How can a foreigner open a company in Zambia?

Zambia, located in the heart of South Africa, offers promising opportunities for foreign entrepreneurs looking to establish a presence in the region.

Company registration is an important step for foreign entrepreneurs wishing to open a business in Zambia. This not only provides a legal basis for doing business, but also offers numerous benefits and protections. Here are some main reasons why company registration is necessary:

• Legitimacy and reliability. Company registration gives foreign entrepreneurs legitimacy and authority in the eyes of potential partners, clients and stakeholders. This demonstrates a commitment to complying with Zambian laws and regulations, increasing trust and confidence in the business.
• Limited liability protection. Registration of a company as a separate legal entity provides protection for the limited liability of its owners. This means that the personal assets of shareholders or directors are usually protected from business liabilities, protecting their personal finances.
• Access to financing. Registered companies have greater access to financing options, including bank loans, venture capital and government grants. Financial institutions and investors are more willing to support a registered business due to the transparency and accountability associated with official registration.
• Legal guarantees. Company registration ensures that the business operates within the legal framework of Zambia. It provides legal guarantees such as protection of intellectual property rights, enforceable contracts and access to remedies in case of disputes.
• Tax compliance and benefits. Company registration allows foreign entrepreneurs to meet their tax obligations and take advantage of potential tax breaks and incentives offered by the Zambian government. This can lead to cost savings and increased profitability in the long term.
• Business opportunities. Registration of a company opens up opportunities for concluding government contracts, participating in tenders and cooperation with local companies. This allows foreign entrepreneurs to actively contribute to Zambia's economic growth and benefit from its developing sectors.

Types of companies in Zambia

• Public limited liability company. Compared to private companies, public corporations are subject to additional rules and transparency requirements and can sell their shares to the general public. Before issuing shares, public companies must register a prospectus with the Patents and Trade Registration Agency (PACRA) and have a minimum of seven members and two directors.
• Private company limited by shares. The fact that this form of business has limited obligations to shareholders makes it the most popular. Once they have invested their money, shareholders are not liable for the company's debts.
• Limited liability company. Participants in this type of business are not subject to any limitations of liability. Although they have to use their personal assets, the members are nevertheless jointly and severally liable for the company's debts.
• Limited Liability Company. This type of business has members who act as guarantors rather than having share capital. In the event of liquidation of the company, the guarantors agree to pay a predetermined amount of money. Typically this type of business is used for non-profit or charitable purposes.
• Foreign company. A firm that is incorporated or registered outside Zambia but has a place of business or carries on business in the country is considered a foreign corporation in Zambia. After establishing a place of business or commencement of activities in Zambia, a foreign company has 28 days to register with the Patents and Companies Registration Agency (PACRA). In addition, the foreign company must appoint at least one Zambian resident as a local director.

Under the Companies Act 2017, foreign investors are allowed to form a company with a sole director and register a local company without the need for Zambian shareholders. Investors usually register their local businesses as limited liability companies, giving them some legal protection.

In Zambia, investors usually register their local businesses as limited liability companies. This company can be considered either private or public.

Business requirements

If you intend to become an investor, you will also need an investment license from the Zambia Development Agency and an investor permit. One of the requirements to pay an investor is to demonstrate the ability to invest at least US$250,000 in cash or capital equipment in the country.

If you intend to bring your employees from the parent country, they will also need to have a work permit to work in Zambia. They are valid for two years.

A business permit is required, which is issued by the council upon completion of the business premises and payment of the relevant fees.

A license to manufacture excisable goods must be obtained from the Zambia Revenue Authority for businesses engaged in the production and import of excisable goods.

Company registration process

1. Checking the Business Name. A name search should be performed to confirm whether the desired business name is available and is not already in use. This is done through PACRA.
2. Complete Form 3. This includes information about the company, information about the directors and the activities of the company.
3. Receive the certificate and documents. Once everything is approved, you will receive a certificate of registration and certificate.

Additional steps after registration

• Obtain a Taxpayer Identification Number (TPIN). Submit your Certificate of Registration and register with the Zambia Revenue Authority (ZRA) to obtain a Taxpayer Identification Number (TPIN).
• Register with the National Pension Scheme Authority (NPSA). If you are an investor, register with the NPSA by submitting a certificate of registration.
• Transparent business tax. Before commencing business operations, please agree the business fee with the Lusaka City Council or the local council from which your business will be operated.
• Register for Value Added Tax (VAT). Register for VAT with the Zambia Revenue Authority if your business involves the production of goods and the value of taxable supplies exceeds the specified thresholds.
• Obtain an investment registration certificate. Investors who invest at least US$250,000 can obtain an investment registration certificate from the Zambia Development Agency. The premises are inspected to ensure compliance with business activities. In case the investor establishes a branch of his foreign company, he must submit a special application form (Form No. 46 “Foreign Company Registration”), accompanied by a copy of the Certificate of Incorporation from the country of origin and its articles of association, regulations, provisions, memoranda and articles, and as well as any other relevant information.
• The company must also indicate the name of the firm, legal entity or individual resident in Zambia who will be authorized to act as the documentary agent.
• Open a bank account. After obtaining a Foreign Taxpayer Registration Certificate, investors can open a bank account with any bank in Zambia.
• Obtain the necessary licenses and permits. Depending on the nature of the business, obtain the appropriate licenses and permits. For example, facilities that manufacture and process consumables may require medical clearance, food hygiene licenses, and food handler health certifications. Companies dealing in excise goods (i.e. manufacturers and importers) must obtain an excise goods license from the Zambia Revenue Authority (ZRA).
• Get a fire safety certificate. All businesses must obtain a fire safety certificate issued by the appropriate council depending on the location of the business. The certificate is renewed annually.