambia has brought the National Trade Facilitation Committee to life to boost domestic and global trade.

Analyzing Different Business Structures in Zambia

Zambia's business landscape facilitates various choices regarding entity structures, each adhering to distinct characteristics. These structures will define what compliances you will follow, what taxes you will be going to pay, and how you will perform decision-making.

Sole Proprietorship

A sole proprietorship is a straightforward business model where an individual has utmost control over almost every aspect, including management and profit. While registering such entities is not a compulsion, it is recommended to certify it via the Patents and Companies Registration Authority (PACRA). One of the demerits of choosing such an entity is the unlimited liabilities, which can put the owner’s assets at risk.

Partnership

Partnerships have two or more foundational members seeking to meet a common business goal. These entities fall under the Partnership Act of 1890. The partnership offers controlled liabilities for each member when it comes to operating the business, profit distribution, and addressing risks.

Company Limited by Shares

In this entity, shareholders purchase the company’s shares as a part of the investment strategy and also elect the BODs. Since this business model provides for controlled liabilities, shareholder’s contributions cannot surpass the invested amount while addressing risks.

Company Limited by Guarantee

Similar to the above structure, the members of this entity are obligated to pay a pre-determined contribution in case of winding up as a part of the guarantee. Such structures are often chosen by entities belonging to the social, environmental, or charitable sectors.

Cooperative Societies

Cooperatives are helmed by a group of members seeking mutual profits and benefits. Adhering to the Cooperative Societies Act, these entities must abide by a different set of rules, maintaining transparency and trust among members.

Public Limited Company

These entities are preferred by significantly large enterprises having augmented market presence and operation. The public share trading is possible for these entities. However, the compliances for them can be relatively strignent as compared to other structures. These entities fall under the scrutiny of the Securities and Exchange Commission.

Non-Governmental Organizations (NGOs)

NGOs are nonprofit entities involved with social, environmental, or humanitarian causes. They take varied forms and fall under the Non-Governmental Organizations Act 2009.

Clubs and Societies

Clubs and societies are driven by members with common interests. They fall under the Clubs Registration Act. These entities render shared interests and flexible administration structures.

Eligibility Criteria Concerning Company Registration in Zambia

To bring a new entity to life, the following conditions should be met by the applicants.

Age or Corporate Entity:

Individuals must be aligned with the national laws or corporate entities.

Authorized Personnel:

Identify at least two working directors and at least one CS,

Shareholders:

Shareholder can be a person or corporate entity, with a minimum requirement of two.

Capital Requirements:

According to Zambian law, there is no minimum capital requirement. However, the Articles of Association must entail the nominal share capital.

Documents Requirement

The paperwork plays a vital in the company registration process. Any negligence on account of documents can lead to registration cancellation. Common documents for company registration include

• Article of Association
• Memorandum of Association
• Form 2 (Application for incorporation)
• Form 5 (consent cum declaration of the company’s director or CS regarding their position)
• Form 11 (Declaration of compliance)
• Form 46 (required by entities seeking Branch office in Zambia)

Process

Step 1: Choose Your Company Type

Choose the apt business model that aligns with your operational, tax, and compliance requirements. Take ample time to evaluate each structure, delving into their merits and demerits.

Step 2: Choose a Company Name

Head to the PACRA to validate and reserve the company name. No approval shall be granted by PACRA if the proposed name is offensive or trademarked.

Step 3: Prepare Required Documents

Draft the foundational documents based on the chosen business structure. In general, company registration requires the drafting of an MoA and AoA, each outlining crucial information regarding the business, its rules, total nominal share capital, and its members.

Step 4: Identify Company Officers and Shareholders

Identify directors, at least one company secretary, and a minimum of two shareholders.

Step 6: Register Your Company

Head to the PACRA application submission either in person or online through the PACRA Online Services portal.

Step 7: Register for Taxes

Register your company with the Zambia Revenue Authority (ZRA) via online mode.

Step 8: Obtain Necessary Permits and Licenses

Depending on your business nature, you may need to secure industry-specific approvals or permits from different authorities before commencing the operation.

 Tax

• Companies operating in Zambia attract a standard corporate tax rate of 30 percent, which is 5% less than what was charged earlier.
• Companies that are recently listed on the Lusaka Securities Exchange must pay CIT @ 28%. This rate shall remain in effect for the first year of listing.
• The 7 percent tax discount is available for the newly listed companies if the majority of them belong to the home country.

Other tax considerations include:

• Entities from the telecommunication sector attract a standard rate of 35%.
• If the first earning is poised at ZMW 250,000, a 30% tax is payable. Those who are earning higher shall pay a tax amounting to 40%.
• Entities serving farming, agro-processing, and export of non-traditional products need to pay a tax of 10%.
• Lapidary and jewelry facilities in the gemstone industry are required to pay a tax worth 25%.
• Entities catering to mineral processing attract 35 percent taxes.
• Entities involved with the production of organic and chemical fertilizers must pay a 15% tax.
• A presumptive tax of 15 percent spans those catering to land-based (brick and mortar) betting operations.

Avail of Adviso Support for Hassle-free Company Establishment

Adviso combines unmatched expertise with a wide network of seasoned professionals, specializing in different subject matters, to grant top-tier global incorporation process. With our support, you can leap into any cross-border business endeavors with clarity and confidence.

Why choose us?

• Proven record of helping hundreds of clients go global.
• Boosting a team of experienced professionals with each expert offering value-addition and getting rid of complications in the business quest.
• End-to-end assistance in resolving matters leading to legal conflicts with authorities during the incorporation journey.
• Ensure zero client intervention when it comes to drafting foundational and other key documents.