Business entities in Zambia
The most common way of doing business in Zambia is to set up a Zambian limited liability company (LLC). Alternatively, foreign entrepreneurs willing to raise capital in the country may choose to setup a Zambia Public Limited Company (PLC). Foreign companies can also register a branch office in Zambia or a representative office in they do not expect to conduct any commercial and productive operations.
The Zambian limited liability company (Private company limited by shares)
- 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. However Healy Consultants advises our Clients to deposit at least US$1,000 share capital to optimize company incorporation process.
The Zambian public limited company (Public 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.
The Zambian branch office
- A branch of a foreign company is considered as a foreign entity in Zambia. The Zambian Companies 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.
The Zambian representative office
- Just like the other entities, 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.
Different types of Zambian business entities
|Entity also known as||Private company limited by shares||Public company||Branch||RO|
|How long to set the company up?||3 weeks||10 weeks||8 weeks||5 weeks|
|How long to open company bank account?||3 weeks||3 weeks||3 weeks||3 weeks|
|Minimum share capital?||US$1,000||US$10,000||US$0||US$0|
|File annual tax return?||Yes||Yes||Yes||No|
|Corporate bank account?||Barclays||Citibank||Standard Chartered||EcoBank|
|Does our Client need to travel?||No||No||No||No|
|Resident director/representative required?||Yes||Yes||Yes||Yes|
|Zambia shareholder required?||No||Yes||No||No|
|Minimum directors/representatives allowed?||2||2||1||1|
|Company secretary required?||No||No||No||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed?||Yes||Yes||Yes||Yes|
|Zambia corporate tax rate?||Variable||Variable||Variable||N/A|
|Annual financial statements required?||Yes||Yes||Yes||Yes|
|Statutory audit required?||No||Yes||Yes||Yes|
|Allowed to issue sales invoices in Zambia?||Yes||Yes||Yes||No|
|Allowed to sign contracts?||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||No|
|Can rent an office in Zambia?||Yes||Yes||Yes||Yes|
|Can buy Zambia property?||Yes||Yes||Yes||No|
|Can own equity in other Zambian companies?||Yes||Yes||Yes||No|
|Total Zambia business setup costs in Yr. 1||US$15,450||US$16,450||US$17,450||US$17,950|
|Subsequent annual costs (excl. accounting and tax fee)||US$3,850||US$4,850||US$5,850||US$6,150|
|Sample engagement fee invoice|